SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
REPORT
OF
FOREIGN ISSUER
Pursuant
to Rule 13a-16 or 15d-16 of
the
Securities Exchange Act of 1934
For
the month of November 2005
Commission
File Number 000-51122
pSivida
Limited
(Translation
of registrant’s name into English)
Level
12
BGC Centre
28
The
Esplanade
Perth
WA
6000
(Address
of principal executive offices)
(Indicate
by check mark whether the registrant files or will file annual reports under
cover Form 20-F or Form 40-F).
Form
20-F
ý Form
40-F o
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1):
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7):
Indicate
by check mark whether the registrant by furnishing the information contained
in
this Form is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes
o No
ý
If
"Yes"
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-___.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant,
pSivida Limited, has duly caused this report to be signed on its behalf by
the
undersigned, thereunto duly authorized.
Date:
November 15, 2005
| pSivida Limited | ||
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| By: | /s/Aaron Finlay | |
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|
Aaron
Finlay
Chief Financial Officer and Company
Secretary
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||
The
following is a summary of the terms of the transactions contemplated by the
agreements contained in this Form 6-K. This
summary is not intended to be complete and is qualified in its entirety by
reference to the exhibits to this Form 6-K.
THIS
FORM
6-K IS NOT AN OFFER TO SELL, NOR IS IT SEEKING AN OFFER TO BUY, ANY SECURITIES
IN ANY JURISDICTION WHERE THE OFFER OR SALE OF THESE SECURITIES IS NOT
PERMITTED.
Securities
Purchase Agreement
pSivida
and an institutional investor (referred to in this form as the investor) entered
into a Securities Purchase Agreement on October 5, 2005. The agreement provides
for the purchase of a note and warrant by the investor. The note purchase price
is equal to US$15 million. The investor will receive a warrant to purchase
up to
633,803 American Depositary Shares (ADSs) of pSivida for no additional
consideration.
Closing
of the issue of the note and warrant is subject to the fulfillment or waiver
of
specified conditions. Under the agreement, pSivida has agreed not to issue
any
securities before February 14, 2006, except pursuant to the conversion of
existing convertible securities, options or warrants or as contemplated pursuant
to pending or completed transactions. pSivida has further agreed not to issue
any further securities for two years after the closing date (other than pursuant
to certain permitted issuances) unless the investor is offered to subscribe
for
at least 50% of the securities to be offered on the same terms as the securities
are to be offered to any other person. An example of a permitted issuance is
a
firm commitment underwritten offering of more than US$25 million.
Under
the
agreement, pSivida agreed, among other things, to continue to file reports
with
the U.S. Securities and Exchange Commission, to keep its securities listed
on
specified exchanges or quotation systems, and not to undertake certain types
of
dilutive securities issues.
The
Note
A
short
summary of the terms of the note follows:
|
·
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The
note will have a face value of US$15,000,000.
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·
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The
note may be converted by the holder into ADSs at any time prior
to the
third anniversary of the date of issue of the note. The number
of shares
to be issued on conversion of the note is to be calculated by dividing
the
face value of the note to be converted (and any accrued but unpaid
interest on the note) by the issue price of the ADSs.
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|
·
|
The
conversion price will initially be US$7.10 per ADS and may be adjusted
under certain circumstances, including, among others, in the event
pSivida
issues securities at a lower price than the price at which the
note may be
converted.
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|
·
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The note matures 3 years after issuance and bears interest at the rate of 8% per annum. | |
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·
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Under
certain circumstances, pSivida may make interest payments in the
form of
ADSs.
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·
|
The
note contains certain events of default which allow the investor
to
accelerate the maturity of the note and permit the investor to
force
payment of the note in the event of a change of control of
pSivida.
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|
·
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pSivida
has the right, in certain specified circumstances, to force the
investor
to convert the note into ADSs, including if the ADSs are trading
at 200%
of the conversion price during a specified period.
|
|
|
·
|
The
investor has the right to require pSivida to prepay one-third of
the note
at the 12, 18 and 24 month anniversary of its issuance under certain
circumstances, including if the ADSs are trading below the conversion
price during a specified period.
|
-2-
|
·
|
The note contains various negative covenants, including limitations on the incurrence of debt and liens, and the maintenance of certain cash levels. |
The
Warrant
The
following is a summary of the terms of the warrant:
|
·
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The
warrant constitutes an option to acquire up to 633,803 ADSs at
any time on
or before the sixth anniversary of the issue of the
warrant.
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|
·
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The per ADS exercise price under the warrant is US$7.20 and may be adjusted under certain circumstances, including, among others, in the event pSivida issues securities at a lower price than the price at which the note may be converted or pSivida makes a pro rata issuance to shareholders. | |
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·
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There is a limit of 4.99% in respect of an investor and its affiliates’ beneficial ownership in pSivida, which may prevent it from exercise of part of the warrant (this limit may be changed by the investor). | |
|
·
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If
there is a fundamental transaction (such as a transaction which
involves a
change in control of pSivida or a transfer of substantially all
of its
assets), pSivida will use its best endeavors to procure that the
successor
entity assumes all of the obligations of pSivida under the
warrant.
|
THE
SECURITIES DESCRIBED HEREIN WILL NOT BE OR HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES ABSENT REGISTRATION OR AN APPLICABLE EXEMPTION FROM REGISTRATION
REQUIREMENTS.
THE
SECURITIES PURCHASE AGREEMENT IS BEING FILED AS AN EXHIBIT TO THIS REPORT OF
FOREIGN ISSUER ON FORM 6-K TO PROVIDE INVESTORS WITH INFORMATION REGARDING
ITS
TERMS. THE SECURITIES PURCHASE AGREEMENT CONTAINS REPRESENTATIONS AND WARRANTIES
THAT PSIVIDA LIMITED AND INVESTORS LISTED ON THE SCHEDULE OF BUYERS MADE TO
EACH
OTHER AS OF THE DATE OF THE SECURITIES PURCHASE AGREEMENT OR OTHER SPECIFIC
DATES, AND SUCH REPRESENTATIONS AND WARRANTIES SHOULD NOT BE RELIED UPON BY
ANY
OTHER PERSON.
EXHIBIT
INDEX
|
EXHIBIT
99.1:
|
Securities
Purchase Agreement, dated October 5, 2005, between pSivida Limited
and the
investor listed on the Schedule of Buyers attached
thereto
|
|
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EXHIBIT
99.2:
|
Form
of Subordinated Convertible Note in the principal amount of
US$15,000,000
|
|
|
EXHIBIT
99.3:
|
Form
of Warrant to Purchase ADRs for the purchase of up to 633,803
ADRs
|
|
|
EXHIBIT
99.4:
|
Form
of Registration Rights Agreement
|
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|
EXHIBIT
99.5:
|
Letter
Agreement, dated November 15, 2005, relating to the Securities Purchase
Agreement
|
-3-
EXHIBIT
99.1
Securities
Purchase Agreement, dated October 5, 2005, between pSivida Limited and the
investor listed on the Schedule of Buyers attached
thereto
Execution
Version
SECURITIES
PURCHASE AGREEMENT
SECURITIES
PURCHASE AGREEMENT
(the
"Agreement"),
dated
as of October 5th 2005 by and among pSivida Limited, an Australian corporation,
with headquarters located at Level 12, BGC Centre, 28 The Esplanade, Perth,
WA
6000 Australia (the "Company"),
and
the investors listed on the Schedule of Buyers attached hereto (individually,
a
"Buyer"
and
collectively, the "Buyers").
WHEREAS:
A. The
Company and each Buyer is executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section 4(2)
of the
Securities Act of 1933, as amended (the "1933
Act"),
and
Rule 506 of Regulation D ("Regulation
D")
as
promulgated by the United States Securities and Exchange Commission (the
"SEC")
under
the 1933 Act.
B. The
Company has authorized a new series of convertible notes of the Company,
which
notes shall be convertible into ordinary shares of the Company (the
"Ordinary
Shares"),
which
are, as of the date hereof, represented by American Depositary Shares each
representing 10 Ordinary Shares and evidenced by an American Depository Receipt
("ADR"),
in
accordance with the terms of the Notes (as converted, the "Conversion
Shares").
C. Each
Buyer wishes to purchase, severally but not jointly, and the Company wishes
to
sell, upon the terms and conditions stated in this Agreement, (i) that aggregate
principal amount of notes, in substantially the form attached hereto as Exhibit
A (the "Notes"),
set
forth opposite such Buyer's name in column (3) on the Schedule of Buyers
(which
aggregate principal amount for all Buyers shall be $15,000,000) and (ii)
warrants, in substantially the form attached hereto as Exhibit B (the
"Warrants"),
to
acquire up to that number of additional Ordinary Shares set forth opposite
such
Buyer's name in column (4) of the Schedule of Buyers (as exercised, the
"Warrant
Shares").
D. The
Notes
bear interest, which at the option of the Company, subject to certain
conditions, may be paid in Ordinary Shares ("Interest
Shares").
E. Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a registration rights agreement, substantially in
the
form attached hereto as Exhibit C (the "Registration
Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration
rights
with respect to the Conversion Shares, the Warrant Shares and the Interest
Shares under the 1933 Act and the rules and regulations promulgated thereunder,
and applicable state securities laws.
F. The
Notes, the Conversion Shares (including ADRs), the Interest Shares (including
ADRs), the Warrants and the Warrant Shares (including ADRs) collectively
are
referred to herein as the "Securities".
NOW,
THEREFORE,
the
Company and each Buyer hereby agree as follows:
1
1. PURCHASE
AND SALE OF DEBENTURES AND WARRANTS.
(a) Amount.
Subject
to the satisfaction (or waiver) of the conditions set forth in Sections 6
and 7
below, the Company shall issue to each Buyer, and each Buyer severally, but
not
jointly, agrees to purchase from the Company on the Closing Date (as defined
below), a principal amount of Notes, as is set forth opposite such Buyer's
name
in column (3) on the Schedule of Buyers, along
with Warrants to acquire that number of Warrant Shares as is set forth opposite
such Buyer's name in column (4) on the Schedule of Buyers.
(b) Closing.
The
closing (the "Closing")
of the
purchase of the Notes and the Warrants by the Buyers shall occur at the offices
of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022. The
date and time of the Closing (the "Closing
Date")
shall
be 10:00 a.m., New York City Time, two (2) Business Days after, and subject
to,
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
6 and 7 below (or such later date as is mutually agreed to by the Company
and
each Buyer).
(c) Purchase
Price.
The
purchase price for each Buyer (the "Purchase
Price")
of the
Notes and related Warrants to be purchased by each such Buyer at the Closing
shall be equal to $1.00 for each $1.00 of principal amount of Notes being
purchased by such Buyer at the Closing.
(d) Form
of Payment.
On the
Closing Date, (A) each Buyer shall pay its aggregate applicable Purchase
Price
to the Company for the Notes and the Warrants to be issued and sold to such
Buyer at the Closing, by wire transfer of immediately available funds in
accordance with the Company's written wire instructions, and (B) the
Company shall deliver to each Buyer the Notes (in the principal amounts as
such
Buyer shall have requested prior to the Closing) which such Buyer is then
purchasing along with the Warrants (in the amounts as such Buyer shall have
requested prior to the Closing) such Buyer is purchasing, duly executed on
behalf of the Company and registered in the name of such Buyer or its designee.
2. BUYER'S
REPRESENTATIONS, WARRANTIES AND COVENANTS.
Each
Buyer represents, warrants, covenants and agrees with respect to only itself
that:
(a) No
Public Sale or Distribution.
Such
Buyer is (i) acquiring the Notes and the Warrants, and (ii) upon conversion
of
the Notes and exercise of the Warrants will acquire the Conversion Shares
issuable upon conversion of the Notes and the Warrant Shares issuable upon
exercise of the Warrants, for its own account and not with a view towards,
or
for resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided,
however,
that by
making the representations herein, such Buyer does not agree to hold any
of the
Securities for any minimum or other specific term and reserves the right
to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act. Such Buyer is
acquiring the Securities hereunder in the ordinary course of its business.
Such
Buyer does not presently have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the Securities.
2
(b) Accredited
Investor Status.
Such
Buyer is an "accredited investor" as that term is defined in Rule 501(a)
of
Regulation D.
(c) Reliance
on Exemptions.
Such
Buyer understands that the Securities are being offered and sold to it in
reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and in compliance with Australian
Securities Laws (as defined below) and that the Company is relying in part
upon
the truth and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of
such Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire the
Securities.
(d) Information.
Such
Buyer and its advisors, if any, have been furnished with 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 requested by such
Buyer
and have had access to those documents described in Section 3(k) as are
generally available to the public. Such Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer
or
its advisors, if any, or its representatives shall modify, amend or affect
such
Buyer's right to rely on the Company's representations and warranties contained
herein and such Buyer represents that, in connection with its purchase of
the
Securities, it has not relied on any statement or representation by the Company
or any of its officers, directors or employees or any of its attorneys or
agents, except as specifically set forth in the Transaction Documents. Such
Buyer understands that its investment in the Securities involves a high degree
of risk. Such Buyer has sought such accounting, legal and tax advice as it
has
considered necessary to make an informed investment decision with respect
to its
acquisition of the Securities.
(e) No
Governmental Review.
Such
Buyer understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
(f) Transfer
or Resale.
Such
Buyer understands that except as provided in the Registration Rights Agreement:
(i) the Securities have not been and are not being registered under the 1933
Act
or any state securities laws, and may not be offered for sale, sold, assigned
or
transferred unless (A) subsequently registered thereunder, (B) such Buyer
shall
have delivered to the Company an opinion of counsel, in a form reasonably
acceptable to the Company, to the effect that such Securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to
an
exemption from such registration, or (C) such Buyer provides the Company
with
such documents, certificates or opinions as the Company may reasonably request
to the effect that such Securities can be sold, assigned or transferred pursuant
to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended (or a
successor rule thereto) (collectively, "Rule
144");
(ii)
any sale of the Securities made in reliance on 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 the Securities under circumstances in which the
seller
(or the Person (as defined in Section 3(r)) through whom the sale is made)
may
be deemed to be an underwriter (as that term is defined in the 1933 Act)
may
require compliance with some other exemption under the 1933 Act or the rules
and
regulations of the SEC thereunder; and (iii) neither the Company nor any
other
Person is under any obligation to register the Securities under the 1933
Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder. The Securities may be pledged in connection with a
bona
fide margin account or other loan or financing arrangement secured by the
Securities and such pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, and no Buyer effecting a
pledge
of Securities shall be required to provide the Company with any notice thereof
or otherwise make any delivery to the Company pursuant to this Agreement
or any
other Transaction Document (as defined in Section 3(b)), including, without
limitation, this Section 2(i).
3
(g) Legends.
Such
Buyer understands that the certificates or other instruments representing
the
Notes and the Warrants and, until such time as the resale of the Conversion
Shares and the Warrant Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the certificates representing
any Securities, except as set forth below, shall bear any legend as required
by
the "blue sky" laws of any state and a restrictive legend in substantially
the
following form (and a stop-transfer order may be placed against transfer
of such
stock certificates):
[NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE
SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE][EXERCISABLE] HAVE
BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR (B) AN OPINION OF COUNSEL,
IN A
FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) IF SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT,
SUCH DOCUMENTS, OPINIONS AND CERTIFICATES AS THE COMPANY MAY REASONABLY REQUIRE.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE
SECURITIES.
The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which
it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection
with
a sale, assignment or other transfer, such holder provides the Company with
an
opinion of counsel, in a form reasonably acceptable to the Company, to the
effect that such sale, assignment or transfer of the Securities may be made
without registration under the applicable requirements of the 1933 Act, or
(iii)
such holder provides the Company with such documents, certificates or opinions
as the Company may reasonably request to the effect that the Securities can
be
sold, assigned or transferred pursuant to Rule 144 or Rule 144A.
4
(h) Validity;
Enforcement.
This
Agreement and the Registration Rights Agreement have been duly and validly
authorized, executed and delivered on behalf of such Buyer and shall constitute
the legal, valid and binding obligations of such Buyer, enforceable against
such
Buyer in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
(i) No
Conflicts.
The
execution, delivery and performance by such Buyer of this Agreement and the
Registration Rights Agreement and the consummation by such Buyer of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of such Buyer or (ii) 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 such Buyer is a party, or (iii) result in a violation
of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and Australian Securities Laws) applicable to such Buyer,
except
in the case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of
such
Buyer to perform its obligations hereunder or thereunder.
(j) Certain
Trading Activities.
(A) No
such Buyer nor its affiliates has directly or indirectly, and no Person acting
on behalf of or pursuant to any understanding with such Buyer or its affiliates
has directly or indirectly, engaged in any transactions in the securities
of the
Company (including, without limitations, any Short Sales) since the time
that
such Buyer was first contacted by the Company, a placement agent or any other
Person with respect to the transactions contemplated hereby (the foregoing,
a
"Prohibited
Transaction").
“Short
Sales”
include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the 1934 Act and all types of direct
and
indirect stock pledges, forward sale contracts, options, puts, calls, short
sales, swaps and similar arrangements (including on a total return basis),
and
sales and other transactions through non-US broker dealers or foreign regulated
brokers (but does not include any actions to secure available shares to borrow
in order to effect Short Sales or similar transactions in the
future.)
(B) Such
Buyer covenants that neither it, its affiliates, nor any Person acting on
its or
its affiliate’s behalf or pursuant to any understanding with it or its affiliate
will (x) engage in any Prohibited Transaction prior to the earlier of the
Effective Date and the Effectiveness Deadline or (y) during the twenty (20)
Trading Days (as defined in the Notes) prior to any Optional Redemption Date
(as
defined in the Notes), engage in any Short Sale or otherwise sell any securities
of the Company other than (i) any Conversion Shares received or due to the
Buyer
at any time upon any conversion of the Note or (ii) any Warrant Shares received
or due to the Buyer at any time upon any exercise of the Warrant.
5
(C) Notwithstanding
any other provision of this Agreement, the Buyers agree and undertake to
the
Company that the Buyers will not transfer or otherwise dispose of, or agree
to
the transfer or dispose of (such action a "Disposal"), any of the: Notes,
Warrants, Conversion Shares, Interest Shares, Warrants or Warrant Shares
(or the
fully paid ordinary shares underlying any of them) within 12 months after
the
relevant date of issue, to any Australian resident or person within Australia
(including through trading on the Australian Stock Exchange), unless the
Disposal does not require a disclosure document under Chapter 6 of the
Corporations Act and the transferee has given the Buyer a binding undertaking
on
the same terms as those contained in this clause.
(k) Residency.
Such
Buyer is a resident of that jurisdiction specified below its address on the
Schedule of Buyers.
(l) Buyer
Agent Fees.
Such
Buyer has taken no action which would give rise to any claim by any Person
for
brokerage commission, finder’s fees or similar payments by the Company relating
to this Agreement or the transactions contemplated hereby ("Buyers'
Agent Fees").
The
Company shall have no obligation with respect to any Buyers' Agent Fees or
with
respect to any claims made by or on behalf of other Persons for any Buyers'
Agent Fees. Such Buyer shall indemnify and hold harmless each of the Company,
its employees, officers, directors, agents and partners and their respective
affiliates, from and against all claims, losses, damages, costs (including
the
costs of preparation and attorney’s fees) and expenses suffered in respect of
any such claimed or existing Buyers' Agent Fees, as and when
incurred.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to each of the Buyers as follows (it being
understood and agreed that all such representations and warranties are made
without recognizing or giving effect to the Acquisition, the documents being
executed in connection therewith and that the company being acquired pursuant
to
the Acquisition is not considered a subsidiary or part of the Company for
the
purposes hereof):
(a) Organization
and Qualification.
The
Company and its "Subsidiaries"
(which
for purposes of this Agreement means any entity in which the Company, directly
or indirectly, owns capital stock or holds an equity or similar interest
in
excess of 50% of such stock or equity) are entities duly organized and validly
existing in good standing under the laws of the jurisdiction in which they
are
formed, and have the requisite power and authorization to own their properties
and to carry on their business as now being conducted. Each of the Company
and
its Subsidiaries is duly qualified as a foreign entity to do business and
is in
good standing in every jurisdiction in which its ownership of property or
the
nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect. As used in this Agreement,
"Material
Adverse Effect"
means
any event or collection of events which individually or in the aggregate
would
reasonably be expected to have a material adverse effect on the business,
properties, assets, operations, results of operations, condition (financial
or
otherwise) or prospects of the Company and its Subsidiaries, taken as a whole,
or on the transactions contemplated hereby and the other Transaction Documents
or by the agreements and instruments to be entered into in connection herewith
or therewith, or on the authority or ability of the Company to perform fully
its
obligations under the Transaction Documents (as defined below). The Company
has
no Subsidiaries except as set forth on Schedule
3(a).
6
(b) Authorization;
Enforcement; Validity.
The
Company has the requisite power and authority to enter into and perform its
obligations under this Agreement, the Notes, the Registration Rights Agreement,
the Irrevocable Transfer Agent Instructions (as defined in Section 5(b)),
the
Warrants and each of the other agreements entered into by the parties hereto
in
connection with the transactions contemplated by this Agreement (collectively,
the "Transaction
Documents")
and,
subject to the Company obtaining the Shareholder Approval (as defined in
Section
4(p),
to
issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
including, without limitation and subject to the Company obtaining the
Shareholder Approval, the issuance of the Notes and the Warrants, the issuance
of the Conversion Shares issuable
upon conversion of the Notes, and the issuance of Warrant Shares issuable
upon
exercise of the Warrants have been duly authorized by the Company's Board
of
Directors and (other than the filing with the SEC of one or more Registration
Statements in accordance with the requirements of the Registration Rights
Agreement) no further filing, consent, or authorization, other than obtaining
the Shareholder Approval, is required by the Company, its Board of Directors
or
its stockholders. This Agreement and the other Transaction Documents of even
date herewith have been duly executed and delivered by the Company, and
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as
such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
(c) Issuance
of Securities.
The
issuance of the Notes and the Warrants shall, upon the occurrence of the
Company
obtaining the Shareholder Approval, be duly authorized and shall be free
from
all taxes, liens and charges with respect to the issue thereof. Subject to
the
company obtaining the Shareholder Approval, upon conversion or in accordance
with the Notes or exercise in accordance with the Warrants, as the case may
be,
the Interest Shares, the Conversion Shares and the Warrant Shares, respectively,
will be validly issued, fully paid and nonassessable and free from all
preemptive or similar rights, taxes, liens and charges with respect to the
issue
thereof, with the holders being entitled to all rights accorded to a holder
of
Ordinary Shares. Assuming the accuracy of the representations and warranties
of
the Buyers contained in Section 2, the offer and issuance by the Company
of the
Securities is exempt from registration under the 1933 Act.
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby
and
thereby (including, without limitation, the issuance of the Notes and the
Warrants and issuance of the Interest Shares, the Conversion Shares and the
Warrant Shares) will not, assuming the Company obtains Shareholder approval
as
contemplated by Section 4(p) (i) result in a violation of the Certificate
of
Incorporation (as defined in Section 3(q)) of the Company or any of its
Subsidiaries, or (ii) 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 (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of the Nasdaq National
Market
(the "Principal
Market"))
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, in
any
such case which is reasonably likely to result in a Material Adverse
Effect.
7
(e) Consents.
The
Company is not required to obtain any consent, authorization or order of,
or
make any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it
to
execute, deliver or perform any of its obligations under or contemplated
by the
Transaction Documents, in each case in accordance with the terms hereof or
thereof. All consents, authorizations, orders, filings and registrations
which
the Company is required to obtain pursuant to the preceding sentence have
been
obtained or effected on or prior to the Closing Date, and the Company and
its
Subsidiaries are unaware of any facts or circumstances which might prevent
the
Company from obtaining or effecting any of the registration, application
or
filings pursuant to the preceding sentence. The Company is not in violation
of
the listing requirements of the Principal Market or the Australian Stock
Exchange and has no knowledge of any facts which would reasonably lead to
delisting or suspension of the ADRs or the Ordinary Shares in the foreseeable
future.
(f) Acknowledgment
Regarding Buyer's Purchase of Securities.
The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of arm's length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an
officer
or director of the Company, (ii) an "affiliate" of the Company (as defined
in
Rule 144) or (iii) to the knowledge of the Company, a "beneficial owner"
of more
than 10% of the Ordinary Shares (as defined for purposes of Rule 13d-3 of
the
Securities Exchange Act of 1934, as amended (the "1934
Act")).
The
Company further acknowledges that no Buyer is acting as a financial advisor
or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated hereby and thereby,
and
any advice given by a Buyer or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Buyer's purchase of the
Securities. The Company further represents to each Buyer that the Company's
decision to enter into the Transaction Documents has been based solely on
the
independent evaluation by the Company and its representatives.
(g) No
General Solicitation; Placement Agent's Fees.
Neither
the Company, nor any of its affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale
of the
Securities. The Company shall be responsible for the payment of any placement
agent's fees, financial advisory fees, or brokers' commissions relating to
or
arising out of its retention of any such Person in connection with the
transactions contemplated hereby. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
attorney's fees and out-of-pocket expenses) arising in connection with any
such
claim. The Company acknowledges that it has engaged BIO-IB, LLC as advisor
(the
"Advisor")
in
connection with the sale of the Securities. No Buyer shall have any obligation
with respect to any claim by any Person for brokerage commission, finder’s fees
or similar payments by the Company relating to this Agreement or the
transactions contemplated hereby ("Company
Advisor Fees")
or with
respect to any claims made by or on behalf of other Persons for any Company
Advisor Fees. The Company shall indemnify and hold harmless each Buyer and
their
respective employees, officers, directors, agents and partners and their
respective affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney’s fees) and expenses suffered
in respect of any such claimed or existing Company Advisor Fees, as and when
incurred.
8
(h) No
Integrated Offering.
Except
for the possibility that the PIPE Transaction (as hereinafter defined) would
be
so regarded, none of the Company, its Subsidiaries, any of their affiliates,
and
any Person acting on 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 require registration of any of the Securities under
the
1933 Act or cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of the 1933 Act or any other applicable
regulatory provisions requiring stockholder approval, including, without
limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed
or
designated; provided,
that if
the offering of the Securities would be required to be integrated with the
PIPE
transaction, such integration would not violate the 1933 Act or any other
applicable regulatory provisions requiring stockholder approval, including,
without limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed
or
designated, but excluding the Shareholder Approval (as hereinafter defined).
None of the Company, its Subsidiaries, their affiliates and any Person acting
on
their behalf will in the future take any action or steps referred to in the
preceding sentence that would require registration of any of the Securities
under the 1933 Act or cause the offering of the Securities to be integrated
with
other offerings.
(i) Dilutive
Effect.
The
Company understands and acknowledges that the number of Conversion Shares
issuable upon conversion of the Notes and the Warrant Shares issuable upon
exercise of the Warrants will increase in certain circumstances. The Company
further acknowledges that its obligation to issue Conversion Shares upon
conversion of the Notes in accordance with this Agreement and the Notes and
its
obligation to issue the Warrant Shares upon exercise of the Warrants in
accordance with this Agreement and the Warrants is, in each case, absolute
and
unconditional regardless of the dilutive effect that such issuance may have
on
the ownership interests of other stockholders of the Company.
(j) Application
of Takeover Protections; Rights Agreement.
The
Company and its board of directors or other similar governing body have taken
all necessary action, if any, in order to render inapplicable any control
share
acquisition, business combination, poison pill (including any distribution
under
a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of any jurisdiction which is or
could
become applicable to any Buyer as a result of the transactions contemplated
by
this Agreement, including, without limitation, the Company's issuance of
the
Securities and any Buyer's ownership of the Securities. The Company has not
adopted a stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Ordinary Shares or a change in control
of the Company.
9
(k) SEC
and Australian Documents; Financial Statements.
Except
as disclosed in Schedule
3(k),
during
the two (2) years prior to the date hereof, the Company has filed all reports,
schedules, forms, statements and other documents required to be filed by
it with
the SEC and the ASX and the ASIC pursuant to the reporting requirements of
the
1934 Act and the Corporations
Act 2001
(Cth),
its Regulations and the ASX Listing Rules "Australian
Securities Laws")
(all
of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements, notes and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the
"SEC
Documents").
The
Company has delivered to the Buyers or their respective representatives true,
correct and complete copies of the SEC Documents not available on the EDGAR
system. As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the Australian Securities
Laws and the rules and regulations of the SEC or the ASX
promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents,
at
the time they were filed with the SEC or the ASX,
as
applicable, 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 the light of the circumstances under which
they
were made, not misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form
in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC and the ASX
with
respect thereto. Such financial statements have been prepared in accordance
with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed
or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case
of
unaudited statements, to normal year-end audit adjustments).
(l) Absence
of Certain Changes.
Except
as disclosed in Schedule
3(l),
since
June 30, 2005, there has been no material adverse change and no material
adverse
development in the business, properties, operations, condition (financial
or
otherwise), results of operations or prospects of the Company. Except as
disclosed in Schedule
3(l),
since
June 30, 2005, the Company has not (i) declared or paid any dividends, (ii)
sold
any assets, individually or in the aggregate, in excess of $100,000 outside
of
the ordinary course of business or (iii) had capital expenditures, individually
or in the aggregate, in excess of $100,000. The Company has not taken any
steps
to seek protection pursuant to any bankruptcy law nor does the Company have
any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so. The Company is not as of the date hereof,
and after giving effect to the transactions contemplated hereby to occur
at the
applicable Closing, will not be Insolvent (as defined below). For purposes
of
this Section 3(l), "Insolvent"
means
(i) the present fair saleable value of the Company's assets is less than
the
amount required to pay the Company's total Indebtedness (as defined in Section
3(s)), (ii) the Company is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured, (iii) the Company intends to incur or believes that
it
will incur debts that would be beyond its ability to pay as such debts mature
or
(iv) the Company has unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted.
10
(m) Conduct
of Business; Regulatory Permits.
Neither
the Company nor its Subsidiaries is in violation of any term of or in default
under its Certificate of Incorporation or their organizational charter,
certificate of incorporation or other organizational documents or bylaws
or
other governing documents, respectively. Neither the Company nor any of its
Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or its Subsidiaries,
and
neither the Company nor any of its Subsidiaries will conduct its business
in
violation of any of the foregoing, except for possible violations which would
not, individually or in the aggregate, have a Material Adverse Effect. Since
January 27, 2005, (i) the ADRs have been designated for quotation on the
Principal Market, (ii) trading in the ADRs has not been suspended by the
SEC,
the ASIC, the ASX or the Principal Market, other than pursuant to the request
of
the Company, and (iii) the Company has received no communication, written
or
oral, from the SEC, the ASIC, the ASX or the Principal Market regarding the
suspension or delisting of the ADRs from the Principal Market, other than
pursuant to the request of the Company. The Company and its Subsidiaries
possess
all certificates, authorizations and permits issued by the appropriate federal,
state, territory or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate,
a
Material Adverse Effect, and neither the Company nor any such Subsidiary
has
received any notice of proceedings relating to the revocation or modification
of
any such certificate, authorization or permit.
(n) Foreign
Corrupt Practices.
Neither
the Company, nor any of its Subsidiaries, nor any director, officer, agent,
employee or other Person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the
Company
(i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity; (ii) made any
direct
or indirect unlawful payment to any foreign or domestic government official
or
employee from corporate funds; (iii) violated or is in violation of any
applicable provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
(o) Sarbanes-Oxley
Act.
