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 July 2006
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.
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:
July 31, 2006
| pSivida Limited | ||
| |
|
|
| By: | /s/ Michael J. Soja | |
|
Michael J. Soja |
||
| Vice President, Finance and Chief Financial Officer | ||
EXHIBIT
INDEX
|
EXHIBIT
99.1
|
Supplemental
Disclosure of pSivida Limited Related To Amendment Agreement, Dated
as of
July 28, 2006.
|
|
EXHIBIT
99.2
|
Amendment
Agreement
|
|
EXHIBIT
99.3
|
Form
of Amended and Restated Note
|
|
EXHIBIT
99.4
|
Form
of Series A Warrant
|
|
EXHIBIT
99.5
|
Form
of Series B Warrant
|
|
EXHIBIT
99.6
|
Form
of Amended and Restated Registration Rights
Agreement
|
-2-
EXHIBIT
99.1
SUPPLEMENTAL
DISCLOSURE OF PSIVIDA LIMITED RELATED TO AMENDMENT AGREEMENT, DATED AS OF JULY
28, 2006.
THIS
SUPPLEMENTAL DISCLOSURE SHALL NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES DESCRIBED HEREIN IN ANY JURISDICTION WHERE
THE
OFFER OR SALE OF THESE SECURITIES IS NOT PERMITTED.
THE
SECURITIES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES ABSENT REGISTRATION OR AN APPLICABLE EXEMPTION FROM REGISTRATION
REQUIREMENTS.
IN
ACCORDANCE WITH GENERAL INSTRUCTION B OF FORM 6-K, THE INFORMATION SET FORTH
IN
THIS SUPPLEMENTAL DISCLOSURE SHALL NOT BE DEEMED TO BE “FILED” FOR PURPOSES OF
SECTION 18 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE “EXCHANGE
ACT”), OR OTHERWISE SUBJECT TO THE LIABILITIES OF THAT SECTION, NOR SHALL SUCH
INFORMATION BE DEEMED INCORPORATED BY REFERENCE IN ANY FILING UNDER THE
SECURITIES ACT OR THE EXCHANGE ACT, EXCEPT AS SHALL BE EXPRESSLY SET FORTH
BY
SPECIFIC REFERENCE IN SUCH A FILING. THE INFORMATION SET FORTH IN THIS
SUPPLEMENTAL DISCLOSURE SHALL NOT BE DEEMED AN ADMISSION AS TO THE MATERIALITY
OF ANY INFORMATION IN THIS SUPPLEMENTAL DISCLOSURE.
The
following is a summary of the terms of the transactions contemplated by the
Amendment Agreement. This summary is not intended to be complete and is
qualified in its entirety by reference to the attachments to this Supplemental
Disclosure.
| 1. |
Amendment
Agreement
|
pSivida
Limited (“pSivida”) and an institutional investor (the “Investor”) entered into
an Amendment Agreement dated as of July 28, 2006, providing for the amendment
and restatement of the Subordinated Convertible Note, dated November 16, 2005,
purchased by the Investor in connection with the Securities Purchase Agreement,
dated as of October 5, 2005, by and between the same parties.
Under
the
Amendment Agreement, pSivida will issue to the Investor an Amended and Restated
Note in the amount of $12.5 million. The Amendment Agreement also provides
for
payment by pSivida of $3.5 million for partial satisfaction and redemption
of
the original Subordinated Convertible Note, payment by pSivida of any accrued
and unpaid interest on the Subordinated Convertible Note, payment by pSivida
of
any penalties incurred as a result of the delay in effectiveness of the
registration statement filed in connection with the Securities Purchase
Agreement, and the issuance of a warrant exercisable for up to 5,700,000
American Depositary Shares (ADSs) of pSivida.
The
Amendment Agreement is being filed as an attachment to this Supplemental
Disclosure to provide investors with information regarding its terms. The
Amendment Agreement contains representations and warranties that pSivida Limited
and the Investor made to each other as of the date of the Amendment Agreement
or
other specific dates, and such representations and warranties should not be
relied upon by any other person.
| 2. |
The
Amended and Restated Note
|
A
short
summary of the terms of the amended and restated note follows:
|
·
|
The
note has a face value of
US$12,500,000.
|
|
·
|
The
note may be converted by the holder into ADSs at any time prior to
the
third anniversary of the date of the original issuance of the note.
The
number of shares to be issued upon 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 conversion price,
as
adjusted, of the ADSs.
|
|
·
|
The
conversion price is US$2.00 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 and based on the market price of pSivida’s ADSs on April 30,
2007.
|
|
·
|
The
note matures 3 years after issuance and bears interest at the rate
of 8%
per annum.
|
|
·
|
Under
certain circumstances, pSivida may make interest payments in the
form of
ADSs.
|
|
·
|
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.
|
|
·
|
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 up to 50% of
the
original principal amount (i.e., $6,250,000) on July 31, 2007 and
January 31, 2008.
|
|
·
|
pSivida
may redeem the note, at its option, in whole or in part at any time
at a
price equal to 108% of the outstanding principal to be redeemed.
In
connection with any such redemption, pSivida will issue warrants
exercisable for a number of shares equal to 30% of such redemption
amount
divided by the then applicable conversion
price.
|
|
·
|
The
note will be secured by certain of pSivida’s royalty and other income
streams. The security interest in such Collateral shall be released
in
conjunction with the sale of the collateral and pSivida’s satisfaction of
any redemption required by the investor
following.
|
|
·
|
The
note contains various negative covenants, including limitations on
the
incurrence of debt and liens, and the maintenance of certain cash
levels.
|
| 3. |
The
Warrants:
|
The
following is a summary of the terms of the warrants:
|
·
|
The
warrants constitute options to acquire up to 5,700,000 ADSs at any
time on
or before the fifth anniversary of the issuance of the
warrant.
|
|
·
|
The
per ADS exercise price under the warrants is US$1.80 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 warrants
may be exercised or pSivida makes a pro rata issuance to shareholders.
|
|
·
|
There
is a limit of 4.99% in respect of the Investor and its affiliates’
beneficial ownership in pSivida, which may prevent it from
exercising part of warrant (this limit may be increased or
decreased by the Investor upon written notice to
pSivida).
|
|
·
|
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
warrants.
|
-2-
|
·
|
Additional
warrants will be issued in the event that pSivida redeems all or
a portion
of the note in connection with an optional redemption or a sale of
collateral. Such warrants will have an exercise price based on the
average
market price prior to their
issuance.
|
| 4. |
Registration
Rights:
|
|
·
|
The
effectiveness deadline for registering shares issuable pursuant to
the
note and warrants will be extended to September 15, 2006 (with provisions
for a further extension if necessary). If the pSivida’s registration
statement is not effective by that date, pSivida will pay penalties
from
May 15, 2006 at a rate equal to 2.5% of the original purchase price per
thirty day period.
|
-3-
AMENDMENT
AGREEMENT
AMENDMENT
AGREEMENT
(the
"Agreement"),
dated
as of July 28, 2006, 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
Castlerigg Master Investments Ltd. (the "Investor").
WHEREAS:
A.
The
Company and the Investor are parties to that certain Securities Purchase
Agreement, dated as of October 5, 2005 (the "Securities
Purchase Agreement"),
pursuant to which, among other things, the Investor purchased from the Company
(i) subordinated convertible notes, dated November 16, 2005 (the "Existing
Notes"),
which
are convertible in accordance with their terms into American Depositary Shares
of the Company ("ADSs"
and, as
converted, the "Existing
Conversion Shares")
each
of which represents 10 ordinary shares of the Company (the "Ordinary
Shares")
and is
evidenced by an American Depository Receipt ("ADR")
and
(ii) warrants (the "Existing
Warrants"),
which
are exercisable to purchase ADSs (the "Existing
Warrant Shares").
B.
On
the
Closing Date (as defined in the Securities Purchase Agreement, the Company
and
the Investors entered into a Registration Rights Agreement, dated as of November
16, 2005 (the "Existing
Registration Rights Agreement"),
pursuant to which the Company agreed to provide certain registration rights
with
respect to the Registrable Securities (as defined in the Existing Registration
Rights Agreement) under the Securities Act of 1933, as amended (the
"1933
Act"),
and
the rules and regulations promulgated thereunder, and applicable state
securities laws.
C.
The
Company and the Investor desire to enter into this Agreement, pursuant to which,
among other things, in consideration of extending the deadline under the
Existing Notes with respect to the Company's requirement to obtain the
effectiveness of the Initial Registration Statement (as defined in the
Registration Rights Agreement) in order for there not to be an Event of Default
(a "Registration
Rights Default"),
(i)
the Company shall pay to the Investor the sum of (x) any accrued and unpaid
interest on the Existing Notes as of the Closing Date (as defined below) and
(y)
any Registration Delay Payments (as defined in the Existing Registration Rights
Agreement), including any accrued and unpaid interest thereon, owed by the
Company to the Investor as of the Closing Date (collectively, the "Amendment
Payment Amount");
(ii)
the Company and the Investor shall amend and restate the Existing Notes in
the
form attached hereto as Exhibit
B
(the
"Amended
and Restated Notes"),
which
shall be convertible into ADSs (as converted, the "Amended
and Restated Conversion Shares"),
in
accordance with the terms thereof; (iii) the Company shall issue, upon the
terms
and conditions stated in this Agreement, Series A warrants in the form attached
hereto as Exhibit
C-1
(the
"Series
A Warrants")
which
shall be exercisable to purchase ADSs (the "Series
A Warrant Shares"),
in
accordance with the terms thereof; and (iv) the Company will agree to issue
to
the Investor series B warrants in the form attached hereto as Exhibit
C-2
(the
"Series
B Warrants",
and
together with the Series A Warrants, the "New
Warrants")
from
time to time in accordance with the terms of the Amended and Restated Notes,
which shall be exercisable to purchase ADSs (the "Series
B Warrant Shares",
and
together with the Series A Warrant Shares, the "New
Warrant Shares",
and
together with Amended and Restated Conversion Shares and the Existing Warrant
Shares, the "Amended
and Restated Shares"),
in
accordance with the terms thereof.
