Unassociated Document
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 January 2007
Commission
File Number 000-51122
pSivida
Limited
(Translation
of registrant’s name into English)
Level
12
BGC Centre
28
The
Esplanade
Perth
WA
6000
(Address
of principal executive offices)
(Indicate
by check mark whether the registrant files or will file annual reports under
cover Form 20-F or Form 40-F).
Form
20-F
ý Form
40-F o
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1):
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7):
Indicate
by check mark whether the registrant by furnishing the information contained
in
this Form is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes
o No
ý
If
"Yes"
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- ___.
The
documents attached as Exhibits 99.1 through 99.5 to this Report on Form
6-K are hereby incorporated by reference herein and into the following
registration statements: (i) the Registrant's Registration Statement on Form
F-3, Registration No. 333-132776; (ii) the Registrant's Registration Statement
on Form F-3, Registration No. 333-132777; and (iii) the Registrant's
Registration Statement on Form F-3, Registration No.
333-135428.
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:
January 3, 2007
pSivida
Limited
Michael
J. Soja
Vice
President of Finance and Chief Financial Officer
EXHIBIT
INDEX
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Second
Amendment Agreement, dated as of December 29, 2006 by and between
pSivida
Limited and Castlerigg Master Investments LTD
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pSivida
Limited Series C Warrants to Purchase ADRs
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Form
of pSivida Limited Series D Warrants to Purchase ADRs
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Form
of Second Amended and Restated Convertible Note
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Press
Release: pSivida Released From Loan
Covenant
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EX 99.1
SECOND
AMENDMENT AGREEMENT
SECOND
AMENDMENT AGREEMENT
(the
"Agreement"),
dated
as of December 29, 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 (as amended prior to the date hereof,
the
"Existing
Securities Purchase Agreement"),
pursuant to which, among other things, the Investor purchased from the Company
(i) subordinated convertible notes, dated November 16, 2005 (the
"Original
Notes"),
which
are convertible in accordance with their terms into American Depositary Shares
of the Company ("ADSs")
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 "Original
Warrants"),
which
are exercisable to purchase 633,803 ADSs (the "Original
Warrant Shares").
B.
On
November 16, 2005, the Company and the Investors entered into a Registration
Rights Agreement (the "Original
Registration Rights Agreement"),
pursuant to which the Company agreed to provide certain registration rights
with
respect to the Registrable Securities (as defined in the Original 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 are also parties to that certain Amendment Agreement,
dated as of July 28, 2006 (the "Amendment
Agreement"),
pursuant to which, among other things, on September 14, 2006, (i) the Company
paid to the Investor the Amendment Payment Amount (as defined in the Amendment
Agreement); (ii) the Company issued to the Investor amended and restated notes
(the "Existing
Notes"),
convertible into ADSs, in accordance with the terms thereof; (iii) the Company
issued to the Investor Series A Warrants (the "Series
A Warrants")
exercisable to purchase 5,700,000 ADSs (the "Existing
Series A Warrant Shares"),
in
accordance with the terms thereof; (iv) the Company agreed to issue to the
Investor warrants (the "Series
B Warrants")
from
time to time in accordance with the terms of the Existing Notes, which shall
be
exercisable to purchase ADSs (the "Existing
Series B Warrant Shares",
and
collectively with the Original Warrant Shares and the Existing Series A Warrant
Shares, the "Existing
Warrant Shares"),
in
accordance with the terms thereof; (v) the Company and the Investor entered
into
the Amended and Restated Registration Rights Agreement (the "Existing
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 Existing
Registration Rights Agreement) under the 1933 Act, and the rules and regulations
promulgated thereunder, and applicable state securities laws; (vi) the Company
redeemed $2.5 million in principal amount of the Original
Notes.
D.
In
connection with that certain Letter Agreement, by and between the Company and
the Investor, dated October 17, 2006 (the "Letter
Agreement"),
the
Company
agreed
to
make certain payments to the Investor, and the Company and the Investor agreed
(i) to amend certain of the provisions of the Existing Registration Rights
Agreement in connection with the Registration Statement on Form F-3 (SEC File
No. 333 132777) registering 12,737,139 ADSs issuable to the Investor
and (ii)
to pay the Investor US$800,000 pursuant to Section 3(a) of the Letter Agreement
(the "Letter
Agreement Payment Amount");
E.
The
Company and the Investor desire to enter into this Agreement, pursuant to which,
among other things, in consideration of the Investor's waiver set forth in
Section 2 below, (i) the Company and the Investor shall amend and restate the
Existing Notes in the form attached hereto as Exhibit
A
(the
"Second Amended
and Restated Notes"
and the
ADSs into which it is convertible, the "Second Amended
and Restated Conversion Shares");
(ii) the Company shall issue, upon the terms and conditions stated in this
Agreement, Series C Warrants in the form attached hereto as Exhibit
B
(the
"Series
C Warrants")
which
shall be exercisable to purchase One Million and Five Hundred Thousand
(1,500,000) ADSs (the "Series
C Warrant Shares"),
in
accordance with the terms thereof; (iii) the Company shall issue, upon the
terms
and conditions stated in this Agreement, Series D Warrants in the form attached
hereto as Exhibit
C
(the
"Series
D Warrants",
and
together with the Series C Warrants, the "New
Warrants")
which
as of the date hereof is estimated to be exercisable to purchase Four Million
(4,000,000) ADSs in accordance with the terms thereof (as estimated, the
"Estimated
Series D Warrants")
and
such number of ADSs issuable upon exercise of the Series D Warrants issued
on
the Closing Date in accordance with the terms thereof and after adjustment
in
accordance with Section 4(c) below are referred to herein as the "Series
D Warrant Shares";
(iv) the parties hereto will further amend and restate the Existing
Registration Rights Agreement in the form attached hereto as Exhibit
D
(the
"Second Amended
and Restated Registration Rights Agreement")
and
(v) the Company shall increase the principal amount of the Existing Notes by
$306,391 (the "Note
Increase Amount"),
which
shall constitute payment in full to the Investor of any accrued and unpaid
interest on the Existing Note of the Investor, which is payable on or prior
to
January 2, 2007 under the terms of the Existing Note to the Investor (the
"Interest
Payment Amount").
F.
The
amendment and restatement of the Existing Notes and the issuance of the Series
C
Warrants and Series D Warrants is being made in reliance upon an exemption
from
registration under the 1933 Act.
G.
On
or
prior to the Closing Date, the Company desires to (i) issue to Nordic Eyepharma
K/S and/or one of its affiliates or designees (collectively, "Nordic")
for a
purchase price of up to Five Million Dollar (US$5,000,000) dollars (x) warrants
(the "Nordic
Warrants"),
which
shall be exercisable at an exercise price of $2.00 per share to purchase up
to
One Million (1,000,000) ADSs and
(y) a
convertible security, which shall be convertible at a conversion price of $2.00
per share into up to Two Million (2,000,000) ADSs (collectively, the
"Interim
Financing Transaction")
and
(ii) in a series of periodic investments, to issue to Nordic or such other
Person (the "Finance
Party")
additional convertible or other securities in exchange for up to Twenty Two
Million Dollars (US$22,000,000), in the aggregate, into the Company, an
affiliate or a special purpose entity (the "Financing
Entity"),
into
which the Company shall have assigned or transferred, as applicable or to which
Financing Party the Company shall have granted a Lien (as defined in the Amended
and Restated Note) in
(collectively,
the "Collateral
Transfer"),
the
intellectual property and assets related to the Company's Medidur and
Mifepristone (RU486) product lines (the "Collateral")
into
the Financing
Entity,
which additional convertible securities shall be convertible at a conversion
price of $2.00 per share into up to Eleven Million, Five Hundred Thousand
(11,500,000) ADSs (the "Secondary
Financing"
and
together with the Interim Financing Transaction, the "Financing
Transactions").
