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 August 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
x Form
40-F o
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1):
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7):
Indicate
by check mark whether the registrant by furnishing the information contained
in
this Form is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes
o No
x
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: August 28, 2006 | ||
| pSivida Limited | ||
| |
|
|
| By: | /s/ Aaron Finlay | |
|
Aaron Finlay
Company
Secretary
|
||
EXHIBIT
INDEX
|
EXHIBIT
99.1:
|
Notice
of Extraordinary General Meeting
|
-2-
21st
August,
2006
Dear
Shareholder
A
General
Meeting will be held in Perth, Australia at 3:00pm WST on 19 September 2006
to
consider two resolutions as outlined in the accompanying Notice of Meeting
(the
Notice).
Background
The
resolutions relate to the ratification of the recently announced renegotiation
of Convertible Notes held by Sandell/Castlerigg (involving the issue of
additional Warrants) and the approval for the issue to Navigator of New
Subordinated Convertible Notes and New Warrants.
These
fund raising initiatives are critical to strengthening your Company's financial
position to allow it to focus on completing various late stage clinical trials
in order to move the Company toward commercialization of its research and
development. Accordingly, I request that you support these initiatives by
approving the resolutions set out in the Notice.
Terms
of New and Amended Fundraisings
A
significant benefit of the renegotiated terms for the arrangements already
in
place (but which the Company would like you to ratify) with Sandell/Castlerigg
is the removal of restrictions previously placed on the Company by the Note
Holder on raising future capital. The renegotiated terms also provide for
a 60
day extension for the registration statement relating to the Convertible
Note to
be declared ‘effective’ by the SEC. This registration statement is expected to
become ‘effective’ imminently. In consideration of these concessions by
Sandell/Castlerigg, the Company has agreed to issue to it additional Warrants
in
respect of American Depository Shares (ADSs)
and
make various changes to the terms of the Convertible Note, as set out in
the
explanatory memorandum accompanying the Notice.
The
lifting of the capital raising restrictions has enabled the Company to enter
into an agreement with Navigator to issue US$6,500,000 in New Subordinated
Convertible Notes and New Warrants in respect of ADSs. If this issue is approved
by Shareholders, these funds will be directed towards the funding of our
late
stage clinical trials and general operating expenses.
Directors'
Recommendation
The
Company is making operational changes to bring about significant cost savings
to
make more efficient use of our resources. Focus is being shifted from research
and development to completion of late stage clinical trials and subsequent
expected commercial returns.
I
encourage you to vote in favour of both resolutions as outlined in the attached
Notice. The amendments to the existing Convertible Note (and the issue of
the
additional Warrants as part of these amendments) have already occurred as
they
did not require shareholder approval. However, should the resolution to approve
this transaction not be ratified by shareholders, the Company will not be
able
to issue any additional securities, without first obtaining shareholder
approval, for a 12 month period due to ASX Listing Rule 7.1. This will reduce
the Company's flexibility to raise further funds as and when the need may
arise,
and will consequently increase the time taken to raise new capital and
potentially the cost of raising any new funds.
Your
Directors believe that the resolutions set out in the Notice, and described
in
the Explanatory Note, are in the best interests of both the Company and the
shareholders, and unanimously recommend that you vote in favour of all the
resolutions, as they intend to do in respect of their own beneficial
holdings.
The
Company’s Annual General Meeting will be held in Perth, Australia at a date to
be confirmed in November 2006. A full update on the Company’s progress and
planned activities will be announced at that time.
Yours
sincerely
Dr
Roger Brimblecombe PhD, DSc, FRCPath, FIBiol
Chief
Executive Officer and Executive Chairman
NOTICE
OF EXTRAORDINARY GENERAL MEETING,
EXPLANATORY
MEMORANDUM
AND
PROXY FORM
Date
of Meeting:
19
September 2006
Time
of Meeting:
3:00pm
Place
of Meeting:
Level
2,
QV1 Building
250
St
George’s Terrace
Perth
WA
6000
NOTICE
OF EXTRAORDINARY GENERAL MEETING
Notice
is
hereby given that an Extraordinary General Meeting of the shareholders of
pSivida Limited (pSivida or Company) will be held at Level 2, QV1 Building,
250
St George’s Terrace Perth WA 6000 on 19 September 2006 at 3:00 pm (Western
Standard Time).