D.
The
Amended and Restated Notes will rank pari passu with all Permitted Indebtedness
and shall be senior to all other Indebtedness other than the Permitted Senior
Indebtedness (as defined in the Amended and Restated Notes) and will be secured
by a first priority, perfected security interest, subject to the Permitted
Senior Indebtedness (as defined in the Amended and Restated Notes) in all of
the
Company and any of its Subsidiary's revenue from the Retisert and Vitrasert
product lines (including, without limitation, and successor or replacement
product line of the Company or any of its Subsidiaries or its direct or
indirect, licensees or sublicensees thereof, the "Collateral
Product Lines"),
whether through licenses, assignments or otherwise with the Company or any
of
its Subsidiaries prior to, on or after the Closing Date (collectively, the
"Collateral"),
including, without limitation, any revenue arising under that certain license
agreement, by and among pSivida, Inc. (f/k/a Control Delivery Systems, Inc.),
a
Delaware corporation (the "Delaware
Subsidiary")
and
Bausch & Lomb Incorporated, dated December 9, 2003 (as such has been and may
from time to time be amended, the "BL
License"),
as
evidenced by (i) a collateral assignment agreement, in a form reasonably
satisfactory to the parties (the "Security
Agreement"),
(ii)
a guaranty agreement of the Delaware Subsidiary in a form reasonably
satisfactory to the parties (the "Guarantee"),
and
(iii) such other security documents and ancillary documents and mutually agreed
upon by the parties or required to be entered into hereunder from time to time
(the "Ancillary
Agreements",
and
together with the Security Agreement and the Guarantee, collectively the
"Security
Documents").
E.
On
the
Closing Date (as defined below), the parties hereto are amending and restating
the Registration Rights Agreement in the form attached hereto as Exhibit
F
(the
"Amended
and Restated Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
with respect to the Registrable Securities (as defined in the Amended and
Restated Registration Rights Agreement) under the 1933 Act, and the rules and
regulations promulgated thereunder, and applicable state securities
laws.
F.
On
the
Closing Date, subject to satisfaction (or waiver) of the conditions set forth
in
Sections 5 and 6 below, at the Closing, the Company shall redeem (the
"Note
Redemption")
$2.5
million in principal amount of the Existing Notes for a redemption price to
be
paid in cash to the Investor equal to $3.5 million (the "Note
Redemption Price").
G.
The
amendment and restatement of the Existing Notes and the issuance of the New
Warrants is being made in reliance upon an exemption from registration under
the
1933 Act.
H.
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings ascribed to them in the Securities Purchase Agreement and, if not
defined therein, the Amended and Restated Notes.
NOW,
THEREFORE,
in
consideration of the foregoing recitals and the mutual promises hereinafter
set
forth, the Company and the Investor hereby agree as follows:
2
|
1.
|
AMENDMENT
AND RESTATEMENT OF NOTES AND ISSUANCE OF NEW WARRANTS, NOTE
REDEMPTION.
|
(a)
Amendment
and Restatement.
Subject
to satisfaction (or waiver) of the conditions set forth in Sections 5 and 6
below, at the closing contemplated by this Agreement (the "Closing"),
(i)
the terms of the Existing Notes in the principal amount of $12.5 million held
by
the Investor shall be amended and restated with effect from the Closing to
the
terms of the Amended and Restated Notes, (ii) the Company shall issue and
deliver to the Investor the Series A Warrants, exercisable for 5,700,000 ADRs
and (iii) the Company shall pay in cash to the Investor the Amendment Payment
Amount. From time to time in accordance with the terms of the Amended and
Restated Notes, the Company shall issue and deliver to the Investor the Series
B
Warrants exercisable for such number of ADRs as determined in accordance with
the terms of the Amended and Restated Notes.
(b)
Note
Redemption.
Subject
to satisfaction (or waiver) of the conditions set forth in Sections 5 and 6
below, at the Closing, pSivida shall effect the Note Redemption.
(c)
Ratifications.
Except
as otherwise expressly provided herein, (i) the Securities Purchase
Agreement, the Existing Warrants and the Irrevocable Transfer Agent Instructions
are, and shall continue to be, in full force and effect and are hereby ratified
and confirmed in all respects, except that on and after the Closing Date (A)
all
references in the Securities Purchase Agreement to "this Agreement", "hereto",
"hereof", "hereunder" or words of like import referring to the Securities
Purchase Agreement shall mean the Securities Purchase Agreement as amended
by
this Agreement, (B) all references in the Transaction Documents to "this
Agreement", "hereto", "hereof", "hereunder" or words of like import referring
to
the Registration Rights Agreement shall mean the Amended and Restated
Registration Rights Agreement, (C) all references in the other Transaction
Documents to the "Registration Rights Agreement", "thereto", "thereof",
"thereunder" or words of like import referring to the Registration Rights
Agreement shall mean the Registration Rights Agreement as amended by this
Agreement, (D) all references in the Securities Purchase Agreement and the
other
Transaction Documents to "Transaction Documents" shall also include this
Agreement, the Amended and Restated Notes, the New Warrants and the Security
Documents, (E) all references in the Securities Purchase Agreement and the
other
Transaction Documents to "Notes" shall mean the Amended and Restated Notes,
(F)
all references in the Securities Purchase Agreement and the other Transaction
Documents to "Conversion Shares" shall mean the Amended and Restated Conversion
Shares, (G) all references in the Securities Purchase Agreement and the other
Transaction Documents to "Warrants" shall be amended to include the New
Warrants, and (H) all references in the Securities Purchase Agreement and the
other Transaction Documents to "Warrant Shares" shall be amended to include
New
Warrant Shares, and (ii) the execution, delivery and effectiveness of this
Agreement shall not operate as an amendment of any right, power or remedy of
the
Investor under any Transaction Document, nor constitute an amendment of any
provision of any Transaction Document.
(d)
Closing
Date.
The
date and time of the Closing (the "Closing
Date")
shall
be 10:00 a.m., New York Time, on August 3, 2006 after notification of
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
5 and 6 below (or such other time and date as is mutually agreed to by the
Company and the Investor). The Closing shall occur on the Closing Date at the
offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York
10022.
3
(e)
Form
of Payment.
On the
Closing Date, (i) the Company (A) shall pay to the Investor the
Amendment Payment Amount and the Note Redemption Price, by wire transfer of
immediately available funds in accordance with the Investor's written wire
instructions provided to the Company prior to the Closing, (B) shall issue
and deliver to the Investor, the Investor's Amended and Restated Notes, duly
executed on behalf of the Company and registered in the name of the Investor,
and (C) shall issue and deliver to the Investor, the Investor's Series A
Warrants, duly executed on behalf of the Company and registered in the name
of
the Investor, and (ii) the Investor shall deliver to the Company the
Investor's Existing Notes for cancellation.
|
2.
|
AMENDMENTS
TO SECURITIES PURCHASE AGREEMENT.
|
The
Securities Purchase Agreement is hereby amended as follows:
(a)
Section
2(j)(A) shall
be
deleted in its entirety;
(b)
Section
2(j)(B) shall be deleted in its entirety; and
(c)
Notwithstanding
anything in Sections 4(n)(ii) and 4(n)(iii) to the contrary, the Company shall
not be required to comply with either Section 4(n)(ii) or 4(n)(iii), except
as
to allow the Investor the rights set forth in the following
sentence:
The
Investor shall have the option to participate in such Subsequent Placement
with
the purchase price of such securities being paid by surrender of outstanding
principal amount of the Amended and Restated Note plus any accrued and unpaid
interest on such principal and late charges, if any, on such principal and
interest.
|
3.
|
REPRESENTATIONS
AND WARRANTIES
|
(a)
Investor
Bring Down.
The
Investor hereby represents and warrants to the Company as set forth in Section
2
of the Securities Purchase Agreement (as amended hereby) as to this Agreement
as
if such representations and warranties were made as of the date hereof and
set
forth in their entirety in this Agreement. The Investor hereby represents and
warrants to the Company with respect to itself only that it is not actually
aware of any outstanding Events of Default. The Investor further represents
and
warrants to the Company that: (a) it is the sole holder of the Existing Notes;
(b) that it has not transferred beneficial ownership thereof; and (c) this
agreement shall constitute written consent of the Required Holders pursuant
to
Section 17 of the Note.
(b)
Company
Bring Down.