H.
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings ascribed to them in the Amended Securities Purchase Agreement (as
defined below) and, if not defined therein, the Second 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:
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1.
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AMENDMENT
AND RESTATEMENT OF NOTES AND ISSUANCE OF NEW
WARRANTS.
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(a)
Series
C Warrants.
As of
the date hereof, as consideration for the Investor entering into this Agreement,
the Company shall issue and deliver to the Investor the Series C Warrants,
exercisable for One Million and Five Hundred Thousand (1,500,000)
ADSs.
(b)
Notes
and Series D Warrants.
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 Investor shall surrender to the Company its Existing Notes and the Company
shall issue and deliver to the Investor the Amended and Restated Notes in a
principal amount equal to the sum of (x) the principal amount of the Existing
Notes being so amended and restated and (y) the Note Increase Amount, (ii)
the
Company shall issue and deliver to the Investor the Series D Warrants,
exercisable for Four Million (4,000,000) ADSs and (iii) the Interest Payment
Amount shall be deemed paid in full to the Investor.
(c)
Letter
Agreement.
Section
3(a) of the Letter Agreement is hereby amended to replace each reference to
"December 28, 2006" with the following:
the
earlier to occur of (x) the Closing Date (as defined in that certain Second
Amendment Agreement, dated December 29, 2006, by and between the Company and
the
Holder (the "Second Amendment Agreement"), (y) the date of the consummation
of
the Secondary Financing (as defined in the Second Amendment Agreement) and
(z)
March 31, 2007
(d)
Ratifications.
Except
as otherwise expressly provided herein, (i) the Existing Securities
Purchase Agreement as amended hereby (the "Amended
Securities Purchase Agreement"),
the
Original Warrants, the Series A 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 Existing Securities Purchase Agreement
to
"this Agreement", "hereto", "hereof", "hereunder" or words of like import
referring to the Existing Securities Purchase Agreement shall mean the Amended
Securities Purchase Agreement, (B) all references in the Transaction
Documents
to "this Agreement", "hereto", "hereof", "hereunder" or words of like import
referring to the Existing Registration Rights Agreement or the Original
Registration Rights Agreement shall mean the Second Amended and Restated
Registration Rights Agreement, (C) all references in the other Transaction
Documents to the "Registration Rights Agreement", "Amended and Restated
Registration Rights Agreement", "thereto", "thereof", "thereunder" or words
of
like import referring to the Existing Registration Rights Agreement or Original
Registration Rights Agreement shall mean the Second Amended and Restated
Registration Rights Agreement, (D) all references in the Securities Purchase
Agreement and the other Transaction Documents to "Transaction Documents" shall
also include this Agreement, the Second Amended and Restated Notes, the Series
C
Warrants and the Series D Warrants, (E) all references in the Securities
Purchase Agreement and the other Transaction Documents to "Notes" or "Amended
and Restated Notes" shall mean the Second Amended and Restated Notes, (F) all
references in the Existing Securities Purchase Agreement and the other
Transaction Documents to "Conversion Shares" or "Amended and Restated Conversion
Shares" shall mean the Second Amended and Restated Conversion Shares, (G) all
references in the existing 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
Series C Warrant Shares and the Series D Warrant Shares in addition to the
Existing 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.
(e)
Closing
Date.
The
date and time of the Closing (the "Closing
Date")
shall
be 10:00 a.m., New York Time, as soon as practicable 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.
(f)
Closing.
On the
Closing Date, (i) the Company (A) shall issue and deliver to the
Investor, the Second 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 Series D 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 Existing Notes for cancellation.
(a)
Net
Cash Balance Waiver.
Effective as of the Closing Date, until and including March 30, 2007, Section
15(e) of the Note is hereby waived in its entirety. From and after March 31,
2007, such waiver shall no longer be effective.
(b)
Registration
Delay Payments Waiver.
Effective as of the Closing Date, the Investor hereby agrees to permanently
waive its right to receive the Registration Delay Payments (as defined in the
Existing Registration Rights Agreement) accrued as a result of the Company's
failure to file the Additional Registration Statement on or prior to the
Additional
Filing
Deadline (as defined in the Existing Registration Rights Agreement), and unpaid
to such Investor as of the date hereof through the tenth day following the
earlier to occur of (A) the Closing Date, (B) the date of the consummation
of
the Secondary Financing and (C) March 31, 2007.
(c)
Transaction
Waiver.
Effective as of the Closing Date, the Investor hereby agrees to waive any
provision of the Second Amended and Restated Note, which would otherwise
prohibit the Collateral Transfer to the Financing Entity in connection with
the
Secondary Financing.
(d)
Standstill.
The
Investor hereby agrees to forbear from taking any remedial action, declaring
any
default and from accelerating and demanding any amounts due, in respect of
the
Existing Note, the Guaranty, the Existing Securities Purchase Agreement, and
all
other related documents, until the earlier of (the "Forbearance
Expiration Date"):
(i)
5:00 p.m. prevailing Boston, Massachusetts time on Wednesday, March 31, 2007,
(ii) the Closing Date and (iii) the occurrence of an Event of Default described
in either of Sections 4(a)(vi) or 4(a)(vii) of the Existing Note (but not
including any involuntary bankruptcy or insolvency petition filed or joined
by
the Investor).
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3.
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REPRESENTATIONS
AND WARRANTIES
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(a)
Investor
Bring Down.
The
Investor hereby represents and warrants to the Company as set forth in Section
2
of the Amended Securities Purchase Agreement 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 Existing Notes.
(b)
Company
Bring Down.
The
Company represents and warrants to the Investor as set forth in Section 3 of
the
Amended Securities Purchase Agreement 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 Amended Securities Purchase
Agreement are replaced in their entirety by the Schedules attached to this
Agreement. Such representations and warranties in the Amended 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 those which have been specifically
waived by the Investor pursuant to Section 2(b). The Company represents and
warrants to the Investor that this Agreement, the terms of the Second Amended
and Restated Notes, the terms of the Series C Warrants, the issue of the Series
C Warrants, the terms of the Series D Warrants, the issue of the Series D
Warrants and the agreement to issue shares or ADRs on exercise of the Second
Amended and Restated Notes or Series C Warrants or Series D 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 Second Amended and Restated Notes and the Second 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.
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4.
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CERTAIN
COVENANTS AND AGREEMENTS; RELEASE
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(a)
Disclosure
of Transactions and Other Material Information.
On or
before 10:30 a.m., New York Time, on the
second 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 Second Amended and
Restated Notes, the Second Amended and Restated Registration Rights Agreement,
the form of each of the Series C Warrants and the Series D Warrants) 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 Second Amended and Restated Notes, the
Second Amended and Restated Registration Rights Agreement, the form of each
of
the Series C Warrants and the Series D Warrants) 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 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 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 Second Amended and Restated Notes, Series C Warrants and Series
D Warrants.
(c)
Most
Favored Nation.
As of
the date hereof, the Company and the Investor agree that the ratio of (i) the
Black Scholes Value of the Series C Warrants and the Estimated Series D Warrants
to be issued to Investor hereunder and (ii) the Black Scholes Value of the
Nordic Warrants anticipated to be issued in the Interim Financing Transaction
equals 5.5 (the "Warrant
Ratio").