In
accordance with Regulation 7.11.37 of the Corporations Act 2001, the directors
have determined that, for the purpose of voting at the meeting, members are
those persons who are the registered holders of Shares at 1:00 pm (Eastern
Standard Time) on 18 September 2006.
A
number
of defined terms are used in this Notice of Meeting and Explanatory Memorandum.
These terms are defined in paragraph 5 of the Explanatory Memorandum.
BUSINESS
Resolution
1 - Ratification of Issue of Additional Warrants in respect of American
Depositary Shares and ratification of amendments to the terms of the Notes
To
consider and, if thought fit, to pass the following resolution as an ordinary
resolution:
That,
for the purposes of Listing Rule 7.4 of the Listing Rules of Australian Stock
Exchange Limited, and for all other purposes, the Company ratifies:
| (a) |
the
issue of Additional Warrants in respect of American Depositary Shares;
and
|
| (b) |
the
amendment to the terms of the Notes,
|
in
each case on the terms and conditions set out in the Explanatory Memorandum
accompanying this Notice.
Resolution
2 - Approval of the Issue of US$6,500,000 in Subordinated Convertible New
Notes
and New Warrants in respect of 2,925,000 American Depositary Shares
To
consider and, if thought fit, to pass the following resolution as an ordinary
resolution:
That,
for the purposes of Listing Rule 7.1 of the Listing Rules of Australian Stock
Exchange Limited, and for all other purposes, the Company approves the issue
of:
| (a) |
US$6,500,000
in Subordinated Convertible New Notes;
and
|
| (b) |
New
Warrants in respect of 2,925,000 American Depositary
Shares,
|
in
each case on the terms and conditions set out in the Explanatory Memorandum
accompanying this Notice.
By
order
of the Board
Aaron
Finlay
Company
Secretary
21stAugust,
2006
NOTES
The
accompanying Explanatory Memorandum forms part of this Notice of Extraordinary
General Meeting and should
be
read
in conjunction with it. Terms defined in the Explanatory Memorandum have the
same meaning where used in this Notice of Extraordinary General
Meeting.
Voting
exclusion statements
The
Company will disregard any votes cast on the resolutions by the following
persons:
|
Resolution
|
Persons
|
|
|
1
Ratification
of issue of Additional Warrantsand
amendments to the terms of theNotes
|
Any person who participated in the
issue and any person who may
obtain a benefit (except a benefit
solely in the capacity of a holder of
ordinary securities) and any
associates of those persons.
|
|
|
2 Approval
of Issue of New Notes and New
Warrants
|
Any person who may participate in
the proposed issue and any person
who may obtain a benefit (except a
benefit solely in the capacity of a
holder of ordinary securities) and any
associates of those persons.
|
|
Unless
| • |
The
vote is cast as a proxy for a person who is entitled to vote, in
accordance with the directions on the proxy form specifying how the
proxy
is to vote; or
|
| • |
The
vote is cast by the Chairman as proxy for a person who is entitled
to
vote, in accordance with a direction on the proxy form to vote as
the
proxy decides.
|
Use
of Technology
It
is
proposed that the Chairman of the Company, Roger Brimblecombe, will chair the
Meeting from the United Kingdom using video conference technology.
EXPLANATORY
MEMORANDUM
EXPLANATORY
MEMORANDUM
| 1. |
Resolution
1 - Ratification of the Issue of Additional Warrants in respect of
American Depositary Shares and ratification of the amendments to
the terms
of the Notes
|
|
Resolution
1 seeks shareholder ratification for the issue of Additional Warrants
in
respect of American Depositary Shares (ADSs)
to Castlerigg Master Investments Ltd. (Investor),
and ratification of amendments to the Notes already held by the
Investor.
|
|
Each
ADS represents 10 Shares.
|
| 1.1 |
Overview
- issue of Additional Warrants
|
|
Shareholder
approval was obtained on 15 November 2005 for the issue to the Investor
of:
|
| 1. |
subordinated
convertible notes in the principal amount of US$15 million (Notes);
and
|
| 2. |
warrants
in respect of 633,803 ADSs (Existing
Warrants).
|
|
The
total amount raised by the issue of the Notes and Existing Warrants
pursuant to the shareholder approval obtained on 15 November 2005
was
US$15 million.
|
|
Under
the provisions of the Notes and in connection with the Registration
Rights
Agreement (an agreement entered into by the Company and Investor
contemporaneously with the Notes and Existing Warrants), the Company
was
required to obtain the effectiveness of a registration statement
under the
US Securities Act 1933 (1933
Act)
on or prior to 14 July 2006 (Registration
Deadline).
