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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 5, 1997
REGISTRATION NO. 333-39905
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MIRAVANT MEDICAL TECHNOLOGIES
(Exact name of registrant as specified in its charter)
DELAWARE 77-0222872
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
7408 HOLLISTER AVENUE
SANTA BARBARA, CALIFORNIA 93117
(805) 685-9880
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
GARY S. KLEDZIK, PH.D.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
MIRAVANT MEDICAL TECHNOLOGIES
7408 HOLLISTER AVE.
SANTA BARBARA, CALIFORNIA 93117
(805) 685-9880
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
JOSEPH E. NIDA, ESQ. JAMES L. NOUSS, JR., ESQ.
THEODORE R. MALONEY, ESQ. ELIZABETH A. KING, ESQ.
NIDA & MALONEY, A PROFESSIONAL CORPORATION BRYAN CAVE LLP
800 ANACAPA STREET 120 BROADWAY, SUITE 500
SANTA BARBARA, CALIFORNIA 93101 SANTA MONICA, CALIFORNIA 90401
(805) 568-1151 (310) 576-2100
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
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If the only securities being registered on the form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT OF SHARES OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED TO BE REGISTERED SHARE PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share 3,540,000 (1) $56.00 (2) $198,240,000 (2) $60,072.73 (3)
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(1) Includes 1,416,000 shares of Common Stock of Miravant Medical
Technologies (the "Company" or the "Registrant") issuable upon exercise
of Common Stock Purchase Warrants (the "Warrants") and up to 708,000
shares of Common Stock which may be issued pursuant to the anti-dilution
provisions of the Warrants, as such number may be adjusted in accordance
with Rule 416, or the price protection provisions of Section 5.3 of the
Securities Purchase Agreement among the Company and the Selling
Shareholders named herein.
(2) Estimated pursuant to Rule 457(h) solely for the purpose of calculating the
amount of the registration fee on the basis of the average of the high and
low reported sale prices of a share of Common Stock of the Company on
November 5, 1997 as reported by the Nasdaq National Market.
(3) Previously paid.
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3,540,000 SHARES
MIRAVANT
MEDICAL TECHNOLOGIES
COMMON STOCK
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All of the shares of Common Stock of Miravant Medical Technologies,
formerly PDT, Inc. (the "Company"), registered pursuant to the Registration
Statement of which this Prospectus is a part (the "Shares") may be sold from
time to time for the accounts of and by the persons named under the caption
"Selling Shareholders." The Shares include 1,416,000 shares of Common Stock
issuable upon the exercise of Common Stock Purchase Warrants (the "Warrants")
and 708,000 shares of Common Stock which may be issued pursuant to the
anti-dilution provisions of the Warrants, as such number may be adjusted in
accordance with Rule 416 of the Securities Act of 1933, as amended (the
"Securities Act"), or the price protection provisions of Section 5.3 of the
Securities Purchase Agreement among the Company and the Selling Shareholders.
The Shares are subject to a Lock-Up Agreement which generally prohibits the
sale of the Shares until September 1998, subject to certain exceptions. See
"Selling Shareholders." The Selling Shareholders have advised the Company
that the Shares may be sold from time to time on the Nasdaq National Market
("NNM") or in negotiated transactions, in each case at prices satisfactory to
the seller. The Selling Shareholders and the brokers and dealers through
which the sales of the Shares may be made may be deemed to be "underwriters"
within the meaning set forth in the Securities Act, and their commissions and
discounts and other compensation may be regarded as underwriters'
compensation. See "Plan of Distribution." The Company has issued, or will
issue upon the exercise of the Warrants, the Shares in certain Private
Placement transactions.
The Company will not receive any proceeds from the sale of Shares by the
Selling Shareholders, but will receive the exercise prices payable upon the
exercise of the Warrants, if exercised for cash. There can be no assurance
that all or any of the Warrants will be exercised or that they will be
exercised for cash. All expenses incurred in connection with this offering
are being borne by the Company, other than any commissions or discounts paid
or allowed by the Selling Shareholders to underwriters, dealers, brokers or
agents.