On
the Closing Date, if either (x) the exercise price of the Nordic Warrants issued
in the Interim Financing Transactions is less than $2.00 (a "Dilutive
Issuance Price")
or (y)
such Nordic Warrants are exercisable
to purchase more than One Million (1,000,000) ADSs (or their equivalent in
ordinary shares), the
Company
shall issue such Series D Warrants to the Investor with an exercise price equal
to such Dilutive Issuance Price (or if no Dilutive Issuance Price exists, the
exercise price shall remain at $2.00) and the number of ADSs issuable upon
exercise of such Series D Warrants (the "Actual
Series D Warrants")
shall
be increased as necessary to ensure that (A) the Black Scholes Value of the
Series C Warrants and the Actual Series D Warrants shall equal (B) the product
of (I) the Warrant Ratio and (II) the Black Scholes Value of the Nordic Warrants
issued in the Interim Financing Transaction; provided,
that,
notwithstanding the foregoing, if the Black Scholes Value of the Actual Series
D
Warrants is less than the Black Scholes Value of the Estimated Series D
Warrants, the Estimated Series D Warrants shall be issued to the Investor on
the
Closing Date. For
the
purpose of this Agreement,
"Black Scholes Value"
of any
warrant means the value of such warrant based on the Black and Scholes Option
Pricing Model obtained from the "OV" function on Bloomberg determined as of
the
day immediately preceding such date of determination and reflecting (i) a
risk-free interest rate corresponding to the U.S. Treasury rate for a period
equal to the remaining term of such warrant as of such date of request and
(ii)
an expected volatility equal to 60 percent.
(d)
Schedules.
The
Company hereby agrees that the Schedules referred to in Section 3(b) and 4(a)
shall be delivered to the Investor no later than the fifth (5th) Business Day
after the date hereof.
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5. |
CONDITIONS
TO ComPANY'S OBLIGATIONs hereunder.
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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)
If
on or
prior to March 31, 2007, the Interim Financing
Transactions shall have been consummated; provided, that after March 31, 2007
this condition shall no longer be a condition to the Company's obligations
hereunder.
(c)
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).
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6.
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CONDITIONS
TO INVESTOR'S OBLIGATIONS
HEREUNDER.
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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.
(b)
The
Company shall have executed and delivered to the Investor the Series C Warrants
being issued to such Investor as of the date hereof.
(c)
The
Company shall have executed and delivered to the Investor the Second Amended
and
Restated Notes and the Series D Warrants being issued to such Investor at the
Closing.
(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 Second
Amended and Restated Conversion Shares and the Second Amended and Restated
Registration Rights Agreement.
(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 Amendment
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, and (ii) the
Constitution, 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 Amendment 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 Amendment 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.
(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.
(j)
The
Company shall have delivered to the Investor such Investor's Investor Counsel
Expense by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Investor.
(k)
The
Company shall have delivered to the Investor such Investor's Letter Agreement
Payment Amount by wire transfer of immediately available funds pursuant to
the
wire instructions provided by the Investor on or prior to the earlier to occur
of (x) the Closing Date, (y) the date of the consummation of the Secondary
Financing and (z) March 31, 2007.
(l)
The
Company shall have delivered duly executed and delivered copies of the
transaction documents with respect to the Financing Transaction to the Investor,
which shall be in form and substance reasonably satisfactory to the Investor
and
the Financing Transactions shall have been consummated.
(m)
The
Stockholder Approval (as defined below) shall have been obtained.
(a)
Stockholder
Approval.
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 called and held not later than February 23, 2007 (the "Stockholder
Meeting Deadline"),
a
proxy statement, substantially in the form which has been previously reviewed
by
the Buyers 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 (the "Resolutions")
providing for the issuance of all of the Securities (as defined in the Amended
Securities Purchase Agreement and any other ADSs issuable hereunder (such
affirmative
approval being referred to herein as the "Stockholder
Approval"
and the
date such approval is obtained, the "Stockholder
Approval Date"),
and
the Company shall use its reasonable best efforts to solicit its stockholders'
approval of the Resolutions and to cause the Board of Directors of the Company
to recommend to the stockholders that they approve the Resolutions. The Company
shall be obligated to seek 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, the Company shall cause an
additional Stockholder Meeting to be held each calendar quarter thereafter
until
such Stockholder Approval is obtained.
In
the
event that the Closing does not occur by April 2, 2007 (the "Termination
Date"),
due
to the Company's or the Investors' failure to satisfy the conditions set forth
in Sections 5 and 6 hereof (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.
(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.
(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 Second Amended and Restated Notes or holders of the
Series C Warrants or holders of the Series D 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:
If
to the
Company:
pSivida
Limited
400
Pleasant Street
Watertown,
MA 02472
Telephone: +1
617
926 5000
Facsimile: +1
617
926 5050
Attention: General
Counsel
with
a
copy (for informational purposes only) to:
Curtis,
Mallet-Prevost, Colt & Mosle LLP
101
Park
Avenue
New
York,
NY 10178
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 Amended
Securities Purchase Agreement, with copies to the Investor's representatives
as
set forth on the Amended 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. Klein, 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.
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 Second Amended and Restated Notes representing
not less than a majority of the aggregate principal amount of the then
outstanding Second 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
Amended 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.]
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 of Finance and Chief Financial
Officer
|
[Signature
Page to Second 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:
CASTLERIGG MASTER INVESTMENTS LTD.
|
| |
|
BY:
SANDELL ASSET MANAGEMENT CORP
By:
Timothy
O’Brien
Name:
Timothy O’Brien
Title:
Chief Financial Officer
|
[Signature
Page to Second Amendment Agreement]
EX 99.2
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE 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
C Warrant To Purchase ADRS
Warrant
No.: Series
C-1
Number
of
ADRs: 1,500,000
Date
of
Issuance: December
29, 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 One
Million Five Hundred Thousand (1,500,000) 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 Second Amendment Agreement, dated as
of
December 29, 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 $0.03 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.
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 Warrant 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
$2.00 per ADR (which is equivalent to $0.20 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.
(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, as
amended (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.
(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.
2. ADJUSTMENT
OF EXERCISE PRICE.
(a) Adjustment
in the Event of a Rights Offering.
If the
Company issues or gives the holders of Ordinary Shares in the Company
the right, pro rata with existing holdings of Ordinary Shares, to subscribe
for additional securities (“Pro
Rata Issue”),
the
Exercise Price in respect of one underlying Ordinary Share shall be reduced
in
accordance with the following formula:
|
O’
= O -
|
E
[P - (S + D)]
|
|
N
+
1
|
Where:
O’
=
the
new
Exercise Price in respect of an underlying Ordinary Share.
O = the
original Exercise Price in respect of an underlying Ordinary Share.
E = the
number of underlying Ordinary Shares to be issued on exercise of each
Warrant.
P = the
average market price per Ordinary Share (weighted by reference to volume) of
the
Ordinary Shares during the 5 trading days ending before the ex rights date
or ex
entitlements date.
S = the
subscription price for an Ordinary Share under the Pro Rata Issue.
D = the
dividend due but not paid on the existing Ordinary Shares (excluding those
to be
issued under the Pro Rata Issue).
N = the
number of Ordinary Shares which must be held to receive one new Share in the
Pro
Rata Issue.
(b) Adjustment
upon pro rata bonus issue of Ordinary Shares.
If
the
Company makes a pro rata bonus issue of Ordinary Shares to its shareholders
prior to the Warrant being exercised, and the Warrant is not exercised prior
to
the record date for the issue, the Warrant will, when exercised, entitle the
Holder to the number of Warrant Shares that would ordinarily be received under
Section 1, plus the number of bonus Ordinary Shares which would have been issued
to the Holder if the Warrant had been exercised prior to the record
date.