The
Company is in compliance with any and all applicable requirements of the
Sarbanes-Oxley Act of 2002 that are effective as of the date hereof and
applicable to it, and any and all applicable rules and regulations promulgated
by the SEC thereunder that are effective as of the date hereof, except where
such noncompliance would not have, individually or in the aggregate, a Material
Adverse Effect.
11
(p) Transactions
With Affiliates.
Except
as set forth in the SEC Documents filed at least ten days prior to the date
hereof and other than as set forth on Schedule
3(p),
as of
the date hereof, none of the officers, directors or employees of the Company
is
presently a party to any transaction with the Company or any of its Subsidiaries
(other than for ordinary course services as employees, officers or directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.
(q) Equity
Capitalization.
As of
the date hereof, the Company has (i) 225,962,166 Ordinary Shares issued and
outstanding and (ii) no preferred shares issued and outstanding. All of such
outstanding shares have been, or upon issuance will be, validly issued and
fully
paid. Except as disclosed in Schedule
3(q):
(i)
none of the Company's share capital is subject to preemptive rights or any
other
similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, or exercisable or exchangeable for,
any
share capital 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 share capital of
the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, or exercisable or exchangeable for,
any
share capital of the Company or any of its Subsidiaries; and (iii) there
are no
securities or instruments containing anti-dilution or similar provisions
that
will be triggered by the issuance of the Securities. Except as disclosed
in
Schedule
3(q)
or in
the materials referred to in Section
3(k),
as of
the date hereof: (i) there are no outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness (as defined in Section 3(s)) of the Company or any
of
its Subsidiaries or by which the Company or any of its Subsidiaries is or
may
become bound; (ii) there are no financing statements securing obligations
in any
material amounts, either singly or in the aggregate, filed in connection
with
the Company or any of its Subsidiaries; (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 their securities (including ADRs) under the 1933
Act
(except the Registration Rights Agreement); (iv) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of
its
Subsidiaries is or may become bound to redeem a security of the Company or
any
of its Subsidiaries; (v) the Company does not have any stock appreciation
rights
or "phantom stock" plans or agreements or any similar plan or agreement;
and
(vi) the Company and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents but not so disclosed in the
SEC
Documents, other than those incurred in the ordinary course of the Company's
or
its Subsidiaries' respective businesses and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect. The Company
has
furnished to the Buyer true, correct and complete copies of the Company's
Constitution as in effect on the date hereof (the "Certificate
of Incorporation")
and
the terms of all securities convertible into, or exercisable or exchangeable
for, Ordinary Shares and the material rights of the holders thereof in respect
thereto.
12
(r) Indebtedness
and Other Contracts.
Except
as disclosed in Schedule
3(r),
as of
the date hereof, neither the Company nor any of its Subsidiaries (i) has
any
outstanding Indebtedness (as defined below), (ii) is a party to any contract,
agreement or instrument, the violation of which, or default under which,
by the
other party(ies) to such contract, agreement or instrument would result in
a
Material Adverse Effect, (iii) is in violation of any term of or in default
under any contract, agreement or instrument relating to any Indebtedness,
except
where such violations and defaults would not result, individually or in the
aggregate, in a Material Adverse Effect, or (iv) is a party to any contract,
agreement or instrument relating to any Indebtedness, the performance of
which,
in the judgment of the Company's officers, has or is expected to have a Material
Adverse Effect. Schedule
3(r)
provides
a detailed description of the material terms of any such outstanding
Indebtedness. For purposes of this Agreement: (x) "Indebtedness"
of any
Person means, without duplication (A) all indebtedness for borrowed money,
(B)
all obligations issued, undertaken or assumed as the deferred purchase price
of
property or services (other than trade payables entered into in the ordinary
course of business), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising
under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired
with
the proceeds of such indebtedness (even though the rights and remedies of
the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under
any
leasing or similar arrangement which, in connection with generally accepted
accounting principles, consistently applied for the periods covered thereby,
is
classified as a capital lease, (G) all indebtedness referred to in clauses
(A)
through (F) above secured by (or for which the holder of such Indebtedness
has
an existing right, contingent or otherwise, to be secured by) any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any
Person,
even though the Person which owns such assets or property has not assumed
or
become liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; (y) "Contingent
Obligation"
means,
as to any Person, any direct or indirect liability, contingent or otherwise,
of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against
loss
with respect thereto; and (z) "Person"
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or
any
department or agency thereof or other entity of whatever nature.
13
(s) Absence
of Litigation.
There
is no action, suit, proceeding, inquiry or investigation before or by the
Principal Market, any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company, the Ordinary Shares or any of the Company's
Subsidiaries or any of the Company's or the Company's Subsidiaries' officers
or
directors in their capacities as such, except as set forth in Schedule
3(s).
(t) Insurance.
The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company
nor
any such Subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and
when
such coverage expires or to obtain similar coverage from similar insurers
as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
(u) Employee
Relations.
(i)
Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or enterprise agreement or employs any member of a union or any
employees subject to an award. The Company and its Subsidiaries believe that
their relations with their employees are good. Except as set forth on
Schedule
3(u),
no
executive officer of the Company or any of its Subsidiaries (as defined in
Rule
501(f) of the 1933 Act) has notified the Company or any such Subsidiary in
writing that such officer intends to leave the Company or any such Subsidiary
or
otherwise terminate such officer's employment with the Company or any such
Subsidiary. No executive officer of the Company or any of its Subsidiaries,
to
the knowledge of the Company or any such Subsidiary, 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 such executive officer does
not
subject the Company or any such Subsidiary to any liability with respect
to any
of the foregoing matters.
(ii) The
Company and its Subsidiaries are in compliance with all United States and
Australian federal, state, territory, local and foreign laws and regulations
respecting labor, employment and employment practices and benefits, terms
and
conditions of employment and wages and hours, except where failure to be
in
compliance would not, either individually or in the aggregate, reasonably
be
expected to result in a Material Adverse Effect.
(v) Title.
The
Company and its Subsidiaries have good and marketable title in fee simple
to all
real property, and good and marketable title to all personal property, in
each
case owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and
defects
except where failure to have such good and marketable title would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. Any real property and facilities held under lease by the
Company
and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings
by the
Company and its Subsidiaries except where failure to so hold would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
14
(w) Intellectual
Property Rights.
The
Company and its Subsidiaries own or possess adequate rights or licenses to
use
all material trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and other intellectual
property rights ("Intellectual
Property Rights")
necessary to conduct their respective businesses as now conducted except
where
failure to so own or possess would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. Except as
set
forth in Schedule
3(w),
none of
the Company's material Intellectual Property Rights have expired or terminated,
or are expected to expire or terminate, within three years from the date
of this
Agreement. The Company does not have any knowledge of any infringement by
the
Company or its Subsidiaries of Intellectual Property Rights of others. There
is
no claim, action or proceeding pending, or to the knowledge of the Company,
threatened, against the Company or its Subsidiaries regarding its Intellectual
Property Rights. The Company is unaware of any facts or circumstances which
could reasonably be expected to give rise to any of the foregoing infringements
or claims, actions or proceedings. The Company and its Subsidiaries have
taken
reasonable security measures to protect the secrecy, confidentiality and
value
of all of their intellectual properties.
(x) Environmental
Laws.
The
Company and its Subsidiaries (i) are in compliance with any and all material
Environmental Laws (as hereinafter defined), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws
to conduct their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or approval where, in each
of
the foregoing clauses (i), (ii) and (iii), the failure to so comply or receive
could be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect. The term "Environmental
Laws"
means
all Australian and United States federal, state, territory, local or foreign
laws relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater,
land
surface or subsurface strata), including, without limitation, laws relating
to
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, or toxic or hazardous substances or wastes (collectively,
"Hazardous
Materials") into
the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved
thereunder.
(y) Subsidiary
Rights.
Except
as set forth in Schedule
3(y)
or the
materials described in Section
3(k),
the
Company or one of its Subsidiaries has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by
the
Company or such Subsidiary.
15
(z) Investment
Company.
The
Company is not an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(aa) Tax
Status.
The
Company and each of its Subsidiaries (i) has made or filed all federal and
all
material, state, foreign and territory income and all other tax returns,
reports
and declarations required by any jurisdiction to which it is subject, (ii)
has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and for which adequate
reserves have been made and (iii) has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to
the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority
of
any jurisdiction, and the officers of the Company know of no basis for any
such
claim.
(bb) Internal
Accounting Controls.
The
Company and each of its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions
are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities
at
reasonable intervals and appropriate action is taken with respect to any
difference.
(cc) Ranking
of Notes.
Except
for Permitted Senior Indebtedness (as defined in the Notes), no Indebtedness
of
the Company is senior to the Notes in right of payment, whether with respect
of
payment of redemptions, interest, damages or upon liquidation or dissolution
or
otherwise.
(dd) Manipulation
of Price.
The
Company has not, and to its knowledge no one acting on its behalf has, (i)
taken, directly or indirectly, any action designed to cause or to result
in the
stabilization or manipulation of the price of any security of the Company
to
facilitate the sale or resale of any of the Securities, (ii) other than the
Advisor, sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Securities, or (iii) other than the Advisor or in
connection with the PIPE Transaction, paid or agreed to pay to any Person
any
compensation for soliciting another to purchase any other securities of the
Company.
(ee) Disclosure.
Other
than with respect to the acquisition expected to be agreed to on or prior
to the
date hereof or in the near future, all as has previously been disclosed to
the
Buyers (the "Acquisition"),
the
Company confirms that neither it nor any other Person acting on its behalf
has
provided any of the Buyers or their agents or counsel with any information
that
constitutes or could reasonably be expected to constitute material, nonpublic
information. The Company understands and confirms that each of the Buyers
will
rely on the foregoing representations in effecting transactions in securities
of
the Company. All disclosure provided to the Buyers regarding the Company,
its
business and the transactions contemplated hereby, including the Schedules
to
this Agreement, furnished by or on behalf of the Company and its Subsidiaries
taken as a whole is true and correct in all material respects and does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light
of the
circumstances under which they were made, not misleading. Except with respect
to
the Acquisition, no event or circumstance has occurred or information exists
with respect to the Company or any of its Subsidiaries or its or their business,
properties, prospects, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed.
16
(ff) Securities
Available for Issuance.
As of
the date hereof, the Company has all necessary power and authority in accordance
with the rules and regulations of the ASX (including ASX Listing Rule 7.1)
to
issue as of the date hereof, if the Notes were to be converted in full on
the
date hereof, two-thirds of the Conversion Shares issuable upon conversion
in
full of the Notes.
4. COVENANTS.
(a) Best
Efforts.
Each
party shall use its best efforts timely to satisfy each of the conditions
to be
satisfied by it as provided in Sections 6 and 7 of this Agreement.
(b) Form
D
and Blue Sky.
The
Company agrees to file a Form D with respect to the Securities as required
under
Regulation D and to provide a copy thereof to each Buyer promptly after such
filing. The Company shall, on or before the Closing Date, take such action
as
the Company shall reasonably determine is necessary in order to obtain an
exemption for or to qualify the Securities for sale to the Buyers at the
Closing
pursuant to this Agreement under applicable securities or "Blue Sky" laws
of the
states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to the Buyers on or
prior
to the Closing Date. The Company shall make all filings and reports relating
to
the offer and sale of the Securities required under applicable securities
or
"Blue Sky" laws of the states of the United States and the applicable Australian
Securities Laws following the Closing Date.
(c) Reporting
Status.
Until
the date on which the Investors (as defined in the Registration Rights
Agreement) shall have sold all the Conversion Shares, Interest Shares and
Warrant Shares and
none
of the Notes or Warrants
is outstanding (the "Reporting
Period"),
the
Company shall file all reports required to be filed with the SEC pursuant
to the
1934 Act and all reports required to be filed with ASIC and the ASX pursuant
to
the Australian Securities Laws, and the Company shall not terminate its status
as a foreign private issuer required to file reports under the 1934 Act even
if
the 1934 Act, the rules and regulations thereunder or the Australian Securities
Laws would otherwise permit such termination, except to the extent (i) the
Company is redomiciled (whether through merger or otherwise) into the United
States or (ii) a successor to the Company replaces the Company as a foreign
private issuer under United States securities laws and, in either case, the
securities of such successor are listed on an Eligible Market (as defined
in the
Notes).
17
(d) Use
of
Proceeds.
The
Company will use the proceeds from the sale of the Securities for general
corporate purposes and not for the (i) repayment of any other outstanding
Indebtedness of the Company or any of its Subsidiaries except Permitted
Indebtedness (other than Permitted Senior Indebtedness) or (ii) redemption
or
repurchase of any of its or its Subsidiaries' equity securities.
(e) Financial
Information.
The
Company agrees to send the following to each Investor (as defined in the
Registration Rights Agreement) during the Reporting Period unless the following
are filed with the SEC through EDGAR and are available to the public through
the
EDGAR system, (i) within two (2) Business Days after the filing thereof with
the
SEC, a copy of its Annual Report (on Form 20-F, or such other form as may
be
available, in the United States), quarterly financial statements and any
other
current reports on Form 6-K in the United States and any registration statements
(other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii)
within one (1) Business Day of the release thereof, facsimile or e-mailed
copies
of all material press releases issued by the Company or any of its Subsidiaries,
and (iii) copies of any notices and other information made available or given
to
the stockholders of the Company generally, contemporaneously with the making
available or giving thereof to the stockholders. As used herein, "Business
Day"
means
any day other than Saturday, Sunday or other day on which commercial banks
in
The City of New York, State of New York, U.S.A. or Perth, Australia are
authorized or required by law to remain closed.
(f) Listing.
The
Company shall promptly secure the listing of all of the Registrable Securities
(as defined in the Registration Rights Agreement) upon each national securities
exchange and automated quotation system, if any, upon which the ADRs are
then
listed (subject to official notice of issuance) and shall maintain such listing
of all Registrable Securities from time to time issuable under the terms
of the
Transaction Documents. The Company shall maintain the ADRs' authorization
for
listing on the Principal Market, except to the extent that the Company or
a
successor has common stock listed on an Eligible Market. Neither the Company
nor
any of its Subsidiaries shall take any action which would be reasonably expected
to result in the delisting or suspension of the ADRs on the Principal Market,
except to the extent that the Company or a successor has common stock listed
on
an Eligible Market. The Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section 4(f).
(g) Fees.
Subject
to Section 8 below, at the Closing, the Company shall pay an expense allowance
to Castlerigg Master Investments Ltd. (a Buyer) or its designee(s) (in addition
to any other expense amounts paid to any Buyer prior to the date of this
Agreement) in an amount not to exceed $25,000 (in addition to any other expense
amounts paid to any Buyer prior to the date of this Agreement), which amount
shall be withheld by such Buyer from its Purchase Price at the Closing. The
Company shall be responsible for the payment of any placement agent's fees,
financial advisory fees, or broker's commissions (other than for Persons
engaged
by any Buyer) relating to or arising out of the transactions contemplated
hereby, including, without limitation, any fees or commissions payable to
the
Advisor. The Company shall pay, and hold each Buyer harmless against, any
liability, loss or expense (including, without limitation, reasonable attorney's
fees and out-of-pocket expenses) arising in connection with any claim relating
to any such payment. Except as otherwise set forth in the Transaction Documents,
each party to this Agreement shall bear its own expenses in connection with
the
sale of the Securities to the Buyers.
18
(h) Pledge
of Securities.
The
Company acknowledges and agrees that the Securities may be pledged by an
Investor (as defined in the Registration Rights Agreement) in connection
with a
bona fide margin agreement or other loan or financing arrangement that is
secured by the Securities, to the extent permitted by Applicable Law. The
pledge
of Securities shall not be deemed to be a transfer, sale or assignment of
the
Securities hereunder, and no Investor effecting such a pledge of Securities
shall be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement or any other
Transaction Document, including, without limitation, Section 2(f) hereof;
provided that an Investor and its pledgee shall be required to comply with
the
provisions of Section 2(f) hereof in order to effect a sale, transfer or
assignment of Securities to such pledgee. The Company hereby agrees to execute
and deliver such documentation as a pledgee of the Securities may reasonably
request in connection with a pledge of the Securities to such pledgee by
an
Investor; provided that the Company shall not be required to agree to any
further obligation or potential liability, or incur any costs or expenses,
beyond those which are as set forth herein.
(i) Disclosure
of Transactions and Other Material Information.
On or
before 8:30 a.m. New York time, on October 12, 2005, the Company shall file
a
Current Report on Form 6-K describing (i) the terms of the transactions
contemplated by the Transaction Documents and (ii) the Acquisition (along
with
any material information regarding the Acquisition previously disclosed to
any
Buyer in the form required by the 1934 Act and attaching the material
Transaction Documents (including, without limitation, this Agreement (other
than
the schedules to this Agreement), the form of Notes, the form of Warrant
and the
form of Registration Rights Agreement) as exhibits to such submission (such
submission including all attachments, the "6-K
Filing").
From
and after the submission of the 6-K Filing with the SEC, no Buyer 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 6-K Filing or in some other public filing
or public disclosure. The Company shall not, and shall cause each of its
Subsidiaries and its and each of their respective officers, directors, employees
and agents, not to, provide any Buyer with any material, nonpublic information
regarding the Company or any of its Subsidiaries from and after the filing
of
the 6-K Filing with the SEC without the express written consent of such Buyer.
In the event of a breach of the foregoing covenant by the Company, any of
its
Subsidiaries, or any of its or their respective officers, directors, employees
and agents, in addition to any other remedy provided herein or in the
Transaction Documents, a Buyer shall have the right to require the Company
to
make promptly a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, nonpublic information. Subject
to
the foregoing, neither the Company, its Subsidiaries nor any Buyer shall
issue
any press releases or any other public statements with respect to the
transactions contemplated hereby; provided,
however,
that
the Company shall be entitled, without the prior approval of any Buyer, to
make
any press release or other public disclosure with respect to such transactions
(i) in substantial conformity with the 6-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and regulations (provided
that in the case of clause (i) each Buyer shall be consulted by the Company
in
connection with any such press release or other public disclosure prior to
its
release).
19
(j) Additional
Registration Statements.
Other
than in connection with the ADRs to be issued relating to the Acquisition
and
the ADRs issued in connection with the PIPE transaction announced by the
company
on Form 6-K on August 24, 2005 (the "PIPE
Transaction"),
until
the date that the Registration Statement (as defined in the Registration
Rights
Agreement) is first declared effective by the SEC (the "Effective
Date")
the
Company shall not file a registration statement under the 1933 Act relating
to
securities that do not include the Securities (other than on Form
S-8).
(k) Additional
Notes; Variable Securities; Dilutive Issuances.
So long
as any Buyer beneficially owns any Securities, the Company will not issue
any
Notes other than to the Buyers as contemplated hereby and the Company shall
not
issue any other securities that would cause a breach or default under the
Notes.
For so long as any Notes or Warrants remain outstanding, the Company shall
not,
in any manner, issue or sell any rights, warrants or options to subscribe
for or
purchase Ordinary Shares or directly or indirectly convertible into or
exchangeable or exercisable for Ordinary Shares at a price which varies or
may
vary with the market price of the ADRs, including by way of one or more reset(s)
to any fixed price unless the conversion, exchange or exercise price of any
such
security cannot be less than the then applicable Conversion Price (as defined
in
the Notes) with respect to the Ordinary Shares into which any Note is
convertible or the then applicable Exercise Price (as defined in the Warrants)
with respect to the Ordinary Shares into which any Warrant is exercisable.
For
so long as any Notes or Warrants remain outstanding, the Company shall not,
in
any manner, enter into or affect any Dilutive Issuance (as defined in the
Notes)
if the effect of such Dilutive Issuance is to cause the Company to be required
to issue upon conversion of any Note or exercise of any Warrant any Ordinary
Shares in excess of that number of Ordinary Shares which the Company may
issue
upon conversion of the Notes and exercise of the Warrants without breaching
the
Company's obligations under the rules or regulations of the Principal Market.
(l) Corporate
Existence.
So long
as any Buyer beneficially owns any Notes or Warrants, the Company shall not
be
party to any Fundamental Transaction (as defined in the Notes) unless the
Company is in compliance with the applicable provisions governing Fundamental
Transactions set forth in the Notes and the Warrants.
(m) Conduct
of Business.
The
business of the Company and its Subsidiaries shall not be conducted in violation
of any law, ordinance or regulation of any governmental entity, except where
such violations would not result, either individually or in the aggregate,
in a
Material Adverse Effect.
(n) Additional
Issuances of Securities.
(i) For
purposes of this Section 4(p), the following definitions shall
apply.
20
(A) "Convertible
Securities"
means
any stock or securities (other than Options) convertible into or exercisable
or
exchangeable for Ordinary Shares.
(B) "Options"
means
any rights, warrants or options to subscribe for or purchase Ordinary Shares
or
Convertible Securities.
(C) "Ordinary
Share Equivalents"
means,
collectively, Options and Convertible Securities.
(ii) Except
with respect to the Acquisition and the PIPE Transaction, from the date hereof
until the date that is 90 Trading Days (as defined in the Notes) following
the
Effective Date (the "Trigger
Date"),
the
Company will not, directly or indirectly, offer, sell, issue, allot, grant
any
option to purchase, or otherwise dispose of (or announce any offer, sale,
grant
or any option to purchase or other disposition of) any of its or its
Subsidiaries' equity or equity equivalent securities, including without
limitation any debt, preferred stock or other instrument or security that
is, at
any time during its life and under any circumstances, convertible into or
exchangeable or exercisable for Ordinary Shares or Ordinary Share Equivalents
(any such offer, sale, grant, disposition or announcement being referred
to as a
"Subsequent
Placement").
(iii) Subject
to applicable law, from the Trigger Date until the two year anniversary of
the
Closing Date, the Company will not, directly or indirectly, effect any
Subsequent Placement unless the Company shall have first complied with this
Section 4(n)(iii).
(A) The
Company shall deliver to each Buyer a written notice (the "Offer
Notice")
of any
proposed or intended issuance or sale or exchange (the "Offer")
of the
securities being offered (the "Offered
Securities")
in a
Subsequent Placement, which Offer Notice shall (w) identify and describe
the
Offered Securities, (x) describe, if known, the price and other terms
upon
which they are to be issued, sold or exchanged, and the number or amount
of the
Offered Securities to be issued, sold or exchanged, (y) identify the
Persons (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (z) offer to issue and sell to or
exchange with such Buyers a pro rata portion of 50% of the Offered Securities
allocated among such Buyers (a) based on such Buyer's pro rata portion of
the
aggregate principal amount of Notes purchased hereunder (the "Basic
Amount"),
and
(b) with respect to each Buyer that elects to purchase its Basic Amount,
any
additional portion of the Offered Securities attributable to the Basic Amounts
of other Buyers as such Buyer shall indicate it will purchase or acquire
should
the other Buyers subscribe for less than their Basic Amounts (the "Undersubscription
Amount").
(B) To
accept
an Offer, in whole or in part, such Buyer must deliver a written notice to
the
Company prior to the end of the tenth (10th)
Business Day after such Buyer's receipt of the Offer Notice (or in the case
such
Offer relates to an offering in excess of US$10 million for Ordinary Shares
that
is being offered primarily to investors outside the United States, prior
to the
end of the second (2nd) Business Day after such Buyer's receipt of the Offer
Notice) (the "Offer
Period"),
setting forth the portion of such Buyer's Basic Amount that such Buyer elects
to
purchase and, if such Buyer shall elect to purchase all of its Basic Amount,
the
Undersubscription Amount, if any, that such Buyer elects to purchase (in
either
case, the "Notice
of Acceptance").
If
the Basic Amounts subscribed for by all Buyers are less than the total of
all of
the Basic Amounts, then each Buyer who has set forth an Undersubscription
Amount
in its Notice of Acceptance shall be entitled to purchase, in addition to
the
Basic Amounts subscribed for, the Undersubscription Amount it has subscribed
for; provided,
however,
that if
the Undersubscription Amounts subscribed for exceed the difference between
the
total of all the Basic Amounts and the Basic Amounts subscribed for (the
"Available
Undersubscription Amount"),
each
Buyer who has subscribed for any Undersubscription Amount shall be entitled
to
purchase only that portion of the Available Undersubscription Amount as the
Basic Amount of such Buyer bears to the total Basic Amounts of all Buyers
that
have subscribed for Undersubscription Amounts, subject to rounding by the
Company to the extent its deems reasonably necessary.
21
(C) The
Company shall have twenty (20) Business Days from the expiration of the Offer
Period above to offer, issue, sell or exchange all or any part of such Offered
Securities as to which a Notice of Acceptance has not been given by the Buyers
(the "Refused
Securities"),
but
only to the offerees described in the Offer Notice (if so described therein)
and
only upon terms and conditions (including, without limitation, unit prices
and
interest rates) that are not more favorable to the acquiring Person or Persons
or less favorable to the Company than those set forth in the Offer
Notice.
(D) In
the
event the Company shall propose to sell less than all the Refused Securities
(any such sale to be in the manner and on the terms specified in Section
4(p)(iii)(C) above), then each Buyer may, at its sole option and in its sole
discretion, reduce the number or amount of the Offered Securities specified
in
its Notice of Acceptance to an amount that shall be not less than the number
or
amount of the Offered Securities that such Buyer elected to purchase pursuant
to
Section 4(n)(iii)(B) above multiplied by a fraction, (i) the numerator of
which
shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued
or sold to Buyers pursuant to Section 4(n)(iii)(C) above prior to such
reduction) and (ii) the denominator of which shall be the original amount
of the
Offered Securities. In the event that any Buyer so elects to reduce the number
or amount of Offered Securities specified in its Notice of Acceptance, the
Company may not issue, sell or exchange more than the reduced number or amount
of the Offered Securities unless and until such securities have again been
offered to the Buyers in accordance with Section 4(n)(iii)(A)
above.
(E) Upon
the
closing of the issuance, sale or exchange of all or less than all of the
Refused
Securities, the Buyers shall acquire from the Company, and the Company shall
issue to the Buyers, the number or amount of Offered Securities specified
in the
Notices of Acceptance, as reduced pursuant to Section 4(p)(iii)(C) above
if the
Buyers have so elected, upon the terms and conditions specified in the Offer.
The purchase by the Buyers of any Offered Securities is subject in all cases
to
the preparation, execution and delivery by the Company and the Buyers of
a
purchase agreement relating to such Offered Securities reasonably satisfactory
in form and substance to the Buyers and their respective counsel.
22
(F) Any
Offered Securities not acquired by the Buyers or other Persons in accordance
with Section 4(p)(iii)(C) above may not be issued, sold or exchanged until
they
are again offered to the Buyers under the procedures specified in this
Agreement.
(iv) Notwithstanding
the foregoing the restrictions contained in subsections (ii) and (iii) of
this
Section 4(n) shall not apply in connection with the issuance of any Excluded
Securities (as defined in the Notes) or with respect to any securities of
AION
Diagnostics.
(o) Tax
Adjustments.
(i) All
payments (including issuance of Interest Shares) by the Company to any Buyer
(including, for the purposes of this Section 4(o), their respective assignees)
in regard or in connection with its ownership of the Notes, the issuance
of
Interest Shares and the conversion of the Notes into stock shall be made
free
and clear of and without deduction for any present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto; excluding, however, the following: taxes based on or measured by
the
net income of a Buyer by the jurisdiction of Buyer's applicable lending office
or any political subdivision thereof and taxes imposed on a Buyer by reason
of
its being connected with the Commonwealth of Australia or any state or territory
thereof otherwise than as a result of such Buyer's activity in connection
with
the acquiring of the Securities or by such Buyer's mere holding of the
Securities (all such non-excluded taxes, levies, imposts, deductions, charges
or
withholdings and all liabilities with respect thereto, "Taxes").
(ii) In
the
event that any withholding or deduction from any payment to be made by the
Company under the Notes or from the issuance of any Interest Shares or upon
the
conversion of the Notes into stock is required in respect of any Taxes, then
the
Company shall promptly:
(A) pay
directly to the relevant authority the full amount required to be so withheld
or
deducted;
(B) (but
in
any event within 30 days) forward to such Buyer an official receipt or other
documentation satisfactory to such Buyer evidencing such payment to such
authority; and
(C) pay
to
such Buyer such additional amount or amounts as is necessary to ensure that
the
net amount actually received by such Buyer will equal the full amount such
Buyer
would have received had no such withholding or deduction been
required;
If
the
Company fails to pay any Taxes when due to the appropriate taxing authority
or
fails to remit to such Buyer the required receipts or other required documentary
evidence, the Company shall indemnify such Buyer for any incremental Taxes,
interest, penalties, expenses and costs that may become payable or are incurred
by such Buyer as a result of any such failure. Such indemnification shall
be
paid within 10 days from the date on which Buyer makes written demand therefore
specifying in reasonable detail the nature and amount of such Taxes and other
costs.
23
(iii) The
Company shall not set off or deduct any sum from any payment due under this
Agreement whether in respect of any claim, counterclaim, right of set-off
or
otherwise howsoever.
(p) Shareholder
Approval.
The
Company shall hold a special or annual meeting of shareholders of the Company
(the "Shareholder
Meeting"),
which
shall be promptly called and held not later than December 1, 2005 (the
"Shareholder
Meeting Deadline"),
seeking such shareholder approval of resolutions providing for the Company's
issuance of all of the Securities (including resolutions in accordance with
ASX
Listing Rule 7.1) in accordance with the rules of the Principal Market and
Australian Securities Law in connection with (i) the transactions contemplated
by this Agreement and (ii) the Acquisition (such approval being referred
to
herein as the "Shareholder
Approval",
and
the date of such approval, the "Shareholder
Approval Date"),
and
the Company shall solicit its shareholders' approval of such resolutions
and
recommend to the shareholders that they approve such resolutions. The Company
shall be obligated to seek to obtain the Shareholder Approval by the Shareholder
Meeting Deadline. If the Shareholder Approval is not obtained on or prior
to the
Shareholder Meeting Deadline and the Buyers do not elect to deem the failure
to
obtain the Shareholder Approval a breach of this covenant (in their sole
discretion), the Company shall cause two (2) additional Shareholder Meetings
to
be held every six months thereafter until such Shareholder Approval is obtained.