The
Company represents and warrants to the Investor as set forth in Section 3 of
the
Securities Purchase Agreement (as amended hereby) as if such representations
and
warranties were made as of the date hereof and set forth in their entirety
in
this Agreement; provided that the Schedules to the Securities Purchase Agreement
are replaced in their entirety by the Schedules attached to this Agreement
(the
"New
Schedules").
4
Such
representations and warranties in the Securities Purchase Agreement to the
transactions thereunder and the securities issued thereby are hereby deemed
for
purposes of this Agreement to be references to the transactions hereunder and
the issuance of the securities hereby, and references therein to "Closing
Date"
being
deemed references to the Closing Date as defined in Section 1(d) above. The
Company represents and warrants to the Investor that it is not aware of any
outstanding Events of Default other than the Registration Rights Default. The
Company represents and warrants to the Investor that this Agreement, the terms
of the Amended and Restated Notes, the terms of the Series A Warrants, the
terms
of the Series B Warrants, the issue of the Series A Warrants and the agreement
to issue Series B Warrants contemplated by the Amended and Restated Notes and
the agreement to issue shares or ADRs on exercise of the Amended and Restated
Notes, Series A Warrants or Series B Warrants: (i) comply in all respects with
the Corporations Act 2001 (Cwth) and the Listing Rules of the Australian Stock
Exchange Limited; and, (ii) do not require any approval from the Australian
Stock Exchange Limited or shareholders of the Company. The
Company will not challenge, and based on the facts in existence as of the date
hereof, has no basis to disagree with, the Investor's position that the holding
period of the Amended and Restated Notes, the New Warrants and the Amended
and
Restated Conversion Shares may be tacked back to the date of issuance of the
Existing Notes for purposes of Rule 144 promulgated under the 1933 Act (or
a
successor rule) and will not take any action which would be likely to adversely
affect such tacking for the benefit of the Investor, including, without
limitation, taking negative action with respect to the reliance by the Company's
transfer agent on an opinion letter of the Investor's Legal
Counsel.
|
4.
|
CERTAIN
COVENANTS AND AGREEMENTS; RELEASE
|
(a)
Disclosure
of Transactions and Other Material Information.
On or
before 10:30 a.m., New York Time, on the
first
Business Day following the date of this Agreement, the Company shall issue
a
press release (the "Initial
Press Release")
and
shall file a Form 6-K describing the terms of the transactions contemplated
by
this Agreement 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 each of the Amended and Restated
Notes, the form of each of the New Warrants, the form of the Amended and
Restated Registration Rights Agreement and the form of Security Documents,
if
available) as exhibits to such submission (such submission including all
attachments, the "Initial
6-K Filing").
On or
before 8:30 a.m., New York Time, on the
first
Business Day following the Closing Date, the Company shall issue a press release
(the "Closing
Press Release")
and
shall file a Form 6-K describing the terms of the transactions contemplated
by
this Agreement in the form required by the 1934 Act and attaching any material
transaction documents not previously filed as exhibits to such filing
(including, without limitation, this Agreement (other than the schedules to
this
Agreement), the form of each of the Amended and Restated Notes, the form of
each
of the New Warrants, the form of the Amended and Restated Registration Rights
Agreement and the form of Security Documents, if available) as exhibits to
such
submission (such submission including all attachments, the "Closing
6-K Filing",
and
together with the Initial 6-K Filing, the "6-K
Filings").
The
Initial Press Release and the Closing Press Release shall also indicate that
the
Company is seeking to raise additional funding. From and after the submission
of
the Closing 6-K Filing with the SEC, no Investor shall be in possession of
any
material, nonpublic information received from the Company, any of its
Subsidiaries or any of its respective officers, directors, employees or agents,
that is not disclosed in the 6-K Filings or in
5
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 the Investor with any material,
nonpublic information regarding the Company or any of its Subsidiaries from
and
after the filing of the Closing 6-K Filing with the SEC without the express
written consent of the Investor. 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, the Investor 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 the Investor 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 the Investor,
to
make any press release or other public disclosure with respect to such
transactions (i) in substantial conformity with the 6-K Filings and
contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) the Investor shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release).
(b)
Fees
and Expenses.
The
Company shall reimburse the Investor for its legal fees and expenses in
connection with the preparation and negotiation of this Agreement and including
matters relating to the threatened Registration Rights Default by paying such
amount to Schulte Roth & Zabel LLP as set forth in such firm's written
invoice therefore (the "Investor
Counsel Expense").
Except as otherwise set forth in this Agreement, each party shall pay the fees
and expenses of its advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the
issuance of the Amended and Restated Notes and New Warrants.
(c)
Post-Closing
Covenant.
On or
prior to ten (10) Business Days after the Closing Date, the Company shall have
taken such actions as reasonably requested by the Investor to secure the
Collateral and perfect the Collateral Agent's security interest in the
Collateral, including, without limitation, by entering into the Security
Documents and filing any necessary UCC financing statements. The failure to
effect the foregoing shall immediately constitute an Event of Default under
the
Amended and Restated Notes. Within five (5) Business Days after the Closing,
the
Company shall have delivered or caused to be delivered to the Investor (i)
true
copies of UCC search results in Massachusetts and Delaware, listing all
effective financing statements which name as debtor the Company or any of its
U.S.-based Subsidiaries filed in the prior five (5) years to perfect an interest
in any assets thereof, together with copies of such financing statements, none
of which, except as otherwise agreed in writing by the Investor, shall cover
any
of the Collateral and, within ten (10) Business Days after the Closing, the
results of searches for any tax lien and judgment lien in Middlesex County,
Massachusetts and Delaware filed against such Person or its property, which
results, except as otherwise agreed to in writing by the Investor shall not
show
any such Liens (as defined in the Security Documents); and (ii) a perfection
certificate, duly completed and executed by the Company and each of its
Subsidiaries, in form and substance satisfactory to the Investor.
6
(d)
Future
Collateral.
So long
as any Notes remain outstanding, if at any time (a "Future
Collateral Event Date")
(i)
the Company or any of its Subsidiaries receives income, proceeds or revenue
relating to any Collateral pursuant to a license, agreement or other arrangement
or circumstance other than the BL License (each a "Future
Agreement",
and
the parties to such Agreement other than the Company or any of its Subsidiaries,
the "Future
Consenting Parties")
or
(ii) any income, proceeds or revenue relating to any Collateral is owed or
paid
directly to the Company or any Subsidiary other than the Delaware Subsidiary,
then the Company shall promptly notify the Investor in writing and within ten
(10) business days after such Future Collateral Event Date, (w) if such income,
proceeds or revenue is owed or paid to a Subsidiary other than the Delaware
Subsidiary, such Subsidiary shall duly execute and deliver a guaranty in the
form of the Guarantee, (x) if such income, proceeds or revenue is owed or paid
to the Company, the Company shall duly execute and/or deliver such opinions
of
counsel and other documents, in form and substance reasonably acceptable to
the
Investor to secure and perfect a security interest in such Collateral, (y)
if
such income, proceeds or revenue is from a Future Agreement, the parties hereto
shall amend the Security Agreement and/or enter into any other necessary
security documents, including, without limitation, any assignments or charges,
to include such Future Agreement, and (z) the Company shall deliver to the
Investor a consent of the Future Consenting Parties, in form and substance
reasonably acceptable to the Investor.
|
5.
|
CONDITIONS
TO COMPANY'S OBLIGATIONS HEREUNDER.
|
The
obligations of the Company to the Investor hereunder are subject to the
satisfaction 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 the Investor with prior written notice
thereof:
(a)
The
Investor shall have executed this Agreement and delivered the same to the
Company.
(b)
The
representations and warranties of the Investor shall be true and correct in
all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all 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, which shall remain true and correct as of such specific
date).
|
6.
|
CONDITIONS
TO INVESTOR'S OBLIGATIONS
HEREUNDER.
|
The
obligations of the Investor hereunder are subject to the satisfaction of each
of
the following conditions, provided that these conditions are for the Investor's
sole benefit and may be waived by the Investor at any time in its sole
discretion by providing the Company with prior written notice
thereof:
(a)
The
Company shall have executed this Agreement and delivered the same to the
Investor.
7
(b)
The
Company shall have executed and delivered to the Investor the Amended and
Restated Notes and the New Warrants being issued to such Investor at the
Closing.
(c)
The
Company shall have delivered to the Investor such Investors Amendment Payment
Amount and the Note Redemption Price by wire transfer of immediately available
funds pursuant to the wire instructions provided by the Investor.
(d)
The
Company shall have delivered to the Company's transfer agent, with a copy to
the
Investors, a letter stating that the
Irrevocable Transfer Agent Instructions dated October 5, 2005 shall also apply
to the Amended and Restated Shares.
(e)
Such
Investor 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, similar
in all material respects to the opinions delivered pursuant to the Securities
Purchase Agreement.
(f)
The
Company shall have delivered to the Investor a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the
resolutions approving the transactions contemplated hereby as adopted by the
Board in a form reasonably acceptable to the Investor, (ii) the Certificate
of
Incorporation and (iii) the Bylaws, each as in effect as of the Closing, similar
in all material respects to the certificate executed by the Secretary of the
Company delivered pursuant to the Securities Purchase Agreement.