The Common Stock of the Company is traded on the NNM under the symbol
"MRVT." On December 3, 1997, the last sale price of the Common Stock as
reported by the NNM was $44.625.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 4.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
December 5, 1997
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's Regional Offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained at prescribed rates from the Public Reference Branch of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a Web site that contains reports, proxy and information
statements and other materials that are filed through the Commission's
Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. This Web site
can be accessed at http://www.sec.gov. Shares of the Company's Common Stock are
listed on the NNM and the reports, proxy statements and other information filed
by the Company also can be inspected at the offices of the National Association
of Securities Dealers, Inc. (the "NASD"), at 1735 K Street, N.W., Washington,
D.C. 20006.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") under the Securities Act with respect to the
Common Stock offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed or incorporated by
reference as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference and the exhibits and the schedules
thereto. For further information pertaining to the Company or the Common Stock
offered hereby, reference is made to the Registration Statement and such
exhibits and schedules thereto, which may be inspected without charge at, and
copies thereof may be obtained at prescribed rates from, the Public Reference
Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith, as indicated below. The Company will provide
without charge to each person to whom a copy of this Prospectus has been
delivered, on the written or oral request of such person, a copy of any or all
of the documents referred to below which are incorporated herein by reference
(other than exhibits to such documents unless they are specifically incorporated
by reference into such documents). Requests for such copies should be directed
to Corporate Secretary, Miravant Medical Technologies, 7408 Hollister Avenue,
Santa Barbara, California 93117; telephone number (805) 685-9880.
The following documents filed with the Commission by the Company under File
No. 0-25544 pursuant to the Exchange Act are incorporated herein by reference:
Annual Report on Form 10-K for the fiscal year ended December 31, 1996;
Quarterly Reports in Forms 10-Q for the fiscal quarters ended March 31and June
30, 1997; Definitive Proxy Statement dated April 25, 1997; Definitive Consent
Solicitation Statement dated August 25, 1997; Current Reports on Form 8-K dated
September 15, September 26 and October 3, 1997; and description of the Company's
Common Stock as contained in Item 1 of the Company's Registration Statement on
Form 8-A filed February 9, 1995.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of
this Prospectus and prior to the termination of the offering of the Common Stock
offered hereby shall be deemed to be incorporated by reference herein and to be
a part hereof from the date of filing of such documents. See "Available
Information." Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document incorporated or deemed to be incorporated
herein by reference, which statement is also incorporated herein by reference,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
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No person is authorized in connection with any offering made hereby to give any
information or to make any representation not contained in this Prospectus, and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company or any Selling Shareholder. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any of the securities offered hereby to any person in any jurisdiction in
which it is unlawful to make such an offer or solicitation. Neither the
delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create any implication that the information contained herein is
correct as of any date subsequent to the date hereof.
THE COMPANY
Miravant Medical Technologies is engaged in the integrated development of
drug and medical device products for use in PhotoPoint-TM- , the Company's
proprietary technologies for photodynamic therapy. PhotoPoint is a medical
procedure which integrates the use of light-activated (photoreactive) drugs,
light producing devices and light delivery devices to achieve selective
photochemical destruction of diseased cells. The Company believes that
PhotoPoint has the potential to be a safe, cost-effective, minimally invasive
primary or adjunctive treatment for indications in a broad number of disease
areas, including oncology, ophthalmology; urology, dermatology, gynecology and
cardiology. The Company is conducting clinical trials in oncology, dermatology
and ophthalmology; is preparing to initiate clinical trials in urology, oncology
and dermatology; and is conducting preclinical studies in oncology,
ophthalmology, urology, dermatology, gynecology and cardiology. All of the
Company's clinical trials are testing the Company's leading drug candidate, tin
ethyl etiopurpurin ("SnET2"). The Company is developing products in
collaboration with its corporate partners, Pharmacia & Upjohn, Inc.
("Pharmacia & Upjohn"), Boston Scientific Corporation ("Boston Scientific"),
Medicis Pharmaceutical Corporation ("Medicis"), Cordis Corporation, a Johnson &
Johnson company ("Cordis"), Iridex Corporation ("Iridex") and Ramus Medical
Technologies ("Ramus").