For the purpose of preparing the notices calling the Shareholder Meeting,
each
Buyer shall provide to the Company, upon reasonable request by the Company,
such
information about the Buyer that is required to be disclosed to the shareholders
of the Company in accordance with the Australian Securities Laws, and which
the
Company cannot otherwise obtain from publicly available sources. Notwithstanding
any other provision in this Agreement, in the event that the Company fails
to
obtain the Shareholder Approval on or prior to the Closing Date and the Buyers
elect to proceed with Closing, the Company will issue to the Buyers at the
option of each Buyer, on Closing, a convertible note and warrants on the
same
terms and conditions as the Note and the Warrants but for a principal value
(in
the case of the Note) elected by such Buyer and for such number of Warrant
Shares (in the case of the Warrants) elected by such Buyer, pro-rata, that
would
result, on conversion of the convertible note and exercise of the warrant
(and,
if the ASX determines, on the issue of any Interest Shares), in the issue
of not
more than the maximum number of shares able to be issued by the Company without
it breaching ASX Listing Rule 7.1 and any applicable rules of the Principal
Market. From time to time, as soon as either (i) the Company obtains the
Shareholder Approval, or (ii) the Company is otherwise able to issue additional
shares without breaching ASX Listing Rule 7.1 and any applicable rules of
the
Principal Market, the Company must issue to each Buyer at the request of
such
Buyer an additional convertible note and additional warrants ("Additional
Securities")
on the
same terms and conditions as the Note and the Warrants but for a principal
value
(in the case of the convertible note) and for such number of Warrant Shares
(in
the case of the warrants), pro-rata, equal to an amount not in excess of
the
lesser of (i) the value or amount that would result, on conversion of the
convertible note and exercise of the warrant, in the issue of the maximum
number
of shares able to be issued by the Company without it breaching ASX Listing
Rule
7.1 , any applicable rules of the Principal Market and any provision of the
Corporations Act; or (ii) the value equal to the total face value of each
of the
Note and Warrant that would have been required to have been issued under
Section
1(a) if Shareholder Approval has been obtained, less the value of any notes
or
warrants already issued to the Buyers under this Section 4(p). In connection
with each issuance of Additional Securities, the Company shall file additional
registration statements in accordance with the terms of the Registration
Rights
Agreement (with the Effectiveness Deadline being 180 days after the issuance
of
any such Registrable Securities) registering the sale of all securities
underlying any Additional Securities received by any Buyer pursuant to this
Section 4(p) not previously included in a registration statement in accordance
with the terms of the Registration Rights Agreement. From and after the date
hereof, the Company must not issue any Securities that would prevent it from
issuing Notes and Warrants to any of the Buyers under this Section 4(p) until
the Buyers have received notes with a face value equal to the face value
of
Notes that would have been required to have been issued under Section 1(a)
if
Shareholder Approval had been obtained and such number of warrants equal
to the
number of Warrants that would have been required to have been issued under
Section 1(a) if Shareholder Approval had been obtained.
24
5. REGISTER;
TRANSFER AGENT INSTRUCTIONS.
(a) Register.
The
Company shall maintain at its principal executive offices (or such other
office
or agency of the Company as it may designate by notice to each holder of
Notes
or Warrants), a register for the Notes and the Warrants, in which the Company
shall record the name and address of the Person in whose name the
Notes and
the
Warrants have been issued (including the name and address of each transferee),
the principal amount of the Notes or Notes held by such Person and the number
of
Warrant Shares issuable upon exercise of the Warrants held by such Person.
The
Company shall keep the register open and available during business hours
for
inspection by any Buyer or its legal representatives upon prior written
notice.
(b) Transfer
Agent Instructions.
The
Company shall issue irrevocable instructions to its transfer agent, and any
subsequent transfer agent, to issue certificates or credit shares to the
applicable balance accounts at The Depository Trust Company ("DTC"),
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares, the Interest Shares, if any, and the Warrant
Shares in
such
amounts as specified from time to time by each Buyer to the Company upon
conversion of the Notes or exercise of the Warrants in the form of Exhibit
D
attached
hereto (the "Irrevocable
Transfer Agent Instructions").
The
Company warrants that no instruction other than the Irrevocable Transfer
Agent
Instructions referred to in this Section 5(b), and stop transfer instructions
to
give effect to Section 2(g) hereof, will be given by the Company to its transfer
agent with respect to the Securities, and that the Securities shall otherwise
be
freely transferable on the books and records of the Company as and to the
extent
provided in this Agreement and the other Transaction Documents. If a Buyer
effects a sale, assignment or transfer of the Securities in accordance with
Section 2(f) and satisfies the conditions applicable to the Buyer set forth
in
the Transfer Agent Instructions entered into simultaneously herewith, the
Company shall permit the transfer and shall promptly instruct its transfer
agent
to issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such
Buyer to effect such sale, transfer or assignment. In the event that such
sale,
assignment or transfer involves Conversion Shares, Interest Shares or Warrant
Shares sold, assigned or transferred pursuant to an effective registration
statement or pursuant to Rule 144, the transfer agent shall issue such
Securities to the Buyer, assignee or transferee, as the case may be, without
any
restrictive legend. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to a Buyer. Accordingly,
the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 5(b) will be inadequate and agrees, in the event of a
breach
or threatened breach by the Company of the provisions of this Section 5(b),
that
a Buyer shall be entitled, in addition to all other available remedies, to
an
order and/or 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.
25
6. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Notes and
the
related Warrants to each Buyer at the Closing is subject to the satisfaction,
at
or before the Closing Date, of each of the following conditions, 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 by providing each Buyer with prior
written notice thereof:
(a) Such
Buyer shall have executed each of the Transaction Documents to which it is
a
party and delivered the same to the Company.
(b) Such
Buyer and each other Buyer shall have delivered to the Company the Purchase
Price for the Notes and the related Warrants being purchased by such Buyer
at
the Closing by wire transfer of immediately available funds pursuant to the
wire
instructions provided by the Company.
(c) The
representations and warranties of such Buyer shall be true and correct in
all
material respects as of the date when made and as of the Closing Date as
though
made at that time (except for representations and warranties that speak as
of a
specific date), and such Buyer 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 such Buyer
at or
prior to the Closing Date.
(d) The
total
amount of Notes and Warrants purchased by the Buyers shall equal the maximum
amount of Notes and Warrants purchasable hereunder in accordance with Section
4(p) as of the Closing.
7. CONDITIONS
TO EACH BUYER'S OBLIGATION TO PURCHASE.
The
obligation of each Buyer hereunder to purchase the Notes and
the
related Warrants at the Closing is subject to the satisfaction, at or before
the
Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such Buyer
at
any time in its sole discretion by providing the Company with prior written
notice thereof:
26
(a) The
Company shall have executed and delivered to such Buyer (A) each of the
Transaction Documents and (B) the Notes (in such principal amounts as such
Buyer
shall request) and
the
related Warrants (in such amounts as such Buyer shall request), in each case,
which are being purchased by such Buyer at the Closing pursuant to this
Agreement.
(b) Such
Buyer shall have received the opinion of Curtis, Mallet-Prevost, Colt &
Mosle LLP, the Company's outside U.S. counsel, and Blake Dawson Waldron,
the
Company's outside Australian counsel, each dated as of the Closing Date,
in
form, scope and substance satisfactory to such Buyer, acting
reasonably.
(c) The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer
Agent Instruction, in the form of Exhibit
D
attached
hereto which instructions shall have been delivered to and acknowledged in
writing by the Company's transfer agent.
(d) The
Company shall have delivered to such Buyer a certificate evidencing the
formation and good standing of the Company in its jurisdiction of formation
issued by the Secretary of State of the State (or comparable office) of such
jurisdiction, as of a date within 10 days of the Closing Date.
(e) The
Company shall have delivered to such Buyer a certificate evidencing the
Company's qualification as a foreign corporation and good standing issued
by the
Secretary of State (or comparable office) of each jurisdiction in which the
Company conducts business, to the extent generally available in each such
jurisdiction, as of a date within 10 days of the Closing Date.
(f) The
Company shall have delivered to such Buyer a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the
resolutions consistent with Section 3(b) as adopted by the Company's board
of
directors or similar governing body or a committee thereof in a form reasonably
acceptable to such Buyer and (ii) the Certificate of Incorporation, each
as in
effect at the Closing, in the form attached hereto as Exhibit F,
and
(iii) the resolutions of shareholders of the Company evidencing the Shareholder
Meeting and Shareholder Approval consistent with Section 4(p).
(g) The
representations and warranties of the Company shall be true and correct in
all
material respects as of the date when made and as of the Closing Date as
though
made at that time (except for representations and warranties that speak as
of a
specific date) and the Company shall have performed, satisfied and complied
in
all material respects with the covenants, agreements and conditions required
by
the Transaction Documents to be performed, satisfied or complied with by
the
Company at or prior to the Closing Date. Such Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated
as of
the Closing Date, to the foregoing effect and as to such other matters as
may be
reasonably requested by such Buyer in the form attached hereto as Exhibit
G.
(h) The
Company shall have delivered to such Buyer a letter from the Company's share
registry or transfer agent certifying the number of shares of Common Stock
outstanding as of a date within five days of the Closing Date.
27
(i) The
ADRs
(I) shall be designated for quotation or listed on the Principal Market and
(II)
shall not have been suspended, as of the Closing Date, by the SEC or the
Principal Market from trading on the Principal Market nor shall suspension
by
the SEC or the Principal Market have been threatened, as of the Closing Date,
either (A) in writing by the SEC or the Principal Market or (B) by falling
below
the minimum listing maintenance requirements of the Principal
Market.
(j) The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities.
(k) The
Company shall have delivered to such Buyer such other documents relating
to the
transactions contemplated by this Agreement as such Buyer or its counsel
may
reasonably request.
8. TERMINATION.
In
the
event that the Closing shall not have occurred with respect to a Buyer on
or
before December 1, 2005 due to the Company's or such Buyer's failure to satisfy
the conditions set forth in Sections 6 and 7 above (and the nonbreaching
party's
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching
party
at the close of business on such date without liability of any party to any
other party; provided, however, if this Agreement is terminated pursuant
to this
Section 8, the Company shall remain obligated to reimburse the non-breaching
Buyers for the expenses described in Section 4(g) above.
9. MISCELLANEOUS.
(a) Governing
Law; Jurisdiction; Jury Trial.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of
New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein,
and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be
deemed
to limit in any way any right to serve process in any manner permitted by
law.
EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
28
(b) Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
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;
provided that a facsimile signature shall be considered due execution and
shall
be binding upon the signatory thereto with the same force and effect as if
the
signature were an original, not a facsimile signature.
(c) Headings.
The
headings of this Agreement are for convenience of reference and shall not
form
part of, or affect the interpretation of, this Agreement.
(d) 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 in that jurisdiction
or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire
Agreement; Amendments.
Except
for the non-disclosure agreement entered into by Sandell Asset Management
Corp.
and the Company on August 31, 2005, this Agreement and the other Transaction
Documents supersede all other prior oral or written agreements between the
Buyers, the Company, their affiliates and Persons acting on their behalf
with
respect to the matters discussed herein, and this Agreement, the other
Transaction Documents and the instruments referenced herein and therein contain
the entire understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation, warranty, covenant
or undertaking with respect to such matters. No provision of this Agreement
may
be amended other than by an instrument in writing signed by the Company and
the
holders of at least a majority of the aggregate number of Registrable Securities
issued and issuable hereunder, and any amendment to this Agreement made in
conformity with the provisions of this Section 9(e) shall be binding on all
Buyers and holders of Securities, as applicable. No provision hereof may
be
waived other than by an instrument in writing signed by the party against
whom
enforcement is sought. No such amendment shall be effective to the extent
that
it applies to less than all of the holders of the applicable Securities then
outstanding. No consideration shall be offered or paid to any Person to amend
or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration also is offered to all of the parties
to
the Transaction Documents, holders of Notes or holders of the Warrants, as
the
case may be. The Company has not, directly or indirectly, made any agreements
with any Buyers relating to the terms or conditions of the transactions
contemplated by the Transaction Documents except as set forth in the Transaction
Documents. Without limiting the foregoing, the Company confirms that, except
as
set forth in this Agreement, no Buyer has made any commitment or promise
or has
any other obligation to provide any financing to the Company or
otherwise.
(f) Notices.
Any
notices, consents, waivers or other communications required or permitted
to be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending
party);
or (iii) one Business Day after deposit with an overnight courier service,
in
each case properly addressed to the party to receive the same. The addresses
and
facsimile numbers for such communications shall be:
29
If
to the
Company:
pSivida
Limited
Level
12,
BGC Centre
28
The
Esplanade, Perth
WA
6000
Australia
Telephone: 61
8 9226
5099
Facsimile: 61
8 9226
5499
Attention: Gavin
Rezos, Managing Director
with
a
copy to:
Curtis,
Mallet-Prevost, Colt & Mosle LLP
101
Park
Avenue
New
York,
N.Y.
U.S.
A.
Telephone: 212-696-6000
Facsimile: 212-697-1559
Attention: Lawrence
Goodman, Esq
If
to the
Transfer Agent:
Citibank,
N.A.
388
Greenwich Street,
14th
Floor
New
York,
New York 10013
Telephone: (212)
816-6694
Facsimile: (212)
816-68650
Attention: Paul
Martin
If
to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers,
with copies to such Buyer's representatives as set forth on the Schedule
of
Buyers,
with
a
copy (for informational purposes only) to:
Schulte
Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 756-2000
Facsimile: (212) 593-5955
Attention: Eleazer N. Klein, Esq.
919 Third Avenue
New York, New York 10022
Telephone: (212) 756-2000
Facsimile: (212) 593-5955
Attention: Eleazer N. Klein, Esq.
30
or
to
such other address and/or facsimile number and/or to the attention of such
other
Person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated
by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided
by an
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.
The
Company hereby irrevocably appoints National Corporate Research, Ltd.,
of 225
West
34th
Street,
Suite 910, New York, N.Y. 10112, U.S.A. ("NCR")
as its
agent for the receipt of service of process in the United States. The Company
agrees that any document may be effectively served on it in connection with
any
action, suit or proceeding in the United States by service on its agents.
The
Buyers consent and agree that the Company may, in its reasonable discretion,
irrevocably appoint a substitute agent for the receipt of service of process
located within the Untied States, and that upon such appointment, the
appointment of NCR may be revoked.
Any
document shall be deemed to have been duly served if marked for the attention
of
the agent at its address as set forth in Section 9(f) or such other address
in
the United States as may be notified to the party wishing to serve the document
and (a) left at the specified address if its receipt is acknowledged in writing;
or (b) sent to the specified address by post, registered mail return receipt
requested. In the case of (a), the document will be deemed to have been duly
served when it is left and signed for. In the case of (b), the document shall
be
deemed to have been duly served when received and acknowledged.
If
the
Company's agent at any time ceases for any reason to act as such, the Company
shall appoint a replacement agent having an address for service in the United
States and shall notify each Buyer of the name and address of the replacement
agent. Failing such appointment and notification, the holders of Notes
representing not less than a majority of the aggregate principal amount of
the
then outstanding Notes shall be entitled by notice to the Company to appoint
a
replacement agent to act on the Company's behalf. The provisions of this
Section
9(f) applying to service on an agent apply equally to service on a replacement
agent.
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchasers of the
Notes
or the Warrants. Except in accordance with the provisions of Section 5(a)
of the
Note, the Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the holders of at least a
majority of the aggregate number of Registrable Securities issued and issuable
hereunder, including by way of a Fundamental Transaction (unless the Company
is
in compliance with the applicable provisions governing Fundamental Transactions
set forth in the Notes and the Warrants). A Buyer may assign some or all
of its
rights hereunder to Persons who assume such Buyer's obligations hereunder
and
who are capable of making the representations and warranties made by such
Buyers
hereunder without the consent of the Company, in which event such assignee
shall
be deemed to be a Buyer hereunder with respect to such assigned rights; provided
that the number of persons deemed to be Buyers pursuant to this Section 9(g)
shall not be greater than 3.
31
(h) No
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.
(i) Survival.
Unless
this Agreement is terminated under Section 8, the representations and warranties
of the Company and the Buyers contained in Sections 2 and 3 and the agreements
and covenants set forth in Sections 4, 5 and 9 shall survive the Closing.
Each
Buyer shall be responsible only for its own representations, warranties,
agreements and covenants hereunder.
(j) 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 any 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.
(k) Indemnification.
In
consideration of each Buyer's execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all
of the
Company's other obligations under the Transaction Documents, the Company
shall
defend, protect, indemnify and hold harmless each Buyer and each other holder
of
the Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons' agents or other representatives (including, without limitation,
those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees")
from
and against any and all actions, causes of action, suits, claims, losses,
costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for
which
indemnification hereunder is sought), and including reasonable attorneys'
fees
and disbursements (the "Indemnified
Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating
to (a)
any misrepresentation or breach of any representation or warranty made by
the
Company in the Transaction Documents or any other certificate, instrument
or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents
or
any other certificate, instrument or document contemplated hereby or thereby
or
(c) any cause of action, suit or claim brought or made against such Indemnitee
by a third party (including for these purposes a derivative action brought
on
behalf of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents or any
other
certificate, instrument or document contemplated hereby or thereby, (ii)
any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, or (iii)
the
status of such Buyer or holder of the Securities as an investor in the Company
pursuant to the transactions contemplated by the Transaction Documents;
provided,
that
the Company shall not have to indemnify any Indemnitee for any Indemnified
Liabilities to the extent that such Indemnified Liabilities result from (x)
any
such Indemnitee's breach of any representation or warranty contained in this
Agreement or failure to perform any covenant or agreement contained in this
Agreement, (y) such Indemnitee's gross negligence, willful default, recklessness
or bad faith in performing its obligations under this Agreement or (z) the
fact
that the Indemnitee's execution, delivery or performance of this Agreement
and
the Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby (A) resulted in a violation of the
organizational documents of such Indemnitee; (B) conflicted with, or constituted
a default (or an event which with notice or lapse of time or both would have
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which
such Indemnitee was a party; or (C) resulted in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and Australian Securities Laws) applicable to such Indemnitee. To the
extent that the foregoing undertaking by the Company may be unenforceable
for
any reason, the Company shall make the maximum contribution to the payment
and
satisfaction of each of the Indemnified Liabilities which is permissible
under
applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section
9(k)
shall be the same as those set forth in Section 6 of the Registration Rights
Agreement.
32
(l) No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen
by the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
(m) Remedies.
Each
Buyer and each holder of the Securities shall have all rights and remedies
set
forth in the Transaction Documents and all rights and remedies which such
holders have been granted at any time under any other agreement or contract
and
all of the rights which such holders have under any law. Any Person having
any
rights under any provision of this Agreement shall be entitled to enforce
such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. Furthermore, the Company recognizes
that in the event that it fails to perform, observe, or discharge any or
all of
its obligations under the Transaction Documents, any remedy at law may prove
to
be inadequate relief to the Buyers. The Company therefore agrees that the
Buyers
shall be entitled to seek temporary and permanent injunctive relief in any
such
case without the necessity of proving actual damages and without posting
a bond
or other security.
(n) Payment
Set Aside.
To the
extent that the Company makes a payment or payments to the Buyers hereunder
or
pursuant to any of the other Transaction Documents or the Buyers enforce
or
exercise their rights hereunder or thereunder, and such payment or payments
or
the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set
aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other Person under any
law
(including, without limitation, any bankruptcy law, foreign, state, territory
or
federal law, common law or equitable cause of action), then to the extent
of any
such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
(o) Independent
Nature of Buyers' Obligations and Rights.
The
obligations of each Buyer under any Transaction Document are several and
not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under
any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall
be
deemed to constitute the Buyers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Buyers
are
in any way acting in concert or as a group with respect to such obligations
or
the transactions contemplated by the Transaction Documents and the Company
acknowledges that the Buyers are not acting in concert or as a group with
respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Buyer confirms that it has independently participated in
the
negotiation of the transaction contemplated hereby with the advice of its
own
counsel and advisors. Each Buyer shall be entitled to independently protect
and
enforce its rights, including, without limitation, the rights arising out
of
this Agreement or out of any other Transaction Documents, and it shall not
be
necessary for any other Buyer to be joined as an additional party in any
proceeding for such purpose.
33
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.
| COMPANY: pSivida Limited |
||
| |
|
|
| By: | /s/ Gavin Rezos | |
|
|
||
|
Name:
Gavin Rezos
Title: Managing Director |
||
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.
| BUYERS:
CASTLERIGG
MASTER INVESTMENTS LTD.
BY:
SANDELL ASSET MANAGEMENTCORP.
|
||
| |
|
|
| By: | /s/ John M. Nussbaum | |
|
|
||
| Name:
John M. Nussbaum Title: Senior Managing Director |
||
EXHIBIT
99.2
Form
of Subordinated Convertible Note in the principal amount of US
$15,000,000
[FORM
OF SUBORDINATED CONVERTIBLE NOTE]
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR (B) AN OPINION OF COUNSEL,
IN A
FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) IF SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT,
SUCH DOCUMENTS, OPINIONS AND CERTIFICATES AS THE COMPANY MAY REASONABLY REQUIRE.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE
SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS
OF
THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 19(a) HEREOF. THE PRINCIPAL AMOUNT
REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.
pSIVIDA
LIMITED
SUBORDINATED
CONVERTIBLE NOTE
| Issuance Date: November 15, 2005 |
Principal:
U.S.
$15,000,000
|
FOR
VALUE RECEIVED,
pSivida
Limited, an Australian corporation (the “Company”),
hereby promises to pay to the order of _________________ or
registered assigns (“Holder”)
the
amount set out above as the Principal (as reduced pursuant to the terms hereof
pursuant to redemption, conversion or otherwise, the “Principal”)
when
due, whether upon the Maturity Date (as defined below), acceleration, redemption
or otherwise (in each case in accordance with the terms hereof) and to pay
interest (“Interest”)
on any
outstanding Principal at the Interest Rate, from the date set out above as
the
Issuance Date (the “Issuance
Date”)
until
the same becomes due and payable, whether upon an Interest Date (as defined
below), the Maturity Date, acceleration, conversion, redemption or otherwise
(in
each case in accordance with the terms hereof). This Subordinated Convertible
Note (including all Subordinated Convertible Notes issued in exchange, transfer
or replacement hereof, this “Note”)
is one
of an issue of Subordinated Convertible Notes issued pursuant to the Securities
Purchase Agreement (as defined below) on the Closing Date (collectively,
the
“Notes”
and
such other Subordinated Convertible Notes, the “Other
Notes”
and the
holders of the Other Notes, the “Other
Holders”)).
Certain capitalized terms used herein are defined in Section 29.
(1) MATURITY.
On the
Maturity Date, the Holder shall surrender this Note to the Company and the
Company shall pay to the Holder an amount in cash representing all outstanding
Principal, accrued and unpaid Interest and accrued and unpaid Late Charges,
if
any. The “Maturity
Date”
shall
be the date which is three (3) years after the Issuance Date, as may be extended
at the option of the Holder (i) in the event that, and for so long
as, an
Event of Default (as defined in Section 4(a)) pursuant to clause (i), (ii)
or
(iii) of Section 4(a) shall have occurred and be continuing or any event
shall
have occurred and be continuing which with the passage of time and the failure
to cure would result in an Event of Default pursuant to clause (i), (ii)
or
(iii) of Section 4(a) and (ii) through the date that is ten (10) Business
Days
after the consummation of a Change of Control in the event that a Change
of
Control is publicly announced or a Change of Control Notice (as defined in
Section 5) is delivered prior to the Maturity Date.
(2) INTEREST;
INTEREST RATE.
Interest on this Note shall commence accruing on the Issuance Date and shall
be
computed on the basis of a 365-day year and actual days elapsed and shall
be
payable in arrears for each Calendar Quarter on the first (1st) day of the
succeeding Calendar Quarter during the period beginning on the Issuance Date
and
ending on, and including, the Maturity Date (each, an “Interest
Date”)
with
the first Interest Date being January 1, 2006. Interest shall be payable
on each
Interest Date, to the record holder of this Note on the applicable Interest
Date, in ADRs (“Interest
Shares”),
or,
at the option of the Company, in cash (“Cash
Interest”),
or a
combination thereof. On or prior to the fifth (5th) Trading Day prior to
each
Interest Date (each, an “Interest
Notice Due Date”),
the
Company shall deliver written notice (each, an “Interest
Election Notice”)
to the
Holder confirming that the Equity Conditions have been satisfied as of such
Interest Notice Due Date and specifying the amount of Interest that shall
be
paid as Cash Interest and the amount of Interest that shall be paid in Interest
Shares. Notwithstanding the foregoing, unless otherwise waived or consented
to
in writing by the Holder, the Company will not be permitted to issue on any
Interest Date a number of Interest Shares (and must pay any excess in Cash
Interest) which exceeds the Maximum Interest Share Amount. Interest to be
paid
on an Interest Date in Interest Shares shall be paid in a number of fully
paid
and nonassessable (rounded to the nearest whole share in accordance with
Section
3(a)) ADRs equal to the quotient of (a) the amount of Interest payable
on
such Interest Date less any Cash Interest paid and (b) the Interest
Conversion Price in effect on the applicable Interest Date. If any Interest
Shares are to be paid on an Interest Date, then the Company shall
(X) provided that the Company’s transfer agent (the “Transfer
Agent”)
is
participating in the Depository Trust Company (“DTC”)
Fast
Automated Securities Transfer Program, credit such aggregate number of Interest
Shares to which the Holder shall be entitled to the Holder’s or its designee’s
balance account with DTC through its Deposit Withdrawal Agent Commission
system,
or (Y) if the foregoing shall not apply, issue and deliver on the
applicable Interest Date, to the address set forth in the register maintained
by
the Company for such purpose pursuant to the Securities Purchase Agreement
or to
such address as specified by the Holder in writing to the Company at least
two
(2) Business Days prior to the applicable Interest Date, a certificate,
registered in the name of the Holder or its designee, for the number of Interest
Shares to which the Holder shall be entitled. In addition, upon payment of
any
Interest Shares, the Company shall deposit the corresponding number of Ordinary
Shares representing the number of American Depositary Shares (“ADSs”)
underlying the ADRs and pay by wire transfer to the Depositary’s account the ADS
issuance fee of $0.04 per ADS to be issued, together with all applicable
taxes
and expenses otherwise payable under the terms of the Deposit Agreement for
the
deposit of Ordinary Shares and issuance of ADSs (including, without limitation,
confirmation that any Australian stock transfer taxes in respect of such
deposit
(if any) have been paid by the Company), and the Company shall otherwise
comply
with and cause any other necessary party to comply with all the terms of
the
Deposit Agreement. Notwithstanding the foregoing, the Company shall not be
entitled to pay Interest in Interest Shares and shall be required to pay
such
Interest in cash as Cash Interest on the applicable Interest Date if, unless
consented to in writing by the Holder, during the period commencing on the
applicable Interest Notice Due Date through the applicable Interest Date
the
Equity Conditions have not been satisfied. Prior to the payment of Interest
on
an Interest Date, Interest on this Note shall accrue at the Interest Rate
and be
payable by way of inclusion of the Interest in the Conversion Amount in
accordance with Section 3(b)(i). Upon the occurrence and during the continuance
of an Event of Default, the Interest Rate shall be increased to ten percent
(10%). In the event that such Event of Default is subsequently cured, the
adjustment referred to in the preceding sentence shall cease to be effective
as
of the date of such cure; provided that the Interest as calculated and unpaid
at
such increased rate during the continuance of such Event of Default shall
continue to apply to the extent relating to the days after the occurrence
of
such Event of Default through and including the date of cure of such Event
of
Default. The Company’s obligation to pay any taxes in respect of the issuance
and delivery of Interest Shares, or to pay to the Holder any additional amounts
associated with such taxes, shall be determined under Section 4(o) of the
Securities Purchase Agreement.
-2-
(3) CONVERSION
OF NOTES.
This
Note shall be convertible into the Company’s ADRs, on the terms and conditions
set forth in this Section 3.
(a) Conversion
Right.
Subject
to the provisions of Section 3(d), at any time or times on or after the Issuance
Date, the Holder shall be entitled to convert any portion of the outstanding
and
unpaid Conversion Amount (as defined below) into fully paid and nonassessable
ADRs in accordance with Section 3(c), at the Conversion Rate (as defined
below).
The Company shall not issue any fraction of an ADR upon any conversion. If
any
conversion would result in the issuance of a fraction of an ADR, the Company
shall round such fraction of an ADR up to the nearest whole share. The Company’s
obligation to pay any taxes in respect of the issuance and delivery of ADRs
or
Ordinary Shares, or to pay to the Holder any additional amounts associated
with
such taxes, shall be determined under Section 4(o) of the Securities Purchase
Agreement.
In
the
event that the Company’s Board of Directors should determine that the Company
shall transform itself (whether by re-incorporation in the United States
or
otherwise) from a foreign private issuer (as defined under the Securities
Act of
1933, as amended), all references to ADRs or ADSs shall be deemed references
to
whatever shares are then issued by the re-domiciled Company and all other
provisions of this Agreement shall be equitably adjusted by the parties hereto
to the extent necessary or appropriate to reflect such new country of
incorporation.
(b) Conversion
Rate.
The
number of ADRs issuable upon conversion of any Conversion Amount pursuant
to
Section 3(a) shall be determined by dividing (x) such Conversion Amount
by
(y) the Conversion Price (the “Conversion
Rate”).
-3-
(i) “Conversion
Amount”
means
the sum of (A) the portion of the Principal to be converted, redeemed
or
otherwise with respect to which this (or any other) determination is being
made,
(B) accrued and unpaid Interest with respect to such Principal and
(C) accrued and unpaid Late Charges with respect to such Principal
and
Interest.
(ii) “Conversion
Price”
means,
as of any Conversion Date (as defined below) or other date of determination,
$7.10 per ADR (which is equivalent to $0.71 per Ordinary Share), subject
to
adjustment as provided herein.
(c) Mechanics
of Conversion.
(i) Optional
Conversion.
To
convert any Conversion Amount into ADRs on any date (a “Conversion
Date”),
the
Holder shall (A) transmit by facsimile (or otherwise deliver), for
receipt
on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed
notice of conversion in the form attached hereto as Exhibit I (the “Conversion
Notice”)
to the
Company and (B) if required by Section 3(c)(iii), surrender this Note
to a
common carrier for delivery to the Company as soon as practicable on or
following such date (or an indemnification undertaking with respect to this
Note
in the case of its loss, theft or destruction). On or before the second (2nd)
Business Day following the date of receipt of a Conversion Notice, the Company
shall transmit by facsimile a confirmation of receipt of such Conversion
Notice
to the Holder and the Transfer Agent. On or before the fifth (5th) Business
Day
following the date of receipt of a Conversion Notice (the “Share
Delivery Date”),
the
Company shall (X) provided that the Transfer Agent is participating
in the
DTC Fast Automated Securities Transfer Program, credit such aggregate number
of
ADRs to which the Holder shall be entitled to the Holder’s or its designee’s
balance account with DTC through its Deposit Withdrawal Agent Commission
system
or (Y) if the foregoing shall not apply, issue and deliver to the
address
as specified in the Conversion Notice, a certificate, registered in the name
of
the Holder or its designee, for the number of ADRs to which the Holder shall
be
entitled. If this Note is physically surrendered for conversion as required
by
Section 3(c)(iii) and the outstanding Principal of this Note is greater than
the
Principal portion of the Conversion Amount being converted, then the Company
shall as soon as practicable and in no event later than three (3) Business
Days
after receipt of this Note and at its own expense, issue and deliver to the
holder a new Note (in accordance with Section 19(d)) representing the
outstanding Principal not converted. The Person or Persons entitled to receive
the ADRs issuable upon a conversion of this Note shall be treated for all
purposes as the record holder or holders of such ADRs on the Conversion Date.
Upon conversion of this Note, the Company shall deposit the corresponding
number
of Ordinary Shares representing the number of ADSs underlying the ADRs and
pay
by wire transfer to the Depositary’s account the ADS issuance fee of $0.04 per
ADS to be issued, together with all applicable taxes and expenses otherwise
payable under the terms of the Deposit Agreement for the deposit of Ordinary
Shares and issuance of ADSs (including, without limitation, confirmation
that
any Australian stock transfer taxes in respect of such deposit (if any) have
been paid by the Company), and the Company shall otherwise comply with and
cause
any other necessary party to comply with all the terms of the Deposit
Agreement.