(g)
The
representations and warranties of the Company shall be true and correct in
all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all 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, which shall remain true and correct as of such 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 and no Default or Event of Default shall have
occurred and be continuing on the date hereof either immediately before or
after
giving effect to this Agreement in accordance with its terms. The Investor
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 the Investor, similar in all
material respects to the certificate executed by the Chief Executive Officer
of
the Company delivered pursuant to the Securities Purchase
Agreement.
(h)
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.
8
(i)
The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the issue and sale of the Securities,
including, without limitation, any approvals or notifications required by the
Principal Market.
|
7.
|
STOCKHOLDER
APPROVAL
|
(a)
Stockholder
Approval.
The
Company represents and warrants that no Stockholder Approval (as defined below)
is required by the applicable rules of the Principal Market or other applicable
securities laws for the issuance of any of the Amended and Restated Shares
and
any stockholder approval previously obtained by the Company with respect to
the
issuance of the Securities pursuant to the terms of the Transaction Documents
will be valid and applicable to the issuance of the Amended and Restated Shares.
If at any time after the Closing Date the issuance of the Amended and Restated
Shares would exceed that number of shares of Common Stock which the Company
may
issue without breaching the Company's obligations under the rules or regulations
of the Principal Market and the Company has not obtained the approval of its
stockholder a required by the applicable rules of the Principal Market, which
is
sufficient to cure such breach prior to the Closing Date, then the Company
shall
obtain the approval of its stockholders as required by the applicable rules
of
the Principal Market for issuances of the Amended and Restated Shares in excess
of such amount. At such time, the Company shall provide each stockholder
entitled to vote at a special or annual meeting of stockholders of the Company
(the "
Stockholder Meeting"),
which
shall be promptly called and held not later than 45 days after the earlier
of
(i) the Principal Market indication of and (ii) the Company becoming aware
of,
any limitation imposed by the Principal Market on the issuance of Amended and
Restated Shares (the "Stockholder
Meeting Deadline"),
a
proxy statement, substantially in the form which has been previously reviewed
by
the Investor and Schulte Roth & Zabel LLP, at the expense of the Company,
soliciting each such stockholder's affirmative vote at the Stockholder Meeting
for approval of resolutions providing for the Company's issuance of all of
the
Amended and Restated Shares as described in the Transaction Documents in
accordance with applicable law and the rules and regulations of the Principal
Market and
such
affirmative
approval being referred to herein as the "Stockholder
Approval"),
and
the Company shall use its reasonable best efforts to solicit its stockholders'
approval of such resolutions and to cause the Board of Directors of the Company
to recommend to the stockholders that they approve such resolutions. The Company
shall be obligated to use its reasonable best efforts, to obtain the Stockholder
Approval by the Stockholder Meeting Deadline. If, despite the Company's
reasonable best efforts the Stockholder Approval is not obtained on or prior
to
the Stockholder Meeting Deadline, the Company shall cause an additional
Stockholder Meeting to be held each twelve month period thereafter until such
Stockholder Approval is obtained, provided that if the Board of Directors of
the
Company does not recommend to the stockholders that they approve such
resolutions at any such Stockholder Meeting and the Stockholder Approval is
not
obtained, or the Amended and Restated Notes are no longer outstanding, the
Company shall cause an additional Stockholder Meeting to be held each calendar
quarter thereafter until such Stockholder Approval is obtained.
|
8.
|
TERMINATION.
|
In
the
event that the Closing does not occur by August 15, 2006, due to the Company's
or the Investors' failure to satisfy the conditions set forth in Sections 5
and
6 hereof
9
(and
the
nonbreaching party's failure to waive such unsatisfied conditions(s)), the
nonbreaching party shall have the option to terminate this Agreement at the
close of business on such date without liability of any party to any other
party; provided,
however,
this if
this Agreement is terminated by the non-breaching Investor pursuant to this
Section 8, the Company shall remain obligated to reimburse the Investor for
the
expenses described in Section 4(c) above. Upon such termination, the terms
hereof shall be null and void and the parties shall continue to comply with
all
terms and conditions of the Transaction Documents, as in effect prior to the
execution of this Agreement.
|
9.
|
MISCELLANEOUS.
|
(a)
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.
(b)
Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(c)
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.
(d)
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.
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 WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
10
(e)
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.
(f)
Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(g)
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.
(h)
Entire
Agreement; Effect on Prior Agreements; Amendments.
Except
for the Transaction Documents (to the extent any such Transaction Document
is
not amended by this Agreement), this Agreement supersedes all other prior oral
or written agreements between the Investor, the Company, their affiliates and
Persons acting on their behalf with respect to the matters discussed herein,
and
this Agreement and the instruments referenced herein 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 the Investor 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
Investor. No provision hereof may be waived other than by an instrument in
writing signed by the party against whom enforcement is sought. 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 Amended and Restated Notes or holders of the New Warrants,
as the case may be. The Company has not, directly or indirectly, made any
agreements with any of the Investors relating to the terms or conditions of
the
transactions contemplated by the Transaction Documents except as set forth
in
the Transaction Documents.
(i)
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:
11
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 (for informational purposes only) 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
Investor, to its address and facsimile number set forth in the Securities
Purchase Agreement, with copies to the Investor's representatives as set forth
on the Securities Purchase Agreement or on the signature page to this Agreement,
with
a
copy (for informational purposes only) to:
Schulte
Roth & Zabel LLP
919
Third
Avenue
New
York,
New York 10022
U.S.A.
Telephone: (212)
756-2000
Facsimile: (212)
593-5955
Attention: Eleazer
N. Kleen, Esq.
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
Investor consents and agrees 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.
12
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(i) 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 the Investor of the name and address of the replacement
agent. Failing such appointment and notification, the holders of Amended and
Restated Notes representing not less than a majority of the aggregate principal
amount of the then outstanding Amended and Restated 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(i) applying to service on an agent
apply equally to service on a replacement agent.
(j)
Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns in accordance with the terms of the
Securities Purchase Agreement.
(k)
Survival.
Unless
this Agreement is terminated under Section 8, the representations and warranties
of the Company and the Investor contained herein and the agreements and
covenants set forth herein shall survive the Closing.
(l)
Remedies.
The
Investor 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 this Agreement, any remedy at law may prove to be
inadequate relief to the Investor. The Company therefore agrees that the
Investor 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.
[Signature
Page Follows]
13
IN
WITNESS WHEREOF,
the
Investor and the Company have caused their respective signature page to this
Agreement to be duly executed as of the date first written above.
|
COMPANY:
PSIVIDA
LIMITED
|
||
| By: |
/s/
Michael J.
Soja
Name:
Michael J. Soja
Title:
Vice President and CFO
|
|
[Signature
Page to Amendment Agreement]
IN
WITNESS WHEREOF,
the
Investor and the Company have caused their respective signature page to this
Agreement to be duly executed as of the date first written above.
|
INVESTOR:
CASTLEPIGG
MASTER
INVESTMENTS
LTD.
|
||
| By: |
__________________________________
Name:
Title:
|
|
[Signature
Page to Amendment Agreement]
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
Amended
and Restated Convertible Note
|
Issuance
Date: November 16, 2005
|
Principal:
U.S. $12,500,000
|
FOR
VALUE RECEIVED,
pSivida
Limited, an Australian corporation (the "Company"),
hereby promises to pay to the order of CASTLERIGG MASTER INVESTMENTS LTD. 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 Convertible Notes issued in exchange, transfer or
replacement hereof, this "Note")
amends, supplements, modifies and completely restates and supersedes the
Subordinated Convertible Note, dated as of November 16, 2005 (the "Existing
Note"),
issued by the Company to the order of the Holder in the principal amount of
$15,000,000, but shall not, except as specifically amended hereby or as set
forth in the Amendment Agreement (as defined below), constitute a release,
satisfaction or novation of any of the obligations under the Existing Note
or
any other Transaction Document (as defined in the Securities Purchase Agreement,
defined below). This Note is one of an issue of Subordinated Convertible Notes
issued pursuant to the Amendment Agreement (the "Amendment
Agreement")
dated
as of July [__], 2006 (collectively, the "Notes"
and
such other 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.
-3-
(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").
(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,
$2.00 per ADR (which is equivalent to $0.20 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));
(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;
-7-
(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.
(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.
-10-
(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 New Issuance Price. 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:
(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.
-11-
(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.
(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.
-12-
(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.
(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.
-13-
(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
April 30, 2007, the Subsequent Conversion Price is less than the then applicable
Conversion Price, then the Conversion Price shall be reset to the Subsequent
Conversion Price.
(8) HOLDER'S
RIGHT OF OPTIONAL REDEMPTION. On each Holder Optional Redemption Date, the
Holder shall have the right, in its sole discretion, to require that the Company
redeem (each a "Holder
Optional Redemption")
up to
$6,250,000 in 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 (10) Business Days after the applicable Holder
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 Holder 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").
-14-
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.
(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.
-15-
(10) COMPANY'S
RIGHT OF OPTIONAL REDEMPTION.
(a) Company
Optional Redemption.
At any
time after the Issuance Date, the Company shall have the right to redeem all
or
any portion of the Conversion Amount then remaining under this Note (a
"Company
Optional Redemption").
The
portion of this Note subject to redemption pursuant to this Section 10 shall
be
redeemed by the Company in cash at a price equal to 108% of the Conversion
Amount being redeemed (the "Company
Optional Redemption Price").