The purpose of the registration statement is to register, pursuant
to the
1933 Act, the re-sale of those Shares in the United States, thus
permitting their sale on the NASDAQ Global
Market.
|
| 1.2 |
Amendment
Agreement
|
|
Once
the Company determined that it would be unable to meet the Registration
Deadline, it agreed with the Investor on an extension of the Registration
Deadline. As announced to ASX on 17 July 2006, on that date the Company
and the Investor entered into the Amendment Agreement pursuant to
which
the Investor agreed to extend the Registration Deadline to 15 September
2006 with respect to the Company's obligation to obtain the effectiveness
of the registration statement. In consideration for the extension
of the
Registration Deadline by the Investor it was agreed
that:
|
| 1. |
the
Company would redeem US$2.5 million of the US$15 million principal
amount
of the Notes in exchange for a payment to the Investor of US$3.5
million;
|
| 2. |
the
Company will also pay to the holder of the
Notes:
|
| a) |
all
accrued and unpaid interest on the Notes;
|
| b) |
any
outstanding registration delay payments including any accrued and
unpaid
interest thereon, owed by the Company to the holder of the Notes;
and
|
| c) |
the
holder’s expenses associated with the
amendments;
|
| 3. |
the
Company would restate the terms of the Notes (see ASX announcement
dated
17 July 2006). The restated terms of the Notes are set out in this
Explanatory Memorandum in relation to paragraph (b) of Resolution
1 (see
below), and include the Company’s future obligation to issue Series B
Warrants (Series
B Warrants)
to the Investor upon certain redemptions of principal by the Company
at
the election of the Company under the Notes;
and
|
| 4. |
the
Company would issue further warrants (Series
A Warrants)
to the Investor which will be exercisable to subscribe for ADSs as
set out
below.
|
1
EXPLANATORY
MEMORANDUM
| 1.3 |
Ratification
sought
|
|
Ratification
of the agreement to issue the Additional Warrants is sought for the
purposes of Listing Rule 7.4 because a company listed on the ASX
cannot
issue or agree to issue securities equal to more than 15% of the
company's
issued share capital in any 12 month period without obtaining shareholder
approval.
|
| 1.4 |
Series
A Warrants
|
|
The
Series A Warrants:
|
| • |
represent
5,700,000 ADSs;
|
| • |
have
a US$1.80 per ADS exercise price.
|
| 1.5 |
Series
B Warrants
|
|
The
Series B Warrants:
|
| • |
will
be issued by the Company only in the event that the Company redeems
all or
a portion of the outstanding principal amount of the Notes, either
in
connection with an optional redemption by the Company or a sale by
the
Company of assets constituting security for the Notes (see paragraph
2.3
of this Explanatory Memorandum under the heading
"Security");
|
| • |
the
number of ADSs subject to any Series B Warrant will be 30% of the
amount
being redeemed divided by the then applicable conversion price. Because
the conversion price of the Notes is subject to adjustment, the maximum
number of Shares issued under the Series B Warrants is not possible
to
state at the date of the Notice of Meeting. However based on the
new
conversion price of US$2.00 and the new principal of US$12.5 million
(refer to paragraph 1.2 above) the Holder would be entitled to receive
1,875,000 Series B Warrants;
|
| • |
will
have an exercise price of the lower of:
|
| 1. |
75%
of the lower of:
|
| a) |
the
arithmetic average of the weighted average price of the ADSs during
the 20
consecutive trading days prior to issue;
|
| b) |
the
arithmetic average of the weighted average price of the ADSs during
the
first 3 consecutive trading days beginning 20 trading days prior
to issue;
and
|
| c) |
the
arithmetic average of the weighted average price of the ADSs during
the
last 3 consecutive trading days prior to issue;
and
|
| 2. |
the
then applicable conversion price.
|
| 1.6 |
Terms
of the Series A Warrants and Series B Warrants (Additional
Warrants)
|
| • |
The
Additional Warrants are freely transferable, but the Company does
not
intend to apply for quotation of the Additional Warrants on ASX,
NASDAQ or
any other exchange.
|
| • |
The
Shares to be issued on the exercise of a Additional Warrant will
rank
equally in all respects with the Company's then existing Shares.