PhotoPoint typically involves the intravenous injection of a photoreactive
drug followed by the application of light of a specific wavelength which
activates the drug. When exposed to the appropriate light wavelength, SnET2 acts
as a catalyst to generate a highly reactive form of oxygen which destroys the
membranes of the cells containing the drug. Importantly, neither SnET2 nor light
alone can produce the photodynamic reaction. After administration, SnET2 is
absorbed by cells throughout the body. The drug begins to clear from normal
cells after several hours but is retained by hyperproliferating cells for up to
several days. As a result, PhotoPoint can be used to selectively destroy
diseased or undesirable cells in two ways: (i) DRUG
SELECTIVITY-hyperproliferating cells such as in a cancer tumor can be
selectively destroyed by allowing the drug to clear from non-target cells before
delivering light to the general area; and (ii) LIGHT SELECTIVITY-in conditions
such as certain eye disorders, tissues can be selectively destroyed by precisely
delivering the light to discrete areas before the drug has cleared. The Company
believes that this selectivity may offer advantages over existing chemotherapy,
radiation therapy and surgery treatments, which can damage both normal and
abnormal tissues.
The Company's objective is to develop and commercialize, with its corporate
partners, all three components of PhotoPoint: photoreactive drugs, light
producing devices and light delivery devices, for use as adjunct or primary
treatments. The key elements of the Company's strategy include: (i) integrating
photoreactive drugs, light producing devices and light delivery devices into
easy-to-use, cost-effective clinical treatment systems, (ii) initially targeting
high-incidence or serious diseases for which there is no satisfactory
alternative treatment or which may offer accelerated regulatory processes and
(iii) collaborating with industry-leading corporate partners who are leaders in
the Company's targeted disease areas and who can assist the Company in expanding
the number of target applications and expediting the development and marketing
of its products.
The Company was incorporated in Delaware in 1989 and, effective September
15, 1997, changed its name from PDT, Inc. to Miravant Medical Technologies. The
Company's executive offices and the offices of its three subsidiaries, Miravant
Pharmaceuticals, Inc., Miravant Systems, Inc. and Miravant Cardiovascular, Inc.,
are located at 7408 Hollister Avenue, Santa Barbara, California 93117. The
Company's telephone number is (805) 685-9880. Unless otherwise indicated, all
references to the Company include the Company and its subsidiaries.
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RISK FACTORS
THE COMPANY DOES NOT PROVIDE FORECASTS OF POTENTIAL FUTURE OPERATIONAL OR
FINANCIAL PERFORMANCE. WHILE MANAGEMENT OF THE COMPANY IS OPTIMISTIC ABOUT THE
COMPANY'S LONG-TERM PROSPECTS, THE FOLLOWING ISSUES AND UNCERTAINTIES, AMONG
OTHERS, SHOULD BE CONSIDERED IN EVALUATING ITS OUTLOOK. THIS PROSPECTUS, AS WELL
AS THE INFORMATION INCORPORATED BY REFERENCE, CONTAINS FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995, WHICH INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS
WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENT OF THE COMPANY,
OR INDUSTRY RESULTS, TO DIFFER MATERIALLY FROM ANY FUTURE RESULTS, PERFORMANCE
OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH STATEMENTS. THE
FACTORS LISTED BELOW REPRESENT CERTAIN IMPORTANT FACTORS THE COMPANY BELIEVES
COULD CAUSE SUCH RESULTS TO DIFFER. THESE FACTORS ARE NOT INTENDED TO REPRESENT
A COMPLETE LIST OF THE GENERAL OR SPECIFIC RISKS THAT MAY AFFECT THE COMPANY. IT
SHOULD BE RECOGNIZED THAT OTHER RISKS MAY BE SIGNIFICANT, PRESENTLY OR IN THE
FUTURE, AND THE RISKS SET FORTH BELOW MAY AFFECT THE COMPANY TO A GREATER EXTENT
THAN INDICATED.
EARLY STAGE OF THE COMPANY AND ITS PRODUCTS
The Company and its products are in an early stage of development. No
revenues have been generated from sales of the Company's drugs and only limited
revenues have been generated from sales of the Company's devices. The Company
does not expect to achieve significant levels of revenues for at least several
years. The Company's revenues to date have consisted, and for the foreseeable
future are expected to consist, principally of grants awarded and payments for
its devices which are purchased by others engaged in preclinical and clinical
testing and research of photodynamic drugs or by companies that distribute the
devices and payments under research and development agreements, license fees,
royalties, clinical reimbursements, milestone payments and interest income. To
achieve profitable operations on a continuing basis, the Company, alone or with
collaborative partners, must successfully research, develop, test, obtain
regulatory approval, manufacture, introduce, market and distribute its products.