The
Company may exercise its redemption right under this Section 10 by delivering
a
written notice thereof by confirmed facsimile and overnight courier to all,
but
not less than all, of the holders of Notes and the Transfer Agent (the
"Company
Optional Redemption Notice"
and the
date such notice is delivered to all the holders is referred to as the
"Company
Optional Redemption Notice Date").
The
Company Optional Redemption Notice shall be irrevocable. The Company Optional
Redemption Notice shall state (A) the date on which the Company Optional
Redemption shall occur (the "Company
Optional Redemption Date")
which
date shall be not less than thirty (30) days nor more than sixty (60) days
after
the Company Optional Redemption Notice Date, (B) the aggregate Principal amount
(the "Company
Optional Redemption Amount")
of the
Notes which the Company has elected to be subject to Optional Redemption from
all of the holders of the Notes pursuant to this Section 10 (and analogous
provisions under the Other Notes) on the Company Optional Redemption Date,
(C)
that in connection with the Company Optional Redemption the Company shall issue
to the Holder Series B Warrants and (D) the number of ADSs for which such Series
B Warrants shall become exercisable shall be equal to the quotient of (1) 30%
of
the Conversion Amount being redeemed and (2) the then applicable Conversion
Price. The Company will make a public announcement containing the information
set forth in the Company Optional Redemption Notice on or before the Company
Optional Redemption Notice Date. The Company may not effect more than one (1)
Company Optional Redemption during any consecutive thirty (30) Trading Day
period. Notwithstanding anything to the contrary in this Section 10, until
the
Company Optional Redemption Price is paid, in full, the Company Optional
Redemption Amount may be converted, in whole or in part, by the holders of
Notes
into ADSs pursuant to Section 3. All Conversion Amounts converted by the Holder
after the Company Optional Redemption Notice Date shall reduce the Conversion
Amount of this Note required to be redeemed on the Company Optional Redemption
Date. Redemptions made pursuant to this Section 10 shall be made in accordance
with Section 13.
(b) Pro
Rata Redemption Requirement.
If the
Company elects to cause a Company Optional Redemption pursuant to Section 10(a),
then it must simultaneously take the same action with respect to the Other
Notes. If the Company elects to cause a Company Optional Redemption pursuant
to
Section 10(a) (or similar provisions under the Other Notes) with respect to
less
than all of the principal amount of the Notes then outstanding, then the Company
shall require redemption of a Principal amount from the Holder and each holder
of the Other Notes equal to the product of (i) the aggregate principal amount
of
Notes which the Company has elected to cause to be redeemed pursuant to Section
8(a), multiplied by (ii) the fraction, the numerator of which is the sum of
the
initial principal amount of Notes purchased by such holder and the denominator
of which is the initial principal amounts of Notes purchased by all holders
holding outstanding Notes (such fraction with respect to each holder is referred
to as its "Redemption
Allocation Percentage",
and
such amount with respect to each holder is referred to as its "Pro
Rata Redemption Amount");
provided that in the event that the initial holder of any Notes has sold or
otherwise transferred any of such holder's Notes, the transferee shall be
allocated a pro rata portion of such holder's Redemption Allocation Percentage
and Pro Rata Redemption Amount.
-16-
(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; SECURITY.
(a) Subordination.
Subject to the final sentence of Section (12)(g)
hereof,
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.
(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), and shall be ranked first with
respect to the proceeds of the Collateral.
-17-
(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.
(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. The foregoing sentence shall not apply with respect to the Holder's
security interest set forth in the Security Documents.
-18-
(13) 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.
The Company shall deliver (A) the Holder Optional Redemption Price to the Holder
on the Holder Optional Redemption Date, (B) the Company Optional Redemption
Price to the Holder on the Company Optional Redemption Date and (C) the Asset
Sale Redemption Price to the Holder on the Asset Sale Redemption Date. 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.
-19-
(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 Permitted 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");
provided, however, that upon the occurrence of the later of (i) the consummation
of one or more Subsequent Placements (as defined in the Securities Purchase
Agreement) in any nine-month period for which the Company receives aggregate
gross proceeds equal to or greater than $16,000,000 or (ii) the effectiveness
of
the Initial Registration Statement (as defined in the Registration Rights
Agreement), the Company shall no longer be required to satisfy 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.
-20-
(f) Asset
Sales.
Promptly after the occurrence of an Asset Sale, the Company shall deliver
written notice thereof via facsimile and overnight courier (an "Asset
Sale Notice")
to the
Holder. Within sixty (60) Trading Days of such notice, the Holder may require
the Company to redeem (an "Asset
Sale Redemption"),
with
the Available Cash Proceeds of such Asset Sale, all or any portion of the
Conversion Amount of this Note by delivering written notice thereof (the
"Asset Sale
Redemption Notice")
to the
Company, which Asset Sale Redemption Notice shall indicate the portion of this
Note the Holder is electing to redeem; provided
that if
the aggregate principal amount of this Note and Other Notes to be redeemed
with
the cash proceeds of an Asset Sale exceed the amount of Available Cash Proceeds
from such Asset Sale, the Company shall redeem this Note and Other Notes on
a
pro rata basis with such proceeds. In connection with the consummation of such
Asset Sale Redemption, the Company shall issue to the Holder Series B Warrants,
which warrants shall be exercisable for a number of ADSs equal to the quotient
of (1) 30% of the Conversion Amount being redeemed and (2) the then applicable
Conversion Price. Each portion of this Note subject to redemption by the Company
pursuant to this Section 15(f) shall be redeemed by the Company at a price
equal
to 110% of the Conversion Amount being redeemed (the "Asset
Sale Redemption Price").
The
Company shall effect such Asset Sale Redemption including issuing such warrant
on a date ("Asset
Sale Redemption Date")
not
later than two (2) business days after receipt of such Asset Sale Redemption
Notice. Upon the consummation of the Asset Sale, the Holder shall take any
action required pursuant to the terms of the Security Documents to release
any
security interest on such Collateral subject to such Asset Sale. The Company
and
the Holder shall reasonably cooperate to coordinate the release of the Holder's
security interest and any Asset Sale Redemption to facilitate an Asset Sale.
Redemptions required by this Section 15(f) shall be made in accordance with
the
provisions of Section 13.
(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.
-21-
(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.
(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.
-22-
(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.
(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.
-23-
(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").
(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.
-24-
(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) "Applicable
Asset Sale Amount"
means
the net cash proceeds from the Asset Sale causing the calculation.
(c) "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.
(d) "Asset
Sale"
means
the sale, lease, conveyance or other disposition of any assets or rights that
constitute Collateral.
(e) "ASX"
means
the Australian Stock Exchange.
(f) "Available
Amount"
means
$7,500,000 less the aggregate principal amount of this Note previously redeemed
pursuant to Section 15(f).
(g) "Available
Cash Proceeds"
of any
Asset Sale means:
(i) If
both
the Applicable Asset Sale Amount and the Cumulative Asset Sale Amount are less
than $7,500,000, 100% of the gross proceeds of such Asset Sale;
(ii) if
the
Applicable Asset Sale Amount is less than $7,500,000 but the Cumulative Asset
Sale Amount is greater than $7,500,000, the lesser of (I) 100% of the net cash
proceeds of such Asset Sale and (II) the sum of (x) the Available
Amount and (y) the Excess Asset Sale Amount; or
(iii) if
the
Applicable Asset Sale Amount is greater than $7,500,000, the lesser of (I)
$7,500,000 and (II) the sum of (x) the Available Amount and (y) the Excess
Asset
Sale Amount;
-25-
provided,
however, that if such Available Cash Proceeds of an Asset Sale is not a positive
number, no cash proceeds of such Asset Sale shall be Available Cash
Proceeds.
(h) "Bloomberg"
means
Bloomberg Financial Markets.
(i) "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.
(j) "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.
(k) "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.
(l) "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.
(m) "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%.
-26-
(n) "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.
(o) "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.
(p) "Collateral"
has the
meaning ascribed to such term in the Security Documents.
(q) "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.
(r) "Consolidated
Total Indebtedness to Market Capitalization Ratio"
means
the ratio of Consolidated Total Indebtedness to Market
Capitalization.
(s) "Convertible
Securities"
means
any shares or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for Ordinary Shares.
(t) "Cumulative
Asset Sale Amount"
means
the aggregate net cash proceeds received by the Company from all Asset Sales
after the Issuance Date (including the Asset Sale that is causing the applicable
calculation).
(u) "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.
-27-
(v) "Depositary"
means
Citibank, N.A. acting in such capacity under the Deposit Agreement.
(w) "Eligible
Market"
means
the Principal Market, The New York Stock Exchange, Inc., the American Stock
Exchange, or The Nasdaq SmallCap Market.
(x) "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.
-28-
(y) "Excess
Asset Sale Amount"
means
solely in the event that the Cumulative Asset Sale Amount is in excess of
$15,000,000, 50% of such net cash proceeds in excess of
$15,000,000.
(z) "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.
(aa) "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.
(bb) "GAAP"
means
United States generally accepted accounting principles, consistently
applied.
(cc) "Holder
Optional Redemption Date"
means
each of July 31, 2007 and January 31, 2008.
(dd) "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.
-29-
(ee) "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.
(ff) "Interest
Rate"
means
eight percent (8.0%) per annum.
(gg) "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.
(hh) "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.
(ii) "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.