The
Company must apply for quotation of such Shares on ASX and such Shares
are
to be represented by ADSs.
|
| • |
The
Additional Warrants constitute transferable options to acquire ADSs
at any
time on or before the fifth anniversary of the issue of the Additional
Warrants.
|
2
EXPLANATORY
MEMORANDUM
| • |
There
is a limit of 4.99% in respect of the holder of the Additional Warrants
and its affiliates’ beneficial ownership in Shares, which may prevent the
holder from exercise of part of the Additional Warrant (this limit
may be
changed by the holder of the Additional Warrants but cannot exceed
9.99%).
|
| • |
The
exercise price may be adjusted in accordance with a formula which
is
substantially the same as the formula contained in ASX Listing Rule
6.22.2, if there is a pro rata issue to holders of
Shares.
|
| • |
Subject
to the Listing Rules, other adjustments may be made upon a bonus
issue to
holders of Shares or the reorganisation of the capital of the
Company.
|
| • |
If
there is a fundamental transaction (such as a transaction which involves
a
change in control of the Company or a transfer of substantially all
of its
assets) the Company will use its best endeavours to procure that
the
successor entity assumes all of the obligations of the Company under
the
Additional Warrants.
|
| • |
The
Investor has agreed not to transfer or dispose of any ADSs or any
Shares
underlying any such securities within 12 months after the relevant
date of
issue to an Australian resident or person within Australia,
unless:
|
| a) |
the
disposal does not require a disclosure document under Chapter 6 of
the
Corporations Act (and the transferee has given the Investor a binding
undertaking on the terms outlined in this paragraph);
or,
|
| b) |
in
the case of ADSs issued upon exercise of an Additional Warrant, a
Registration Statement is not available for resale of such ADSs.
In this
case the Company will issue a "cleansing statement" in accordance
with
section 708A(5) of the Corporations
Act.
|
| 1.7 |
Use
of funds
|
|
The
issue of the Series A Warrants and the Series B Warrants will not
raise
any additional funds for the Company. Funds received from the exercise
of
the Series A Warrants and the Series B Warrants will be used for
the
Company's general working capital
requirements.
|
| 1.8 |
Terms
of the Existing Warrants
|
|
The
terms of the Existing Warrants have not changed and they continue
to have
an exercise price of US$7.20 per ADS (representing US$0.72 per
Share).
|
| 1.9 |
Overview
- amendments to the Notes
|
|
As
set out above in this Explanatory Memorandum to paragraph (a) of
Resolution 1, as part of the consideration for the Investor extending
the
Registration Deadline to 15 September 2006, the Company agreed to
amend
some of the terms of the Notes (see ASX announcement dated 17 July
2006).
|
| 1.10 |
Ratification
sought
|
|
Ratification
of the amendments to the Notes is not strictly required under ASX's
Listing Rules. However, the Company considered it appropriate to
put the
matter to Shareholders for ratification as part of the overall
arrangements with the Investor.
|
| 1.11 |
Terms
of the Notes (as amended)
|
|
A
copy of the Notes as amended has been lodged with the US Securities
and
Exchange Commission and the full text of the Notes are available
on their
website at www.sec.gov. A short summary of the terms of the Notes
as
amended follows:
|
|
• Each
Note has a face value of US$1.00.
|
3
EXPLANATORY
MEMORANDUM
| • |
The
Notes may be converted by the holder into Shares (represented by
ADSs) at
any time prior to the third anniversary of the original date of issue
of
the Notes. The number of Shares to be issued on conversion of the
Notes is
to be calculated by dividing the face value of the Notes to be converted
(and any accrued but unpaid interest on those Notes) by the conversion
price (rounded up to the nearest 10
Shares).