The time frame necessary to achieve these goals for any individual product is
long and uncertain. Most of the products currently under development by the
Company will require significant additional research and development,
preclinical and clinical testing and regulatory approval prior to
commercialization. There can be no assurance that the Company's research or
product development efforts or those of its collaborative partners will be
successfully completed, that the drugs or devices currently under development
will be successfully transformed into marketable products, that required
regulatory approvals can be obtained, that products can be manufactured at an
acceptable cost and with appropriate quality, that any approved products can be
successfully marketed, or that any products that may be marketed will be
favorably accepted. The likelihood of the Company's success must be considered
in light of these and other problems, expenses, difficulties, complications and
delays frequently encountered in connection with the formation of a new business
and the development and commercialization of new products, particularly
pharmaceutical and medical device products.
HISTORY OF LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY
The Company has generated little revenue to date, has experienced operating
losses since its inception in 1989 and has not yet achieved profitability. The
Company had an accumulated deficit of approximately $50.6 million (audited) and
$61.8 million (unaudited) as of December 31, 1996 and June 30, 1997,
respectively. These losses have resulted primarily from the Company's research
and development programs, the funding of preclinical and clinical testing and
regulatory activities and the general and administrative expenses associated
with these activities. The Company anticipates incurring substantial and
increasing losses over at least the next several years. The extent of losses and
the time required to reach profitability are highly uncertain. To achieve
sustained profitable operations, the Company, alone or with collaborative
partners, must successfully research, develop, test, obtain regulatory approval,
manufacture, introduce, market and distribute its products. There can be no
assurance that the Company will be able to achieve profitability or that
profitability, if achieved, can be sustained on an ongoing basis. Moreover, if
profitability is achieved, the level of that profitability cannot be accurately
predicted.
UNPROVEN SAFETY AND EFFICACY; CLINICAL TRIALS
All drug and device products currently under development by the Company
will require extensive preclinical and clinical testing prior to regulatory
approval for commercial use. None of the Company's
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products have completed testing for efficacy or safety in humans. There can be
no assurance that such testing will demonstrate that SnET2 or any other of the
Company's products is safe or efficacious or that testing for any of the
Company's compounds currently under development will be commenced or completed
successfully within any specified time period, if at all. Further, there can be
no assurance that clinical data reported by the Company will not change as a
result of the continuing evaluation of patients. Data obtained from preclinical
and clinical trials are subject to varying interpretations which can delay,
limit or prevent approval by the FDA or other regulatory authorities. There can
be no assurance that the Company will not encounter problems in research and
development, preclinical testing or clinical trials that will cause the Company
to delay, suspend or cancel clinical trials. Many potential pharmaceutical and
medical device products that achieve promising results in preclinical tests and
clinical trials fail to demonstrate sufficient safety or efficacy to warrant
approval by the FDA or other regulatory authorities, and there can be no
assurance that any of the Company's potential products will obtain the required
approvals or, if approved, will obtain sufficient market acceptance to become
commercially successful. Moreover, as a result of changing market, clinical or
regulatory conditions, or clinical trial results, the Company's focus may shift
to other indications, or it may be determined not to further pursue one or more
of the indications currently being pursued.
To date, the Company has very limited experience in conducting clinical
trials. The Company will either need to rely on third parties, including its
collaborative partners, to design and conduct any required clinical trials or
expend resources to hire additional personnel to administer such clinical
trials. There can be no assurance that the Company will be able to find
appropriate third parties to design and conduct clinical trials or that it will
have the resources to hire personnel to administer clinical trials in-house.