-4-
(ii) Company’s
Failure to Timely Convert.
If the
Company shall fail to issue a certificate to the Holder or credit the Holder’s
balance account with DTC for the number of ADRs to which the Holder is entitled
upon conversion of any Conversion Amount on or prior to the date which is
five
(5) Business Days after the Conversion Date (a “Conversion
Failure”),
then
(A) the Company shall pay damages in cash to the Holder for each date
of
such Conversion Failure in an amount equal to an interest rate equal to 10%
per
annum applied to the product of (I) the sum of the number of ADRs
not
issued to the Holder on or prior to the Share Delivery Date and to which
the
Holder is entitled, and (II) the Closing Sale Price of the ADRs on
the
Share Delivery Date and (B) the Holder, upon written notice to the
Company,
may void its Conversion Notice with respect to, and retain or have returned,
as
the case may be, any portion of this Note that has not been converted pursuant
to such Conversion Notice; provided that the voiding of a Conversion Notice
shall not affect the Company’s obligations to make any payments which have
accrued prior to the date of such notice pursuant to this Section 3(c)(ii)
or
otherwise. In addition to the foregoing, if within three (3) Trading Days
after
the Company’s receipt of the facsimile copy of a Conversion Notice the Company
shall fail to issue and deliver a certificate to the Holder or credit the
Holder’s balance account with DTC for the number of ADRs to which the Holder is
entitled upon such holder’s conversion of any Conversion Amount, and if on or
after such Trading Day the Holder purchases (in an open market transaction
or
otherwise) ADRs to deliver in satisfaction of a sale by the Holder of ADRs
issuable upon such conversion that the Holder anticipated receiving from
the
Company (a “Buy-In”),
then
the Company shall, within three (3) Business Days after the Holder’s request and
in the Holder’s discretion, either (i) pay cash to the Holder in an amount
equal to the Holder’s total purchase price (including brokerage commissions, if
any) for the ADRs so purchased (the “Buy-In
Price”),
at
which point the Company’s obligation to deliver such certificate (and to issue
such ADRs) shall be deemed to have been satisfied and shall terminate, or
(ii) promptly honor its obligation to deliver to the Holder a certificate
or certificates representing such ADRs and pay cash to the Holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of
(A) such number of ADRs, times (B) the Closing Bid Price on
the
Conversion Date.
(iii) Book-Entry.
Notwithstanding anything to the contrary set forth herein, upon conversion
of
any portion of this Note in accordance with the terms hereof, the Holder
shall
not be required to physically surrender this Note to the Company unless
(A) the full Conversion Amount represented by this Note is being converted
or (B) the Holder has provided the Company with prior written notice
(which
notice may be included in a Conversion Notice) requesting reissuance of this
Note upon physical surrender of this Note. The Holder and the Company shall
maintain records showing the Principal, Interest and Late Charges converted
and
the dates of such conversions or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require physical
surrender of this Note upon conversion.
(iv) Pro
Rata Conversion; Disputes.
In the
event that the Company receives a Conversion Notice from more than one holder
of
Notes for the same Conversion Date and the Company can convert some, but
not
all, of such portions of the Notes submitted for conversion, the Company,
subject to Section 3(d), shall convert from each holder of Notes electing
to
have Notes converted on such date a pro rata amount of such holder’s portion of
its Notes submitted for conversion based on the principal amount of Notes
submitted for conversion on such date by such holder relative to the aggregate
principal amount of all Notes submitted for conversion on such date. In the
event of a dispute as to the number of ADRs issuable to the Holder in connection
with a conversion of this Note, the Company shall issue to the Holder the
number
of ADRs not in dispute and resolve such dispute in accordance with Section
24.
-5-
(d) Limitations
on Conversions
(i) Beneficial
Ownership.
The
Company shall not effect any conversion of this Note, and the Holder of this
Note shall not have the right to convert any portion of this Note pursuant
to
Section 3(a), to the extent that after giving effect to such conversion,
the
Holder (together with the Holder’s affiliates) would beneficially own (directly
or indirectly) in excess of 4.99% (the “Maximum
Percentage”)
of the
number of Ordinary Shares outstanding immediately after giving effect to
such
conversion. For purposes of the foregoing sentence, the number of Ordinary
Shares beneficially owned (directly or indirectly) by the Holder and its
affiliates shall include the number of Ordinary Shares represented by the
ADRs
issuable upon conversion of this Note with respect to which the determination
of
such sentence is being made, but shall exclude the number of Ordinary Shares
represented by the ADRs or otherwise which would be issuable upon
(A) conversion of the remaining, nonconverted portion of this Note
beneficially owned by the Holder or any of its affiliates and (B) exercise
or conversion of the unexercised or nonconverted portion of any other securities
of the Company beneficially owned by the Holder or any of its affiliates
(including, without limitation, any Other Notes or warrants) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein. Except as set forth in the preceding sentence, for purposes of this
Section 3(d), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes
of this Section 3(d), in determining the number of outstanding Ordinary Shares,
the Holder may rely on the number of outstanding Ordinary Shares as reflected
in
(x) the Company’s most recent Form 20-F, Form 6-K or other public filing
with the Securities and Exchange Commission, as the case may be (y) a
more
recent public announcement by the Company or (z) any other notice
by the
Company or the Transfer Agent setting forth the number of Ordinary Shares
outstanding. For any reason at any time, upon the written or oral request
of the
Holder, the Company shall within two (2) Business Days confirm orally and
in
writing to the Holder the number of Ordinary Shares then outstanding. In
any
case, the number of outstanding Ordinary Shares shall be determined after
giving
effect to the conversion or exercise of securities of the Company, including
this Note, by the Holder and its affiliates since the date as of which such
number of outstanding Ordinary Shares was reported. By written notice to
the
Company, the Holder may increase or decrease the Maximum Percentage to any
other
percentage not in excess of 9.99% specified in such notice; provided that
(i) any such increase will not be effective until the sixty-first
(61st)
day after such notice is delivered to the Company, and (ii) any such
increase or decrease will apply only to the Holder and not to any other holder
of Notes.
-6-
(ii) Principal
Market Regulation.
The
Company shall not be obligated to issue any ADRs upon conversion of this
Note,
and the Holder of this Note shall not have the right to receive upon conversion
of this Note any ADRs, if the issuance of such ADRs would exceed the aggregate
number of ADRs which the Company may issue upon conversion or exercise, as
applicable, of the Notes and Warrants or otherwise without breaching the
Company’s obligations under the rules or regulations of the Principal Market (or
such other Eligible Market on which the ADRs or Ordinary Shares are listed)
and
the ASX (the “Exchange
Cap”),
except that such limitation shall not apply in the event that the Company
obtains the approval of its shareholders as required by the applicable rules
of
the Principal Market and the ASX listing rules for issuances in excess of
such
amount. Until such approval is obtained, no purchaser of the Notes pursuant
to
the Securities Purchase Agreement (the “Purchasers”)
shall
be issued in the aggregate, upon conversion or exercise, as applicable, of
Notes
or Warrants, or otherwise any ADRs in an amount greater than the product
of the
Exchange Cap multiplied by a fraction, the numerator of which is the principal
amount of Notes issued to the applicable Purchaser pursuant to the Securities
Purchase Agreement on the Closing Date and the denominator of which is the
aggregate principal amount of all Notes issued to the Purchasers pursuant
to the
Securities Purchase Agreement on the Closing Date (with respect to each
Purchaser, the “Exchange
Cap Allocation”).
In
the event that any Purchaser shall sell or otherwise transfer any of such
Purchaser’s Notes, the transferee shall be allocated a pro rata portion of such
Purchaser’s Exchange Cap Allocation, and the restrictions of the prior sentence
shall apply to such transferee with respect to the portion of the Exchange
Cap
Allocation allocated to such transferee. In the event that any holder of
Notes
shall convert all of such holder’s Notes into a number of ADRs which, in the
aggregate, is less than such holder’s Exchange Cap Allocation, then the
difference between such holder’s Exchange Cap Allocation and the number of ADRs
actually issued to such holder shall be allocated to the respective Exchange
Cap
Allocations of the remaining holders of Notes on a pro rata basis in proportion
to the aggregate principal amount of the Notes then held by each such
holder.
(4) RIGHTS
UPON EVENT OF DEFAULT.
(a) Event
of Default.
Each of
the following events shall constitute an “Event
of Default”:
(i) the
failure of the applicable Registration Statement required to be filed pursuant
to the Registration Rights Agreement to be declared effective by the SEC
on or
prior to the date that is sixty (60) days after the applicable Effectiveness
Deadline (as defined in the Registration Rights Agreement), or, while the
applicable Registration Statement is required to be maintained effective
pursuant to the terms of the Registration Rights Agreement, the effectiveness
of
the applicable Registration Statement lapses for any reason (including, without
limitation, the issuance of a stop order) or is unavailable to any holder
of the
Notes for sale of all of such holder’s Registrable Securities (as defined in the
Registration Rights Agreement) in accordance with the terms of the Registration
Rights Agreement, and such lapse or unavailability continues for a period
of ten
(10) consecutive days or for more than an aggregate of thirty (30) days in
any
365-day period (other than days during an Allowable Grace Period (as defined
in
the Registration Rights Agreement));
-7-
(ii) the
suspension from trading or failure of the ADRs to be listed on an Eligible
Market for a period of five (5) consecutive days or for more than an aggregate
of ten (10) days in any 365-day period;
(iii) the
Company’s (A) failure to cure a Conversion Failure by delivery of the
required number of ADRs within twelve (12) Business Days after the applicable
Conversion Date or (B) notice, written or oral, to any holder of the
Notes,
including by way of public announcement or through any of its agents, at
any
time, of its intention not to comply with a request for conversion of any
Notes
into ADRs that is tendered in accordance with the provisions of the
Notes;
(iv) the
Company’s failure to pay to the Holder any amount of Principal when and as due
or any Interest, Late Charges or other amounts within three Business Days
of the
date when and as due under this Note (including, without limitation, the
Company’s failure to pay any redemption payments) or any other Transaction
Document (as defined in the Securities Purchase Agreement) or any other
agreement, document, certificate or other instrument delivered in connection
with the transactions contemplated hereby and thereby to which the Holder
is a
party;
(v) any
Indebtedness, the aggregate of which obligation(s) exceed(s) US$250,000.00
(or
the equivalent in one or more other currencies) individually or in the aggregate
is declared to be or otherwise becomes due and payable prior to its specified
maturity (other than as a result of a mandatory prepayment not attributable
to
an event of default) or with respect to which the Company or any of its
Subsidiaries fails to make any payment at the maturity date as and when
due;
(vi) the
Company or any of its Material Subsidiaries (as such term is defined under
Regulation S-K under the Securities and Exchange Act of 1933, as amended),
pursuant to or within the meaning of Title 11, U.S. Code, or any similar
Federal, foreign or state law for the relief of debtors (collectively,
“Bankruptcy
Law”),
(A) commences a voluntary case, (B) consents to the entry of
an order
for relief against it in an involuntary case, (C) consents to the
appointment of a receiver, trustee, assignee, liquidator or similar official
(a
“Custodian”),
(D) makes a general assignment for the benefit of its creditors or
(E) admits in writing that it is generally unable to pay its debts
as they
become due;
(vii) a
court
of competent jurisdiction enters an order or decree under any Bankruptcy
Law
that (A) is for relief against the Company or any of its Material
Subsidiaries in an involuntary case, (B) appoints a Custodian of the
Company or any of its Material Subsidiaries or (C) orders the liquidation
of the Company or any of its Material Subsidiaries;
(viii) a
final
judgment or judgments for the payment of money aggregating in excess of
$2,500,000 are rendered against the Company or any of its Subsidiaries and
which
judgments are not, within sixty (60) days after the entry thereof, bonded,
discharged or stayed pending appeal, or are not discharged within sixty (60)
days after the expiration of such stay; provided,
however,
that
any such judgment shall not give rise to an Event of Default under this
subsection (viii) if and for so long as (A) the amount of such
judgment is covered by a valid and binding policy of insurance between the
defendant and the insurer covering full payment thereof and (B) such
insurer has been notified, and has not disputed the claim made for payment,
of
the amount of such judgment;
-8-
(ix) the
Company breaches any material representation, warranty, covenant or other
term
or condition of any Transaction Document in any material respect, except,
in the
case of a breach of a covenant which is curable, only if such breach continues
for a period of at least ten (10) consecutive Business Days after notice
from
any Holder or the Company becomes or reasonably should be expected to have
become aware of such breach;
(x) any
material breach or failure in any respect to comply with either of Sections
8 or
15 of this Note; or
(xi) any
Event
of Default (as defined in the Other Notes) occurs with respect to any Other
Notes.
(b) Redemption
Right.
Promptly after the occurrence of an Event of Default with respect to this
Note
or any Other Note, the Company shall deliver written notice thereof via
facsimile and overnight courier (an “Event
of Default Notice”)
to the
Holder. At any time after the earlier of the Holder’s receipt of an Event of
Default Notice and the Holder becoming aware of an Event of Default and until
30
days after such Event of Default has been cured, the Holder may require the
Company to redeem all or any portion of this Note by delivering written notice
thereof (the “Event
of Default Redemption Notice”)
to the
Company, which Event of Default Redemption Notice shall indicate the portion
of
this Note the Holder is electing to redeem. Each portion of this Note subject
to
redemption by the Company pursuant to this Section 4(b) shall be redeemed
by the
Company at a price equal to the greater of (i) the product of (x) the
Conversion Amount to be redeemed and (y) the Redemption Premium and
(ii) the product of (A) the Conversion Rate with respect to
such
Conversion Amount in effect at such time as the Holder delivers an Event
of
Default Redemption Notice and (B) the Closing Sale Price of the ADRs
on the
date immediately preceding such Event of Default (the “Event
of Default Redemption Price”).
Redemptions required by this Section 4(b) shall be made in accordance with
the
provisions of Section 13.
(5) RIGHTS
UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.
(a) Assumption.
The
Company shall not enter into or be party to a Fundamental Transaction unless,
and shall use its best endeavors to procure that, (i) the Successor
Entity
(if other than the Company) assumes in writing all of the obligations of
the
Company under this Note and the other Transaction Documents in accordance
with
the provisions of this Section 5(a) pursuant to written agreements in form
and
substance reasonably satisfactory to the Required Holders and approved by
the
Required Holders prior to such Fundamental Transaction, including agreements
to
deliver to each holder of Notes in exchange for such Notes a security of
such
Successor Entity evidenced by a written instrument substantially similar
in form
and substance to the Notes, including, without limitation, having a principal
amount and interest rate equal to the principal amounts and the interest
rates
of the Notes held by such holder and having similar ranking to the Notes,
and
reasonably satisfactory to the Required Holders and (ii) the Successor
Entity is a publicly traded corporation whose common shares (or whose American
Depositary Shares) are quoted on or listed for trading on an Eligible Market.
Upon the occurrence of any Fundamental Transaction, such Successor Entity
shall
succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Note referring to the “Company”
shall refer instead to such Successor Entity), and may exercise every right
and
power of the Company and shall assume all of the obligations of the Company
under this Note with the same effect as if such Successor Entity had been
named
as the Company herein. Upon consummation of the Fundamental Transaction,
such
Successor Entity shall deliver to the Holder confirmation that there shall
be
issued upon conversion or redemption of this Note at any time after the
consummation of the Fundamental Transaction, in lieu of the ADRs (or other
securities, cash, assets or other property) purchasable upon the conversion
or
redemption of the Notes prior to such Fundamental Transaction, such publicly
traded common shares (or their equivalent) of the Successor Entity (including
its Parent Entity), as adjusted in accordance with the provisions of this
Note.
The provisions of this Section shall apply similarly and equally to successive
Fundamental Transactions and shall be applied without regard to any limitations
on the conversion or redemption of this Note.
-9-
(b) Redemption
Right.
No
sooner than thirty (30) days nor later than ten (10) days prior to the
consummation of a Change of Control, the Company shall deliver written notice
thereof via facsimile and overnight courier to the Holder (a “Change
of Control Notice”);
provided that in no case shall the Company deliver or be required to deliver
such Change of Control Notice prior to the public announcement of such Change
of
Control. At any time during the period beginning after the Holder’s receipt of a
Change of Control Notice and ending on the date of the consummation of such
Change of Control (or, in the event a Change of Control Notice is not delivered
at least ten (10) days prior to a Change of Control, at any time on or after
the
date which is ten (10) days prior to a Change of Control and ending ten (10)
days after the consummation of such Change of Control), the Holder may require
the Company to redeem all or any portion of this Note by delivering written
notice thereof (“Change
of Control Redemption Notice”)
to the
Company, which Change of Control Redemption Notice shall indicate the Conversion
Amount the Holder is electing to redeem. The portion of this Note subject
to
redemption pursuant to this Section 5 shall be redeemed by the Company at
a
price equal to the greater of (i) the product of (x) the Conversion
Amount being redeemed and (y) the quotient determined by dividing
(A) the Closing Sale Price of the ADRs immediately following the public
announcement of such proposed Change of Control by (B) the Conversion
Price
and (ii) the product of Change of Control Premium and the Conversion
Amount
being redeemed (the “Change
of Control Redemption Price”).
Redemptions required by this Section 5 shall be made in accordance with the
provisions of Section 13 and shall have priority to payments to shareholders
in
connection with a Change of Control.
-10-
(6) RIGHTS
UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.
(a) Purchase
Rights.
If at
any time the Company, directly or indirectly, grants, issues or sells any
Options, Convertible Securities or rights to purchase shares, warrants,
securities or other property pro rata to the record holders of any class
of
Ordinary Shares (the “Purchase
Rights”),
then
the Holder will be entitled to acquire, to the extent permitted by applicable
Law, upon the terms applicable to such Purchase Rights, the aggregate Purchase
Rights which the Holder could have acquired if the Holder had held the number
of
Ordinary Shares underlying the ADRs acquirable upon complete conversion of
this
Note (without taking into account any limitations or restrictions on the
convertibility of this Note) immediately before the date on which a record
is
taken for the grant, issuance or sale of such Purchase Rights, or, if no
such
record is taken, the date as of which the record holders of Ordinary Shares
are
to be determined for the grant, issue or sale of such Purchase
Rights.
(b) Other
Corporate Events.
In
addition to and not in substitution for any other rights hereunder, prior
to the
consummation of any Fundamental Transaction pursuant to which holders of
ADRs or
Ordinary Shares are entitled to receive securities or other assets with respect
to or in exchange for ADRs or Ordinary Shares (a “Corporate
Event”),
the
Company shall make appropriate provision, to the extent not prohibited by
applicable law, to insure that the Holder will thereafter have the right
to
receive upon a conversion of this Note, (i) in addition to the ADRs
receivable upon such conversion, such securities or other assets to which
the
Holder would have been entitled with respect to such ADRs had such ADRs been
held by the Holder upon the consummation of such Corporate Event (without
taking
into account any limitations or restrictions on the convertibility of this
Note)
or (ii) in lieu of the ADRs otherwise receivable upon such conversion,
such
securities or other assets received by the holders of ADRs or Ordinary Shares
in
connection with the consummation of such Corporate Event in such amounts
as the
Holder would have been entitled to receive had this Note initially been issued
with conversion rights for the form of such consideration (as opposed to
ADRs)
at a conversion rate for such consideration commensurate with the Conversion
Rate. Provision made pursuant to the preceding sentence shall be in a form
and
substance satisfactory to the Required Holders. The provisions of this Section
shall apply similarly and equally to successive Corporate Events and shall
be
applied without regard to any limitations on the conversion or redemption
of
this
Note.
(7) RIGHTS
UPON ISSUANCE OF OTHER SECURITIES.
(a) Adjustment
of Conversion Price upon Issuance of Ordinary Shares.
If and
whenever on or after the Subscription Date, the Company issues or sells,
or in
accordance with this Section 7(a) is deemed to have issued or sold, any Ordinary
Shares (including those underlying any ADRs and the issuance or sale of Ordinary
Shares owned or held by or for the account of the Company, but excluding
Ordinary Shares deemed to have been issued or sold by the Company in connection
with any Excluded Security) for a consideration per Ordinary Share (the
“New
Issuance Price”)
less
than a price (the “Applicable
Price”)
equal
to (i) one-tenth (1/10th) of the Conversion Price (in the case of
ADRs) or
(ii) the Conversion Price (in the case that the Conversion Price is
determined by reference to the Ordinary Shares) in effect immediately prior
to
such issue or sale (the foregoing a “Dilutive
Issuance”),
then
immediately after such Dilutive Issuance, the Conversion Price then in effect
shall be reduced to an amount equal to the product of (A) the Conversion
Price in effect immediately prior to such Dilutive Issuance and (B) the
quotient determined by dividing (1) the sum of (I) the product
derived
by multiplying the Conversion Price in effect immediately prior to such Dilutive
Issuance and the number of Ordinary Shares Deemed Outstanding immediately
prior
to such Dilutive Issuance plus (II) the consideration, if any, received
by
the Company upon such Dilutive Issuance, by (2) the product derived
by
multiplying (I) the Conversion Price in effect immediately prior to
such
Dilutive Issuance by (II) the number of Ordinary Shares Deemed Outstanding
immediately after such Dilutive Issuance. Appropriate and equitable adjustment
to the terms and provisions of this Note shall be made in the event of any
change to the ratio of ADRs to Ordinary Shares represented thereby. For purposes
of determining the adjusted Conversion Price under this Section 7(a), the
following shall be applicable:
-11-
(i) Issuance
of Options.
If the
Company in any manner grants or sells any Options and the lowest price per
share
for which one Ordinary Share is issuable upon the exercise of any such Option
or
upon conversion or exchange or exercise of any Convertible Securities issuable
upon exercise of such Option is less than the Applicable Price, then such
Ordinary Share shall be deemed to be outstanding and to have been issued
and
sold by the Company at the time of the granting or sale of such Option for
such
price per share. For purposes of this Section 7(a)(i), the “lowest price per
share for which one Ordinary Share is issuable upon the exercise of any such
Option or upon conversion or exchange or exercise of any Convertible Securities
issuable upon exercise of such Option” shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable by the Company with
respect to any one Ordinary Share upon granting or sale of the Option, upon
exercise of the Option and upon conversion or exchange or exercise of any
Convertible Security issuable upon exercise of such Option. No further
adjustment of the Conversion Price shall be made upon the actual issuance
of
such Ordinary Shares or of such Convertible Securities upon the exercise
of such
Options or upon the actual issuance of such Ordinary Shares upon conversion
or
exchange or exercise of such Convertible Securities.
(ii) Issuance
of Convertible Securities.
If the
Company in any manner issues or sells any Convertible Securities and the
lowest
price per share for which one Ordinary Share is issuable upon such conversion
or
exchange or exercise thereof is less than the Applicable Price, then such
Ordinary Share shall be deemed to be outstanding and to have been issued
and
sold by the Company at the time of the issuance of sale of such Convertible
Securities for such price per share. For the purposes of this Section 7(a)(ii),
the “price per share for which one Ordinary Share is issuable upon such
conversion or exchange or exercise” shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable by the Company with
respect to any one Ordinary Share upon the issuance or sale of the Convertible
Security and upon the conversion or exchange or exercise of such Convertible
Security. No further adjustment of the Conversion Price shall be made upon
the
actual issuance of such Ordinary Shares upon conversion or exchange or exercise
of such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which adjustment
of the Conversion Price had been or are to be made pursuant to other provisions
of this Section 7(a), no further adjustment of the Conversion Price shall
be
made by reason of such issue or sale.
-12-
(iii) Change
in Option Price or Rate of Conversion.
If the
purchase price provided for in any Options, the additional consideration,
if
any, payable upon the issue, conversion, exchange or exercise of any Convertible
Securities, or the rate at which any Convertible Securities are convertible
into
or exchangeable or exercisable for Ordinary Shares changes at any time, the
Conversion Price in effect at the time of such change shall be adjusted to
the
Conversion Price which would have been in effect at such time had such Options
or Convertible Securities provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold. For purposes of this Section 7(a)(iii),
if
the terms of any Option or Convertible Security that was outstanding as of
the
Subscription Date are changed in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the Ordinary
Shares deemed issuable upon exercise, conversion or exchange thereof shall
be
deemed to have been issued as of the date of such change. No adjustment shall
be
made if such adjustment would result in an increase of the Conversion Price
then
in effect.
(iv) Calculation
of Consideration Received.
In case
any Option is issued in connection with the issue or sale of other securities
of
the Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the Options
will be deemed to have been issued for a consideration of $.01. If any Ordinary
Shares, Options or Convertible Securities are issued or sold or deemed to
have
been issued or sold for cash, the consideration received therefor will be
deemed
to be the gross amount paid by the purchaser therefor. If any Ordinary Shares,
Options or Convertible Securities are issued or sold for a consideration
other
than cash, the amount of the consideration other than cash received by the
Company will be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company will be the Closing Sale Price of such securities
on the
date of receipt. If any Ordinary Shares, Options or Convertible Securities
are
issued to the owners of the non-surviving entity in connection with any merger
in which the Company is the surviving entity, the amount of consideration
therefor will be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such Ordinary
Shares, Options or Convertible Securities, as the case may be. The fair value
of
any consideration other than cash or securities will be determined in good
faith
by the Board of Directors of the Company.
(v) Record
Date.
If the
Company takes a record of the holders of Ordinary Shares for the purpose
of
entitling them (A) to receive a dividend or other distribution payable
in
Ordinary Shares, Options or in Convertible Securities or (B) to subscribe
for or purchase Ordinary Shares, Options or Convertible Securities, then
such
record date will be deemed to be the date of the issue or sale of the Ordinary
Shares deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
-13-
(b) Adjustment
of Conversion Price upon Pro Rata Bonus Issue of Ordinary Shares.
If the
Company makes a pro rata bonus issue of Ordinary Shares to its shareholders
prior to conversion of the Note, and the Note is not converted prior to the
record date for the issue, the Note will, when converted, entitle the holder
to
the number of ADRs that would ordinarily be received under Section 3, plus
the
number of bonus Ordinary Shares which would have been issued to the Holder
if
the Note had been converted prior to the record date.
(c) Adjustment
of Conversion Price upon Subdivision or Combination of Ordinary
Shares.
If the
Company at any time on or after the Subscription Date subdivides (by any
share
split, share dividend, recapitalization or otherwise) one or more classes
of its
outstanding ADRs (or Ordinary Shares underlying such ADRs) into a greater
number
of ADRs (or Ordinary Shares), the Conversion Price in effect immediately
prior
to such subdivision will be proportionately reduced. If the Company at any
time
on or after the Subscription Date combines (by combination, reverse share
split
or otherwise) one or more classes of its outstanding ADRs (or Ordinary Shares)
into a smaller number of ADRs (or Ordinary Shares), the Conversion Price
in
effect immediately prior to such combination will be proportionately increased.
Any adjustment under this Section 7(d) shall be subject to (and will be
correspondingly reorganised in a manner which is permissible under, or necessary
to comply with) the ASX Listing Rules or the rules of any Eligible Market
in
force at the relevant time and shall become effective at the close of business
on the date the subdivision or combination becomes effective.
(d) Capital
reorganizations.
If
there is a reorganisation of the capital of the Company, the number of ADRs
applicable to the Note and/or the Conversion Price of the Note will be
correspondingly reorganised in a manner, which is permissible under, or
necessary to comply, with the ASX Listing Rules or the rules of any other
Eligible Market in force at the relevant time. Subject to the above, if there
is
a reorganisation of the capital of the Company, the number of ADRs applicable
to
the Note or the Conversion Price or both will be reorganised so that the
Holder
of the Note will not receive a benefit that holders of Ordinary Shares do
not
receive. The Company shall give notice to the Holder of the Note of any
adjustments to the number of ADRs which are to be issued on conversion of
the
Note or to the Conversion Price. Before a Note is converted, all adjustment
calculations are to be carried out including all fractions (in relation to
each
of the number of ADRs applicable to the Note and the Conversion Price), but
on
conversion the number of ADRs issued is rounded down to the next lower whole
number and the Conversion Price rounded up to the next higher cent.
(e) Other
Events.
If any
event occurs of the type contemplated by the provisions of this Section 7
but
not expressly provided for by such provisions (including, without limitation,
the granting of share appreciation rights, phantom share rights or other
rights
with equity features), then the Company’s Board of Directors will make an
appropriate adjustment in the Conversion Price so as to protect the rights
of
the Holder under this Note; provided that no such adjustment will increase
the
Conversion Price as otherwise determined pursuant to this Section
7.
(f) Adjustment.
If on
the seventh month anniversary of the Issuance Date, the Subsequent Conversion
Price is less than the then applicable Conversion Price, then the Conversion
Price shall be reset to the Subsequent Conversion Price.
-14-
(8) HOLDER’S
RIGHT OF OPTIONAL REDEMPTION.
In the
event that the arithmetic average of the Weighted Average Price of the ADRs
over
the ten (10) Trading Days ending on the Trading Day immediately preceding
each
of the one (1) year anniversary of the Subscription Date, the eighteen (18)
month anniversary of the Subscription Date and the two (2) year anniversary
of
the Subscription Date (each an “Optional
Redemption Date”),
is
less than the then applicable Conversion Price, the Holder shall have the
right,
in its sole discretion, to require that the Company redeem (each a “Holder
Optional Redemption”)
up to
one third of the original Principal amount of the Note plus accrued and unpaid
Interest with respect to such Principal and accrued and unpaid Late Charges
with
respect to such principal and Interest (the “Optional
Redemption Amount”)
by
delivering written notice thereof (a “Holder
Optional Redemption Notice”
and,
collectively with the Event of Default Redemption Notice and the Change of
Control Redemption Notice, the “Redemption
Notices”
and
each a “Redemption
Notice”)
to the
Company no later than ten Business Days after the applicable Optional Redemption
Date. The Holder Optional Redemption Notice shall indicate the amount of
the
applicable Optional Redemption Amount the Holder is electing to have redeemed
on
such Optional Redemption Exercise Date (the “Holder
Optional Redemption Amount”)
and
the date of such redemption (the “Optional
Redemption Exercise Date”);
provided,
however,
that
(a) such Holder Optional Redemption Amount indicated shall not exceed
the
Optional Redemption Amount and (b) such Optional Redemption Exercise
Date
shall not be less than ten (10) Business Days after the date of delivery
of such
Holder Optional Redemption Notice. The portion of this Note subject to
redemption pursuant to this Section 8 shall be redeemed by the Company in
cash
on the applicable Optional Redemption Date at a price equal to the Holder
Optional Redemption Amount being redeemed (the “Holder
Optional Redemption Price”
and,
collectively with the Event of Default Redemption Price and the Change of
Control Redemption Price, the “Redemption
Prices”
and,
each a “Redemption
Price”).
Such
Holder covenants that it will comply with Section 2(j) of the Securities
Purchase Agreement.
(9) COMPANY’S
RIGHT OF MANDATORY CONVERSION.
(a) Mandatory
Conversion.