|
Conversion
Price
| • |
The
issue price of the Shares to be issued on conversion of the Notes
is
US$0.20 per Share (or US$2.00 per ADS), subject to anti-dilution
adjustments relating to future share issues by the Company (described
below), if any, and if on 30 April 2007 108% of the arithmetic average
of
the weighted average price at which the ADSs trade on NASDAQ for
the 10
consecutive trading days ending on the trading day immediately preceding
30 April 2007, is less than the applicable conversion price, then
the
conversion price will be reset to that amount (Conversion
Price).
|
| • |
The
Conversion Price will be reduced to the issue price of any Shares
issued
in the future by the Company if that issue price is less than the
then
effective Conversion Price (a Dilutive
Issue).
For this purpose, certain issues of shares (Permitted
Issues)
are to be ignored, such as an issue under an employee benefit plan,
on
conversion of any convertible securities on issue on the date of
the Note,
pursuant to a merger or business or asset acquisition, or under a
firm
commitment underwritten offering which will raise more than US$25
million.
|
| • |
The
Company cannot undertake any Dilutive Issue if the effect of the
issue
would be that the number of Shares which the Company would be required
to
issue on conversion of all remaining Notes is greater than the maximum
number of Shares which the Company is permitted at that time to issue
under the Listing Rules of ASX (including
the 15% limit in Listing Rule
7.1).
|
Term
| • |
The
Notes mature 3 years after they are
issued.
|
| • |
The
Notes contain certain events of default which allow the holder of
the
Notes to accelerate the maturity of the Notes and permit the holder
of the
Notes to force payment of the Note in the event of a change of control
of
the Company.
|
| • |
In
the event that the ADSs trade at 200% of the conversion price during
a
specified length of time, the Company has the right to force the
holder of
the Notes to convert the Notes into
ADSs.
|
Interest
| • |
Interest
accrues on the Notes at the rate of 8.0% per annum and is to be paid
quarterly in arrears. All or any part of the Interest may be paid,
at the
option of the Company, by the issue of Shares (represented by ADSs)
or in
cash. Where possible directors intend to make interest payments by
the
issue of Shares.
|
| • |
If
any interest on the Notes is to be satisfied by the issue of Shares,
the
issue price of such Shares will be one tenth of 85% of the volume
weighted
average price at which the ADSs trade on NASDAQ on the 10 trading
days
before the day on which the interest is due to be paid. Accordingly,
the
number of Shares to be issued by way of interest on the Notes will
be the
number (rounded up to a multiple of 10 Shares) produced by dividing
the
amount of the interest by that issue
price.
|
| • |
There
is a cap on the amount of interest that may be satisfied by the issue
of
Shares on any interest payment date. That cap is essentially 15%
of total
value of ADSs traded on NASDAQ on the 20 trading days immediately
before
the day on which the interest is due to be paid. Any interest in
excess of
that cap must be paid in cash.
|
4
EXPLANATORY
MEMORANDUM
| • |
During
any period that there is an Event of Default in respect of the Company
which has not been cured, interest accrues on the Notes at the rate
of
10.0% per annum. Events
of default include the Company’s failure to deliver converted ADSs within
a period of 12 business days, suspension from trading for more than
5
business days or 10 business days within a 12 month period, a failure
to
have the Registration Statement declared effective by the US Securities
and Exchange Commission, a failure to pay interest and other customary
events such as bankruptcy.
|
Redemption
of the Notes
| • |
Any
Notes not converted by the third anniversary of their issue must
be
redeemed. In connection with such a redemption, the Company must
repay the
face value of the Notes plus any accrued but unpaid interest on the
Notes
in cash.
|
Early
redemption of the Notes at the option of the holder
| • |
The
holder of the Notes will have an option to have up to US$6.25 million
of
the Notes redeemed on each of 31 July 2007 and 31 January
2008.
|
| • |
If
a change of control occurs in relation to the Company, the holder
of any
Notes may require their Notes to be
redeemed.
|
| • |
If
the Company sells, leases, conveys or otherwise disposes of any assets
comprising part or all of the security for the Notes, the holder
of the
Notes may require the Company to redeem part or all of the Notes.