(c) Adjustment
upon Subdivision or Combination of Ordinary Shares.
If the
Company at any time on or after the Subscription Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of
its
outstanding ADRs (or Ordinary Shares underlying such ADRs) into a greater number
of ADRs (or Ordinary Shares), the Exercise Price in effect immediately prior
to
such subdivision will be proportionately reduced and the number of Warrant
Shares (or Ordinary Shares underlying such Warrant Shares) will be
proportionately increased. If the Company at any time on or after the
Subscription Date combines (by combination, reverse stock split or otherwise)
one or more classes of its outstanding ADRs (or Ordinary Shares underlying
such
ADRs) into a smaller number of ADRs (or Ordinary Shares underlying such ADRs),
the Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares (or Ordinary Shares
underlying such Warrant Shares) will be proportionately decreased. Any
adjustment under this Section 2(c) shall be subject to (and will be
correspondingly reorganized in a manner which is permissible under, or necessary
to comply with) the ASX Listing Rules or the rules of any Recognized Exchange
in
force at the relevant time and shall become effective at the close of business
on the date the subdivision or combination becomes effective.
(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.
3. FUNDAMENTAL
TRANSACTIONS. The Company shall not enter into or be party to a Fundamental
Transaction unless, and shall use its best endeavors to procure that, (i)
the Successor Entity (if other than the Company) assumes in writing all of
the
obligations of the Company under this Warrant and the other Transaction
Documents in accordance with the provisions of this Section (4)(b) pursuant
to written agreements in form and substance reasonably satisfactory to the
Required Holders and approved by the Required Holders prior to such Fundamental
Transaction, including agreements to deliver to each holder of Warrants in
exchange for such Warrants a security of such Successor Entity evidenced by
a
written instrument substantially similar in form and substance to this Warrant,
including, without limitation, an adjusted exercise price equal to the value
for
the Ordinary Shares reflected by the terms of such Fundamental Transaction,
and
exercisable for a corresponding number of shares of capital stock equivalent
to
the Ordinary Shares underlying the Warrant Shares acquirable and receivable
upon
exercise of this Warrant (without regard to any limitations on the exercise
of
this Warrant) prior to such Fundamental Transaction, and reasonably satisfactory
to the Required Holders and (ii) such Successor Entity is a publicly traded
corporation whose common shares (or whose American Depositary Shares) are quoted
on or listed for trading on an Eligible Market. Upon the occurrence of any
Fundamental Transaction, such Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the “Company” shall
refer instead to such Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under
this
Warrant with the same effect as if such Successor Entity had been named as
the
Company herein. Upon consummation of the Fundamental Transaction, such Successor
Entity shall deliver to the Holder confirmation that there shall be issued
upon
exercise of this Warrant at any time after the consummation of the Fundamental
Transaction, in lieu of the Warrant Shares (or other securities, cash, assets
or
other property) purchasable upon the exercise of the Warrant prior to such
Fundamental Transaction, such shares of the publicly traded common stock (or
their equivalent) of the Successor Entity (including its Parent Entity), as
adjusted in accordance with the provisions of this Warrant. In addition to
and
not in substitution for any other rights hereunder, prior to the consummation
of
any Fundamental Transaction pursuant to which holders of Ordinary Shares
(directly or indirectly through Warrant Shares or otherwise) are entitled to
receive securities or other assets with respect to or in exchange for Ordinary
Shares (a “Corporate Event”), the Company shall make appropriate provision, to
the extent not prohibited by applicable law, to insure that the Holder will
thereafter have the right to receive upon an exercise of this Warrant at any
time after the consummation of the Fundamental Transaction but prior to the
Expiration Date, in lieu of the Warrant Shares purchasable upon the exercise
of
the Warrant prior to such Fundamental Transaction, such, securities or other,
assets which the Holder would have been entitled to receive upon the happening
of such Fundamental Transaction had the Warrant been exercised immediately
prior
to such Fundamental Transaction. The provisions of this Section shall apply
similarly and
equally
to successive Fundamental Transactions and Corporate Events and shall be applied
without regard to any limitations on the exercise of this Warrant.
4. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment
of its Constitution or Bylaws or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, and will at all times in
good faith carry out all the provisions of this Warrant and take all action
as
may be required to protect the rights of the Holder. Without limiting the
generality of the foregoing, the Company (i) shall not increase the par
value of any Ordinary Shares underlying the Warrant Shares receivable upon
the
exercise of this Warrant above the Exercise Price then in effect and
(ii) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares upon the exercise of this Warrant.
5. WARRANT
HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in such Person’s capacity as a holder of this
Warrant, shall not be entitled to vote or receive dividends or be deemed the
holder of share capital of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the Holder, solely in
such
Person’s capacity as the Holder of this Warrant, any of the rights of a
shareholder of the Company or any right to vote, give or withhold consent to
any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to
the
issuance to the Holder of the Warrant Shares which such Person is then entitled
to receive upon the due exercise of this Warrant. In addition, nothing contained
in this Warrant shall be construed as imposing any liabilities on the Holder
to
purchase any securities (upon exercise of this Warrant or otherwise) or as
a
shareholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company. Notwithstanding this Section 6, the Company
shall provide the Holder with copies of the same notices and other information
given to the shareholders of the Company generally, contemporaneously with
the
giving thereof to the shareholders.
6. REISSUANCE
OF WARRANTS.
(a) Transfer
of Warrant.
If this
Warrant is to be transferred, the Holder shall surrender this Warrant to the
Company, whereupon the Company will forthwith issue and deliver upon the order
of the Holder a new Warrant (in accordance with Section 7(d)), registered as
the
Holder may request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less then the total number of
Warrant Shares then underlying this Warrant is being transferred, a new Warrant
(in accordance with Section 7(d)) to the Holder representing the right to
purchase the number of Warrant Shares not being transferred.
(b) Lost,
Stolen or Mutilated Warrant.
Upon
receipt by the Company of evidence reasonably satisfactory to the Company of
the
loss, theft, destruction or mutilation of this Warrant, and, in the case of
loss, theft or destruction, of any indemnification undertaking by the Holder
to
the Company in customary form and, in the case of mutilation, upon surrender
and
cancellation
of this Warrant, the Company shall execute and deliver to the Holder a new
Warrant (in accordance with Section 7(d)) representing the right to purchase
the
Warrant Shares then underlying this Warrant.
(c) Exchangeable
for Multiple Warrants.
This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Warrant or Warrants (in accordance
with Section 7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant
will represent the right to purchase such portion of such Warrant Shares as
is
designated by the Holder at the time of such surrender; provided, however,
that
no Warrants for fractional Warrant Shares shall be given.
(d) Issuance
of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to the terms
of
this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
(ii) shall represent, as indicated on the face of such new Warrant, the right
to
purchase the Warrant Shares then underlying this Warrant (or in the case of
a
new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant
Shares designated by the Holder which, when added to the number of Warrant
Shares underlying the other new Warrants issued in connection with such
issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such
new Warrant which is the same as the Issuance Date, and (iv) shall have the
same
rights and conditions as this Warrant.
7. NOTICES;
CURRENCY.
(a) Notices.
Whenever notice is required to be given under this Warrant, unless otherwise
provided herein, such notice shall be given in accordance with Section 9(f)
of
the Securities Purchase Agreement. The Company shall provide the Holder with
prompt written notice of all actions taken pursuant to this Warrant, including
in reasonable detail a description of such action and the reason therefore.