If at
any time from and after the sixtieth (60th) day after the Effective Date
(as
defined in the Registration Statement) (the “Mandatory
Conversion Eligibility Date”),
(i) the Weighted Average Price of the ADRs exceed for each of any
twenty
(20) out of twenty-five (25) consecutive Trading Days following the Mandatory
Conversion Eligibility Date (the “Mandatory
Conversion Measuring Period”),
200%
of the applicable Conversion Price (subject to appropriate adjustments for
share
splits, share dividends, share combinations and other similar transactions
after
the Subscription Date) and (ii) the Equity Conditions shall have been
satisfied (or waived in writing by the Holder), during the period commencing
on
the Mandatory Conversion Notice Date through the applicable Mandatory Conversion
Date (each, as defined below), the Company shall have the right to require
the
Holder to convert all, or any portion, of the Conversion Amount then remaining
under this Note as designated in the Mandatory Conversion Notice into fully
paid, validly issued and nonassessable ADRs in accordance with Section 3(c)
hereof at the Conversion Rate as of the Mandatory Conversion Date (a
“Mandatory
Conversion”).
The
Company may exercise its right to require conversion under this Section 9(a)
by
delivering within not more than three (3) Business Days following the end
of any
such Mandatory Conversion Measuring Period a written notice thereof by facsimile
and overnight courier to all, but not less than all, of the holders of Notes
and
the Transfer Agent (the “Mandatory
Conversion Notice”
and the
date all of the holders received such notice is referred to as the “Mandatory
Conversion Notice Date”).
The
Mandatory Conversion Notice shall be irrevocable. The Mandatory Conversion
Notice shall state (i) the Business Day selected for the Mandatory
Conversion in accordance with this Section 9(a), which Business Day shall
be at
least twenty (20) Business Days but not more than sixty (60) Business Days
following the Mandatory Conversion Notice Date (the “Mandatory
Conversion Date”),
(ii) the aggregate Conversion Amount of the Notes subject to mandatory
conversion from all of the holders of the Notes pursuant to this Section
9 (and
analogous provisions under the Other Notes) and (iii) the number of
ADRs to
be issued to such Holder on the Mandatory Conversion Date.
-15-
(b) Pro
Rata Conversion Requirement.
If the
Company elects to cause a conversion of any Conversion Amount of this Note
pursuant to Section 9(a), then it must simultaneously take the same action
in
the same proportion with respect to the Other Notes. All Conversion Amounts
converted by the Holder after the Mandatory Conversion Notice Date shall
reduce
the Conversion Amount of this Note required to be converted on the Mandatory
Conversion Date. If the Company has elected a Mandatory Conversion, the
mechanics of conversion set forth in Section 3(c) shall apply, to the extent
applicable, as if the Company and the Transfer Agent had received from the
Holder on the Mandatory Conversion Date a Conversion Notice with respect
to the
Conversion Amount being converted pursuant to the Mandatory
Conversion.
(10) [RESERVED]
(11) NONCIRCUMVENTION.
The
Company hereby covenants and agrees that the Company will not, by amendment
of
its Constitution, Bylaws or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issue or sale
of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Note, and will at all times in
good
faith carry out all of the provisions of this Note and take all action as
may be
required to protect the rights of the Holder of this Note. Without limiting
the
generality of the foregoing, the Company (i) shall not increase the
par
value of any Ordinary Shares underlying the Conversion Shares receivable
upon
the conversion of this Note above the Conversion Price then in effect and
(ii) shall take all such actions as may be necessary or appropriate
in
order that the Company may validly and legally issue fully paid and
nonassessable Conversion Shares upon the conversion of this Note.
(12) SUBORDINATION
TO PERMITTED SENIOR INDEBTEDNESS.
(a) Subordination.
The
indebtedness represented by this Note and the payment of any Principal,
Interest, Late Charges, redemption amount, liquidated damages, fees, expenses
or
any other amounts in respect of this Note (collectively, the “Subordinated
Indebtedness”)
is
hereby expressly made subordinate and junior and subject in right of payment,
only to the extent expressly set forth in Section 12(b) hereof, to the prior
payment in full of all Permitted Senior Indebtedness of the Company hereinafter
incurred.
-16-
(b) Payment
upon Dissolution, Etc.
In the
event of any bankruptcy, insolvency, reorganization, receivership, composition,
assignment for benefit of creditors or other similar proceeding initiated
by or
against the Company or any dissolution or winding up or total or partial
liquidation or reorganization in bankruptcy of the Company (each, a
“Proceeding”),
all
principal, interest and other obligations due upon any Permitted Senior
Indebtedness shall first be paid in full or fully cash collateralized before
the
Holder shall be entitled to receive or, if received, to retain any payment
or
distribution on account of this Note and, during the continuance of any such
Proceeding, any payment or distribution of assets of the Company of any kind
or
character, whether in cash, property or securities, to which the Holder would
be
entitled with respect to any Subordinated Indebtedness but for the provisions
of
this Section 12 shall be paid by the Company or by any receiver, trustee
in
bankruptcy, liquidating trustee, agent or other Person making such payment
or
distribution, or by the Holder who shall have received such payment or
distribution, directly to the holders of the Permitted Senior Indebtedness
(pro
rata to each such holder on the basis of the respective amounts of such
Permitted Senior Indebtedness held by such holder) or their representatives
to
the extent necessary to pay all such Permitted Senior Indebtedness in full
after
giving effect to any concurrent payment or distribution to or for the holders
of
such Permitted Senior Indebtedness, before any payment or distribution is
made
to the Holder or any holders of the Notes; provided,
however,
that
notwithstanding anything to the contrary, in any event the Holder shall be
entitled to receive and retain any and all Junior Securities (as defined
below).
(c) Certain
Rights.
Nothing
contained in this Section 12 or elsewhere in this Note or any other Transaction
Document, is intended to or shall impair, as among the Company, its creditors
including the holders of Permitted Senior Indebtedness and the Holder, the
right, which is absolute and unconditional, of the Holder to convert this
Note
in accordance herewith.
(d) Rights
of Holder Unimpaired.
The
provisions of this Section 12 are and are intended solely for the purposes
of
defining the relative rights of the Holder and the holders of Permitted Senior
Indebtedness and nothing in this Section 12 shall impair, as between the
Company
and the Holder, the obligation of the Company, which is unconditional and
absolute, to pay to the Holder the Principal hereof (and premium, if any),
accrued Interest hereon and all other Subordinated Indebtedness payable
hereunder, all in accordance with the terms of this Note.
(e) Junior
Securities.
As used
herein, “Junior
Securities”
means
debt or equity securities of the Company as reorganized or readjusted, or
debt
or equity securities of the Company or any other Person provided for by a
plan
of reorganization or readjustment authorized by an order or decree of a court
of
competent jurisdiction in a Proceeding under any applicable law, so long
as in
the case of debt securities, such Junior Securities are subordinated in right
of
payment to all Permitted Senior Indebtedness and to whatever is issued to
the
holders of the Permitted Senior Indebtedness on account of the Permitted
Senior
Indebtedness, to the same extent as, or to a greater extent than, the
Subordinated Indebtedness is so subordinated as provided for
herein.
(f) Intercreditor
Arrangements.
In the
event that a holder of Permitted Senior Indebtedness shall require the holders
of the Notes to enter into any intercreditor or subordination agreement or
any
similar arrangements, the Company shall reimburse the Holder for any reasonable
expenses incurred in connection with the negotiation, execution and delivery
of
any such agreement (and any related documents), including without limitation,
reasonable legal fees and expenses.
-17-
(g) Lien
Subordination.
Any
Lien of Holder, whether now or hereafter existing in connection with the
amounts
due under this Note, on any assets or property of Company or any proceeds
or
revenues therefrom which Holder may have at any time as security for any
amounts
due and obligations under this Note shall be subordinate to all Liens hereafter
granted to a holder of Permitted Senior Indebtedness by Company or by law,
notwithstanding the date, order or method of attachment or perfection of
any
such Lien or the provisions of any applicable law.
(13) HOLDER’S
REDEMPTIONS.
(a) Mechanics.
The
Company shall deliver the applicable Event of Default Redemption Price to
the
Holder within ten (10) Business Days after the Company’s receipt of the Holder’s
Event of Default Redemption Notice. If the Holder has submitted a Change
of
Control Redemption Notice in accordance with Section 5(b), the Company shall
deliver the applicable Change of Control Redemption Price to the Holder on
the
later of (i) concurrently with the consummation of such Change of
Control
or (ii) within ten (10) Business Days after the Company’s receipt of such
notice. In the event of a redemption of less than all of the Conversion Amount
of this Note, the Company shall promptly cause to be issued and delivered
to the
Holder a new Note (in accordance with Section 19(d)) representing the
outstanding Principal which has not been redeemed. In the event that the
Company
does not pay the applicable Redemption Price to the Holder within the time
period required, at any time thereafter and until the Company pays such unpaid
Redemption Price in full, the Holder shall have the option, in lieu of
redemption, to require the Company to promptly return to the Holder all or
any
portion of this Note representing the Conversion Amount that was submitted
for
redemption and for which the applicable Redemption Price (together with any
Late
Charges thereon) has not been paid. Upon the Company’s receipt of such notice,
(x) the Redemption Notice shall be null and void with respect to such
Conversion Amount, (y) the Company shall immediately return this Note,
or
issue a new Note (in accordance with Section 19(d)) to the Holder representing
such Conversion Amount and (z) the Conversion Price of this Note or
such
new Notes shall be adjusted to the lesser of (A) the Conversion Price
as in
effect on the date on which the Redemption Notice is voided and (B) the
lowest Closing Bid Price of the ADRs during the period beginning on and
including the date on which the Redemption Notice is delivered to the Company
and ending on and including the date on which the Redemption Notice is voided.
The Holder’s delivery of a notice voiding a Redemption Notice and exercise of
its rights following such notice shall not affect the Company’s obligations to
make any payments of Late Charges which have accrued prior to the date of
such
notice with respect to the Conversion Amount subject to such
notice.
(b) Redemption
by Other Holders.
Upon
the Company’s receipt of notice from any of the holders of the Other Notes for
redemption or repayment as a result of an event or occurrence substantially
similar to the events or occurrences described in Sections 4(b), Section
5(b) or
Section 8 (each, an “Other
Redemption Notice”),
the
Company shall immediately forward to the Holder by facsimile a copy of such
notice. If the Company receives a Redemption Notice and one or more Other
Redemption Notices, during the seven (7) Business Day period beginning on
and
including the date which is three (3) Business Days prior to the Company’s
receipt of the Holder’s Redemption Notice and ending on and including the date
which is three (3) Business Days after the Company’s receipt of the Holder’s
Redemption Notice and the Company is unable to redeem all principal, interest
and other amounts designated in such Redemption Notice and such Other Redemption
Notices received during such seven (7) Business Day period, then the Company
shall redeem a pro rata amount from each holder of the Notes (including the
Holder) based on the principal amount of the Notes submitted for redemption
pursuant to such Redemption Notice and such Other Redemption Notices received
by
the Company during such seven (7) Business Day period.
-18-
(14) VOTING
RIGHTS.
The
Holder shall have no voting rights as the holder of this Note, except as
required by law, the Corporations
Act 2001
(Cth) and as expressly provided in this Note, or any other Transaction
Documents.
(15) COVENANTS.
(a) Rank.
All
payments due under this Note (a) shall rank pari
passu
with all
Other Notes and all Permitted Indebtedness (other than Senior Indebtedness
and
Permitted Indebtedness described in clause (B) of the definition thereof)
and
(b) shall be senior to all other Indebtedness of the Company and its
Subsidiaries other than Permitted Senior Indebtedness.
(b) Incurrence
of Indebtedness.
So long
as this Note is outstanding, the Company shall not, and the Company shall
not
permit any of its Subsidiaries to, directly or indirectly, incur or guarantee,
assume or suffer to exist any Indebtedness, other than (i) the Indebtedness
evidenced by this Note and the Other Notes and (ii) Permitted
Indebtedness.
(c) Existence
of Liens.
So long
as this Note is outstanding, the Company shall not, and the Company shall
not
permit any of its Subsidiaries to, directly or indirectly, allow or suffer
to
exist any mortgage, lien, pledge, charge, security interest or other encumbrance
upon or in any property or assets (including accounts and contract rights)
owned
by the Company or any of its Subsidiaries (collectively, “Liens”)
other
than Permitted Liens.
(d) Restricted
Payments.
The
Company shall not, and the Company shall not permit any of its Subsidiaries
to,
directly or indirectly, redeem, defease, repurchase, repay or make any payments
in respect of, by the payment of cash or cash equivalents (in whole or in
part,
whether by way of open market purchases, tender offers, private transactions
or
otherwise), all or any portion of any Permitted Indebtedness whether by way
of
payment in respect of principal of (or premium, if any) or interest on such
Indebtedness if at the time such payment is due or is otherwise made or,
after
giving effect to such payment, an event constituting, or that with the passage
of time and without being cured would constitute, an Event of Default has
occurred and is continuing.
(e) Net
Cash Balance.
So long
as this Note is outstanding, the Company shall at all times maintain a Net
Cash
Balance in excess of 30% of the aggregate remaining unamortized or un-converted
Principal amount of Notes then outstanding (the “Net
Cash Balance Test”).
Promptly after any date on which the Net Cash Balance Test is not satisfied
(a
“Failure
Date”),
and
to the extent such failure constitutes non-public material information the
Company shall publicly disclose (on a Current Report on Form 6-K or otherwise)
such material non-public information and provide to the Holder a certification
as to the amount of the Net Cash Balance as of the Failure Date.
-19-
(16) PARTICIPATION.
The
Holder, as the holder of this Note, shall be entitled to receive such dividends
paid (other than cash dividends) and distributions made to the holders of
ADRs
or Ordinary Shares to the same extent as if the Holder had converted this
Note
into ADRs (without regard to any limitations on conversion herein or elsewhere)
and had held such ADRs on the record date for such dividends and distributions.
Payments under the preceding sentence shall be made concurrently with the
dividend or distribution to the holders of ADRs or Ordinary Shares.
(17) VOTE
TO ISSUE, OR CHANGE THE TERMS OF, NOTES.
The
affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting of the Required Holders shall be required for any
change or amendment to this Note or the Other Notes.
(18) TRANSFER.
This
Note and any ADRs issued upon conversion of this Note may be offered, sold,
assigned or transferred by the Holder without the consent of the Company,
subject only to the provisions of Section 2(f) of the Securities Purchase
Agreement.
(19) REISSUANCE
OF THIS NOTE.
(a) Transfer.
If this
Note is to be transferred, the Holder shall surrender this Note to the Company,
whereupon the Company will forthwith issue and deliver upon the order of
the
Holder a new Note (in accordance with Section 19(d)), registered as the Holder
may request, representing the outstanding Principal being transferred by
the
Holder and, if less then the entire outstanding Principal is being transferred,
a new Note (in accordance with Section 19(d)) to the Holder representing
the
outstanding Principal not being transferred. The Holder and any assignee,
by
acceptance of this Note, acknowledge and agree that, by reason of the provisions
of Section 3(c)(iii) following conversion or redemption of any portion of
this
Note, the outstanding Principal represented by this Note may be less than
the
Principal stated on the face of this Note.
(b) Lost,
Stolen or Mutilated Note.
Upon
receipt by the Company of evidence reasonably satisfactory to the Company
of the
loss, theft, destruction or mutilation of this Note, and, in the case of
loss,
theft or destruction, of any indemnification undertaking by the Holder to
the
Company in customary form and, in the case of mutilation, upon surrender
and
cancellation of this Note, the Company shall execute and deliver to the Holder
a
new Note (in accordance with Section 19(d)) representing the outstanding
Principal.
(c) Note
Exchangeable for Different Denominations.
This
Note is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with Section
19(d)
and in principal amounts of at least $100,000) representing in the aggregate
the
outstanding Principal of this Note, and each such new Note will represent
such
portion of such outstanding Principal as is designated by the Holder at the
time
of such surrender.
-20-
(d) Issuance
of New Notes.
Whenever the Company is required to issue a new Note pursuant to the terms
of
this Note, such new Note (i) shall be of like tenor with this Note,
(ii) shall represent, as indicated on the face of such new Note, the
Principal remaining outstanding (or in the case of a new Note being issued
pursuant to Section 19(a) or Section 19(c), the Principal designated by the
Holder which, when added to the principal represented by the other new Notes
issued in connection with such issuance, does not exceed the Principal remaining
outstanding under this Note immediately prior to such issuance of new Notes),
(iii) shall have an issuance date, as indicated on the face of such
new
Note, which is the same as the Issuance Date of this Note, (iv) shall
have
the same rights and conditions as this Note, and (v) shall represent
accrued and unpaid Interest and Late Charges on the Principal and Interest
of
this Note, from the Issuance Date.
(20) REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF.
The
remedies provided in this Note shall be cumulative and in addition to all
other
remedies available under this Note and any of the other Transaction Documents
at
law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the Holder’s right to pursue
actual and consequential damages for any failure by the Company to comply
with
the terms of this Note. Amounts set forth or provided for herein with respect
to
payments, conversion and the like (and the computation thereof) shall be
the
amounts to be received by the Holder and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at
law
for any such breach may be inadequate. The Company therefore agrees that,
in the
event of any such breach or threatened breach, the Holder shall be entitled,
in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond
or
other security being required.
(21) PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS.
If
(a) this Note is placed in the hands of an attorney for collection
or
enforcement or is collected or enforced through any legal proceeding or the
Holder otherwise takes action to collect amounts due under this Note or to
enforce the provisions of this Note or (b) there occurs any bankruptcy,
reorganization, receivership of the Company or other proceedings affecting
Company creditors’ rights and involving a claim under this Note, then the
Company shall pay the costs incurred by the Holder for such collection,
enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, but not limited to, attorneys’ fees
and disbursements.
(22) CONSTRUCTION;
HEADINGS.
This
Note shall be deemed to be jointly drafted by the Company and all the Purchasers
and shall not be construed against any person as the drafter hereof. The
headings of this Note are for convenience of reference and shall not form
part
of, or affect the interpretation of, this Note.
(23) FAILURE
OR INDULGENCE NOT WAIVER.
No
failure or delay on the part of the Holder in the exercise of any power,
right
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude other
or
further exercise thereof or of any other right, power or privilege.
-21-
(24) DISPUTE
RESOLUTION.
In the
case of a dispute as to the determination of the Closing Bid Price, the Closing
Sale Price
or the
Weighted Average Price or the arithmetic calculation of the Conversion Rate
or
the Redemption Price, the Company shall submit the disputed determinations
or
arithmetic calculations via facsimile within two (2) Business Days of receipt,
or deemed receipt, of the Conversion Notice or Redemption Notice or other
event
giving rise to such dispute, as the case may be, to the Holder. If the Holder
and the Company are unable to agree upon such determination or calculation
within two (2) Business Days of such disputed determination or arithmetic
calculation being submitted to the Holder, then the Company shall, within
two
Business Days submit via facsimile (a) the disputed determination
of the
Closing Bid Price, the Closing Sale Price or the Weighted Average Price to
an
independent, reputable investment bank selected by the Company and approved
by
the Holder or (b) the disputed arithmetic calculation of the Conversion
Rate or the Redemption Price to the Company’s independent, outside accountant.
The Company, at the Company’s expense, shall cause the investment bank or the
accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the Holder of the results no later than seven
(7)
Business Days from the time it receives the disputed determinations or
calculations. Such investment bank’s or accountant’s determination or
calculation, as the case may be, shall be binding upon all parties absent
demonstrable error.
(25) NOTICES;
CURRENCY; PAYMENTS.
(a) Notices.
Whenever notice is required to be given under this Note, unless otherwise
provided herein, such notice shall be given in accordance with Section 9(f)
of
the Securities Purchase Agreement. The Company shall provide the Holder with
prompt written notice of all actions taken pursuant to this Note, including
in
reasonable detail a description of such action and the reason therefore.
Without
limiting the generality of the foregoing, the Company will give written notice
to the Holder (i) immediately upon any adjustment of the Conversion
Price,
setting forth in reasonable detail, and certifying, the calculation of such
adjustment and (ii) at least twenty (20) days prior to the date on
which
the Company closes its books or takes a record (A) with respect to
any
dividend or distribution upon the ADRs or Ordinary Shares, (B) with
respect
to any pro rata subscription offer to holders of ADRs or Ordinary Shares
or
(C) for determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation, provided in each case that such
information shall be made known to the public prior to or in conjunction
with
such notice being provided to the Holder.
(b) Currency.
Unless
otherwise indicated, all dollar amounts referred to in this Note are in United
States Dollars.
(c) Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant
to this Note, such payment shall be made in lawful money of the United States
of
America by a check drawn on the account of the Company and sent via overnight
courier service to such Person at such address as previously provided to
the
Company in writing (which address, in the case of each of the Purchasers,
shall
initially be as set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement); provided that the Holder may elect to receive a payment
of
cash via wire transfer of immediately available funds by providing the Company
with prior written notice setting out such request and the Holder’s wire
transfer instructions. Whenever any amount expressed to be due by the terms
of
this Note is due on any day which is not a Business Day, the same shall instead
be due on the next succeeding day which is a Business Day and, in the case
of
any Interest Date which is not the date on which this Note is paid in full,
the
extension of the due date thereof shall not be taken into account for purposes
of determining the amount of Interest due on such date. Any amount of Principal
or other amounts due under the Transaction Documents, other than Interest,
which
is not paid when due shall result in a late charge being incurred and payable
by
the Company in an amount equal to interest on such amount at the rate of
ten
percent (10%) per annum from the date such amount was due until the same
is paid
in full (“Late
Charge”).
-22-
(26) CANCELLATION.
After
all Principal, accrued Interest and other amounts at any time owed on this
Note
have been paid in full, this Note shall automatically be deemed canceled,
shall
be surrendered to the Company for cancellation and shall not be
reissued.
(27) WAIVER
OF NOTICE.
To the
extent permitted by law, the Company hereby waives demand, notice, protest
and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note and the Securities Purchase
Agreement.
(28) GOVERNING
LAW.
This
Note shall be construed and enforced in accor-dance with, and all questions
concerning the construction, validity, interpretation and performance of
this
Note shall be governed by, the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New
York.
(29) CERTAIN
DEFINITIONS.
For
purposes of this Note, the following terms shall have the following
meanings:
(a) “ADRs”
means
the American Depositary Receipts of the Company evidencing the American
Depositary Shares of the Company which each represent ten (10) Ordinary Shares
or any successor securities. Appropriate and equitable adjustment to the
terms
and provisions of this Notes shall be made in the event of any change to
the
ratio of ADRs to Ordinary Shares.
(b) “Approved
Stock Plan”
means
any employee benefit plan which has been approved by the Board of Directors
of
the Company, pursuant to which the Company’s securities may be issued to any
employee, officer, director or consultant for services provided to the
Company.
(c) “ASX”
means
the Australian Stock Exchange.
(d) “Bloomberg”
means
Bloomberg Financial Markets.
(e) “Business
Day”
means
any day other than Saturday, Sunday or other day on which commercial banks
in
The City of New York, State of New York, U.S.A. or Perth, Australia are
authorized or required by law to remain closed.
-23-
(f) “Calendar
Quarter”
means
each of: the period beginning on and including January 1 and ending on and
including March 31; the period beginning on and including April 1 and ending
on
and including June 30; the period beginning on and including July 1 and ending
on and including September 30; and the period beginning on and including
October
1 and ending on and including December 31.
(g) “Cash
Equivalents”
means
(i) securities issued, or directly and fully guaranteed or insured,
by the
government of the United States, Australia or the United Kingdom or any agency
or instrumentality thereof having maturities of not more than one year from
the
date of the acquisition by a Person, (ii) demand deposits and time
deposits
and certificates of deposit, having maturities of not more than one year
from
the date of acquisition, of any domestic commercial bank which has, or the
holding company of which has, a commercial paper rating meeting the requirements
specified in clause (iv) below, (iii) repurchase obligations with
a term of
not more than 270 days for underlying securities of the types described in
clauses (i) and (ii) entered into with any financial institution meeting
the
qualifications specified in clause (ii) above, and (iv) commercial
paper
rated at least A-2 or the equivalent thereof by Standard & Poor’s Ratings
Group or P-2 or the equivalent thereof by Moody’s Investors Service, Inc. and in
either case maturing within one year after the date of acquisition.
(h) “Change
of Control”
means
any Fundamental Transaction other than (i) any consolidation, merger,
combination, or any reorganization, recapitalization or reclassification
of the
Ordinary Shares pursuant to, which holders of the Company’s voting power
immediately prior to such consolidation, merger, combination, reorganization,
recapitalization or reclassification continue after such consolidation, merger,
combination, reorganization, recapitalization or reclassification to hold
publicly traded securities and, directly or indirectly, the voting power
of the
surviving entity or entities necessary to elect a majority of the members
of the
board of directors (or their equivalent if other than a corporation) of such
entity or entities, or (ii) pursuant to a migratory merger effected
solely
for the purpose of changing the jurisdiction of incorporation of the
Company.
(i) “Change
of Control Premium”
means
(i) until the 12-month anniversary of the Issuance Date, 120%,
(ii) from and after the 12-month anniversary of the Issuance Date
until the
24-month anniversary of the Issuance Date, 115%, (iii) from and after
the
24-month anniversary of the Issuance Date until the 30-month anniversary
of the
Issuance Date, 110%, and (iv) after the 30-month anniversary of the
Issuance Date, 105%.
(j) “Closing
Bid Price”
and
“Closing
Sale Price”
means,
for any security as of any date, the last closing bid price and last closing
trade price, respectively, for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price or the
closing
trade price, as the case may be, then the last bid price or last trade price,
respectively, of such security prior to 4:00:00 p.m., New York Time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price
or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or
last
trade price, respectively, of such security in the over-the-counter market
on
the electronic bulletin board for such security as reported by Bloomberg,
or, if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the “pink
sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If
the Closing Bid Price or the Closing Sale Price cannot be calculated for
a
security on a particular date on any of the foregoing bases, the Closing
Bid
Price or the Closing Sale Price, as the case may be, of such security on
such
date shall be the fair market value as mutually determined by the Company
and
the Holder. If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved pursuant
to
Section 24. All such determinations to be appropriately adjusted for any
share
dividend, share split, share combination or other similar transaction during
the
applicable calculation period.
-24-
(k) “Closing
Date”
shall
have the meaning set forth in the Securities Purchase Agreement, which date
is
the date the Company initially issued Notes pursuant to the terms of the
Securities Purchase Agreement.
(l) “Consolidated
Total Indebtedness”
means,
with respect to any Person at any date, all Indebtedness of such Person
determined on a consolidated basis in accordance with GAAP, including, in
any
event, with respect to the Company and its Subsidiaries, the outstanding
principal amount of the Notes.
(m) “Consolidated
Total Indebtedness to Market Capitalization Ratio”
means
the ratio of Consolidated Total Indebtedness to Market
Capitalization.
(n) “Convertible
Securities”
means
any shares or securities (other than Options) directly or indirectly
convertible into or exercisable or exchangeable for Ordinary
Shares.
(o) “Deposit
Agreement”
means
that certain Deposit Agreement, dated as of January 24, 2005, by and among
the
Company, the Depositary and the holders and beneficial owners from time to
time
of ADSs evidenced by ADRs issued pursuant to such agreement.
(p) “Depositary”
means
Citibank, N.A. acting in such capacity under
(q) “Eligible
Market”
means
the Principal Market, The New York Stock Exchange, Inc., the American Stock
Exchange, or The Nasdaq SmallCap Market.
(r) “Equity
Conditions”
means:
(i) on each day during the period beginning on the date which is the
later
of (x) the earlier of (A) the Effectiveness Deadline and (B) the
Effective Date and (y) one (1) month prior to the applicable date
of
determination and ending on and including the applicable date of determination
(the “Equity
Conditions Measuring Period”),
either (x) the Registration Statement filed pursuant to the Registration
Rights Agreement shall be effective and available for the resale of all
remaining Registrable Securities in accordance with the terms of the
Registration Rights Agreement and there shall not have been any Grace Periods
(as defined in the Registration Rights Agreement) or (y) all ADRs
issuable
upon conversion of the Notes and exercise of the Warrants shall be eligible
for
sale without restriction and without the need for registration under any
applicable federal or state securities laws; (ii) on each day during
the
Equity Conditions Measuring Period, the ADRs are designated for quotation
on the
Principal Market or an Eligible Market and shall not have been suspended
from
trading on such exchange or market (other than suspensions of not more than
two
(2) days and occurring prior to the applicable date of determination due
to
business announcements by the Company) nor shall delisting or suspension
by such
exchange or market been threatened or pending either (A) in writing
by such
exchange or market or (B) by falling below the minimum listing maintenance
requirements of such exchange or market; (iii) during the Equity Conditions
Measuring Period the Company shall have delivered Conversion Shares upon
conversion of the Notes and ADRs upon exercise of the Warrants to the holders
on
a timely basis as set forth herein hereof (and analogous provisions under
the
Other Notes) and the Warrants; (iv) any applicable ADRs to be issued
in
connection with the event requiring determination may be issued in full without
violating Section 3(d) hereof and the rules or regulations of the Principal
Market or any applicable Eligible Market; (v) during the Equity Conditions
Measuring Period, the Company shall not have failed to timely make any payments
within five (5) Business Days of when such payment is due pursuant to any
Transaction Document; (vi) during the Equity Conditions Measuring
Period,
there shall not have occurred either (A) the public announcement of
a
pending, proposed or intended Fundamental Transaction which has not been
abandoned, terminated or consummated or (B) an Event of Default or
an event
that with the passage of time or giving of notice would constitute an Event
of
Default; (vii) the Company shall have no knowledge of any fact that
would
cause (x) the Registration Statements required pursuant to the Registration
Rights Agreement not to be effective and available for the resale of all
remaining Registrable Securities in accordance with the terms of the
Registration Rights Agreement or (y) any ADRs issuable upon conversion
of
the Notes and ADRs issuable upon exercise of the Warrants not to be eligible
for
sale without restriction pursuant to Rule 144(k) and any applicable state
securities laws; and (viii) during the Equity Conditions Measuring
Period,
the Company otherwise shall have been in material compliance with and shall
not
have materially breached or be in material breach of any material provision,
covenant, representation or warranty of any Transaction Document.
-25-
(s) “Excluded
Securities”
means
any Ordinary Shares issued or issuable: (i) in connection with any
Approved
Stock Plan; (ii) upon conversion of the Notes or the exercise of the
Warrants; (iii) pursuant to a bona fide firm commitment underwritten
public
offering with a nationally recognized underwriter which generates gross proceeds
to the Company in excess of $25,000,000 (other than an “at-the-market offering”
as defined in Rule 415(a)(4) under the 1933 Act and “equity lines”);
(iv) in connection with the payment of any Interest Shares on the
Notes;
(v) in connection with any acquisition by the Company, whether through
an
acquisition of shares or a merger of any business, assets or technologies
the
primary purpose of which is not to raise equity capital; (vi) upon
conversion of any Options or Convertible Securities which are outstanding
on the
day immediately preceding the Subscription Date, provided that the terms
of such
Options or Convertible Securities are not amended, modified or changed on
or
after the Subscription Date; (vii) in replacement of outstanding Ordinary
Shares as a result of the re-incorporation of the Company into the United
States; (viii) in connection with any rights offering to all holders
of
Ordinary Shares generally; and (ix) in connection with a Strategic
Financing.