The
price payable by the Company on such a redemption is 110% of the
conversion amount being redeemed. The Company will also issue to
the
holder of the Notes warrants, namely Series B Warrants, exercisable
for a
number of shares of the Company equal to:
|
| 1. |
30%
of the conversion amount redeemed, divided
by
|
| 2. |
the
then applicable conversion price of the
Notes.
|
|
Terms
of the Series B Warrants are set out above in this Explanatory Memorandum
in relation to paragraph (a) of Resolution
1.
|
Early
redemption of the Notes at the option of the Company
| • |
In
the event that the ADSs trade at 200% of the conversion price during
a
specified length of time, the Company has the right to force the
holder of
the Notes to convert the Notes into ADSs.
|
| • |
The
Company may redeem all or any part of the Notes at any time at its
option
at 108% face value and the issue of Series B Warrants. The Series
B
Warrants will be exercisable for a number of Shares equal
to:
|
| 1. |
30%
of the conversion amount being redeemed, divided
by
|
| 2. |
the
then applicable conversion price.
|
Right
to participate in other issues by the Company
| • |
The
holder of the Notes has the right to participate in any pro rata
issue of
securities by the Company as if the holder had converted their Notes
immediately before the record date for the
issue.
|
Right
to participate in non-cash distributions by the Company
| • |
The
holder of the Notes is entitled to participate in any dividends paid
(other than cash dividends) and distributions made by the Company
to the
holders of Shares or ADSs as if the holder had converted their Notes
into
Shares on the record date for such distribution.
|
5
EXPLANATORY
MEMORANDUM
Security
| • |
The
Notes will be secured by the Company's current royalties, subject
to
release of that security upon any disposition by the Company of the
royalty stream.
|
Subordination
| • |
The
Company's obligation to pay any amount in respect of the Notes on
a
winding up of the Company is subordinated to the payment of all
indebtedness of the Company and its subsidiaries under any credit
facility
with a financial institution, subject to certain limits on the amount
of
such indebtedness.
|
Cash
test
| • |
So
long as any Notes are on issue, beginning on 30 September 2006, the
Company must maintain a net cash balance equal to 30% of the remaining
unamortised principal amount of the Notes on issue except after the
later
of:
|
| (a) |
the
consummation of one or more placements in any 9 month period for
which the
Company receives aggregate gross proceeds equal to or greater than
US$16
million; and
|
| (b) |
the
effectiveness of the registration statement filed with US Securities
and
Exchange Commission (SEC) relating to the Notes and
Warrants.
|
Additional
covenants
| • |
The
Notes contain various negative covenants, including limitations on
the
incurrence of debt and liens.
|
| • |
There
is a limit of 4.99% in respect of the holder of the Notes and its
affiliates’ beneficial ownership in Shares, which may prevent it from
exercise of part of the Notes (this limit may be changed by the holder
of
the Notes but cannot exceed 9.99%).
|
| 2. |
Resolution
2 - Approval of the Issue of US$6,500,000 in Subordinated Convertible
New
Notes and New Warrants in respect of 2,925,000 American Depositary
Shares
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Resolution
2 seeks shareholder approval for the issue of subordinated convertible
notes convertible into ADSs and the issue of warrants exercisable
for
ADSs.
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| 2.1 |
Overview
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As
set out in the ASX announcement dated 31 July 2006, the Company signed
an
agreement with Absolute Europe Catalyst Fund, Absolute Octane Fund
and
Australian IT
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Investments
Ltd for additional funding of US$6,500,000 by way of the issue of
a new
series of subordinated convertible notes (New
Notes)
and warrants (New
Warrants).
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ADSs
issued upon conversion of the New Notes or exercise of the New Warrants
will be registered under the US Securities Act 1933 to permit resale
in
the United States within 180 days from the date of the
agreement.
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The
issue of Shares underlying the ADSs upon conversion of the New Notes
and
exercise of the New Warrants is subject to the passing of Resolution
3.
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| 2.2 |
New
Notes
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A
form of the New Notes is expected to be lodged with US Securities
and
Exchange Commission and will be available at www.sec.gov shortly
after
their sale. A short summary of the terms of the New Notes
follows:
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6
EXPLANATORY
MEMORANDUM
| • |
Each
of the New Notes will have a face value of
US$1.00.