RELIANCE ON COLLABORATIVE PARTNERS
The Company has entered into collaborative relationships with certain
corporations and academic institutions in connection with the research and
development, preclinical and clinical testing, licensing, manufacturing and
distribution of its products. In July 1995, the Company entered into a
collaborative agreement with Pharmacia & Upjohn, Inc. pursuant to which the
Company granted to Pharmacia & Upjohn an exclusive worldwide license to use,
distribute and sell SnET2 for therapeutic or diagnostic applications in the
area of photodynamic therapy. The amount of royalty revenues and other
payments, if any, ultimately received by the Company with respect to sales of
SnET2 is dependent, in part, on the amount and timing of resources Pharmacia
& Upjohn commits to research and development, clinical testing and regulatory
and marketing activities, which are entirely within the control of Pharmacia
& Upjohn. The resources committed by Pharmacia & Upjohn in these areas will
depend on Pharmacia & Upjohn's own competitive, marketing and strategic
considerations, including the relative advantages of alternative products or
therapies developed and marketed by Pharmacia & Upjohn or competitors. There
can be no assurance that Pharmacia & Upjohn will pursue the development and
commercialization of SnET2 or that Pharmacia & Upjohn will perform its
obligations as expected. In addition, the Company is collaborating with
Boston Scientific and Cordis with respect to the development of catheters for
use in PhotoPoint, and with Medicis to develop and commercialize the
Company's PhotoPoint technology for dermatology applications. The Company
has not entered into any definitive collaborative agreement with any of these
three companies. No assurance can be given that these additional
collaborations will culminate in definitive collaborative agreements or
marketable products or will otherwise be successful. Also, the Company has
entered into a device co-development and distribution agreement with Iridex
in ophthalmology for PhotoPoint and a co-development agreement with Ramus in
cardiology for PhotoPoint. There can be no assurance that Iridex and Ramus
will continue to pursue the development of devices in the fields of
ophthalmology for PhotoPoint and cardiology, respectively, or that such
development will result in marketable products.
In addition, the Company is currently at various stages of discussions with
other companies regarding the establishment of various collaborations. The
Company's current and future collaborations are important because they allow the
Company greater access to funds, research, development or testing resources and
to manufacturing, sales or distribution resources than it would otherwise have,
and the Company intends to continue to rely on such collaborative arrangements.
However, there can be no assurance that the Company will be able to negotiate
acceptable collaborative arrangements in the future or that such future or
existing collaborative arrangements will be successful or result in products
that are marketed or sold. In addition, there can be no assurance that such
collaborative relationships will not limit or restrict the Company in any way.
Further, there can be no assurance that the Company's collaborative partners
will not develop or pursue alternative technologies either on their own or in
collaboration with others, including the Company's competitors, as a means of
developing or marketing products for the diseases targeted by the collaborative
programs and the Company's products.
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ADDITIONAL FINANCING REQUIREMENTS AND UNCERTAINTY OF CAPITAL FUNDING
The Company has incurred negative cash flows from operations since its
inception and has expended substantial funds in connection with its research and
development programs and preclinical and clinical testing. The Company may
require substantial funding in the future to continue or undertake its research
and development activities, preclinical and clinical testing and manufacturing,
marketing, sales, distribution and administrative activities or to pursue
acquisition opportunities. There can be no assurance that the Company's existing
capital resources, together with the proceeds from future offerings and future
cash flows, will be sufficient to fund the Company's future operations.
COMPETITION AND TECHNOLOGICAL UNCERTAINTY
Many of the Company's competitors have substantially greater financial,
technical and human resources than the Company and substantially greater
experience in developing products, conducting preclinical or clinical testing,
obtaining regulatory approvals and manufacturing and marketing. Further, the
Company's competitive position could be materially adversely affected by the
establishment of patent protection by its competitors. There can be no assurance
that the Company's existing competitors or other companies will not succeed in
developing technologies and products that are more effective or affordable than
those being developed by the Company or that would render the Company's
technology and products less competitive or obsolete.
The Company's products are subject to the risks of failure inherent in the
development and testing of products based on innovative technologies. These
risks include the possibilities that this technology or any or all of the
Company's products may be found to be ineffective or to have unanticipated
limitations or otherwise fail.
GOVERNMENT REGULATION
The production and marketing of the Company's products and its ongoing
research and development, preclinical testing and clinical trial activities are
subject to extensive regulation and review by numerous governmental authorities
in the United States, including the U.S. Food and Drug Administration (the
"FDA"), and in other countries. All drugs and most medical devices developed by
the Company must undergo rigorous preclinical and clinical testing and an
extensive regulatory approval process administered by the FDA under the Food,
Drug and Cosmetic Act, and comparable foreign authorities before they can be
marketed. These processes involve substantial cost and can take many years. The
Company has limited experience in, and limited resources available to commit to,
regulatory activities. Failure to comply with the applicable regulatory
requirements can, among other things, result in non-approval, suspensions of
regulatory approvals, fines, product seizures and recalls, operating
restrictions, injunctions and criminal prosecution.