Without limiting the generality of the foregoing, the Company will give written
notice to the Holder (i) immediately upon any adjustment of the Exercise Price,
setting forth in reasonable detail, and certifying, the calculation of such
adjustment and (ii) at least fifteen days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or
distribution upon the Ordinary Shares or Warrant Shares, (B) with respect to
any
grants, issuances or sales of any Options, Convertible Securities or rights
to
purchase stock, warrants, securities or other property to holders of Ordinary
Shares or Warrant Shares or (C) for determining rights to vote with respect
to
any Fundamental Transaction, dissolution or liquidation, provided in each case
that such information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder.
(b) Currency.
Unless
otherwise indicated, all dollar amounts referred to in this Warrant are in
United States Dollars.
8. AMENDMENT
AND WAIVER. The provisions of this Warrant may be amended by the Company and
the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the
written
consent of the Required Holders and approval from the holders of Ordinary Shares
at a shareholders meeting held in accordance with the ASX Listing Rules and
Corporations
Act 2001
(Cth) or
if otherwise permitted by the ASX Listing Rules. Notwithstanding any provision
of this Warrant, , a term of this Warrant which has the effect of reducing
the
exercise price, increasing the period for exercise or increasing the number
of
Warrant Shares or Ordinary Shares received on exercise is prohibited if it
would
result in a breach of the ASX Listing Rules. Notwithstanding the above, no
change may increase the exercise price of any SPA Warrant or decrease the number
of Warrant Shares or class of stock obtainable upon exercise of any SPA Warrant
without the written consent of the Holder, unless otherwise provided in the
ASX
Listing Rules. A change which has the effect of reducing the purchase price,
increasing the period for exercise or increasing the number of securities
received cannot be made. In addition, subject to the ASX Listing Rules, no
such
amendment shall be effective to the extent that it applies to less than all
of
the holders of the SPA Warrants then outstanding.
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.
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.
(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.
(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 Second Amended and Restated Registration Rights Agreement by and
among the Company and the Buyers, as such agreement may be amended from time
to
time.
(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]
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
Name:
Michael J. Soja
Title:
Vice President of Finance and Chief Financial Officer
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) ordinary shares (“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
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 December [__],
2006
from the Company and acknowledged and agreed to by Citibank, N.A.
PSIVIDA
LIMITED
Name:
Title:
EX 99.3
FORM
OF SERIES D WARRANT
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE 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
[C][D] Warrant To Purchase ADRS
Warrant
No.: Series
[ ]
Date
of
Issuance: [ ](“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
[ ]
([ ])
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 Second Amendment Agreement, dated as
of
December 29, 2006 (the “Subscription
Date”),
by
and among the Company and the investors (the “Buyers”)
referred to therein (the “Amendment
Agreement”).
| 1 |
Insert
for Series C Warrants: 1.5 million ADRs. Insert for Series D Warrants:
4
million ADRs.
|
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 $0.03 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.
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 Warrant 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
$[ ]2
per ADR
(which is equivalent to $[ ] 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
|
2
|
Insert
for Series C Warrants: $2.00. Insert for Series D Warrants:
The lower of
(x) $2.00 and (y) the lowest exercise price or conversion price
per ADR
(or its equivalent) issued to Nordic (as defined in the Amendment
Agreement) in connection with any of the Nordic Transactions
(as defined
in the Amendment Agreement).
|
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.
(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, as
amended (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.
(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.
2. ADJUSTMENT
OF EXERCISE PRICE.
(a) Adjustment
in the Event of a Rights Offering.
If the
Company issues or gives the holders of Ordinary Shares in the Company
the right, pro rata with existing holdings of Ordinary Shares, to subscribe
for additional securities (“Pro
Rata Issue”),
the
Exercise Price in respect of one underlying Ordinary Share shall be reduced
in
accordance with the following formula:
|
O’
= O -
|
E
[P - (S + D)]
|
|
N
+
1
|
Where:
O’
=
the
new
Exercise Price in respect of an underlying Ordinary Share.
O = the
original Exercise Price in respect of an underlying Ordinary Share.
E = the
number of underlying Ordinary Shares to be issued on exercise of each
Warrant.
P = the
average market price per Ordinary Share (weighted by reference to volume) of
the
Ordinary Shares during the 5 trading days ending before the ex rights date
or ex
entitlements date.
S = the
subscription price for an Ordinary Share under the Pro Rata Issue.
D = the
dividend due but not paid on the existing Ordinary Shares (excluding those
to be
issued under the Pro Rata Issue).
N = the
number of Ordinary Shares which must be held to receive one new Share in the
Pro
Rata Issue.
(b) Adjustment
upon pro rata bonus issue of Ordinary Shares.
If
the
Company makes a pro rata bonus issue of Ordinary Shares to its shareholders
prior to the Warrant being exercised, and the Warrant is not exercised prior
to
the record date for the issue, the Warrant will, when exercised, entitle the
Holder to the number of Warrant Shares that would ordinarily be received under
Section 1, plus the number of bonus Ordinary Shares which would have been issued
to the Holder if the Warrant had been exercised prior to the record
date.
(c) Adjustment
upon Subdivision or Combination of Ordinary Shares.
If the
Company at any time on or after the Subscription Date subdivides (by any stock
split, stock
dividend,
recapitalization or otherwise) one or more classes of its outstanding ADRs
(or
Ordinary Shares underlying such ADRs) into a greater number of ADRs (or Ordinary
Shares), the Exercise Price in effect immediately prior to such subdivision
will
be proportionately reduced and the number of Warrant Shares (or Ordinary Shares
underlying such Warrant Shares) will be proportionately increased. If the
Company at any time on or after the Subscription Date combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding ADRs
(or Ordinary Shares underlying such ADRs) into a smaller number of ADRs (or
Ordinary Shares underlying such ADRs), the Exercise Price in effect immediately
prior to such combination will be proportionately increased and the number
of
Warrant Shares (or Ordinary Shares underlying such Warrant Shares) will be
proportionately decreased. Any adjustment under this Section 2(c) shall be
subject to (and will be correspondingly reorganized in a manner which is
permissible under, or necessary to comply with) the ASX Listing Rules or the
rules of any Recognized Exchange in force at the relevant time and shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(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.
3. FUNDAMENTAL
TRANSACTIONS. The Company shall not enter into or be party to a Fundamental
Transaction unless, and shall use its best endeavors to procure that, (i)
the Successor Entity (if other than the Company) assumes in writing all of
the
obligations of the Company under this Warrant and the other Transaction
Documents in accordance with the provisions of this Section (4)(b) pursuant
to written agreements in form and substance reasonably satisfactory to the
Required Holders and approved by the Required Holders prior to such Fundamental
Transaction, including agreements to deliver to each holder of Warrants in
exchange for such Warrants a security of such Successor Entity evidenced by
a
written instrument substantially similar in form and substance to this Warrant,
including, without limitation, an adjusted exercise price equal to the value
for
the Ordinary Shares reflected by the terms of such Fundamental Transaction,
and
exercisable for a corresponding number of shares of capital stock equivalent
to
the Ordinary Shares underlying the Warrant Shares acquirable and receivable
upon
exercise of this Warrant (without regard to any limitations on the exercise
of
this Warrant) prior to such Fundamental Transaction, and reasonably satisfactory
to the Required Holders and (ii) such Successor Entity is a publicly traded
corporation whose common shares (or whose American Depositary Shares) are quoted
on or listed for trading on an Eligible Market. Upon the occurrence of any
Fundamental Transaction, such Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the “Company” shall
refer instead to such Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under
this
Warrant with the same effect as if such Successor Entity had been named as
the
Company herein. Upon consummation of the Fundamental Transaction, such Successor
Entity shall deliver to the Holder confirmation that there shall be issued
upon
exercise of this Warrant at any time after the consummation of the Fundamental
Transaction, in lieu of the Warrant Shares (or other securities, cash, assets
or
other property) purchasable upon the exercise of the Warrant prior to such
Fundamental Transaction, such shares of the publicly traded common stock (or
their equivalent) of the Successor Entity (including its Parent Entity), as
adjusted in accordance with the provisions of this Warrant. In addition to
and
not in substitution for any other rights hereunder, prior to the consummation
of
any Fundamental Transaction pursuant to which holders of Ordinary Shares
(directly or indirectly through Warrant Shares or otherwise) are entitled to
receive securities or other assets with respect to or in exchange for Ordinary
Shares (a “Corporate Event”), the Company shall make appropriate provision, to
the extent not prohibited by applicable law, to insure that the Holder will
thereafter have the right to receive upon an exercise of this Warrant at any
time after the consummation of the Fundamental Transaction but prior to the
Expiration Date, in lieu of the Warrant Shares purchasable upon the exercise
of
the Warrant prior to such Fundamental Transaction, such, securities or other,
assets which the Holder would have been entitled to receive upon the happening
of such Fundamental Transaction had the Warrant been exercised immediately
prior
to such Fundamental Transaction. The provisions of this Section shall apply
similarly and equally to successive Fundamental Transactions and Corporate
Events and shall be applied without regard to any limitations on the exercise
of
this Warrant.
4. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment
of its Constitution or Bylaws or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, and will at all times in
good faith carry out all
the
provisions of this Warrant and take all action as may be required to protect
the
rights of the Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any Ordinary Shares
underlying the Warrant Shares receivable upon the exercise of this Warrant
above
the Exercise Price then in effect and (ii) shall take all such actions as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the exercise
of
this Warrant.
5. WARRANT
HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in such Person’s capacity as a holder of this
Warrant, shall not be entitled to vote or receive dividends or be deemed the
holder of share capital of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the Holder, solely in
such
Person’s capacity as the Holder of this Warrant, any of the rights of a
shareholder of the Company or any right to vote, give or withhold consent to
any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to
the
issuance to the Holder of the Warrant Shares which such Person is then entitled
to receive upon the due exercise of this Warrant. In addition, nothing contained
in this Warrant shall be construed as imposing any liabilities on the Holder
to
purchase any securities (upon exercise of this Warrant or otherwise) or as
a
shareholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company. Notwithstanding this Section 6, the Company
shall provide the Holder with copies of the same notices and other information
given to the shareholders of the Company generally, contemporaneously with
the
giving thereof to the shareholders.
6. REISSUANCE
OF WARRANTS.
(a) Transfer
of Warrant.
If this
Warrant is to be transferred, the Holder shall surrender this Warrant to the
Company, whereupon the Company will forthwith issue and deliver upon the order
of the Holder a new Warrant (in accordance with Section 7(d)), registered as
the
Holder may request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less then the total number of
Warrant Shares then underlying this Warrant is being transferred, a new Warrant
(in accordance with Section 7(d)) to the Holder representing the right to
purchase the number of Warrant Shares not being transferred.
(b) Lost,
Stolen or Mutilated Warrant.
Upon
receipt by the Company of evidence reasonably satisfactory to the Company of
the
loss, theft, destruction or mutilation of this Warrant, and, in the case of
loss, theft or destruction, of any indemnification undertaking by the Holder
to
the Company in customary form and, in the case of mutilation, upon surrender
and
cancellation of this Warrant, the Company shall execute and deliver to the
Holder a new Warrant (in accordance with Section 7(d)) representing the right
to
purchase the Warrant Shares then underlying this Warrant.
(c) Exchangeable
for Multiple Warrants.
This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Warrant or Warrants (in accordance
with Section 7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant
will represent the right to purchase such portion of such Warrant Shares as
is
designated by the
Holder
at
the time of such surrender; provided, however, that no Warrants for fractional
Warrant Shares shall be given.
(d) Issuance
of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to the terms
of
this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
(ii) shall represent, as indicated on the face of such new Warrant, the right
to
purchase the Warrant Shares then underlying this Warrant (or in the case of
a
new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant
Shares designated by the Holder which, when added to the number of Warrant
Shares underlying the other new Warrants issued in connection with such
issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such
new Warrant which is the same as the Issuance Date, and (iv) shall have the
same
rights and conditions as this Warrant.
7. NOTICES;
CURRENCY.
(a) Notices.
Whenever notice is required to be given under this Warrant, unless otherwise
provided herein, such notice shall be given in accordance with Section 9(f)
of
the Securities Purchase Agreement. The Company shall provide the Holder with
prompt written notice of all actions taken pursuant to this Warrant, including
in reasonable detail a description of such action and the reason therefore.
Without limiting the generality of the foregoing, the Company will give written
notice to the Holder (i) immediately upon any adjustment of the Exercise Price,
setting forth in reasonable detail, and certifying, the calculation of such
adjustment and (ii) at least fifteen days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or
distribution upon the Ordinary Shares or Warrant Shares, (B) with respect to
any
grants, issuances or sales of any Options, Convertible Securities or rights
to
purchase stock, warrants, securities or other property to holders of Ordinary
Shares or Warrant Shares or (C) for determining rights to vote with respect
to
any Fundamental Transaction, dissolution or liquidation, provided in each case
that such information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder.
(b) Currency.
Unless
otherwise indicated, all dollar amounts referred to in this Warrant are in
United States Dollars.
8. AMENDMENT
AND WAIVER. The provisions of this Warrant may be amended by the Company and
the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the Required Holders and approval from the holders of Ordinary Shares
at a shareholders meeting held in accordance with the ASX Listing Rules and
Corporations
Act 2001
(Cth) or
if otherwise permitted by the ASX Listing Rules. Notwithstanding any provision
of this Warrant, , a term of this Warrant which has the effect of reducing
the
exercise price, increasing the period for exercise or increasing the number
of
Warrant Shares or Ordinary Shares received on exercise is prohibited if it
would
result in a breach of the ASX Listing Rules. Notwithstanding the above, no
change may increase the exercise price of any SPA Warrant or decrease the number
of Warrant Shares or class of stock obtainable upon exercise of any SPA Warrant
without the written consent of the Holder, unless otherwise provided in the
ASX
Listing Rules. A change which has the effect of reducing the purchase price,
increasing the period for
exercise
or increasing the number of securities received cannot be made. In addition,
subject to the ASX Listing Rules, no such amendment shall be effective to the
extent that it applies to less than all of the holders of the SPA Warrants
then
outstanding.
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.
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.
(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.
(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 Second Amended and Restated Registration Rights Agreement by and
among the Company and the Buyers, as such agreement may be amended from time
to
time.
(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]
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
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) ordinary shares (“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
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 December [__],
2006
from the Company and acknowledged and agreed to by Citibank, N.A.