(t) “Fundamental
Transaction”
means
that the Company shall, directly or indirectly, in one or more related
transactions, (i) consolidate or merge with or into (whether or not
the
Company is the surviving corporation) another Person, or (ii) sell,
assign,
transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company to another Person, or (iii) allow
another Person to make a purchase, tender or exchange offer that is accepted
by
the holders of more than the 50% of the outstanding Ordinary Shares (not
including any Ordinary Shares held by the Person or Persons making or party
to,
or associated or affiliated with the Persons making or party to, such purchase,
tender or exchange offer), or (iv) consummate a share purchase agreement
or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person
whereby
such other Person acquires more than the 50% of the outstanding Ordinary
Shares
(not including any Ordinary Shares held by the other Person or other Persons
making or party to, or associated or affiliated with the other Persons making
or
party to, such share purchase agreement or other business combination), or
(v) reorganize, recapitalize or reclassify its Ordinary
Shares.
-26-
(u) “GAAP”
means
United States generally accepted accounting principles, consistently
applied.
(v) “Holder
Pro Rata Amount”
means a
fraction (i) the numerator of which is the Principal amount of this
Note on
the Closing Date and (ii) the denominator of which is the aggregate
principal amount of the Notes issued to the initial purchasers pursuant to
the
Securities Purchase Agreement on the Closing Date of all then outstanding
Notes.
(w) “Interest
Conversion Price”
means,
with respect to any Interest Date, that price which shall be computed as
85% of
the arithmetic average of the Weighted Average Price of the ADRs on each
of the
ten (10) consecutive Trading Days ending on the Trading Day immediately
preceding the applicable Interest Date (each, an “Interest
Measuring Period”).
All
such determinations to be appropriately adjusted for any share split, share
dividend, share combination or other similar transaction during such
period.
(x) “Interest
Rate”
means
eight percent (8.0%) per annum.
(y) “Market
Capitalization”
of the
Company means the amount determined by multiplying the total number of Ordinary
Shares issued and outstanding (as reflected in the Company’s latest Form 20-F or
other publicly filed report) times the arithmetic average of the Weighted
Average Price of the Ordinary Shares for the ten (10) consecutive Trading
Days
preceding the date of measurement.
(z) “Maximum
Interest Share Amount”
means
the Holder Pro Rata Amount of the quotient determined by dividing (A) the
product of (x) 15% and (y) the sum of the Trading Dollar Volume
of the
ADRs for the twenty (20) Trading Days ending on the Trading Day immediately
preceding the applicable Interest Date by (B) the applicable Interest
Conversion Price.
(aa) “Net
Cash Balance”
means,
at any date, the difference between (i) aggregate amount of all cash
and
Cash Equivalents and Short and Long Term Investments reflected on the Company’s
balance sheet as at such date, minus
(ii) the unpaid principal balance of the Permitted Indebtedness (not
including amounts owed under the Notes and any accounts payable) on such
date.
(bb) “Options”
means
any rights, warrants or options to subscribe for or purchase Ordinary Shares
or
Convertible Securities.
-27-
(cc) “Ordinary
Shares Deemed Outstanding”
means,
at any given time, the number of shares of Ordinary Shares actually outstanding
at such time (directly or indirectly through ADRs or otherwise), plus the
number
of Ordinary Shares deemed to be outstanding pursuant to Sections 7(a)(i)
and
7(a)(ii) hereof regardless of whether the Options or Convertible Securities
are
actually exercisable at such time, but excluding any Ordinary Shares owned
or
held by or for the account of the Company or issuable upon conversion and
exercise, as applicable, of the SPA Securities and the Warrants.
(dd) “Ordinary
Shares”
means
(i) the Company’s ordinary shares, no par value per share, and
(ii) any share capital into which such Ordinary Shares shall have
been
changed or any share capital resulting from a reclassification of such Ordinary
Shares.
(ee) “Parent
Entity”
of a
Person means an entity that, directly or indirectly, controls the applicable
Person and whose common shares or equivalent equity security is quoted or
listed
on an Eligible Market, or, if there is more than one such Person or Parent
Entity, the Person or Parent Entity with the largest public market
capitalization as of the date of consummation of the Fundamental
Transaction.
(ff) “Permitted
Indebtedness”
means
(A) Permitted Senior Indebtedness, (B) Indebtedness incurred
by the
Company that is made expressly subordinate in right of payment to the
Indebtedness evidenced by this Note, as reflected in a written agreement
acceptable to the Holder and approved by the Holder in writing, and which
Indebtedness does not provide at any time for (1) the payment, prepayment,
repayment, repurchase or defeasance, directly or indirectly, of any principal
or
premium, if any, thereon until ninety-one (91) days after the Maturity Date
or
later and (2) total interest and fees at a rate in excess of eight
percent
(8%) per annum, (C) Indebtedness secured by Permitted Liens,
(D) Indebtedness to trade creditors incurred in the ordinary course
of
business, and (E) Indebtedness of any entity acquired by or merged
with the
Company not for capital raising purposes and existing at the date of such
acquisition or merger, (F) Indebtedness not covered by (A) through
(E)
above which is incurred by the Company in an amount not to exceed an aggregate
of $10 million dollars, provided that such Indebtedness is not in any way
convertible into, exchangeable for or in any way payable in equity securities
of
the Company and, provided further that such Indebtedness shall only be incurred
to the extent that the Consolidated Total Indebtedness to Market Capitalization
Ratio does not exceed .15 at the time of incurrence of such Indebtedness
and
(G) extensions, refinancings and renewals of any items of Permitted
Indebtedness, provided that the principal amount is not increased or the
terms
modified to impose more burdensome terms upon the Company or its Subsidiary,
as
the case may be.
(gg) “Permitted
Liens”
means
(i) any Lien for taxes not yet due or delinquent or being contested
in good
faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP, (ii) any statutory Lien arising
in the
ordinary course of business by operation of law with respect to a liability
that
is not yet due or delinquent, (iii) any Lien created by operation
of law,
such as materialmen’s liens, mechanics’ liens and other similar liens, arising
in the ordinary course of business with respect to a liability that is not
yet
due or delinquent or that are being contested in good faith by appropriate
proceedings, (iv) Liens (A) upon or in any equipment acquired
or held
by the Company or any of its Subsidiaries to secure the purchase price of
such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition or lease of such equipment, or (B) existing on such equipment
at the time of its acquisition, provided that the Lien is confined solely
to the
property so acquired and improvements thereon, and the proceeds of such
equipment, (v) Liens incurred in connection with the extension, renewal
or
refinancing of the indebtedness secured by Liens of the type described in
clauses (i) and (iv) above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and
the
principal amount of the Indebtedness being extended, renewed or refinanced
does
not increase, (vi) leases or subleases and licenses and sublicenses
granted
to others in the ordinary course of the Company’s business, not interfering in
any material respect with the business of the Company and its Subsidiaries
taken
as a whole, (vii) Liens in favor of customs and revenue authorities
arising
as a matter of law to secure payments of custom duties in connection with
the
importation of goods, (viii) Liens on any assets of any entity acquired
by
or merged with the Company not for capital raising purposes and existing
at the
date of such acquisition or merger, and (ix) Liens arising from judgments,
decrees or attachments in circumstances not constituting an Event of Default
under Section 4(a)(viii).
-28-
(hh) “Permitted
Senior Indebtedness”
means
the principal of (and premium, if any), interest on, and all fees and other
amounts (including, without limitation, any reasonable out-of-pocket costs,
enforcement expenses (including reasonable out-of-pocket legal fees and
disbursements), collateral protection expenses and other reimbursement or
indemnity obligations relating thereto) payable by Company and/or its
Subsidiaries under or in connection with any credit facility to be entered
into
by the Company and/or its Subsidiaries with one or more financial institutions
together with any amendments, restatements, renewals, refundings, refinancings
or other extensions thereof); provided,
however,
that
the aggregate outstanding amount of such Permitted Senior Indebtedness (taking
into account the maximum amounts which may be advanced under the loan documents
evidencing such Permitted Senior Indebtedness) does not as of the date on
which
any such Permitted Senior Indebtedness is incurred exceed $10,000,000, with
respect to the unpaid principal balance of loans thereunder and, provided
further that such Permitted Senior Indebtedness shall only be incurred to
the
extent that the Consolidated Total Indebtedness to Market Capitalization
Ratio
does not exceed .15 at the time of incurrence of such Permitted Senior
Indebtedness.
(ii) “Person”
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization, any other entity and
a
government or any department or agency thereof.
(jj) “Principal
Market”
means
the Nasdaq National Market.
(kk) “Redemption
Premium”
means
(i) in the case of the Events of Default described in Section 4(a)(i)
- (v)
and (viii) - (xi), 110% or (ii) in the case of the Events of Default described
in Section 4(a)(vi) - (vii), 100%.
(ll) “Required
Holders”
means
the holders of Notes representing at least a majority of the aggregate principal
amount of the Notes then outstanding.
(mm) “SEC”
means
the United States Securities and Exchange Commission.
-29-
(nn) “Securities
Purchase Agreement”
means
that certain securities purchase agreement dated as of the Subscription Date
by
and among the Company and the initial holders of the Notes pursuant to which
the
Company issued the Notes.
(oo) “Strategic
Financing”
means
the issuance, directly or indirectly, of Ordinary Shares or warrants to purchase
Ordinary Shares at a purchase price or an exercise price, as the case may
be,
that is not less than the market price of the Ordinary Shares on the date
of
issuance of such Ordinary Shares or warrant, in connection with any strategic
investor, vendor, lease or similar arrangement (the primary purpose of which
is
not to raise equity capital), provided that the aggregate number of shares
of
Ordinary Shares which the Company may issue pursuant to this definition shall
not exceed ten percent (10%) of the outstanding Ordinary Shares at the time
of
issuance (subject to adjustment for stock splits, stock dividends, stock
combination and similar transactions)
(pp) “Subscription
Date”
means
October 5, 2005.
(qq) “Subsequent
Conversion Price”
means
108% of the arithmetic average of the Weighted Average Price of the ADRs
for the
ten (10) consecutive Trading Days ending on the Trading Day immediately
preceding the seven month anniversary of the Subscription Date. All such
determinations to be appropriately adjusted for any share split, share dividend,
share combination or other similar transaction during such period.
(rr) “Successor
Entity”
means
the Person, which may be the Company, formed by, resulting from or surviving
any
Fundamental Transaction or the Person with which such Fundamental Transaction
shall have been made, provided that if such Person is not a publicly traded
entity whose common shares or equivalent equity security is quoted or listed
for
trading on an Eligible Market, Successor Entity shall mean such Person’s Parent
Entity.
(ss) “Trading
Day”
means
any day on which the ADRs are traded on the Principal Market, or, if the
Principal Market is not the principal trading market for the ADRs, then on
the
principal securities exchange or securities market on which the ADRs are
then
traded; provided that “Trading Day” shall not include any day on which the ADRs
are scheduled to trade on such exchange or market for less than 4.5 hours
or any
day that the ADRs are suspended from trading during the final hour of trading
on
such exchange or market (or if such exchange or market does not designate
in
advance the closing time of trading on such exchange or market, then during
the
hour ending at 4:00:00 p.m., New York Time).
(tt) “Trading
Dollar Volume”
means,
for any day on which the ADRs are traded on the Principal Market, the product
of
(i) the daily average trading volume of the ADRs on such day multiplied
by
(ii) the Weighted Average Price for the ADRs on such day.
(uu) “Warrants”
has the
meaning ascribed to such term in the Securities Purchase Agreement, and shall
include all warrants issued in exchange therefor or replacement
thereof.
-30-
(vv) “Weighted
Average Price”
means,
for any security as of any date, the dollar volume-weighted average price
for
such security on the Principal Market during the period beginning at 9:30:01
a.m., New York Time (or such other time as the Principal Market publicly
announces is the official open of trading), and ending at 4:00:00 p.m., New
York
Time (or such other time as the Principal Market publicly announces is the
official close of trading) as reported by Bloomberg through its “Volume at
Price” functions, or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the over-the-counter market
on
the electronic bulletin board for such security during the period beginning
at
9:30:01 a.m., New York Time (or such other time as such market publicly
announces is the official open of trading), and ending at 4:00:00 p.m., New
York
Time (or such other time as such market publicly announces is the official
close
of trading) as reported by Bloomberg, or, if no dollar volume-weighted average
price is reported for such security by Bloomberg for such hours, the average
of
the highest closing bid price and the lowest closing ask price of any of
the
market makers for such security as reported in the “pink sheets” by Pink Sheets
LLC (formerly the National Quotation Bureau, Inc.). If the Weighted Average
Price cannot be calculated for a security on a particular date on any of
the
foregoing bases, the Weighted Average Price of such security on such date
shall
be the fair market value as mutually determined by the Company and the Holder.
If the Company and the Holder are unable to agree upon the fair market value
of
such security, then such dispute shall be resolved pursuant to Section 24.
All
such determinations to be appropriately adjusted for any share dividend,
share
split, share combination or other similar transaction during the applicable
calculation period.
[Signature
Page Follows]
-31-
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed as
of the
Issuance Date set out above.
| pSIVIDA LIMITED | ||
| |
|
|
| By: | ||
|
|
||
|
Name:
Gavin Rezos
Title: Managing
Director
|
||
-32-
EXHIBIT
99.3
Form
of Warrant to Purchase ADRs for the purchase of up to 633,803
ADRs
[FORM
OF WARRANT]
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISEABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR (B) AN OPINION OF COUNSEL,
IN A
FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) IF SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT,
SUCH DOCUMENTS, OPINIONS AND CERTIFICATES AS THE COMPANY MAY REASONABLY REQUIRE.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE
SECURITIES.
pSIVIDA
LIMITED
WARRANT
TO PURCHASE ADRS
Warrant
No.: S-1
Number
of
ADRs: 633,803
Date
of
Issuance: November 15, 2005 (“Issuance
Date”)
PSIVIDA
LIMITED, an Australian corporation (the “Company”),
hereby certifies that, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged,_________________,
the
registered holder hereof or its permitted assigns (the “Holder”),
is
entitled, subject to the terms set forth below, to purchase from the Company,
at
the Exercise Price (as defined below) then in effect, upon surrender of this
Warrant to Purchase ADRs (as defined below) (including any Warrants to Purchase
ADRs issued in exchange, transfer or replacement hereof, the “Warrant”),
at
any time or times on or after the date hereof, but not after 11:59 p.m.,
New
York Time, on the Expiration Date (as defined below), up to six hundred
thirty-three thousand eight hundred three fully paid nonassessable ADRs (as
defined below) (the “Warrant
Shares”).
Except as otherwise defined herein, capitalized terms in this Warrant shall
have
the meanings set forth in Section 15. This Warrant is one of the Warrants
to
purchase Warrant Shares (the “SPA
Warrants”)
issued
pursuant to Section 1 of that certain Securities Purchase Agreement, dated
as of
October 5, 2005 (the “Subscription
Date”),
by
and among the Company and the investors (the “Buyers”)
referred to therein (the “Securities
Purchase Agreement”).
1 EXERCISE
OF WARRANT.
(a) Mechanics
of Exercise.
Subject
to the terms and conditions hereof (including, without limitation, the
limitations set forth in Section 1(f)), this Warrant may be exercised by
the
Holder on any day on or after the date hereof, in whole or in part, by
(i) delivery of a written notice, in the form attached hereto as
Exhibit
A
(the
“Exercise
Notice”),
of
the Holder’s election to exercise this Warrant and (ii) payment to the
Company of an amount equal to the applicable Exercise Price multiplied by
the
number of Warrant Shares as to which this Warrant is being exercised (the
“Aggregate
Exercise Price”)
in
cash or wire transfer of immediately available funds. The Holder shall not
be
required to deliver the original Warrant in order to effect an exercise
hereunder. Execution and delivery of the Exercise Notice with respect to
less
than all of the Warrant Shares shall have the same effect as cancellation
of the
original Warrant and issuance of a new Warrant evidencing the right to purchase
the remaining number of Warrant Shares. On or before the second (2nd) Business
Day following the date on which the Company has received each of the Exercise
Notice and the Aggregate Exercise Price the “Exercise
Delivery Documents”),
the
Company shall transmit by facsimile an acknowledgment of confirmation of
receipt
of the Exercise Delivery Documents to the Holder and the Company’s transfer
agent (the “Transfer
Agent”).
On or
before the fifth (5th) Business Day following the date on which the Company
has
received all of the Exercise Delivery Documents (the “Share
Delivery Date”),
the
Company shall (X) provided that the Transfer Agent is participating
in The
Depository Trust Company (“DTC”)
Fast
Automated Securities Transfer Program, upon the request of the Holder, credit
such aggregate number of Warrant Shares to which the Holder is entitled pursuant
to such exercise to the Holder’s or its designee’s balance account with DTC
through its Deposit Withdrawal Agent Commission system, or (Y) if
the
Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, issue and dispatch by overnight courier to the address
as
specified in the Exercise Notice, a certificate, registered in the Company’s
share register in the name of the Holder or its designee, for the number
of
Warrant Shares to which the Holder is entitled pursuant to such exercise.
Upon
delivery of the Exercise Delivery Documents, the Holder shall be deemed for
all
corporate purposes to have become the holder of record of the Ordinary Shares
represented by the ADRs with respect to which this Warrant has been exercised,
irrespective of the date of delivery of the certificates evidencing the ADRs.
If
this Warrant is submitted in connection with any exercise pursuant to this
Section 1(a) and the number of Warrant Shares represented by this Warrant
submitted for exercise is greater than the number of Warrant Shares being
acquired upon an exercise, then the Company shall as soon as practicable
and in
no event later than three Business Days after any exercise and at its own
expense, issue a new Warrant (in accordance with Section 7(d)) representing
the
right to purchase the number of Warrant Shares purchasable immediately prior
to
such exercise under this Warrant, less the number of Warrant Shares with
respect
to which this Warrant is exercised. No fractional Warrant Shares are to be
issued upon the exercise of this Warrant, but, at the option of the Company,
(i) the number of Warrant Shares to be issued shall be rounded up
to the
nearest whole number or (ii) in lieu of any fractional Warrant Shares
to
which the Holder would otherwise be entitled, the Company shall make a cash
payment to the Holder equal to the Closing Sale Price on the date of exercise
multiplied by such fraction. Upon exercise of this Warrant, the Company shall
deposit the corresponding number of Ordinary Shares representing the American
Depositary Shares (“ADSs”)
underlying the ADRs and pay by wire transfer to the Depositary’s account the ADS
issuance fee of $0.04 per ADS to be issued, together with all applicable
taxes
and expenses otherwise payable under the terms of the Deposit Agreement for
the
deposit of Ordinary Shares and issuance of ADSs (including, without limitation,
confirmation that any Australian stock transfer taxes in respect of such
deposit
(if any) have been paid by the Company), and the Company shall otherwise
comply
with and cause any other necessary party to comply with all the terms of
the
Deposit Agreement. The Company shall pay any and all taxes (excluding any
taxes
on the income of the Holder) which may be payable with respect to the issuance
and delivery of Warrant Shares upon exercise of this Warrant. Appropriate
and
equitable adjustment to the terms and provisions of this Warrant shall be
made
in the event of any change to the ratio of Warrant Shares to Ordinary Shares
represented thereby.
-2-
In
the
event that the Company’s Board of Directors should determine that the Company
shall transform itself (whether by re-incorporation in the United States
or
otherwise) from a foreign private issuer (as defined under the Securities
Act of
1933, as amended) all references to ADRs or ADSs shall be deemed references
to
whatever shares are then issued by the re-domiciled Company and all other
provisions of this Agreement shall be equitably adjusted by the parties hereto
to the extent necessary or appropriate to reflect such new country of
incorporation.
(b) Exercise
Price.
For
purposes of this Warrant, “Exercise
Price”
means
$7.20 per ADR (which is equivalent to $0.72 per Ordinary Share), subject
to
adjustment as provided herein.
(c) Company’s
Failure to Timely Deliver Securities.
If the
Company shall fail to issue to the Holder, the number of Warrant Shares to
which
the Holder is entitled upon the Holder’s exercise of this Warrant and register
such Warrant Shares on the Company’s share register or to credit the Holder’s
balance account with DTC for such number of Warrant Shares to which the Holder
is entitled upon the Holder’s exercise of this Warrant on or prior to the date
which is three (3) Business Days after receipt of the Exercise Delivery
Documents (an “Exercise
Failure”),
then
the Company shall pay damages in cash to the Holder for each date of such
Exercise Failure in an amount equal to an interest rate equal to 10% per
annum
applied to the product of (X) the sum of the number of Warrant Shares
not
issued to the Holder on or prior to the Share Delivery Date and to which
the
Holder is entitled and (Y) the Closing Sale Price of the Warrant Shares
on
the Share Delivery Date. In addition to the foregoing, if within three (3)
Trading Days after the Company’s receipt of the facsimile copy of a Exercise
Notice the Company shall fail to issue and deliver to the Holder and register
such Warrant Shares on the Company’s share register or credit the Holder’s
balance account with DTC for the number of Warrant Shares to which the Holder
is
entitled upon such holder’s exercise hereunder, and if on or after such Trading
Day the Holder purchases (in an open market transaction or otherwise) ADRs
to
deliver in satisfaction of a sale by the Holder of ADRs issuable upon such
exercise that the Holder anticipated receiving from the Company (a “Buy-In”),
then
the Company shall, within three (3) Business Days after the Holder’s request and
in the Holder’s discretion, either (i) pay cash to the Holder in an amount
equal to the Holder’s total purchase price (including brokerage commissions, if
any) for the ADRs so purchased (the “Buy-In
Price”),
at
which point the Company’s obligation to deliver and issue such ADRs shall be
deemed to have been satisfied and shall terminate, or (ii) promptly
honor
its obligation to deliver to the Holder a certificate or certificates
representing such ADRs and pay cash to the Holder in an amount equal to the
excess (if any) of the Buy-In Price over the product of (A) such number
of
ADRs, times (B) the Closing Bid Price on the date of exercise.
-3-
(d) Registration
Rights.
Notwithstanding anything contained herein to the contrary, if a Registration
Statement (as defined in the Registration Rights Agreement) covering the
Warrant
Shares that are the subject of the Exercise Notice (the “Unavailable
Warrant Shares”)
is not
available for resale of such Unavailable Warrant Shares then the Holder may
elect to exercise this Warrant for Warrant Shares in the form of ADRs or
in the
form of the Ordinary Shares underlying the ADRs and in either case the Company
must, contemporaneous with the issue of the Warrant Shares that are the subject
of the Exercise Notice, lodge with the ASX Limited a notice complying with
section 708A(5)(E) of the Corporations Act 2001 and the ASX Listing Rules
(“Cleansing
Notice”)
and
notify the Holder that it has so lodged a Cleansing Notice, and upon the
lodgement by the Company of the Cleansing Notice, the Holder is free to dispose
of any Ordinary Shares or any interest in Ordinary Shares it holds on the
Australian Stock Exchange Limited in the ordinary course of trading or otherwise
in Australia to any person and the restrictions on sale in the Securities
Purchase Agreement, including without limitation in section 2(j)(C) of the
Securities Purchase Agreement, does not apply to any such disposal.
Notwithstanding the foregoing, from after the second anniversary of the Issuance
Date, in the event that the aggregate number of Ordinary Shares that trades
on
the ASX is less than either (i) an average of 50,000 Common Shares
on each
Trading Day during any two month period or (ii) a weighted average
trading
price of at least US$50,000 on average during each Trading Day during any
two
month period, then at the request of the Holder the Company as of the date
of
such request once again (each of (i) and (ii), a “Registration
Event”)
shall
be subject to the terms of the Registration Rights Agreement as to the Warrant
Shares; provided, that the Holder makes such request within thirty (30) days
of
a Registration Event.
(e) Disputes.
In the
case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall issue to
the
Holder the number of Warrant Shares that are not disputed and resolve such
dispute in accordance with Section 12.
(f) Limitations
on Exercises.
(i) Beneficial
Ownership.
The
Company shall not effect the exercise of this Warrant, and the Holder shall
not
have the right to exercise this Warrant, to the extent that after giving
effect
to such exercise, the Holder (together with affiliates) would beneficially
own
(directly or indirectly through
Warrant Shares or otherwise) in excess of 4.99% (the “Maximum
Percentage”)
of the
Ordinary Shares outstanding immediately after giving effect to such exercise.
For purposes of the foregoing sentence, the number of Ordinary Shares
beneficially owned (directly or indirectly through Warrant Shares or otherwise)
by the Holder and its affiliates shall include the number of Ordinary Shares
underlying the Warrant Shares issuable upon exercise of this Warrant with
respect to which the determination of such sentence is being made, but shall
exclude the number of Ordinary Shares underlying Warrant Shares which would
be
issuable upon (i) exercise of the remaining, unexercised portion of
this
Warrant beneficially owned by the Holder and its affiliates and
(ii) exercise or conversion of the unexercised or unconverted portion
of
any other securities of the Company beneficially owned by such Person and
its
affiliates (including, without limitation, any convertible notes or convertible
preferred stock or warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this section, beneficial ownership shall
be
calculated in accordance with Section 13(d) of the Securities Exchange Act
of
1934, as amended. For purposes of this Warrant, in determining the number
of
outstanding Ordinary Shares, the Holder may rely on the number of outstanding
Ordinary Shares as reflected in (1) the Company’s most recent Form 20-F,
Form 6-K or other public filing with the Securities and Exchange Commission,
as
the case may be, (2) a more recent public announcement by the Company
or
(3) any other notice by the Company or the Transfer Agent setting
forth the
number of Ordinary Shares outstanding. For any reason at any time, upon the
written or oral request of the Holder, the Company shall within two (2) Business
Days confirm orally and in writing to the Holder the number of Ordinary Shares
then outstanding. In any case, the number of outstanding Ordinary Shares
shall
be determined after giving effect to the conversion or exercise of securities
of
the Company, including the SPA Securities and the SPA Warrants, by the Holder
and its affiliates since the date as of which such number of outstanding
Ordinary Shares was reported. By written notice to the Company, the Holder
may
increase or decrease the Maximum Percentage to any other percentage not in
excess of 9.99% specified in such notice; provided that (i) any such
increase will not be effective until the sixty-first (61st) day after such
notice is delivered to the Company, and (ii) any such increase or
decrease
will apply only to the Holder and not to any other holder of SPA
Warrants.
-4-
(ii) Principal
Market Regulation.
The
Company shall not be obligated to issue any ADRs upon exercise of this Warrant,
and the Holder of this Warrant shall not have the right to receive upon
conversion of this Warrant, any ADRs, if the issuance of such ADRs would
exceed
that number of ADRs which the Company may issue upon exercise of this Warrant
(including, as applicable, any ADRs issued upon conversion of the SPA
Securities) without breaching the Company’s obligations under the rules or
regulations of the Principal Market (or such other Eligible Market on which
the
ADRs or Ordinary Shares are listed) or the ASX (the “Exchange
Cap”),
except that such limitation shall not apply in the event that the Company
obtains the approval of its stockholders as required by the applicable rules
of
the Principal Market and the ASX listing rules for issuances of ADRs in excess
of such amount. Until such approval is obtained, no Buyer shall be issued,
in
the aggregate, upon exercise or conversion, as applicable, of any SPA Warrants
or SPA Securities, any ADRs in an amount greater than the product of the
Exchange Cap multiplied by a fraction, the numerator of which is the total
number of ADRs underlying the SPA Warrants issued to such Buyer pursuant
to the
Securities Purchase Agreement on the Subscription Date and the denominator
of
which is the aggregate number of ADRs underlying all the Warrants issued
to the
Buyers pursuant to the Securities Purchase Agreement on the Subscription
Date
(with respect to each Buyer, the “Exchange
Cap Allocation”).
In
the event that any Buyer shall sell or otherwise transfer any of such Buyer’s
SPA Warrants, the transferee shall be allocated a pro rata portion of such
Buyer’s Exchange Cap Allocation, and the restrictions of the prior sentence
shall apply to such transferee with respect to the portion of the Exchange
Cap
Allocation allocated to such transferee. In the event that any holder of
SPA
Warrants shall exercise all of such holder’s SPA Warrants into a number of ADRs
which, in the aggregate, is less than such holder’s Exchange Cap Allocation,
then the difference between such holder’s Exchange Cap Allocation and the number
of ADRs actually issued to such holder shall be allocated to the respective
Exchange Cap Allocations of the remaining holders of SPA Warrants on a pro
rata
basis in proportion to the ADRs underlying the SPA Warrants then held by
each
such holder.
-5-
2 ADJUSTMENT
OF EXERCISE PRICE.
(a) If
the
Company issues or gives the holders of Ordinary Shares in the Company the
right,
pro rata with existing holdings of Ordinary Shares, to subscribe for additional
securities (“Pro
Rata Issue”),
the
Exercise Price in respect of one underlying Ordinary Share shall be reduced
in
accordance with the following formula:
O'
= O -
E[P-(S+D)]/[N+1]
Where:
|
O'
|
= |
the
new Exercise Price in respect of an underlying Ordinary
Share.
|
|
|
O
|
= |
the
original Exercise Price in respect of an underlying Ordinary
Share.
|
|
|
E
|
= |
the
number of underlying Ordinary Shares to be issued on exercise of
each
Warrant.
|
|
|
P
|
= |
the
average market price per Ordinary Share (weighted by reference
to volume)
of the Ordinary Shares during the 5 trading days ending before
the ex
rights date or ex entitlements date.
|
|
|
S
|
= |
the
subscription price for an Ordinary Share under the Pro Rata
Issue.
|
|
|
D
|
= |
the
dividend due but not paid on the existing Ordinary Shares (excluding
those
to be issued under the Pro Rata Issue).
|
|
|
N
|
= |
the
number of Ordinary Shares which must be held to receive one new
Share in
the Pro Rata Issue.
|
(b) Adjustment
upon pro rata bonus issue of Ordinary Shares.
If the
Company makes a pro rata bonus issue of Ordinary Shares to its shareholders
prior to the Warrant being exercised, and the Warrant is not exercised prior
to
the record date for the issue, the Warrant will, when exercised, entitle
the
Holder to the number of Warrant Shares that would ordinarily be received
under
Section 1, plus the number of bonus Ordinary Shares which would have been
issued
to the Holder if the Warrant had been exercised prior to the record
date.
(c) Adjustment
upon Subdivision or Combination of Ordinary Shares.
If the
Company at any time on or after the Subscription Date subdivides (by any
stock
split, stock dividend, recapitalization or otherwise) one or more classes
of its
outstanding ADRs (or Ordinary Shares underlying such ADRs) into a greater
number
of ADRs (or Ordinary Shares), the Exercise Price in effect immediately prior
to
such subdivision will be proportionately reduced and the number of Warrant
Shares (or Ordinary Shares underlying such Warrant Shares) will be
proportionately increased. If the Company at any time on or after the
Subscription Date combines (by combination, reverse stock split or otherwise)
one or more classes of its outstanding ADRs (or Ordinary Shares underlying
such
ADRs) into a smaller number of ADRs (or Ordinary Shares underlying such ADRs),
the Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares (or Ordinary Shares
underlying such Warrant Shares) will be proportionately decreased. Any
adjustment under this Section 2(c) shall be subject to (and will be
correspondingly reorganized in a manner which is permissible under, or necessary
to comply with) the ASX Listing Rules or the rules of any Recognized Exchange
in
force at the relevant time and shall become effective at the close of business
on the date the subdivision or combination becomes effective.
-6-
(d) Other
Events.