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| • |
The
New Notes may be converted by the holder into Shares (represented
by ADSs)
at any time prior to the third anniversary of the date of issue of
the New
Notes.
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| • |
The
number of Shares to be issued on conversion of the New Notes is to
be
calculated by dividing the face value of the New Notes to be converted
(and any accrued but unpaid interest on those Notes) by the conversion
price of the Shares (rounded up to the nearest 10
Shares).
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Conversion
Price
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The
issue price of the Shares to be issued on conversion of the New Notes
is
US$0.20 per Share (or US$2.00 per ADS), subject to anti-dilution
adjustments relating to any future share issues by the Company (described
below). If on 30 April 2007, 108% of the arithmetic average of the
weighted average price at which the ADSs trade on NASDAQ for the
10
consecutive trading days ending on the trading day immediately preceding
30 April 2007 is less than the applicable conversion price, the issue
price will be reset to the market price (Conversion
Price).
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| • |
The
Conversion Price will be reduced to the issue price of any shares
issued
in the future by the Company for an issue price less than the then
effective Conversion Price (a Dilutive
Issue).
For this purpose, certain issues of shares (Permitted
Issues)
are to be ignored, such as an issue under an employee benefit plan,
on
conversion of any convertible securities on issue on the date of
the New
Notes, pursuant to a merger or business or asset acquisition, or
under a
firm commitment underwritten offering which will raise more than
US$25
million.
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| • |
The
Company cannot undertake any Dilutive Issue if the effect of the
issue
would be that the number of Shares which the Company would be required
to
issue on conversion of all remaining Notes is greater than the maximum
number of Shares which the Company is permitted at that time to issue
under the Listing Rules of ASX (including
the 15% limit in Listing Rule
7.1).
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Term
| • |
The
New Notes mature 3 years after they are
issued.
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| • |
The
New Notes contain certain events of default which allow the holder
of the
Notes to accelerate the maturity of the New Notes and permit the
holder of
the New Notes to force payment of the New Notes in the event of a
change
of control of the Company.
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| • |
The
Company has the right, in certain specified circumstances, to force
the
holder of the Notes to convert the New Notes into ADSs, including
if the
ADSs are trading at 200% of the conversion price during a specified
period.
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Interest
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Interest
accrues on the Notes at the rate of 8.0% per annum and is to be paid
quarterly in arrears. All or any part of the Interest may be paid,
at the
option of the Company, by the issue of Shares (represented by ADSs)
or in
cash. Where possible directors intend to make interest payments by
the
issue of Shares.
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| • |
If
any interest on the New Notes is to be satisfied by the issue of
Shares,
the issue price of such Shares will be one tenth of 85% of the volume
weighted average price at which the ADSs trade on NASDAQ on the 10
trading
days before the day on which the interest is due to be paid. Accordingly,
the number of Shares to be issued by way of interest on the New Notes
will
be the number (rounded up to a multiple of 10 Shares) produced by
dividing
the amount of the interest by that issue
price.
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7
EXPLANATORY
MEMORANDUM
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There
is a cap on the amount of interest that may be satisfied by the issue
of
Shares on any interest payment date. That cap is essentially 15%
of total
value of ADSs traded on NASDAQ on the 20 trading days immediately
before
the day on which the interest is due to be paid. Any interest in
excess of
that cap must be paid in cash.
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| • |
During
any period that there is an Event of Default in respect of the Company
which has not been cured, interest accrues on the New Notes at the
rate of
10.0% per annum.
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Redemption
of the Notes
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Any
New Notes not converted by the third anniversary of their issue must
be
redeemed. On redemption the Company must repay the face value of
the New
Notes plus any accrued but unpaid interest on the New
Notes.
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Early
redemption of the Notes at the option of the holder
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If
one tenth of the volume weighted average price at which ADSs trade
on
NASDAQ over the 10 trading days immediately preceding 14 August 2008
and
14 February 2009 (in each case, assuming that the existing Notes
are
repaid) is less than the Conversion Price on the respective date,
the
holders of New Notes may require the Company to redeem up to US$3,250,000
of their New Notes by delivering a notice to the Company within 10
business days of that date.