(jj) "Optional
Redemption Date"
means
any of a Company Redemption Date, an Asset Sale Redemption Date and a Holder
Redemption Date.
(kk) "Options"
means
any rights, warrants or options to subscribe for or purchase Ordinary Shares
or
Convertible Securities.
(ll) "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.
(mm) "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.
-30-
(nn) "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, (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 and (H) Indebtedness evidenced by this Note
and
the Other Notes.
(oo) "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, (ix) Liens arising from judgments, decrees or attachments
in circumstances not constituting an Event of Default under Section 4(a)(viii)
and (x) Liens securing the obligations under this Note and the Other
Notes.
(pp) "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.
-31-
(qq) "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.
(rr) "Principal
Market"
means
the Nasdaq National Market.
(ss) "Redemption
Notices"
means,
collectively, the Event of Default Redemption Notice, the Change of Control
Redemption Notice, the Holder Optional Redemption Notice, the Company Optional
Redemption Notice and the Asset Sale Redemption Notice, each of the foregoing,
individually, a Redemption Notice.
(tt) "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%.
(uu) "Redemption
Prices"
means,
collectively, the Event of Default Redemption Price, Change of Control
Redemption Price, the Holder Optional Redemption Price, the Company Optional
Redemption Price and the Asset Sale Redemption Price, each of the foregoing,
individually, a Redemption Price.
(vv) "Registration
Rights Agreement"
means
that certain registration rights agreement dated as of July __, 2006 by and
among the Company and the Holder relating to, among other things, the
registration of the resale of the ADSs issuable upon conversion of the Notes,
payment of interest under the Notes, and exercise of the Warrants and the Series
B Warrants, as the same may be amended, restated, supplemented or otherwise
modified.
(ww) "Required
Holders"
means
the holders of Notes representing at least a majority of the aggregate principal
amount of the Notes then outstanding.
(xx) "SEC"
means
the United States Securities and Exchange Commission.
(yy) "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, as amended by the Amendment Agreement, dated July
__,
2006, between the Holder and the Company, as the same may be further amended,
restated, supplemented or otherwise modified.
-32-
(zz) "Security
Documents"
has the
meaning ascribed to such term in the Securities Purchase Agreement.
(aaa) "Series
B 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.
(bbb) "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)
(ccc) "Subscription
Date"
means
October 5, 2005.
(ddd) "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 April 30, 2007. All such determinations to be appropriately adjusted
for any share split, share dividend, share combination or other similar
transaction during such period.
(eee) "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.
(fff) "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).
(ggg) "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.
(hhh) "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.
-33-
(iii) "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]
-34-
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:
|
||
| Title: | ||
EXHIBIT
I
PSIVIDA
LIMITED
CONVERSION
NOTICE
Reference
is made to the Convertible Note (the "Note")
issued
to the undersigned by pSivida Limited (the "Company").
In
accordance with and pursuant to the Note, the undersigned hereby elects to
convert the Conversion Amount (as defined in the Note) of the Note indicated
below into ADRs (the "ADRs")
of the
Company, as of the date specified below.
|
Date
of
Conversion: _________________________________________________________________________
|
|||||||||||||
|
Aggregate
Conversion Amount to be converted:
_________________________________________________________________
|
|||||||||||||
|
Please
confirm the following information:
|
|||||||||||||
|
Conversion
Price: ___________________________________________________________________________
|
|||||||||||||
|
Number
of ADRs to be
issued: ___________________________________________________________________
|
|||||||||||||
|
Please
issue the ADRs into which the Note is being converted in the following
name and to the following address:
|
|||||||||||||
|
Issue
to:
|
_______________________________________________________________________________ | ||||||||||||
| _______________________________________________________________________________ | |||||||||||||
| _______________________________________________________________________________ | |||||||||||||
|
Facsimile
Number: ___________________________________________________________________________
|
|||||||||||||
|
Authorization: ______________________________________________________________________________
|
|||||||||||||
|
By: _______________________________________________________________________________
|
|||||||||||||
|
Title: _________________________________________________________________________
|
|||||||||||||
|
Dated: _________________________________________________________________________________________
|
|||||||||||||
|
Account
Number: ____________________________________________________________________________
|
|||||||||||||
|
(if
electronic book entry transfer)
|
|||||||||||||
|
Transaction
Code
Number: ______________________________________________________________________
|
|||||||||||||
|
(if
electronic book entry transfer)
|
|||||||||||||
ACKNOWLEDGMENT
The
Company hereby acknowledges this Conversion Notice and hereby directs
[Insert
Name of Transfer Agent]
to issue
the above indicated number of ADRs in accordance with the Transfer Agent
Instructions dated October __, 2005 from the Company and acknowledged and agreed
to by [Insert
Name of Transfer Agent].
|
pSivida
Limited
|
||
| |
|
|
| By: | ||
|
Name:
|
||
| Title: | ||
[FORM
OF SERIES A 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
Series
A Warrant To Purchase ADRS
Warrant
No.:_____________
Number
of
ADRs:______________
Date
of
Issuance: August ___, 2006 ("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, CASTLERIGG MASTER INVESTMENTS
LTD., 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), representing up to Five
Million, Seven Hundred Thousand (5,700,000) 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 Amendment Agreement, dated as of July
28,
2006 (the "Subscription
Date"),
by
and among the Company and the investors (the "Buyers")
referred to therein (the "Amendment
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
$1.80 per ADR (which is equivalent to $0.18 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 that certain
Securities Purchase Agreement, dated as of October 5, 2005, by and among the
Company and the buyers listed on the Schedule of Buyers attached thereto (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
Amendment 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 Amendment 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.
-6-
(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.
(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.
-8-
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.
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.
-9-
(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.
(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.
-10-
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.
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 accor-dance 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.
-11-
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.
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.
-12-
(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.
(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 Capital Market.
(j) "Expiration
Date"
means
the date that is sixty 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.
-13-
(n) "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.
(o) "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.
(p) "Principal
Market"
means
the Nasdaq Global Market.
(q) "Registration
Rights Agreement"
means
that certain registration rights agreement by and among the Company and the
Buyers.
(r) "Required
Holders"
means
the holders of the SPA Warrants representing at least a majority of Warrant
Shares underlying the SPA Warrants then outstanding.
(s) "SPA
Securities"
means
the Notes issued pursuant to the Amendment Agreement.
(t) "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.
(u) "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).
(v) "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: |
||
| Title: | ||
EXHIBIT
A
EXERCISE
NOTICE
TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT
TO PURCHASE ADRS
PSIVIDA
LIMITED
The
undersigned holder hereby exercises the right to purchase _________________
of
the ADRs, each of which representing ten (10) shares of the ordinary shares
of
common stock, no par value per share ("Ordinary
Shares")
of
pSivida Limited, an Australian corporation (the "Company"),
evidenced by the attached Warrant to Purchase ADRs (the "Warrant").
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.
1. Payment
of Exercise Price.
The
undersigned holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the
Warrant.
2. Delivery
of ADRs.
The
Company shall deliver to the holder __________ ADRs in accordance with the
terms
of the Warrant.
Date:
_______________ __, ______
|
Name
of Registered Holder
|
|||
| By: | |||
|
Name:
Title:
|
|||
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs Citibank,
N.A. to issue the above indicated number of Ordinary Shares in accordance with
the Transfer Agent Instructions dated August __, 2006 from the Company and
acknowledged and agreed to by Citibank, N.A.
| pSIVIDA LIMITED | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title | ||
[FORM
OF SERIES B 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
Series
B Warrant To Purchase ADRS
Warrant
No.:_____________
Number
of
ADRs:______________
Date
of
Issuance: ____ ___, 200_ ("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, [CASTLERIGG MASTER INVESTMENTS
LTD.], 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), representing up to
______________ (_____________)1
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
in connection with those certain convertible notes (the "Notes")
issued
pursuant to that certain Amendment Agreement, dated as of July 28, 2006 (the
"Subscription
Date"),
by
and among the Company and the investors (the "Buyers")
referred to therein (the "Amendment
Agreement").
1 Insert
the number of shares equal to 30% of the number of Conversion Shares issuable
upon redemption of the Amended and Restated Convertible Notes pursuant to
an
Asset Sale Redemption or a Company Optional Redemption.
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
an amount equal to the lower of (i) 75% of the Average Market Price and (ii)
the
then applicable Conversion Price (as defined in the Notes), 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 that certain
Securities Purchase Agreement, dated as of October 5, 2005, by and among the
Company and the buyers listed on the Schedule of Buyers attached thereto (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.
-4-
(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.
(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
Amendment 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 Amendment 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. | ||
-6-
(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.
(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.
-8-
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.
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.
-9-
(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.
(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.
-10-
(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.
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 accor-dance 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.
-11-
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.
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) "Average
Market Price"
means,
as of any date, the lesser of (i) the arithmetic average of the Weighted Average
Price (as defined in the Notes) of the ADRs during the twenty (20) consecutive
Trading Day period ending on the Trading Day immediately prior to such date
(the
"Measuring
Period"),
(ii)
the arithmetic average of the Weighted Average Price of the ADRs during the
first three (3) consecutive Trading Day period of such Measuring Period and
(iii) the arithmetic average of the Weighted Average Price of the ADRs during
the last three (3) consecutive Trading Day period of such Measuring Period;
provided,
that
all such determinations shall be appropriately adjusted for any stock split,
stock dividend, stock combination or other similar transaction that
proportionately decreases or increases the ADRs during such
periods.