If any
event occurs of the type contemplated by the provisions of this Section 2
but
not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock rights or other
rights
with equity features), then the Company’s Board of Directors will make an
appropriate adjustment in the Exercise Price and the number of Warrant Shares
so
as to protect the rights of the Holder; provided that such adjustment is
made in
accordance with the ASX Listing Rules. No such adjustment pursuant to this
Section 2(d) will increase the Exercise Price or decrease the number of Warrant
Shares as otherwise determined pursuant to this Section 2, unless in accordance
with any ASX Listing Rule.
(e) Other
Capital Reorganizations.
Notwithstanding any other provision contained in this Warrant, the rights
of a
warrant holder will be changed to the extent necessary to comply with the
listing rules applying to a reorganization of capital at the time of
reorganization. Subject to the above, if there is a reorganization of the
capital of the Company, the number of Warrant Shares applicable to the Warrant
and/or Exercise Price of the Warrant will be reorganized as follows: (i) if
the Company returns capital on its Ordinary Shares, the number of Warrant
Shares
applicable to the Warrant will remain the same, and the Exercise Price of
each
Warrant will be reduced by the same amount as the amount returned in relation
to
each Ordinary Share; (ii) if the Company returns capital on its Ordinary
Shares by a cancellation of capital that is lost or not represented by available
assets, the number of Warrant Shares applicable to the Warrant and the Exercise
Price is unaltered; (iii) if the Company reduces its issued Ordinary
Shares
on a pro rata basis, the number of Warrant Shares applicable to the Warrant
will
be reduced in the same ratio as the Ordinary Shares and the Exercise Price
will
be amended in inverse proportion to that ratio; and (iv) if the Company
reorganizes its issued Ordinary Shares in any way not otherwise contemplated
by
the preceding paragraphs, the number of Warrant Shares applicable to the
Warrant
or the Exercise Price or both will be reorganized so that the Warrant Holder
will not receive a benefit that holders of Ordinary Shares do not receive.
The
Company shall give notice to Warrant Holders of any adjustments to the number
of
Warrant Shares applicable to the Warrant or the number of Ordinary Shares
which
are to be issued on exercise of a Warrant or to the Exercise Price. Before
a
Warrant is exercised, all adjustment calculations are to be carried out
including all fractions (in relation to each of the number of Warrant Shares
applicable to the Warrant, the number of Ordinary Shares and the Exercise
Price), but on exercise the number of Warrant Shares or Ordinary Shares issued
is rounded down to the next lower whole number and the Exercise Price rounded
up
to the next higher cent.
-7-
3 FUNDAMENTAL
TRANSACTIONS.
The
Company shall not enter into or be party to a Fundamental Transaction unless,
and shall use its best endeavors to procure that, (i) the Successor
Entity
(if other than the Company) assumes in writing all of the obligations of
the
Company under this Warrant and the other Transaction Documents in accordance
with the provisions of this Section (4)(b) pursuant to written agreements
in
form and substance reasonably satisfactory to the Required Holders and approved
by the Required Holders prior to such Fundamental Transaction, including
agreements to deliver to each holder of Warrants in exchange for such Warrants
a
security of such Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant, including, without
limitation, an adjusted exercise price equal to the value for the Ordinary
Shares reflected by the terms of such Fundamental Transaction, and exercisable
for a corresponding number of shares of capital stock equivalent to the Ordinary
Shares underlying the Warrant Shares acquirable and receivable upon exercise
of
this Warrant (without regard to any limitations on the exercise of this Warrant)
prior to such Fundamental Transaction, and reasonably satisfactory to the
Required Holders and (ii) such Successor Entity is a publicly traded
corporation whose common shares (or whose American Depositary Shares) are
quoted
on or listed for trading on an Eligible Market. Upon the occurrence of any
Fundamental Transaction, such Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the “Company” shall
refer instead to such Successor Entity), and may exercise every right and
power
of the Company and shall assume all of the obligations of the Company under
this
Warrant with the same effect as if such Successor Entity had been named as
the
Company herein. Upon consummation of the Fundamental Transaction, such Successor
Entity shall deliver to the Holder confirmation that there shall be issued
upon
exercise of this Warrant at any time after the consummation of the Fundamental
Transaction, in lieu of the Warrant Shares (or other securities, cash, assets
or
other property) purchasable upon the exercise of the Warrant prior to such
Fundamental Transaction, such shares of the publicly traded common stock
(or
their equivalent) of the Successor Entity (including its Parent Entity),
as
adjusted in accordance with the provisions of this Warrant. In addition to
and
not in substitution for any other rights hereunder, prior to the consummation
of
any Fundamental Transaction pursuant to which holders of Ordinary Shares
(directly or indirectly through Warrant Shares or otherwise) are entitled
to
receive securities or other assets with respect to or in exchange for Ordinary
Shares (a “Corporate Event”), the Company shall make appropriate provision, to
the extent not prohibited by applicable law, to insure that the Holder will
thereafter have the right to receive upon an exercise of this Warrant at
any
time after the consummation of the Fundamental Transaction but prior to the
Expiration Date, in lieu of the Warrant Shares purchasable upon the exercise
of
the Warrant prior to such Fundamental Transaction, such, securities or other,
assets which the Holder would have been entitled to receive upon the happening
of such Fundamental Transaction had the Warrant been exercised immediately
prior
to such Fundamental Transaction. The provisions of this Section shall apply
similarly and equally to successive Fundamental Transactions and Corporate
Events and shall be applied without regard to any limitations on the exercise
of
this Warrant.
4 NONCIRCUMVENTION.
The
Company hereby covenants and agrees that the Company will not, by amendment
of
its Constitution or Bylaws or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issue or sale
of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, and will at all times
in
good faith carry out all the provisions of this Warrant and take all action
as
may be required to protect the rights of the Holder. Without limiting the
generality of the foregoing, the Company (i) shall not increase the
par
value of any Ordinary Shares underlying the Warrant Shares receivable upon
the
exercise of this Warrant above the Exercise Price then in effect and
(ii) shall take all such actions as may be necessary or appropriate
in
order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares upon the exercise of this Warrant.
-8-
5 WARRANT
HOLDER NOT DEEMED A STOCKHOLDER.
Except
as otherwise specifically provided herein, the Holder, solely in such Person’s
capacity as a holder of this Warrant, shall not be entitled to vote or receive
dividends or be deemed the holder of share capital of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
any of the rights of a shareholder of the Company or any right to vote, give
or
withhold consent to any corporate action (whether any reorganization, issue
of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the Warrant
Shares
which such Person is then entitled to receive upon the due exercise of this
Warrant. In addition, nothing contained in this Warrant shall be construed
as
imposing any liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a shareholder of the Company, whether
such
liabilities are asserted by the Company or by creditors of the Company.
Notwithstanding this Section 6, the Company shall provide the Holder with
copies
of the same notices and other information given to the shareholders of the
Company generally, contemporaneously with the giving thereof to the
shareholders.
6 REISSUANCE
OF WARRANTS.
(a) Transfer
of Warrant.
If this
Warrant is to be transferred, the Holder shall surrender this Warrant to
the
Company, whereupon the Company will forthwith issue and deliver upon the
order
of the Holder a new Warrant (in accordance with Section 7(d)), registered
as the
Holder may request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less then the total number
of
Warrant Shares then underlying this Warrant is being transferred, a new Warrant
(in accordance with Section 7(d)) to the Holder representing the right to
purchase the number of Warrant Shares not being transferred.
(b) Lost,
Stolen or Mutilated Warrant.
Upon
receipt by the Company of evidence reasonably satisfactory to the Company
of the
loss, theft, destruction or mutilation of this Warrant, and, in the case
of
loss, theft or destruction, of any indemnification undertaking by the Holder
to
the Company in customary form and, in the case of mutilation, upon surrender
and
cancellation of this Warrant, the Company shall execute and deliver to the
Holder a new Warrant (in accordance with Section 7(d)) representing the right
to
purchase the Warrant Shares then underlying this Warrant.
(c) Exchangeable
for Multiple Warrants.
This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Warrant or Warrants (in accordance
with Section 7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new
Warrant
will represent the right to purchase such portion of such Warrant Shares
as is
designated by the Holder at the time of such surrender; provided, however,
that
no Warrants for fractional Warrant Shares shall be given.
-9-
(d) Issuance
of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to the terms
of
this Warrant, such new Warrant (i) shall be of like tenor with this
Warrant, (ii) shall represent, as indicated on the face of such new
Warrant, the right to purchase the Warrant Shares then underlying this Warrant
(or in the case of a new Warrant being issued pursuant to Section 7(a) or
Section 7(c), the Warrant Shares designated by the Holder which, when added
to
the number of Warrant Shares underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of Warrant Shares
then
underlying this Warrant), (iii) shall have an issuance date, as indicated
on the face of such new Warrant which is the same as the Issuance Date, and
(iv) shall have the same rights and conditions as this
Warrant.
7 NOTICES;
CURRENCY.
(a) Notices.
Whenever notice is required to be given under this Warrant, unless otherwise
provided herein, such notice shall be given in accordance with Section 9(f)
of
the Securities Purchase Agreement. The Company shall provide the Holder with
prompt written notice of all actions taken pursuant to this Warrant, including
in reasonable detail a description of such action and the reason therefore.
Without limiting the generality of the foregoing, the Company will give written
notice to the Holder (i) immediately upon any adjustment of the Exercise
Price, setting forth in reasonable detail, and certifying, the calculation
of
such adjustment and (ii) at least fifteen days prior to the date on
which
the Company closes its books or takes a record (A) with respect to
any
dividend or distribution upon the Ordinary Shares or Warrant Shares,
(B) with respect to any grants, issuances or sales of any Options,
Convertible Securities or rights to purchase stock, warrants, securities
or
other property to holders of Ordinary Shares or Warrant Shares or (C) for
determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall
be
made known to the public prior to or in conjunction with such notice being
provided to the Holder.
(b) Currency.
Unless
otherwise indicated, all dollar amounts referred to in this Warrant are in
United States Dollars.
8 AMENDMENT
AND WAIVER.
The
provisions of this Warrant may be amended by the Company and the Company
may
take any action herein prohibited, or omit to perform any act herein required
to
be performed by it, only if the Company has obtained the written consent
of the
Required Holders and approval from the holders of Ordinary Shares at a
shareholders meeting held in accordance with the ASX Listing Rules and
Corporations
Act 2001
(Cth) or
if otherwise permitted by the ASX Listing Rules. Notwithstanding any provision
of this Warrant, , a term of this Warrant which has the effect of reducing
the
exercise price, increasing the period for exercise or increasing the number
of
Warrant Shares or Ordinary Shares received on exercise is prohibited if it
would
result in a breach of the ASX Listing Rules. Notwithstanding the above, no
change may increase the exercise price of any SPA Warrant or decrease the
number
of Warrant Shares or class of stock obtainable upon exercise of any SPA Warrant
without the written consent of the Holder, unless otherwise provided in the
ASX
Listing Rules. A change which has the effect of reducing the purchase price,
increasing the period for exercise or increasing the number of securities
received cannot be made. In addition, subject to the ASX Listing Rules, no
such
amendment shall be effective to the extent that it applies to less than all
of
the holders of the SPA Warrants then outstanding.
-10-
9 SEVERABILITY.
If any
provision of this Warrant or the application thereof becomes or is declared
by a
court of competent jurisdiction to be illegal, void or unenforceable, the
remainder of the terms of this Warrant will continue in full force and
effect.
10 GOVERNING
LAW.
This
Warrant shall be governed by and construed and enforced in accordance with,
and
all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the
State
of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than
the
State of New York.
11 CONSTRUCTION;
HEADINGS.
This
Warrant shall be deemed to be jointly drafted by the Company and all the
Buyers
and shall not be construed against any person as the drafter hereof. The
headings of this Warrant are for convenience of reference and shall not form
part of, or affect the interpretation of, this Warrant.
12 DISPUTE
RESOLUTION.
In the
case of a dispute as to the determination of the Exercise Price or the
calculation of the Warrant Shares, the Company shall submit the disputed
determinations or arithmetic calculations via facsimile within two (2) Business
Days of receipt of the Exercise Notice giving rise to such dispute, as the
case
may be, to the Holder. If the Holder and the Company are unable to agree
upon
such determination or calculation within three (3) Business Days of such
disputed determination or arithmetic calculation being submitted to the Holder,
then the Company shall, within two Business Days submit via facsimile
(a) the disputed determination of the Exercise Price to an independent,
reputable investment bank selected by the Company and approved by the Holder
or
(b) the disputed arithmetic calculation of the Warrant Shares to the
Company’s independent, outside accountant. The Company at the Company’s expense,
shall cause the investment bank or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the
Holder
of the results no later than ten Business Days from the time it receives
the
disputed determinations or calculations. Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.
13 REMEDIES,
OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
The
remedies provided in this Warrant shall be cumulative and in addition to
all
other remedies available under this Warrant and the other Transaction Documents,
at law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder
right
to pursue actual damages for any failure by the Company to comply with the
terms
of this Warrant. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at
law
for any such breach may be inadequate. The Company therefore agrees that,
in the
event of any such breach or threatened breach, the holder of this Warrant
shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
-11-
14 TRANSFER.
This
Warrant may be offered for sale, sold, transferred or assigned without the
consent of the Company, except as may otherwise be required by Section 2(f)
of
the Securities Purchase Agreement.
15 CERTAIN
DEFINITIONS.
For
purposes of this Warrant, the following terms shall have the following
meanings:
(a) “ADRs”
means
the American Depositary Receipts of the Company evidencing the American
Depositary Shares of the Company which each represent ten (10) Ordinary
Shares.
(b) “ASX”
means
the Australian Stock Exchange
(c) “Bloomberg”
means
Bloomberg Financial Markets.
(d) “Business
Day”
means
any day other than Saturday, Sunday or other day on which commercial banks
in
The City of New York, State of New York, U.S.A. or Perth, Australia are
authorized or required by law to remain closed.
(e) “Closing
Bid Price”
and
“Closing
Sale Price”
means,
for any security as of any date, the last closing bid price and last closing
trade price, respectively, for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price or the
closing
trade price, as the case may be, then the last bid price or last trade price,
respectively, of such security prior to 4:00:00 p.m., New York Time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price
or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or
last
trade price, respectively, of such security in the over-the-counter market
on
the electronic bulletin board for such security as reported by Bloomberg,
or, if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the “pink
sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If
the Closing Bid Price or the Closing Sale Price cannot be calculated for
a
security on a particular date on any of the foregoing bases, the Closing
Bid
Price or the Closing Sale Price, as the case may be, of such security on
such
date shall be the fair market value as mutually determined by the Company
and
the Holder. If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved pursuant
to
Section 12. All such determinations to be appropriately adjusted for any
stock
dividend, stock split, stock combination or other similar transaction during
the
applicable calculation period.
(f) “Convertible
Securities”
means
any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for ADRs or Ordinary Shares.
(g) “Deposit
Agreement”
means
that certain Deposit Agreement, dated as of January 24, 2005 by and among
the
Company, the Depositary and the holders and beneficial owners from time to
time
of ADSs evidenced by ADRs issued pursuant to such agreement.
-12-
(h) “Depositary”
means
Citibank, N.A., acting in such capacity under the Deposit
Agreement.
(i) “Eligible
Market”
means
the Principal Market, The New York Stock Exchange, Inc., the American Stock
Exchange or The Nasdaq SmallCap Market.
(j) “Expiration
Date”
means
the date that is seventy-two months after the Issuance Date or, if such date
falls on a day other than a Business Day or on which trading does not take
place
on the Principal Market (a “Holiday”),
the
next date that is not a Holiday.
(k) “Fundamental
Transaction”
means
that the Company shall, directly or indirectly, in one or more related
transactions, (i) consolidate or merge with or into (whether or not
the
Company is the surviving corporation) another Person, or (ii) sell,
assign,
transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company to another Person, or (iii) allow
another Person to make a purchase, tender or exchange offer that is accepted
by
the holders of more than the 50% of either the outstanding Ordinary Shares
(not
including any Ordinary Shares held by the Person or Persons making or party
to,
or associated or affiliated with the Persons making or party to, such purchase,
tender or exchange offer), or (iv) consummate a stock purchase agreement
or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person
whereby
such other Person acquires more than the 50% of the outstanding Ordinary
Shares
(not including any Ordinary Shares held by the other Person or other Persons
making or party to, or associated or affiliated with the other Persons making
or
party to, such stock purchase agreement or other business combination), or
(v) reorganize, recapitalize or reclassify its Ordinary
Shares.
(l) “Options”
means
any rights, warrants or options to subscribe for or purchase ADRs, Ordinary
Shares or Convertible Securities.
(m) “Ordinary
Shares”
means
(i) the Company’s ordinary shares of common stock, no par value per share,
and (ii) any share capital into which such Ordinary Shares shall have
been
changed or any share capital resulting from a reclassification of such Ordinary
Shares.
(n) “Ordinary
Shares Deemed Outstanding”
means,
at any given time, the number of shares of Ordinary Shares actually outstanding
at such time (directly or indirectly through ADRs or otherwise), plus the
number
of Ordinary Shares deemed to be outstanding pursuant to Sections 2(a)(i)
and
2(a)(ii) hereof regardless of whether the Options or Convertible Securities
are
actually exercisable at such time, but excluding any Ordinary Shares owned
or
held by or for the account of the Company or issuable upon conversion and
exercise, as applicable, of the SPA Securities and the Warrants.
(o) “Parent
Entity”
of a
Person means an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is quoted or
listed
on an Eligible Market, or, if there is more than one such Person or Parent
Entity, the Person or Parent Entity with the largest public market
capitalization as of the date of consummation of the Fundamental
Transaction.
-13-
(p) “Person”
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization, any other entity and
a
government or any department or agency thereof.
(q) “Principal
Market”
means
the Nasdaq National Market.
(r) “Registration
Rights Agreement”
means
that certain registration rights agreement by and among the Company and the
Buyers.
(s) “Required
Holders”
means
the holders of the SPA Warrants representing at least a majority of Warrant
Shares underlying the SPA Warrants then outstanding.
(t) “SPA
Securities”
means
the Notes issued pursuant to the Securities Purchase Agreement.
(u) “Successor
Entity”
means
the Person, which may be the Company, formed by, resulting from or surviving
any
Fundamental Transaction or the Person with which such Fundamental Transaction
shall have been made, provided that if such Person is not a publicly traded
entity whose common stock or equivalent equity security is quoted or listed
for
trading on an Eligible Market, Successor Entity shall mean such Person’s Parent
Entity.
(v) “Trading
Day”
means
any day on which the ADRs are traded on the Principal Market, or, if the
Principal Market is not the principal trading market for the ADRs, then on
the
principal securities exchange or securities market on which the ADRs are
then
traded; provided that “Trading Day” shall not include any day on which the ADRs
are scheduled to trade on such exchange or market for less than 4.5 hours
or any
day that the ADRs are suspended from trading during the final hour of trading
on
such exchange or market (or if such exchange or market does not designate
in
advance the closing time of trading on such exchange or market, then during
the
hour ending at 4:00:00 p.m., New York Time).
(w) “Transaction
Documents”
has the
meaning set forth in the Securities Purchase Agreement.
[Signature
Page Follows]
-14-
IN
WITNESS WHEREOF,
the
Company has caused this Warrant to Purchase ADRs to be duly executed as of
the
Issuance Date set out above.
| pSIVIDA LIMITED | ||
| |
|
|
| By: | ||
|
|
||
|
Name:
Gavin Rezos
Title: Managing
Director
|
||
-15-
EXHIBIT
99.4
Form
of Registration Rights Agreement
FORM
REGISTRATION
RIGHTS AGREEMENT
REGISTRATION
RIGHTS AGREEMENT (this "Agreement"),
dated
as of November 15, 2005,
by
and among pSivida
Limited, an
Australian corporation, with headquarters located at Level 12 BGC Centre,
28 The
Esplanade, Perth Australia 6000 (the "Company"),
and
the undersigned buyers (each, a "Buyer"
and
collectively, the "Buyers").
WHEREAS:
A. In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the "Securities
Purchase Agreement"),
the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Buyers an aggregate
of
(i) $15 million in principal amount of convertible notes (the "Notes")
which
will be convertible into ADRs (as defined hereinafter) (the "Conversion
Shares"),
in
accordance with the terms of the Notes and (ii) warrants (the "Warrants")
which
will be exercisable to purchase ADRs (as exercised, the "Warrant
Shares").
B. To
induce
the Buyers to execute and deliver the Securities Purchase Agreement, the
Company
has agreed to provide certain registration rights under the Securities Act
of
1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the "1933
Act"),
and
applicable state securities laws.
C. To
further induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed that in the event that a Registration Event
(as defined in the Warrants) occurs, the Company shall, at the request of
the
Required Holders (as defined below), register (a "Subsequent
Registration")
the
Warrant Shares underlying any outstanding Warrants.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the Company and each of the Buyers hereby
agree
as follows:
1. Definitions.
As
used
in this Agreement, the following terms shall have the following
meanings:
a. "ADRs"
means
the American Depositary Receipts of the Company evidencing the American
Depositary Shares of the Company which each represent ten (10) ordinary shares
of the Company ("Ordinary
Shares").
b. "Business
Day"
means
any day other than Saturday, Sunday or any other day on which commercial
banks
in The City of New York, State of New York, U.S. A. or Perth, Australia are
authorized or required by law to remain closed.
c. "Closing
Date"
shall
have the meaning set forth in the Securities Purchase Agreement.
d. "Effective
Date"
means,
with respect to the Initial Registration Statement or a Subsequent Registration
Statement, the date such Registration Statement has been declared effective
by
the SEC.
e. "Effectiveness
Deadline"
means
the Initial Effectiveness Deadline (as defined below) and the Subsequent
Effectiveness Deadline (as defined below), as applicable.
f. "Initial Effectiveness
Deadline"
means
the date which is 180 days after the date of this Agreement.
g. "Initial Registrable
Securities"
means
(i) the Conversion Shares, (ii) the Warrant Shares, (iii) any Interest
Shares (as defined in the Notes) issued or issuable under the Notes and
(iv) any shares of capital stock issued or issuable with respect to
the
Conversion Shares, the Interest Shares, the Warrant Shares, the Notes and
the
Warrants, as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitations
on
conversions of the Notes or exercises of the Warrants.
h. "Initial Required
Registration Amount"
means
(i) 130% of the number of Conversion Shares issued and issuable as of the
Trading Day immediately preceding the applicable date of determination, (ii)
130% of the number of Warrant Shares issued and issuable pursuant to the
Warrants as of the Trading Day immediately preceding the applicable date
of
determination, in each case subject to adjustment as provided in Section
2(f)
and (iii) 100% of the Interest Shares paid by the Company.
i. "Investor"
means a
Buyer, any transferee or assignee thereof to whom a Buyer assigns its rights
under this Agreement and who agrees to become bound by the provisions of
this
Agreement in accordance with Section 9 and any transferee or assignee thereof
to
whom a transferee or assignee assigns its rights under this Agreement and
who
agrees to become bound by the provisions of this Agreement in accordance
with
Section 9.
j. "Person"
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or
any
department or agency thereof.
k. "register,"
"registered,"
and
"registration"
refer
to a registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 and the
declaration or ordering of effectiveness of such Registration Statement(s)
by
the SEC.
l. "Registrable
Securities"
means
the Initial Registrable Securities and the Subsequent Registrable
Securities.
m. "Registration
Statement"
means a
registration statement or registration statements of the Company filed under
the
1933 Act covering the Registrable Securities.
n. "Required
Holders"
means
the holders of at least a majority of the Registrable Securities.
o. "Required
Registration Amount"
means
with respect to an Initial Registration Statement, the Initial Required
Registration Amount, and, with respect to a Subsequent Registration Statement,
the Subsequent Required Registration Amount.
p. "Rule
415"
means
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis.
q. "Subsequent
Filing Deadline"
means
30 days after the date of receipt by the Company of a Subsequent Registration
Request.
r. "Subsequent
Effectiveness Deadline"
means
120 days after the date of receipt by the Company of a Subsequent Registration
Request.
s. "Subsequent
Registrable Securities"
means,
after the second anniversary of the Issuance Date, the Warrant Shares issued
and
issuable in connection with the Warrants, provided that there shall have
occurred a Registration Event.
t. “Subsequent
Registration Request”
means a
request to the Company from a Holder of Warrants for a Subsequent Registration
of Subsequent Registrable Securities, which Subsequent Registration Request
has
been sent to and received by the Company within 30 days of the Registration
Event to which it relates.
u. "Subsequent
Registration Statement"
means a
registration statement or registration statements of the Company filed under
the
1933 Act covering any Subsequent Registrable Securities.
v. "Subsequent
Required Registration Amount"
means
130% of the number of Warrant Shares issued and issuable pursuant to the
Warrant
as of the Trading Day immediately preceding the applicable date of determination
which have not previously been sold pursuant to an effective registration
statement, without restriction pursuant to Rule 144(k) or on the ASX, subject
to
adjustment as provided in Section 2(f).
w. "SEC"
means
the United States Securities and Exchange Commission.
x. "Trading
Day"
means
any day on which the ADRs are traded on the Nasdaq National Market, or, if
the
Nasdaq National Market is not the principal trading market for the ADRs,
then on
the principal securities exchange or securities market on which the ADRs
are
then traded; provided that "Trading Day" shall not include any day on which
the
ADRs are scheduled to trade on such exchange or market for less than 4.5
hours
or any day that the ADRs are suspended from trading during the final hour
of
trading on such exchange or market (or if such exchange or market does not
designate in advance the closing time of trading on such exchange or market,
then during the hour ending at 4:00:00 p.m., New York Time).
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement. In the event that
the
Company’s Board of Directors should determine that the Company shall transform
itself (whether by re-incorporation in the United States or otherwise) from
a
foreign private issuer (as defined in the Securities Act of 1933, as amended)
,
all references to ADRs shall be deemed references to the securities that
are
substituted for the ADRs with equitable adjustment of the provisions of this
Agreement for such substituted securities.
2. Registration.
a. Initial
Mandatory Registration.
The
Company shall prepare, and, as soon as practicable, file with the SEC the
Initial Registration Statement on Form F-3 or Form S-3 covering the resale
of
all of the Initial Registrable Securities. In the event that Form F-3 or
Form
S-3 is unavailable for such a registration, the Company shall use Form F-1
or
Form S-1, as applicable, subject to the provisions of Section 2(e). The Initial
Registration Statement prepared pursuant hereto shall register for resale
at
least the number of ADRs equal to the Initial Required Registration Amount
as of
the date the Initial Registration Statement is initially filed with the SEC.
The
Initial Registration Statement shall contain (except if otherwise directed
by
the Required Holders) the "Selling
Shareholders"
and
"Plan
of Distribution"
sections in substantially the form attached hereto as Exhibit
B,
with
such changes as may be appropriate to reflect the inclusion of other permissible
securities of the Company and other changes which may be necessary or
appropriate. The Company shall use its reasonable best efforts to have the
Initial Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the Initial Effectiveness
Deadline.
b. Subsequent
Mandatory Registrations.
The
Company shall, after the occurrence of a Registration Event and upon receipt
of
a Subsequent Registration Request, prepare, and, as soon as practicable but
in
no event later that the Subsequent Filing Deadline, file with the SEC a
Subsequent Registration Statement on Form SB-2 or Form S-3 covering the resale
of all of the Subsequent Registrable Securities. In the event that Form SB-2
or
Form S-3 is unavailable for such a registration, the Company shall use such
other form as is available for such a registration on another appropriate
form
reasonably acceptable to the Required Holders, subject to the provisions
of
Section 2(e). Each Subsequent Registration Statement prepared pursuant hereto
shall register for resale at least that number of ADRs equal to the Subsequent
Required Registration Amount as of the date such Registration Statement is
initially filed with the SEC. Each Subsequent Registration Statement shall
contain (except if otherwise directed by the Required Holders) the "Selling
Shareholders" and "Plan of Distribution" sections in substantially the form
attached hereto as Exhibit B, with such changes as may be necessary or
appropriate. The Company shall use its reasonable best efforts to have each
Subsequent Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the applicable Subsequent Effectiveness
Deadline.
c. Allocation
of Registrable Securities.
The
initial number of Registrable Securities included in any Registration Statement
and any increase in the number of Registrable Securities included therein
shall
be allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement covering
such initial number of Registrable Securities or increase thereof is declared
effective by the SEC. In the event that an Investor sells or otherwise transfers
any of such Investor's Registrable Securities, each transferee shall be
allocated a pro rata portion of the then remaining number of Registrable
Securities included in such Registration Statement for such transferor. Any
ADRs
included in a Registration Statement and which remain allocated to any Person
which ceases to hold any Registrable Securities covered by such Registration
Statement shall be allocated to the remaining Investors, pro rata based on
the
number of Registrable Securities then held by such Investors which are covered
by such Registration Statement. Other than as permitted by Section 4(k) of
the
Securities Purchase Agreement, in no event shall the Company include any
securities other than Registrable Securities on any Registration Statement
without the prior written consent of the Required Holders.
d. Legal
Counsel.
Subject
to Section 5 hereof, the Required Holders shall have the right to select
one
legal counsel to review and oversee any registration pursuant to this Section
2,
which shall be Schulte Roth & Zabel LLP or such other counsel as is
thereafter designated in writing by the Required Holders prior to the initiation
of such other legal counsel's review and oversight of any registration
("Legal
Counsel").
The
Company and Legal Counsel shall reasonably cooperate with each other in
performing the Company's obligations under this Agreement.
e. Ineligibility
for Form F-3 or Form S-3.
In the
event that Form F-3 or Form S-3 is not available for the registration of
the
resale of Registrable Securities hereunder, the Company shall (i) register
the
resale of the Registrable Securities on another appropriate form reasonably
acceptable to the Required Holders and (ii) undertake to register the
Registrable Securities on Form F-3 or Form S-3 as soon as such form is
available, provided that the Company shall maintain the effectiveness of
the
Registration Statement then in effect until such time as a Registration
Statement on Form F-3 or Form S-3 covering the Registrable Securities has
been
declared effective by the SEC.
f. Sufficient
Number of ADRs Registered.
In the
event the number of ADRs available under a Registration Statement filed pursuant
to Section 2(a) is insufficient to cover all of the Registrable Securities
required to be covered by such Registration Statement or an Investor's allocated
portion of the Registrable Securities pursuant to Section 2(c), the Company
shall amend the applicable Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or both,
so as
to cover at least the Required Registration Amount, but as of the Trading
Day
immediately preceding the date of the filing of such amendment or new
Registration Statement, in each case, as soon as practicable, but in any
event
not later than fifteen (15) Business Days after the necessity therefor arises.
The Company shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following
the
filing thereof. For purposes of the foregoing provision, the number of ADRs
available under a Registration Statement shall be deemed "insufficient to
cover
all of the Registrable Securities" if at any time the number of ADRs available
for resale under the Registration Statement is less than the product determined
by multiplying (i) the Required Registration Amount by (ii) 0.90. The
calculation set forth in the foregoing sentence shall be made without regard
to
any limitations on the conversion of the Notes or the exercise of the Warrants
and such calculation shall assume that the Notes and the Warrants are then
convertible into ADRs and are issuable at the then prevailing Interest
Conversion Price (as defined in the Notes), Conversion Rate (as defined in
the
Notes) or Exercise Price (as defined in the Warrants), as
applicable.
g. Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement.