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| • |
If
a change of control occurs in relation to the Company, the holder
of any
New Notes may require their New Notes to be
redeemed.
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Early
redemption of the Notes at the option of the Company
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If
at any time after 60 days following the effectiveness of the registration
statement, the daily volume weighted average price at which ADSs
trade on
NASDAQ is more than 20 times the Conversion Price (expressed on a
per
share basis, or 2 times the conversion price expressed on a per ADS
basis)
on 20 days out of 25 consecutive days, the Company has the right
to redeem
all or some of the New Notes.
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| • |
The
Company may redeem all or any part of the New Notes at any time at
its
option at 108% of face value.
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Additional
covenants
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The
New Notes contain various negative covenants, including limitations
on the
incurrence of debt and liens.
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| • |
There
is a limit of 4.99% in respect of the holders of the New Notes and
their
affiliates’ beneficial ownership in Shares, which may prevent the holders
of the New Notes from exercising of part of the New Notes (this limit
may
be changed by the holders of the New Notes but cannot exceed
9.99%).
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| 2.3 |
New
Warrants
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| • |
The
New Warrants:
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| (i) |
are
exercisable to purchase 2,925,000 ADSs;
and
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| (ii) |
have
a US$2.00 per ADS exercise price.
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| • |
The
New Warrants constitute transferable options to acquire ADSs at any
time
on or before the fifth anniversary of the issue of the New
Warrants.
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| • |
The
New Warrants are freely transferable, but the Company does not intend
to
apply for quotation of the New Warrants on ASX, NASDAQ or any other
exchange.
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8
EXPLANATORY
MEMORANDUM
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The
Shares to be issued on the exercise of an New Warrant will rank equally
in
all respects with the Company's then existing Shares. The Company
must
apply for quotation of such Shares on ASX and such Shares are to
be
represented by ADSs.
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| • |
There
is a limit of 4.99% in respect of the holders of the New Warrants
and
their affiliates’ beneficial ownership in Shares, which may prevent the
holders of the New Warrants from exercising of part of the New Warrant
(this limit may be changed by the holders of the New Warrants but
cannot
exceed 9.99%).
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| • |
The
exercise price may be adjusted in accordance with a formula which
is
substantially the same as the formula contained in ASX Listing Rule
6.22.2, if there is a pro rata issue to holders of
Shares.
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| • |
Subject
to the Listing Rules, other adjustments may be made upon a bonus
issue to
holders of Shares or the reorganisation of the capital of the
Company.
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If
there is a fundamental transaction (such as a transaction which involves
a
change in control of the Company or a transfer of substantially all
of its
assets) the Company will use its best endeavours to procure that
the
successor entity assumes all of the obligations of the Company under
the
New Warrants.
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| • |
In
addition to the registration obligations under the RRA, the Company
will
be required, subject to certain limitations, to ensure that the Ordinary
Shares are listed and tradable on the
ASX.
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| 2.4 |
Use
of funds
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The
funds raised from the issue of the New Notes will be used for funding
of
late stage clinical trials and general operating
expenses.
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The
issue of the New Warrants will not raise any additional funds for
the
Company. Funds received from the exercise of the New Warrants will
be used
for the Company's general working capital
requirements.
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| 3. |
Board
Recommendations
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Subject
to the qualifications below, the Board recommends that shareholders
vote
in favour of all of the resolutions at the
Meeting.
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| 4. |
Undirected
Proxies
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The
Chairman of the meeting intends to use any undirected proxies held
by him
to vote in favour of each of the resolutions at the
meeting.
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| 5. |
Definitions
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Additional
Warrants means
Series A Warrants and Series B Warrants.
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ADS
means
American Depositary Shares (note: each of these is equivalent to
10
Shares)
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| ASX means Australian Stock Exchange Limited. |
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Board
means
the board of directors of the Company.
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Company
means
pSivida Limited, ABN 78 009 232 026.
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Listing
Rules means
the Listing Rules of ASX.
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Options
means
options to subscribe for Shares.
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Shares
means
fully paid ordinary shares in the
Company.
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Warrants
means
Existing Warrants, Series A Warrants and Series B
Warrants.
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