(d) "Bloomberg"
means
Bloomberg Financial Markets.
-12-
(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.
(f) "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.
(g) "Convertible
Securities"
means
any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for ADRs or Ordinary Shares.
(h) "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.
(i) "Depositary"
means
Citibank, N.A., acting in such capacity under the Deposit
Agreement.
(j) "Eligible
Market"
means
the Principal Market, The New York Stock Exchange, Inc., the American Stock
Exchange or The Nasdaq Capital Market.
(k) "Expiration
Date"
means
the date that is sixty 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.
-13-
(l) "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.
(m) "Options"
means
any rights, warrants or options to subscribe for or purchase ADRs, Ordinary
Shares or Convertible Securities.
(n) "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.
(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.
(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 Global 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 Amendment 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.
-14-
(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]
-15-
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: |
||
| Title: | ||
EXHIBIT
A
EXERCISE
NOTICE
TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT
TO PURCHASE ADRS
PSIVIDA
LIMITED
The
undersigned holder hereby exercises the right to purchase _________________
of
the ADRs, each of which representing ten (10) shares of the ordinary shares
of
common stock, no par value per share ("Ordinary
Shares")
of
pSivida Limited, an Australian corporation (the "Company"),
evidenced by the attached Warrant to Purchase ADRs (the "Warrant").
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.
1. Payment
of Exercise Price.
The
undersigned holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the
Warrant.
2. Delivery
of ADRs.
The
Company shall deliver to the holder __________ ADRs in accordance with the
terms
of the Warrant.
Date:
_______________ __, ______
|
Name
of Registered Holder
|
|||
| By: | |||
|
Name:
Title:
|
|||
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs Citibank,
N.A. to issue the above indicated number of Ordinary Shares in accordance with
the Transfer Agent Instructions dated August __, 2006 from the Company and
acknowledged and agreed to by Citibank, N.A.
| pSIVIDA LIMITED | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title: | ||
AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT
AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated
as of August __, 2006,
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
Castlerigg Master Investments Ltd. (the "Investor").
WHEREAS:
A. The
Company and the Investor (collectively with any other investors that may become
a party to this Agreement, the "Investors")
are
parties to that certain Securities Purchase Agreement, dated as of October
5,
2005 (the "Securities
Purchase Agreement"),
pursuant to which, among other things, the Investors purchased from the Company
(i) Subordinated Convertible Notes, dated November 16, 2005 (the "Existing
Notes")
and
(ii) warrants (the "Existing
Warrants"),
which
are exercisable to purchase ADSs (the "Existing
Warrant Shares").
In
connection with the Amendment Agreement by and among the Company and the
Investor, dated as of July 28, 2006, (the "Amendment
Agreement"),
the
Company has agreed, among other things, (i) to amend and restate all of such
Investor's Existing Notes for senior secured convertible notes (the
"Notes"),
which
shall be convertible into ADSs (as converted, the "Conversion
Shares"),
in
accordance with the terms thereof, (ii) to issue to the Investor warrants (the
"Series
A Warrants")
which
shall be exercisable to purchase ADSs (the "Series
A Warrant
Shares")
and
(iii) to be obligated under the terms of the Notes to issue, from time to time,
Series B warrants (the "Series
B Warrants"
and
together with the Series A Warrants and the Existing Warrants, the "Warrants")
which
shall be exercisable into ADRs (the "Series
B Warrant Shares"
and
together with the Series A Warrant Shares and the Existing Warrant Shares,
the
"Warrant
Shares")
to the
investor in the future in accordance with the terms of the Notes.B.
C. To
induce
the Buyers to execute and deliver the Amendment Agreement, the Company has
agreed to execute and deliver this Agreement which amends, restates and
consolidates the terms and conditions of that certain Registration Rights
Agreement, by and among the Company and the Investors, dated as of November
16,
2005 whereby the Company 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.
D. To
further induce the Buyers to execute and deliver the Amendment Agreement, the
Company has agreed that in the event that a Registration Event (as defined
in
the Warrants) occurs or Series B Warrants are issued, 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
September 15, 2006 or, in the event the SEC requires the Company to make
substantial and material accounting disclosure to the SEC (other than any
disclosure specifically requested by the SEC prior to the date hereof) solely
relating to the transactions contemplated by the Amendment Agreement, October
15, 2006.
g. "Initial Registrable
Securities"
means
(i) the Conversion Shares, (ii) the Warrant Shares issuable upon the
exercise of any Warrants then outstanding, (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 issuable upon the exercise of any Warrants
then outstanding, 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.
-2-
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 (i) in the case of a registration pursuant to Section 2(b)(i)
the
date of receipt by the Company of a Subsequent Registration Request and (ii)
in
the case of a registration pursuant to Section 2(b)(ii) the issuance of the
applicable Series B Warrants.
r. "Subsequent
Effectiveness Deadline"
means
120 days after (i) in the case of a registration pursuant to Section 2(b)(i)
the
date of receipt by the Company of a Subsequent Registration Request and (ii)
in
the case of a registration pursuant to Section 2(b)(ii) the issuance of the
applicable Series B Warrants.
s. "Subsequent
Registrable Securities"
means,
as applicable (i) in the case of a registration pursuant to Section 2(b)(i),
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 and (ii) in the case of a registration pursuant
to
Section 2(b)(ii), the Series B Warrant Shares issuable upon exercise of any
Series B Warrants then outstanding and not previously registered.
-3-
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 (i) in the case of a registration pursuant to Section 2(b)(i), the
number of Warrant Shares issued and issuable pursuant to the Warrants 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) and (ii) in the case of a registration pursuant
to
Section 2(b)(ii), the number of Series B Warrant Shares issued and issuable
pursuant to the Series B 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).
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, (i) 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 or (ii) amend its existing
registration statement on Form F-3 with the SEC file number 333-132777 to cover
the resale of all 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.
-4-
b. Subsequent
Mandatory Registrations.
(i)
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 F-3, Form SB-2 or Form S-3 covering
the resale of all of the Subsequent Registrable Securities. In the event that
Form F-3, 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.
(ii)
The
Company shall, after the issuance of any Series B Warrants, 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 F-3, Form SB-2
or
Form S-3 covering the resale of all of the Subsequent Registrable Securities.
In
the event that Form F-3, 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.
-5-
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.
-6-
g. Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement.
If 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 declared effective by the SEC on or before the Initial
Effectiveness Deadline (an "Initial
Effectiveness 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 two and one half percent (2.5%) of the
aggregate Purchase Price of such Investor's Registrable Securities included
in
such Registration Statement (minus any Registration Delay Payments previously
paid to such holder) on (B) every thirtieth day (pro rated for periods totaling
less than thirty days) from the date of an Initial Effectiveness Failure until
such Initial Effectiveness Failure is cured; provided,
however,
Registration Delay Payments (as defined below) will be deemed to have begun
to
accrue for such Initial Effectiveness Failure on May 15, 2006. 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, with respect to a Subsequent Registration Statement, (A)
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 Subsequent Effectiveness Deadline
(a "Subsequent
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 a Subsequent
Effectiveness Failure until such Subsequent 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.
-7-
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.
-8-
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.
-9-
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.
-10-
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).
-11-
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.
-12-
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.
-13-
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.
-14-
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) 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 (iii) 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.
-15-
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.
-16-
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.
-17-
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.
-18-
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.
-19-
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.
-20-
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.
-21-
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.
*
* * * *
*
-22-
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.
|
COMPANY:
PSIVIDA
LIMITED
|
||
| |
|
|
| By: | ||
|
Name: Gavin Rezos |
||
| Title: Managing Director | ||
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.
|
BUYERS:
CASTLERIGG
MASTER INVESTMENTS LTD.
|
||
| |
|
|
| By: | ||
|
Name: |
||
| Title: | ||
SCHEDULE
OF BUYERS
|
Buyer
|
Buyer
Address
and
Facsimile Number
|
Buyer's
Representative's Address
and
Facsimile Number
|
|
Castlerigg
Master Investments
|
c/o
Sandell Asset Management Corp.
40
West 57th
Street
26th
Floor
New
York, New York 10019
Attention:
Cem Hacioglu/Matthew Pliskin
Facsimile: (212)
603-5710
Telephone: (212)
603-5775
|
Schulte
Roth & Zabel LLP
919
Third Avenue
New
York, NY 10022
Attn:
Eleazer Klein, Esq.
Facsimile:
(212) 593-5955
Telephone:
(212) 756-2000
|
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
Citibank,
N.A.
388
Greenwich Street,
14th
Floor
New
York,
New York 10013
Attention:
Paul
Martin
Re:
PSIVIDA
LIMITED
Ladies
and Gentlemen:
We
are
counsel to pSivida
Limited, an
Australian corporation (the "Company"),
and
have represented the Company in connection with that certain Amendment Agreement
(the "Purchase
Agreement")
entered into by and among the Company and the buyers named therein
(collectively, the "Holders")
pursuant to which the Company issued to the Holders notes convertible into
the
Company's ADRs (as converted, the "Conversion
Shares"),
and
warrants (the "Warrants")
exercisable for Ordinary Shares (the "Warrant
Shares").