If (i)
a Registration Statement covering all of the Registrable Securities required
to
be covered thereby and required to be filed by the Company pursuant to this
Agreement is not (A) with respect to a Subsequent Registration Statement,
filed
with the SEC on or before the Subsequent Filing Deadline (a "Filing
Failure")
or (B)
declared effective by the SEC on or before the respective Effectiveness Deadline
(an "Effectiveness
Failure")
or
(ii) on any day after the Effective Date (A) sales of all of the Registrable
Securities required to be included on such Registration Statement cannot
be made
(other than during an Allowable Grace Period (as defined in Section 3(r))
pursuant to such Registration Statement (including, without limitation, because
of a failure to keep such Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to such Registration
Statement or to register a sufficient number of ADRs), (B) the Registrable
Securities are not listed or included for quotation on an Eligible Market
(as
defined in the Notes) or trading of the ADRs is suspended or halted thereon
(other than during an Allowable Trading Grace Period) (each, a "Maintenance
Failure"),
then,
as partial relief for the damages to any holder by reason of any such delay
in
or reduction of its ability to sell the ADRs (which remedy shall not be
exclusive of any other remedies available at law or in equity), the Company
shall pay to each holder of Registrable Securities relating to such Registration
Statement an amount in cash equal to one and one half percent (1.5%) of the
aggregate Purchase Price of such Investor's Registrable Securities included
in
such Registration Statement on each of the following dates: (A) every thirtieth
day (pro rated for periods totaling less than thirty days) after a Filing
Failure until such Filing Failure is cured; (B) every thirtieth day (pro
rated
for periods totaling less than thirty days) from the date of an Effectiveness
Failure until such Effectiveness Failure is cured and (C) every thirtieth
day
(pro rated for periods totaling less than thirty days) from the date of a
Maintenance Failure until such Maintenance Failure is cured. The payments
to
which a holder shall be entitled pursuant to this Section 2(g) are referred
to
herein as "Registration
Delay Payments."
Registration Delay Payments shall be paid on the earlier of (I) the last
day of
the calendar month during which such Registration Delay Payments are incurred
and (II) the fifth Business Day after the event or failure giving rise to
the
Registration Delay Payments is cured. In the event the Company fails to make
Registration Delay Payments in a timely manner, such Registration Delay Payments
shall bear interest at the rate of 1.0% per month (prorated for partial months)
until paid in full.
3. Related
Obligations.
At
such
time as the Company is obligated to file a Registration Statement with the
SEC
pursuant to Section 2(a), 2(b) or 2(f), the Company will use its reasonable
best
efforts to effect the registration of the Registrable Securities consistent
with
the Plan of Distribution and, pursuant thereto, the Company shall have the
following obligations:
a. The
Company shall promptly prepare and file with the SEC a Registration Statement
with respect to the Registrable Securities and use its reasonable best efforts
to cause such Registration Statement relating to the Registrable Securities
to
become effective as soon as practicable after such filing (but in no event
later
than the Effectiveness Deadline). The Company shall keep each Registration
Statement effective pursuant to Rule 415 at all times until the earlier of
(i)
the date as of which the Investors may sell all of the Registrable Securities
covered by such Registration Statement without restriction pursuant to Rule
144(k) (or successor thereto) promulgated under the 1933 Act or (ii) the
date on
which the Investors shall have sold all the Registrable Securities covered
by
such Registration Statement (the "Registration
Period"),
which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of
a
material fact or omit to state a material fact required to be stated therein,
or
necessary to make the statements therein, in the light of the circumstances
in
which they were made, not misleading. The term "best efforts" shall mean,
among
other things, that the Company shall submit to the SEC, within four (4) Business
Days after the later of the date that (i) Company learns that no review of
a
particular Registration Statement will be made by the staff of the SEC or
that
the staff has no further comments on the Registration Statement, as the case
may
be, and (ii) the approval of Legal Counsel pursuant to Section 3(c) (which
approval is immediately sought), a request for acceleration of effectiveness
of
such Registration Statement to a time and date not later than 48 hours after
the
submission of such request.
b. The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and
the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
be
necessary to keep such Registration Statement effective at all times during
the
Registration Period, subject to Allowable Grace Periods, and, during such
period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company filing
a
report on Form 10-K or 10-KSB, as applicable, Form 10-Q or 10-QSB, as
applicable, or Form 8-K or any analogous report under the Securities Exchange
Act of 1934, as amended (the "1934
Act"),
the
Company shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with
the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement such Registration
Statement.
c. The
Company shall (A) permit Legal Counsel to review and comment upon (i) a
Registration Statement at least five (5) Business Days prior to its filing
with
the SEC and (ii) all amendments and supplements to all Registration Statements
(except for reports incorporated by reference therein) within a reasonable
number of days prior to their filing with the SEC, and (B) not file any
Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel reasonably objects. The Company shall not submit a request
for
acceleration of the effectiveness of a Registration Statement or any amendment
or supplement thereto without the prior approval of Legal Counsel, which
consent
shall not be unreasonably withheld. The Company shall furnish to Legal Counsel,
without charge, (i) copies of any correspondence from the SEC or the staff
of
the SEC to the Company or its representatives relating to any Registration
Statement, (ii) promptly after the same is prepared and filed with the SEC,
one
copy of any Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference, if requested by an Investor, and all exhibits and (iii) upon the
effectiveness of any Registration Statement, one copy of the prospectus included
in such Registration Statement and all amendments and supplements thereto.
The
Company shall reasonably cooperate with Legal Counsel in performing the
Company's obligations pursuant to this Section 3.
d. The
Company shall furnish to each Investor whose Registrable Securities are included
in any Registration Statement, without charge, (i) promptly after the same
is
prepared and filed with the SEC, at least one copy of such Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested
by an
Investor, all exhibits and each preliminary prospectus, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably request)
and (iii) such other documents, including copies of any preliminary or final
prospectus, as such Investor may reasonably request from time to time in
order
to facilitate the disposition of the Registrable Securities owned by such
Investor.
e. The
Company shall use its reasonable best efforts to (i) register and qualify,
unless an exemption from registration and qualification applies, the resale
by
Investors of the Registrable Securities covered by a Registration Statement
under such other securities or "blue sky" laws of all applicable jurisdictions
in the United States, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications
in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall
not be
required in connection therewith or as a condition thereto to (x) qualify
to do
business in any jurisdiction where it would not otherwise be required to
qualify
but for this Section 3(e), (y) subject itself to general taxation in any
such
jurisdiction, or (z) file a general consent to service of process in any
such
jurisdiction. The Company shall promptly notify Legal Counsel and each Investor
who holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "blue
sky"
laws of any jurisdiction in the United States or its receipt of actual notice
of
the initiation or threatening of any proceeding for such purpose.
f. The
Company shall notify Legal Counsel and each Investor in writing, of the
happening of any event, as promptly as practicable after becoming aware of
such
event, as a result of which the prospectus included in a Registration Statement,
as then in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to make
the
statements therein, in light of the circumstances under which they were made,
not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and, subject to Section 3(r), promptly
prepare
a supplement or amendment to such Registration Statement to correct such
untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to Legal Counsel and each Investor (or such other number of copies
as
Legal Counsel or such Investor may reasonably request). The Company shall
also
promptly notify Legal Counsel and each Investor in writing, (i) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment
has
become effective (notification of such effectiveness shall be delivered to
Legal
Counsel and each Investor by facsimile or e-mail on the same day of such
effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus
or
related information, and (iii) of the Company's reasonable determination
that a
post-effective amendment to a Registration Statement would be
appropriate.
g. The
Company shall use its reasonable best efforts to prevent the issuance of
any
stop order or other suspension of effectiveness of a Registration Statement,
or
the suspension of the qualification of any of the Registrable Securities
for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify Legal Counsel and each Investor who holds Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
h. If
any
Investor is required under applicable securities law to be described in the
Registration Statement as an underwriter, at the reasonable request of any
Investor, the Company shall furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time
on
such dates as an Investor may reasonably request (i) a letter, dated such
date,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants
to
underwriters in an underwritten public offering, addressed to the Investors,
and
(ii) an opinion, dated as of such date, of counsel representing the Company
for
purposes of such Registration Statement, in form, scope and substance as
is
customarily given in an underwritten public offering, addressed to the
Investors.
i. The
Company shall make available for inspection by (i) any Investor, (ii) Legal
Counsel and (iii) one firm of accountants or other agents retained by the
Investors (collectively, the "Inspectors"),
all
pertinent financial and other records, and pertinent corporate documents
and
properties of the Company (collectively, the "Records"),
as
shall be necessary and reasonably requested by each Inspector, and cause
the
Company's officers, directors and employees, counsel and the Company's
independent certified public accountants to supply all information which
may be
necessary and any Inspector may reasonably request; provided, however, that
each
Inspector shall agree to hold in strict confidence and shall not make any
disclosure (except to an Investor) or use of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, and such inspector executes
any
non-disclosure, non-use or similar document which may be reasonably required
by
Company, its independent certified public accountants or its counsel (and
upon
execution of which the Company shall not be deemed to be in violation of
its
agreement not to provide to such Investor any material, nonpublic information
or
to publicly disclose such information) unless (a) the disclosure of such
Records
is necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release of
such
Records is ordered pursuant to a final, non-appealable subpoena or order
from a
court or government body of competent jurisdiction, or (c) the information
in
such Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement of which the Inspector
has knowledge. Each Investor agrees that it shall, upon learning that disclosure
of such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and
allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality agreement between
the Company and any Investor) shall be deemed to limit the Investors' ability
to
sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
j. The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws,
(ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release
of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available
to the
public other than by disclosure in violation of this Agreement or any other
agreement of which the Company has knowledge. The Company agrees that it
shall,
upon learning that disclosure of such information concerning an Investor
is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to such Investor and allow
such
Investor, at the Investor's expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such
information.
k. The
Company shall use its reasonable best efforts either to (i) cause all the
Registrable Securities covered by a Registration Statement to be listed on
each
securities exchange on which securities of the same class or series issued
by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of all the Registrable Securities covered by the
Registration Statement on the Nasdaq National Market, or (iii) if, despite
the
Company's best efforts to satisfy the preceding clause (i) or (ii), the Company
is unsuccessful in satisfying the preceding clause (i) or (ii), to secure
the
inclusion for quotation on The Nasdaq SmallCap Market for such Registrable
Securities and, without limiting the generality of the foregoing, to use
its
best efforts to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD")
as
such with respect to such Registrable Securities. The Company shall pay all
fees
and expenses in connection with satisfying its obligation under this Section
3(k).
l. The
Company shall cooperate with the Investors who hold Registrable Securities
being
offered and, to the extent applicable, facilitate the timely preparation
and
delivery of certificates (not bearing any restrictive legend) representing
the
Registrable Securities to be offered pursuant to a Registration Statement
and
enable such certificates to be in such denominations or amounts, as the case
may
be, as the Investors may reasonably request and registered in such names
as the
Investors may request.
m. If
reasonably requested by an Investor, the Company shall as soon as reasonably
practicable (i) incorporate in a prospectus supplement or post-effective
amendment such information as an Investor reasonably requests to be included
therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of
Registrable Securities being offered or sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities
to be
sold in such offering; and (ii) make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters
to be
incorporated in such prospectus supplement or post-effective amendment if
reasonably requested by an Investor holding any Registrable
Securities.
n. The
Company shall use its reasonable best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to consummate the disposition of such Registrable Securities.
o. The
Company shall make generally available to its security holders as soon as
practical, but not later than one hundred eighty (180) days after the close
of
the period covered thereby, an earnings statement (in form complying with
the
provisions of Rule 158 under the 1933 Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement.
p. The
Company shall otherwise use its best efforts to comply with all applicable
rules
and regulations of the SEC in connection with any registration
hereunder.
q. Within
three (3) Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall
cause legal counsel for the Company to deliver, to the transfer agent for
such
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that
such
Registration Statement has been declared effective by the SEC substantially
in
the form attached hereto as Exhibit
A.
r. Notwithstanding
anything to the contrary herein, the Company may delay, including by delaying
the filing of a Registration Statement, the disclosure of material, non-public
information concerning the Company the disclosure of which at the time is
not,
in the good faith opinion of the Board of Directors of the Company and its
counsel, in the best interest of the Company and, in the opinion of counsel
to
the Company, otherwise required (a "Grace
Period")
and,
as applicable, suspend sales of Registered Securities under an effective
Registration Statement; provided, that the Company shall promptly (i) notify
the
Investors in writing of the existence of material, non-public information
giving
rise to a Grace Period (provided that in each notice the Company will not
disclose the content of such material, non-public information to the Investors)
and the date on which the Grace Period will begin, and (ii) notify the Investors
in writing of the date on which the Grace Period ends; and, provided further,
that no Grace Period shall exceed 15 consecutive days and during any 365
day
period such Grace Periods shall not exceed an aggregate of 45 days and the
first
day of any Grace Period must be at least 2 Trading Days after the last day
of
any prior Grace Period (an "Allowable
Grace Period").
For
purposes of determining the length of a Grace Period above, the Grace Period
shall begin on and include the date the holders receive the notice referred
to
in clause (i) and shall end on and include the later of the date the holders
receive the notice referred to in clause (ii) and the date referred to in
such
notice. The provisions of Sections 2(f) and 3(e) hereof shall not be applicable
during the period of any Allowable Grace Period. Upon expiration of the Grace
Period, the Company shall again be bound by the first sentence of Section
3(f)
with respect to the information giving rise thereto unless such material
non-public information is no longer applicable. Notwithstanding anything
to the
contrary, the Company shall cause its transfer agent to deliver unlegended
certificates for ADRs to a transferee of an Investor in accordance with the
terms of the Securities Purchase Agreement in connection with any sale of
Registrable Securities with respect to which an Investor has entered into
a
contract for sale, and delivered a copy of the prospectus included as part
of
the applicable Registration Statement, prior to the Investor's receipt of
the
notice of a Grace Period and for which the Investor has not yet settled.
Notwithstanding
anything to the contrary herein, the Company may suspend trading of its equity
securities on the applicable Eligible Market on which its equity securities
are
then trading, due to the existence of material, non-public information
concerning the Company the disclosure of which at the time is not, in the
good
faith opinion of the Board of Directors of the Company and its counsel, in
the
best interest of the Company (a "Trading
Grace Period");
provided, that the Company shall promptly (i) notify the Investors in writing
of
the existence of such suspension (provided that in each notice the Company
will
not disclose the content of any material, non-public information to the
Investors) and the date on which the Trading Grace Period will begin, and
(ii)
notify the Investors in writing of the date on which the Trading Grace Period
ends; and, provided further, that no Trading Grace Period shall exceed 5
consecutive days and during any 365 day period such Trading Grace Periods
shall
not exceed an aggregate of 15 days and the first day of any Trading Grace
Period
must be at least 2 Trading Days after the last day of any prior Trading Grace
Period (an "Allowable
Grace Trading Period").
For
purposes of determining the length of a Trading Grace Period above, the Trading
Grace Period shall begin on and include the date the holders receive the
notice
referred to in clause (i) and shall end on and include the later of the date
the
holders receive the notice referred to in clause (ii) and the date referred
to
in such notice. The provisions of Sections 2(f) hereof shall not be applicable
during the period of any Allowable Trading Grace Period.
4. Obligations
of the Investors.
a. At
least
five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify each Investor in writing
of the
information the Company requires from each such Investor if such Investor
elects
to have any of such Investor's Registrable Securities included in such
Registration Statement. It shall be a condition precedent to the obligations
of
the Company to complete the registration pursuant to this Agreement with
respect
to the Registrable Securities of a particular Investor that such Investor
shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect and maintain
the effectiveness of the registration of such Registrable Securities and
shall
execute such documents in connection with such registration as the Company
may
reasonably request.
b. Each
Investor, by such Investor's acceptance of the Registrable Securities, agrees
to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder,
unless
such Investor has notified the Company in writing of such Investor's election
to
exclude all of such Investor's Registrable Securities from such Registration
Statement.
c. Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first
sentence of 3(f), such Investor will immediately discontinue disposition
of
Registrable Securities pursuant to any Registration Statement(s) covering
such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or the first
sentence of 3(f) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary, the Company shall cause
its
transfer agent to deliver unlegended certificates for ADRs to a transferee
of an
Investor in accordance with the terms of the Securities Purchase Agreement
in
connection with any sale of Registrable Securities with respect to which
an
Investor has entered into a contract for sale prior to the Investor's receipt
of
a notice from the Company of the happening of any event of the kind described
in
Section 3(g) or the first sentence of 3(f) and for which the Investor has
not
yet settled.
d. Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it in connection with sales
of
Registrable Securities pursuant to the Registration Statement.
5. Expenses
Of Registration.
All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements
of
counsel for the Company shall be paid by the Company. The Company shall also
reimburse Castlerigg Master Investments Ltd. for the fees and disbursements
of
Legal Counsel incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3 of this Agreement which amount
shall
be limited to $10,000 in the aggregate.
6. Indemnification.
In
the
event any Registrable Securities are included in a Registration Statement
under
this Agreement:
a. To
the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Investor, the directors, officers, partners,
members, employees, agents, representatives of, and each Person, if any,
who
controls any Investor within the meaning of the 1933 Act or the 1934 Act
(each,
an "Indemnified
Person"),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys' fees, amounts paid in settlement or
expenses, joint or several, (collectively, "Claims")
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by
or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified
Damages"),
to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of
or are based upon: (i) any untrue statement or alleged untrue statement of
a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other "blue sky" laws of any jurisdiction
in
which Registrable Securities are offered ("Blue
Sky Filing"),
or
the omission or alleged omission to state a material fact required to be
stated
therein or necessary to make the statements therein not misleading, (ii)
any
untrue statement or alleged untrue statement of a material fact contained
in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,
if
the Company files any amendment thereof or supplement thereto with the SEC)
or
the omission or alleged omission to state therein any material fact necessary
to
make the statements made therein, in light of the circumstances under which
the
statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any material violation
of this Agreement (the matters in the foregoing clauses (i) through (iv)
being,
collectively, "Violations").
Subject to Section 6(c), the Company shall reimburse the Indemnified Persons,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified
Person
for such Indemnified Person expressly for use in connection with the preparation
of the Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company pursuant
to
Section 3(d); (ii) with respect to any preliminary prospectus, shall not
inure
to the benefit of any such person from whom the person asserting any such
Claim
purchased the Registrable Securities that are the subject thereof (or to
the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(d), and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a Violation and such Indemnified
Person, notwithstanding such advice, used it or failed to deliver the correct
prospectus as required by the 1933 Act and such correct prospectus was timely
made available pursuant to Section 3(d); (iii) shall not be available to
the
extent such Claim is based on a failure of the Investor to deliver or to
cause
to be delivered the prospectus made available by the Company, including a
corrected prospectus, if such prospectus or corrected prospectus was timely
made
available by the Company pursuant to Section 3(d); and (iv) shall not apply
to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Such indemnity shall remain in full force
and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9.
b. In
connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is
set
forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement and each Person, if any, who controls
the
Company within the meaning of the 1933 Act or the 1934 Act (each, an
"Indemnified
Party"),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
or
Indemnified Damages arise out of or are based upon any Violation, in each
case
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company
by such
Investor expressly for use in connection with such Registration Statement;
and,
subject to Section 6(c), such Investor will reimburse any legal or other
expenses reasonably incurred by an Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior
written
consent of such Investor, which consent shall not be unreasonably withheld
or
delayed; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages
as does
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made
by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any preliminary prospectus
shall
not inure to the benefit of any Indemnified Party if the untrue statement
or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or
supplemented.
c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any
indemnifying party under this Section 6, deliver to the indemnifying party
a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed, to
assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as
the
case may be; provided, however, that an Indemnified Person or Indemnified
Party
shall have the right to retain its own counsel with the fees and expenses
of not
more than one counsel for such Indemnified Person or Indemnified Party to
be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of
the
Indemnified Person or Indemnified Party and the indemnifying party would
be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by
such
counsel in such proceeding. In the case of an Indemnified Person, legal counsel
referred to in the immediately preceding sentence shall be selected by the
Required Holders to which the Claim relates. The Indemnified Party or
Indemnified Person shall cooperate reasonably with the indemnifying party
in
connection with any negotiation or defense of any such action or Claim by
the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or Claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to
the
status of the defense or any settlement negotiations with respect thereto.
No
indemnifying party shall be liable for any settlement of any action, claim
or
proceeding effected without its prior written consent, provided, however,
that
the indemnifying party shall not unreasonably withhold, delay or condition
its
consent. No indemnifying party shall, without the prior written consent of
the
Indemnified Party or Indemnified Person, consent to entry of any judgment
or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim or litigation. Following indemnification as provided
for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties,
firms
or corporations relating to the matter for which indemnification has been
made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve
such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party
is
prejudiced in its ability to defend such action.
d. The
indemnification required by this Section 6 shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as
and
when Indemnified Damages are incurred and applicable bills are
received.
e. The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
f. Nothing
herein shall the right of any party to this Agreement to bring a contractual
claim against any other party to this Agreement for a breach of this
Agreement.
7. Contribution.
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with
respect
to any amounts for which it would otherwise be liable under Section 6 to
the
fullest extent permitted by law; provided, however, that: (i) no person involved
in the sale of Registrable Securities which person is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in
connection with such sale shall be entitled to contribution from any person
involved in such sale of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such
seller
from the sale of such Registrable Securities pursuant to such Registration
Statement.
8. Reports
Under The 1934 Act.
Until
the
date on which (A) the Investors shall have sold all the Conversion Shares
and
the Warrant Shares and (B) none of the Notes or Warrants is outstanding,
with a
view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that
may
at any time permit the Investors to sell securities of the Company to the
public
without registration ("Rule
144"),
the
Company agrees to:
a. make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
b. file
with
the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements (it being understood that nothing herein shall
limit the Company's obligations under Section 4(c) of the Securities Purchase
Agreement) and the filing of such reports and other documents is required
for
the applicable provisions of Rule 144; and
c. furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company, if true, that it has
complied with the reporting requirements of Rule 144, the 1933 Act and the
1934
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, to the extent
not
available on EDGAR, and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities pursuant to Rule
144
without registration.
9. Assignment
of Registration Rights.
The
rights under this Agreement shall be automatically assignable by the Investors
to any transferee of Registrable Securities if: (i) the Investor agrees in
writing with the transferee or assignee to assign such rights, and a copy
of
such agreement is furnished to the Company within three (3) Business Days
after
such assignment; (ii) the Company is, within three (3) Business Days after
such
transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect
to
which such registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further disposition
of
such securities by the transferee or assignee is restricted under the 1933
Act
and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence
the
transferee or assignee agrees in writing with the Company to be bound by
all of
the provisions contained herein; and (v) such transfer shall have been made
in
accordance with the applicable requirements of the Securities Purchase
Agreement.
10. Amendment
of Registration Rights.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Holders. Any amendment or waiver effected in accordance with this Section
10
shall be binding upon each Investor and the Company. No such amendment shall
be
effective to the extent that it applies to less than all of the holders of
the
Registrable Securities. No consideration shall be offered or paid to any
Person
to amend or consent to a waiver or modification of any provision of any of
this
Agreement unless the same consideration also is offered to all of the parties
to
this Agreement.
11. Miscellaneous.
a. A
Person
is deemed to be a holder of Registrable Securities whenever such Person owns
or
is deemed to own of record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, the Company shall act upon the
basis
of instructions, notice or election received from the such record owner of
such
Registrable Securities.
b. Any
notices, consents, waivers or other communications required or permitted
to be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending
party);
or (iii) one Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive
the
same. The addresses and facsimile numbers for such communications shall
be:
If
to the
Company:
pSivida
Limited.
Level
12,
BGC Centre
28
The
Esplanade, Perth
WA
6000
Australia
Telephone: 61
8 9226
5099
Facsimile: 61
8 9226
5499
Attention: Gavin
Rezos, Managing Director
With
a
copy (which shall not constitute notice) to:
Curtis,
Mallet-Prevost, Colt & Mosle LLP
101
Park
Avenue
New
York,
N.Y. 10178
U.S.A.
Telephone: 212-696-6000
Facsimile: 212-697-1559
Attention: Lawrence
Goodman, Esq.
Peter Stewart, Esq.
If
to
Legal Counsel:
Schulte
Roth & Zabel LLP
919
Third
Avenue
New
York,
New York 10022
Telephone: (212)
756-2000
Facsimile: (212)
593-5955
Attention: Eleazer
Klein, Esq.
If
to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers
attached hereto, with copies to such Buyer's representatives as set forth
on the
Schedule of Buyers, or to such other address and/or facsimile number and/or
to
the attention of such other person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by
the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the
first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
c. The
Company hereby irrevocably appoints National Corporate Research Ltd., 225
West
34th
Street,
Suite 910, New York, N.Y. 10112 ("NCR") as its agent for the receipt of service
of process in the United States. The Company agrees that any document may
be
effectively served on it in connection with any action, suit or proceeding
in
the United States by service on its agents. The Buyers consent and agree
that
the Company may, in its reasonable discretion, irrevocably appoint a substitute
agent for the receipt of service of process located within the Untied States,
and that upon such appointment, the appointment of NCR may be
revoked.
(1)
Any document shall be deemed to have been duly served if marked for the
attention of the agent at its address (as set forth in Section 9(f) of the
Securities Purchase Agreement) or such other address in the United States
as may
be notified to the party wishing to serve the document and (a) left at the
specified address if its receipt is acknowledged in writing; or (b) sent
to the
specified address by post, registered mail return receipt requested. In the
case
of (a), the document will be deemed to have been duly served when it is left
and
signed for. In the case of (b), the document shall be deemed to have been
duly
served when received and acknowledged.
(2)
If the Company's agent at any time ceases for any reason to act as such,
the
Company shall appoint a replacement agent having an address for service in
the
United States and shall notify each Buyer of the name and address of the
replacement agent. Failing such appointment and notification, the Buyer shall
be
entitled by notice to the Company to appoint a replacement agent to act on
the
Company's behalf. The provisions of this Section 11(c) applying to service
on an
agent apply equally to service on a replacement agent.
d. Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate
as a
waiver thereof.
e. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of
New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting The City of New York, Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or
with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court,
that
such suit, action or proceeding is brought in an inconvenient forum or that
the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to
such
party at the address for such notices to it under this Agreement and agrees
that
such service shall constitute good and sufficient service of process and
notice
thereof. Nothing contained herein shall be deemed to limit in any way any
right
to serve process in any manner permitted by law. 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 in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
f. This
Agreement and the other Transaction Documents (as defined in the Securities
Purchase Agreement) constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set
forth
or referred to herein and therein. This Agreement and the other Transaction
Documents supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.
g. Subject
to the requirements of Section 9, this Agreement shall inure to the benefit
of
and be binding upon the permitted successors and assigns of each of the parties
hereto.
h. The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
i. This
Agreement may be executed in identical counterparts, each of which shall
be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
j. 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.
k. All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders, determined as if all of the Notes held by Investors
then outstanding have been converted into Registrable Securities and all
Warrants then outstanding have been exercised for Registrable Securities
without
regard to any limitations on conversion of the Notes or on exercises of the
Warrants.
l. The
language used in this Agreement will be deemed to be the language chosen
by the
parties to express their mutual intent and no rules of strict construction
will
be applied against any party.
m. 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.
n. The
obligations of each Buyer hereunder are several and not joint with the
obligations of any other Buyer, and no provision of this Agreement is intended
to confer any obligations on any Buyer vis a vis any other Buyer. Nothing
contained herein, and no action taken by any Buyer pursuant hereto, shall
be
deemed to constitute the Buyers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Buyers
are
in any way acting in concert or as a group with respect to such obligations
or
the transactions contemplated herein.
*
* * * *
*
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
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COMPANY:
PSIVIDA LIMITED
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| By: | ||
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Name:
Gavin Rezos
Title: Managing
Director
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IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.
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BUYERS:
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| By: | ||
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Name:
Title:
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EXHIBIT
99.5
Letter
Agreement, dated November 15, 2005, relating to the Securities Purchase
Agreement
[Castlerigg
Master Investments Ltd. letterhead]
November
11, 2005
pSivida
Limited
Level
12,
BGC Centre
28
The
Esplanade, Perth
WA
6000
Australia
Re:
Investment in pSivida Limited (the “Company”)
Gentlemen:
Reference
is hereby made to the Securities Purchase Agreement (the “Securities
Purchase Agreement”),
dated
as of October 5th, 2005, by and among the Company and the investors on the
Schedule of Buyers attached thereto. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to such terms in the
Securities Purchase Agreement.
Notwithstanding
the provisions of the Securities Purchase Agreement to the contrary, the parties
hereto agree as follows:
1. That
the
provisions of clause (x) of Section 2(j)(B) of the Securities Purchase Agreement
are hereby amended and restated to read as follows: “(x) engage in any
Prohibited Transaction prior to the seventh month anniversary of the Issuance
Date”.
2. That
the
first sentence of Section 4(i) of the Securities Purchase Agreement is hereby
amended and restated to read as follows: “On or before 8:30 a.m. New York time,
on November 15, 2005, the Company shall file a Current Report on Form
6-K
describing the terms of the transactions contemplated by the Transaction
Documents and attaching the material Transaction Documents (including, without
limitation, this Agreement (other than the schedules to this Agreement), the
form of Notes, the form of Warrant and the form of Registration Rights
Agreement) as exhibits to such sub mission (such submission including all
attachments, the “6-K Filing”).”
3. That
this
letter agreement shall be included as part of the 6-K Filing.
4. That
any
form of Notice or Proxy or similar instrument prepared or delivered after the
date hereof in connection with seeking Shareholder Approval in accordance with
Section 4(p) of the Securities Purchase Agreement , shall be furnished to Buyer
at least two Business Days prior to dissemination or filing, as applicable,
for
Buyer’s review and in order to allow Buyer’s reasonable comments to be
incorporated in any such instrument (such review and comments to be provided
by
the Buyer promptly and in a timely manner so as not to delay or otherwise
adversely affect the calling or holding of any such Shareholder
Meeting).
5. If
Shareholder Approval is obtained at the Company’s shareholder meeting on
November 15, 2005, that the Company shall include in its Annual Report on
Form 20-F for the fiscal year ended June 30, 2005 the following:
(a) a
statement that the Company has received the Shareholder Approval pursuant to
the
rules and regulations of the ASX and (b) (i) a statement disclosing that the
Company may not have followed Rule 4350(i)(1) of the Nasdaq Marketplace Rules
and (ii) a statement pursuant to Rule 4350(a) of the Nasdaq Marketplace Rules
describing the home country practice followed by the Company in lieu of the
requirements of such rule.
This
letter agreement may be executed in counterparts, each of which shall be
identical and all of which, when taken together, shall constitute one and the
same instrument. This letter agreement shall be governed by and interpreted
in
accordance with the laws of the State of New York, USA.
Please
indicate your agreement to the foregoing by signing a copy of this letter where
indicated below and returning it to us.
[Remainder
of page intentionally left blank; signature page follows.]
-2-
| Very truly ours, | |
| CASTLERIGG MASTER INVESTMENTS LTD. |
| |
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| By: | /s/ Jim Cacioppo | |
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Name:
Jim Cacioppo
Title: President
|
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Agree and Acknowledged
PSIVIDA LIMITED
| By: /s/ Gavin Rezos | |||
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| Name:
Gavin Rezos Title: Managing Director |
-3-