PSIVIDA
LIMITED
Name:
Title:
EX 99.4
FORM
OF SECOND AMENDED AND RESTATED CONVERTIBLE NOTE
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR (B) AN OPINION OF COUNSEL,
IN A
FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) IF SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT,
SUCH DOCUMENTS, OPINIONS AND CERTIFICATES AS THE COMPANY MAY REASONABLY REQUIRE.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE
SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS
OF
THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 19(a) HEREOF. THE PRINCIPAL AMOUNT
REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.
pSivida
Limited
Second
Amended and Restated Convertible Note
|
Issuance
Date: November 16, 2005
|
Principal:
U.S. $[12,257,319.68]1
|
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
Amended
and Restated Convertible Note, dated November 16. 2005, as amended by that
certain
| 1 |
Plus
accrued and unpaid interest through the Closing Date (as defined
in the
Second Amendment Agreement, dated as of December 29, 2006).
|
Letter
Agreement (the “Letter
Agreement”),
dated
as of October 17, 2006 (the “Existing
Note”),
which
amends, supplements, modifies and completely restates and supersedes the
Subordinated Convertible Note, dated as of November 16, 2005 (the “Original
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 Second Amendment Agreement (as defined below), constitute a
release, satisfaction or novation of any of the obligations under the Existing
Note, the Original 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 Second Amendment Agreement
(the “Second Amendment
Agreement”)
dated
as of December [__],
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.
(3) CONVERSION
OF NOTES. This Note shall be convertible into the Company’s ADRs, on the terms
and conditions set forth in this Section 3.
(a) Conversion
Right.
Subject
to the provisions of Section 3(d), at any time or times on or after the Issuance
Date, the Holder shall be entitled to convert any portion of the outstanding
and
unpaid Conversion Amount (as defined below) into fully paid and nonassessable
ADRs in accordance with Section 3(c), at the Conversion Rate (as defined below).
The Company shall not issue any fraction of an ADR upon any conversion. If
any
conversion would result in the issuance of a fraction of an ADR, the Company
shall round such fraction of an ADR up to the nearest whole share. The Company’s
obligation to pay any taxes in respect of the issuance and delivery of ADRs
or
Ordinary Shares, or to pay to the Holder any additional amounts associated
with
such taxes, shall be determined under Section 4(o) of the Securities Purchase
Agreement.
In
the
event that the Company’s Board of Directors should determine that the Company
shall transform itself (whether by re-incorporation in the United States or
otherwise) from a foreign private issuer (as defined under the Securities Act
of
1933, as amended), all references to ADRs or ADSs shall be deemed references
to
whatever shares are then issued by the re-domiciled Company and all other
provisions of this Agreement shall be equitably adjusted by the parties hereto
to the extent necessary or appropriate to reflect such new country of
incorporation.
(b) Conversion
Rate.
The
number of ADRs issuable upon conversion of any Conversion Amount pursuant to
Section 3(a) shall be determined by dividing (x) such Conversion Amount by
(y)
the Conversion Price (the “Conversion
Rate”).
(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.
(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.
(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.
(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;
(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;
(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.
(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.
(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.
(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.
(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.
(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”).
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 Additional 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.
(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.
(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.
(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.
(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.
(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, from and after March 31, 2007, 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. On
March 31, 2007, the Company shall (i) provide to the Holder a certification
certifying whether the Net Cash Balance Test has been satisfied and (ii) to
the
extent such certification contains non-public material information, publicly
disclose (on a Current Report on Form 6-K or otherwise) such material non-public
information. Promptly on any date after March 31, 2007 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.
(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.
(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.
(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.
(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 as such section was modified by the Letter
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.
(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;
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%.
(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.
(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 Capital 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 Initial Effectiveness Deadline (as defined in the
Registration Rights Agreement) and (B) the Initial Effective Date (as defined
in
the Registration Rights Agreement) 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.
(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.
(ee) “Indebtedness”
has
the
meaning ascribed to such term in the Securities Purchase Agreement.
(ff) “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.
(gg) “Interest
Rate”
means
eight percent (8.0%) per annum.
(hh) “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.
(ii) “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.
(jj) “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, any accounts payable or Indebtedness described in Section
29(oo)(B)) on such date.
(kk) “Optional
Redemption Date”
means
any of a Company Redemption Date, an Asset Sale Redemption Date and a Holder
Redemption Date.
(ll) “Options”
means
any rights, warrants or options to subscribe for or purchase Ordinary Shares
or
Convertible Securities.
(mm) “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.
(nn) “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.
(oo) “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.
(pp) “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.
(qq) “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.
(rr) “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.
(ss) “Principal
Market”
means
the Nasdaq Global Market.
(tt) “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.
(uu) “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%.
(vv) “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.
(ww) “Registration
Rights Agreement”
means
that certain Second Amended and Restated Registration Rights Agreement, dated
as
of December [__],
2006 by
and between 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 warrants issued to the
Holder, as such agreement may be amended, restated, supplemented or otherwise
modified.
(xx) “Required
Holders”
means
the holders of Notes representing at least a majority of the aggregate principal
amount of the Notes then outstanding.
(yy) “SEC”
means
the United States Securities and Exchange Commission.
(zz) “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
28,
2006, between the Holder and the Company, the Letter Agreement, and the Second
Amendment Agreement, as the same may be further amended, restated, supplemented
or otherwise modified.
(aaa) “Security
Documents”
has
the
meaning ascribed to such term in the Securities Purchase Agreement.
(bbb) “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.
(ccc) “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)
(ddd) “Subscription
Date”
means
October 5, 2005.
(eee) “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.
(fff) “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.
(ggg) “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).
(hhh) “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.
(iii) “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.
(jjj) “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]
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed as of
the
Issuance Date set out above.
|
pSivida
Limited
|
| |
| |
|
By:
__________________________________________
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|
Name:
|
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Title:
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EXHIBIT
I
PSIVIDA
LIMITED
NOTE
CONVERSION NOTICE
Reference
is made to the Second Amended and Restated Convertible Note (the "Note")
issued
to the undersigned by PSIVIDA LIMITED (the "Company"),
payable to the undersigned. In accordance with and pursuant to the Note, the
undersigned hereby elects to convert (A) a portion of the Principal, (B) accrued
and unpaid Interest with respect to such Principal and (C) accrued and unpaid
Late Charges with respect to such Principal and Interest. (the “Conversion
Amount”) of the Note indicated below into Conversion ADSs (as defined in the
Note) in the form of American Depositary Shares (“ADSs”),
as of
the date specified below.
Date
of
Conversion: ___________________________________________
Conversion
Amount: ___________________________________________
Please
confirm the following information:
Conversion
Price: ______________________________________________
Number
of
ADSs to be issued: _____________________________________
Please
deliver ADSs specified above, as follows:
In
the case of book-entry delivery of ADSs
|
DTC
Participant Name:
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|
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DTC
Participant Account Number:
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Account
No. for undersigned at DTC Participant (f/b/o
information):
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Contact
Person at DTC Participant:
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Daytime
telephone number of contact person at DTC Participant:
|
|
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E-mail
address of contact person at DTC Participant:
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-OR-
In
the case of ADSs evidenced by an ADR certificate:
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Name
of Holder:
|
|
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Address
of Holder:
|
|
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Tax
Identification Number of Holder:
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Daytime
Telephone Number of Holder:
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Federal
Express Account Number of Holder:
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The
undersigned represents that it is the beneficial owner of the Note being
converted and that each of the statements following a checked box is true and
correct as of the date hereof:
| o |
(i)
the ADSs to be delivered upon conversion of the Note have been sold
or are
being sold pursuant to a resale registration statement declared effective
under the U.S. Securities Act of 1933, as amended (the "Securities
Act")
(and the undersigned has not been informed by the Company that such
registration statement has ceased to be effective under the Securities
Act) and (ii) the undersigned is the person identified as selling
shareholder in the applicable
prospectus.
|
| o |
The
ADSs to be delivered upon conversion of the Note have not been sold
and
the undersigned has beneficially owned the Note for a period of at
least
two years prior to the date hereof and is not at present nor has
it been
during the two year period preceding the date hereof, an “Affiliate” of
the Company, as such term is defined in the Securities
Act.
|
| o |
The
ADSs to be delivered upon conversion of the Note have been sold or
are
being sold pursuant to an exemption from registration under the Securities
Act and the undersigned has delivered an opinion of counsel, reasonably
satisfactory to the Company, that a public sale, assignment or transfer
of
the ADSs may be made without registration under the Securities
Act.