Pursuant to the Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Holders (the "Registration
Rights Agreement")
pursuant to which the Company agreed, among other things, to register the resale
of the Registrable Securities (as defined in the Registration Rights Agreement),
including the ADRs issuable upon conversion of the Notes, as interest on the
Notes and upon exercise of the Warrants under the Securities Act of 1933, as
amended (the "1933
Act").
In
connection with the Company's obligations under the Registration Rights
Agreement, on ____________ ___, 2006, the Company filed a Registration Statement
on Form F-3 (File No. 333-_____________) (the "Registration
Statement")
with
the Securities and Exchange Commission (the "SEC")
relating to the Registrable Securities which names each of the Holders as a
selling stockholder thereunder.
In
connection with the foregoing, we advise you that a member of the SEC's staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
This
letter shall serve as our standing opinion to you that the ADRs are freely
transferable by the Holders pursuant to the Registration Statement. You need
not
require further letters from us to effect any future legend-free issuance or
reissuance of ADRs to the Holders as contemplated by the Company's Irrevocable
Transfer Agent Instructions dated August __, 2006. This letter shall serve
as
our standing instructions to you with regard to this matter.
| Very truly yours, | ||
| |
|
[ISSUER'S COUNSEL] |
|
By:
|
|
|
|
|
||
CC: [LIST
NAMES OF HOLDERS]
EXHIBIT
B
SELLING
STOCKHOLDERS
The
ADRs
being offered by the selling stockholders are issuable (i) upon conversion
of
the convertible notes, (ii) as interest on the convertible notes and (iii)
upon
exercise of the warrants. For additional information regarding the notes and
warrants, see "Private Placement of Convertible Notes and Warrants" above.
We
are registering the ADRs in order to permit the selling stockholders to offer
the ADRs for resale from time to time. Except for the ownership of the notes
and
the warrants, the selling stockholders have not had any material relationship
with us within the past three years.
The
table
below lists the selling stockholders and other information regarding the
beneficial ownership of the ordinary shares underlying the ADRs by each of
the
selling stockholders. The second column lists the number of ordinary shares
beneficially owned (directly or indirectly through ADRs) by each selling
stockholder, based on its ownership of the notes and the warrants, as of
________, 2006, assuming conversion of all the notes and exercise of all
warrants held by the selling stockholders on that date, without regard to any
limitations on conversions or exercise.
The
third
column lists the ordinary shares being offered by this prospectus by the selling
stockholders.
In
accordance with the terms of registration rights agreements with the holders
of
the notes and the warrants, this prospectus generally covers the resale of
at
least 130% of the sum of (i) the maximum number of ADRs issuable upon conversion
of the notes (assuming that the notes are convertible at their initial
Conversion Price and without taking into account any limitations on the
conversion of the notes set forth in such notes), (ii) the maximum number of
ADRs issuable upon exercise of the related warrants (without taking into account
any limitations on the exercise of the warrants set forth in the warrants)
and
(iii) as interest on the convertible notes, in each case as of the Trading
Day
immediately preceding the date this registration statement was initially filed
with the SEC. Because the conversion price of the notes and the exercise price
of the warrants may be adjusted, the number of ADRs that will actually be issued
may be more or less than the number of ADRs being offered by this prospectus.
The fourth column assumes the sale of all of the ADRs offered by the selling
stockholders pursuant to this prospectus.
Under
the
terms of the notes and the warrants, a selling stockholder may not convert
the
notes, or exercise the warrants, to the extent such conversion or exercise
would
cause such selling stockholder, together with its affiliates, to beneficially
own a number of ordinary shares (directly or indirectly through ADRs) which
would exceed 4.99% of our then outstanding ordinary shares following such
conversion or exercise, excluding for purposes of such determination ordinary
shares issuable upon conversion of the notes which have not been converted
and
upon exercise of the warrants which have not been exercised. The number of
shares in the second column does not reflect this limitation. The selling
stockholders may sell all, some or none of their ADRs in this offering. See
"Plan of Distribution."
|
Name
of Selling Stockholder
|
Number
of Ordinary Shares
Owned
Prior to Offering
|
Maximum
Number of
Ordinary
Shares to be Sold
Pursuant
to this Prospectus
|
Number
of Ordinary
Shares
Owned After
Offering
|
|
Castlerigg
Master Investments (1)
|
0
|
(1) Sandell
Asset Management Corp. is the investment manager of Castlerigg Master Investment
Ltd. ("Castlerigg") and has shared voting and dispositive power over the
securities owned by Castlerigg. Sandell Asset Management Corp. and Thomas E.
Sandell, its sole shareholder, disclaim beneficial ownership of the securities
owned by Castlerigg.
PLAN
OF DISTRIBUTION
We
are
registering the ADRs issuable upon conversion of the notes and upon exercise
of
the warrants and as interest on the convertible notes to permit the resale
of
these ADRs by the holders of the notes and the warrants from time to time after
the date of this prospectus. We will not receive any of the proceeds from the
sale by the selling stockholders of the ADRs. We will bear all fees and expenses
incident to our obligation to register the ADRs.
The
selling stockholders may sell all or a portion of the ADRs beneficially owned
by
them and offered hereby from time to time directly or through one or more
underwriters, broker-dealers or agents. If the ADRs are sold through
underwriters or broker-dealers, the selling stockholders will be responsible
for
underwriting discounts or commissions or agent's commissions. The ADRs may
be
sold in one or more transactions at fixed prices, at prevailing market prices
at
the time of the sale, at varying prices determined at the time of sale, or
at
negotiated prices. These sales may be effected in transactions, which may
involve crosses or block transactions,
|
·
|
on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
|
|
·
|
in
the over-the-counter market;
|
|
·
|
in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
|
|
·
|
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the ADRs as
agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
short
sales;
|
|
·
|
pursuant
to Rule 144 under the Securities
Act;
|
|
·
|
broker-dealers
may agree with the selling securityholders to sell a specified number
of
such ADRs at a stipulated price per
ADR;
|
|
·
|
a
combination of any such methods of sale;
and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
If
the
selling stockholders effect such transactions by selling ADRs to or through
underwriters, broker-dealers or agents, such underwriters, broker-dealers or
agents may receive commissions in the form of discounts, concessions or
commissions from the selling stockholders or commissions from purchasers of
the
ADRs for whom they may act as agent or to whom they may sell as principal (which
discounts, concessions or commissions as to particular underwriters,
broker-dealers or agents may be in excess of those customary in the types of
transactions involved). In connection with sales of the ADRs or otherwise,
the
selling stockholders may enter into hedging transactions with broker-dealers,
which may in turn engage in short sales of the ADRs in the course of hedging
in
positions they assume. The selling stockholders may also sell ADRs short and
deliver ADRs covered by this prospectus to close out short positions. The
selling stockholders may also loan or pledge ADRs to broker-dealers that in
turn
may sell such ADRs.
The
selling stockholders may pledge or grant a security interest in some or all
of
the notes, warrants or the ADRs owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the ADRs from time to time pursuant to this prospectus or any
amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act of 1933, as amended, amending, if necessary, the list
of
selling stockholders to include the pledgee, transferee or other successors
in
interest as selling stockholders under this prospectus. The selling stockholders
also may transfer and donate the ADRs in other circumstances in which case
the
transferees, donees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.
The
selling stockholders and any broker-dealer participating in the distribution
of
the ADRs may be deemed to be "underwriters" within the meaning of the Securities
Act, and any commission paid, or any discounts or concessions allowed to, any
such broker-dealer may be deemed to be underwriting commissions or discounts
under the Securities Act. At the time a particular offering of the ADRs is
made,
a prospectus supplement, if required, will be distributed which will set forth
the aggregate amount of ADRs being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker-dealers.
Under
the
securities laws of some states, the ADRs may be sold in such states only through
registered or licensed brokers or dealers. In addition, in some states the
ADRs
may not be sold unless such ADRs have been registered or qualified for sale
in
such state or an exemption from registration or qualification is available
and
is complied with.
There
can
be no assurance that any selling stockholder will sell any or all of the ADRs
registered pursuant to the shelf registration statement, of which this
prospectus forms a part.
The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of
1934,
as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the ADRs by the selling stockholders and any
other
participating person. Regulation M may also restrict the ability of any person
engaged in the distribution of the ADRs to engage in market-making activities
with respect to the ADRs. All of the foregoing may affect the marketability
of
the ADRs and the ability of any person or entity to engage in market-making
activities with respect to the ADRs.
We
will
pay all expenses of the registration of the ADRs pursuant to the registration
rights agreement, estimated to be $[ ] in total,
including, without limitation, Securities and Exchange Commission filing fees
and expenses of compliance with state securities or "blue sky" laws; provided,
however, that a selling stockholder will pay all underwriting discounts and
selling commissions, if any. We will indemnify the selling stockholders against
liabilities, including some liabilities under the Securities Act, in accordance
with the registration rights agreements, or the selling stockholders will be
entitled to contribution. We may be indemnified by the selling stockholders
against civil liabilities, including liabilities under the Securities Act,
that
may arise from any written information furnished to us by the selling
stockholder specifically for use in this prospectus, in accordance with the
related registration rights agreements, or we may be entitled to
contribution.
Once
sold
under the shelf registration statement, of which this prospectus forms a part,
the ADRs will be freely tradable in the hands of persons other than our
affiliates.