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| o |
The
ADSs to be delivered upon conversion of the Note have been sold or
are
being sold pursuant to Rule 144 promulgated under the Securities
Act, or a
successor rule thereto, and will be or have been sold in accordance
with
the terms of Rule 144 and the undersigned has provided the Company
with
reasonable assurances, reasonably satisfactory to the Company, that
the
ADSs can be sold pursuant to Rule
144.
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| o |
The
ADSs to be delivered upon conversion of the Note have not been sold
and
are not being sold and the ADSs delivered shall remain restricted
securities in the undersigned's hands, and the undersigned acknowledges
that such ADSs will be delivered in physical form, will bear the
restrictive legend set forth below and will be subject to the provisions
of Section 2.12 of the Deposit Agreement.
|
SECURITIES
ACT LEGEND:
THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE DEPOSITARY AND THE COMPANY,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (C) SUCH DOCUMENTS AND
CERTIFICATES AS THE DEPOSITARY AND THE COMPANY MAY REASONABLY REQUIRE, OR (II)
UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. 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.
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Name:
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Signature:
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Title:
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Date:
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Address:
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Daytime
Telephone Number:
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E-mail
Address:
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ACKNOWLEDGMENT
The
Company hereby acknowledges this Conversion Notice and hereby directs Citibank,
N.A., as Depositary (the “Depositary”), to
issue
the above indicated number of ADSs in accordance with the Amended ADS Issuance
Instructions Letter, dated December [__],
2006,
from the Company to the Depositary and acknowledged and agreed to by the
Depositary.
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PSIVIDA
LIMITED
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By:
____________________________________
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Name:
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Title:
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EX 99.5
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ASX/Media
RELEASE
|
2
January 2007
|
pSivida
released from loan covenant
pSivida's
lender agrees to release the Company from loan covenant
necessary to
complete specified financing transactions with
Nordic Biotech Advisors and
gives other relief
| |
·
|
The
lender has agreed to allow the Company to transfer or grant security
interests in the Company’s MedidurTM
and Mifepristone assets which would be necessary to complete specified
financing transactions with Nordic;
|
| |
·
|
The
lender agreed to forego the interest payment due on January 2, 2007
in
favor of adding approximately US$309k (AU$391k) to the principal
amount of
the loan [representing the value of the American Depository Receipts
(ADSs) with which the Company would have issued to satisfy the payment
had
it met certain conditions allowing it to pay with
ADSs);
|
| |
·
|
The
lender agreed to defer the Company’s scheduled payment of US$800k (AU$1m)
for prior registration delay penalties until the earlier of the closing
of
the Nordic transaction or March 31,
2007;
|
| |
·
|
The
lender agreed to forgive US$770k (AU$973k) of additional registration
delay penalties accruing through the earlier of the closing of the
Nordic
transaction or March 31, 2007;
|
| |
·
|
The
lender agreed to amend the Company’s loan covenants to release it from the
obligation to satisfy a minimum cash balance test of 30% of the
outstanding principal until March 31, 2007; and
|
| |
·
|
The
lender agreed that the Company would have until ten days after the
earlier
of the closing of the Nordic transaction or March 31, 2007 to file
a
registration statement with respect to securities issuable on exercise
of
the lender’s warrants.
|
In
return
for the foregoing, the Company has issued to the lender warrants to purchase
1.5 million ADSs over 5 years with an exercise price of US$2.00 per ADS and
has agreed, upon receipt of required approvals, including shareholder approval,
and satisfaction of other standard conditions, to issue additional warrants
to
purchase 4.0 million ADSs over 5 years with an exercise price of US$2.00,
subject to adjustment based on the final terms of the Company’s transaction with
Nordic.
The
Company expects to close definitive documents with Nordic Biotech Advisors
for a
US$4.0m (AU$5.1m) corporate investment in the Company and a US$22.0m (AU$27.8m)
investment over time in a ‘Special Purpose Vehicle’ that is expected to fully
fund the Company’s portion of costs to develop MedidurTM
for the
treatment of the chronic eye disease diabetic macular edema.
THIS
RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION TO BUY ANY
SECURITIES.
-ENDS-
Released
by:
|
pSivida
Limited
Brian
Leedman
Director
of Investor Relations
pSivida
Limited
Tel:
+ 61 412 281 780
brianl@psivida.com
|
US
Public Relations
Beverly
Jedynak
President
Martin
E. Janis & Company, Inc
Tel:
+1 (312) 943 1100 ext. 12
bjedynak@janispr.com
|
European
Public Relations
Accent
Marketing Limited
Eva
Reuter
Tel:
+49 (254) 393 0740
e.reuter@e-reuter-ir.com
|
NOTES
TO EDITORS:
pSivida
is a global bio-nanotech company committed to the biomedical sector and the
development of drug delivery products. Retisert™ is FDA approved for the
treatment of uveitis. Vitrasert® is FDA approved for the treatment of
AIDS-related CMV Retinitis. Bausch & Lomb own the trademarks Vitrasert® and
Retisert™. pSivida has licensed the technologies underlying both of these
products to Bausch & Lomb. The technology underlying Medidur™ for diabetic
macular edema is licensed to Alimera Sciences and is in Phase III clinical
trials.
pSivida
owns the rights to develop and commercialise a modified form of silicon
(porosified or nano-structured silicon) known as BioSilicon™, which has
applications in drug delivery, wound healing, orthopaedics, and tissue
engineering. pSivida’s subsidiary, AION Diagnostics Limited is developing
diagnostic products and the subsidiary pSiNutria is developing food technology
products both using BioSilicon™.
pSivida’s
intellectual property portfolio consists of 76 patent families, 95 granted
patents, including patents accepted for issuance, and over 300 patent
applications.
pSivida
conducts its operations from offices and facilities near Boston in the United
States, Malvern in the United Kingdom, Perth in Australia and Singapore.
pSivida
is listed on NASDAQ (PSDV),
the
Australian Stock Exchange (PSD)
and on
the Frankfurt Stock Exchange on the XETRA system (German Symbol:
PSI. Securities Code (WKN) 358705).
pSivida is a founding member of the NASDAQ Health Care Index and the Merrill
Lynch Nanotechnology Index.
This
document contains forward-looking statements that involve risks and
uncertainties including with respect to the potential signing of definitive
agreements with Nordic on the terms contemplated by the Company and its lender;
the satisfaction by the Company of the conditions to the waivers and consents
offered by the lender; and potential products, applications and regulatory
approvals. Although we believe that the expectations reflected in such
forward-looking statements are reasonable at this time, we can give no assurance
that such expectations will prove to be correct. Given these uncertainties,
readers are cautioned not to place undue reliance on such forward-looking
statements. Actual results could differ materially from those anticipated in
these forward-looking statements due to many important factors including:
failure of the company to successfully close the transaction with Nordic
contemplated by the Memorandum of Understandings with Nordic on the terms
contemplated or at all; and the failure of the Company to obtain the requisite
shareholder approvals to complete the Nordic transactions and the issuance
of
the warrants to the Company’s lender. Other reasons are contained in cautionary
statements in the Annual Report on Form 20-F filed with the U.S. Securities
and
Exchange Commission, including, without limitation, under Item 3.D, "Risk
Factors" therein. We do not undertake to update any oral or written
forward-looking statements that may be made by or on behalf of
pSivida.