The time required for completing such testing and obtaining such approvals
is uncertain and approval itself may not be obtained. In addition, delays or
rejections may be encountered due to, among other reasons, regulatory review of
each submitted new drug, device or combination drug/device application or
product license application, as well as changes in regulatory policy during the
period of product development. Similar delays may also be encountered in foreign
countries. To date, no pharmaceutical product candidate being developed by the
Company has been submitted for approval or has been approved by the FDA or any
other regulatory authority for marketing, and there can be no assurance that,
even after investing substantial time and expense, regulatory approval will be
obtained for any products developed by the Company. Moreover, if regulatory
approval of a product is granted, such approval may entail limitations on the
indicated uses for which the product may be marketed. Further, even if such
regulatory approval is obtained, a marketed product, its manufacturer and the
facilities in which the product is manufactured are subject to continual review
and periodic inspections. Later discovery of previously unknown problems with a
product, manufacturer or facility may result in restrictions on such product or
manufacturer, including withdrawal of the product from the market and
litigation. Although to date photodynamic therapy products have been categorized
by the FDA as combination drug-device products, there can be no assurance that
the Company's products currently under investigation or any future drug/device
products will continue to be categorized for regulatory purposes as combination
products, that they will not require separate drug and device submissions, or
that they will not require separate approval by regulatory authorities.
REIMBURSEMENT
The Company's ability to commercialize its products successfully may depend
in part on the extent to which reimbursement for such products and related
treatment will be available from corporate partners, government health
administration authorities, private health insurers, managed care entities and
other
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organizations. Such payors are increasingly challenging the price of medical
products and services and establishing protocols and formularies which
effectively limit physicians' ability to select products and procedures.
Uncertainty exists as to the reimbursement status of health care products
(especially innovative technologies), and there can be no assurance that
adequate reimbursement coverage will be available to enable the Company to
achieve market acceptance of its products or to maintain price levels sufficient
for realization of an appropriate return on its products.
LIMITED MANUFACTURING AND MARKETING CAPABILITY AND EXPERIENCE
To be successful, the Company's products must be manufactured in commercial
quantities under current Good Manufacturing Practices regulations ("GMP")
prescribed by the FDA and at acceptable costs. Although the Company intends to
manufacture drugs and devices, the Company has not yet manufactured any products
in commercial quantities under GMP and has no experience in such commercial
manufacturing. Miravant Systems, Inc. has achieved registration to ISO 9001 and
EN 46001 quality standards of the European Community; however, there is no
assurance that this subsidiary of the Company will be able to maintain these
registrations, nor that the registrations will facilitate the marketing of the
medical devices in Europe. The Company will need to expand its manufacturing
capabilities and/or depend on its collaborators, licensees or contract
manufacturers for the commercial manufacture of its products. In the event the
Company determines to expand its manufacturing capabilities, it will require the
expenditure of substantial funds, the hiring and retention of significant
additional personnel and compliance with extensive regulations applicable to
such expansion. There can be no assurance that the Company will be able to
expand such capabilities successfully or that it will be able to manufacture
products in commercial quantities for sale at competitive prices. Further, there
can be no assurance that the Company will be able to enter into manufacturing
arrangements with collaborators, licensees, or contract manufacturers on
acceptable terms or at all. If the Company is not able to expand its
manufacturing capabilities or enter into additional commercial manufacturing
agreements, it could be materially and adversely affected.
The Company has limited experience in marketing, distributing and selling
pharmaceutical products, and will need to develop a sales force or rely on its
collaborators or licensees or make arrangements with others to provide for the
marketing, distribution and sale of its products. There can be no assurance that
the Company's marketing, distribution and sales capabilities or current or
future arrangements with third parties to perform such activities will be
adequate for the successful commercialization of its products.
UNCERTAINTY REGARDING PATENTS AND PROPRIETARY TECHNOLOGY
The Company's success will depend, in part, on its and its licensors'
ability to obtain, assert and defend its patents, protect trade secrets and
operate without infringing the proprietary rights of others. The Company has
filed applications for or has been issued U.S. and foreign patents a majority of
which relate to its light delivery and measurement devices, and the Company has
an exclusive license under patent applications or patents of others relating to
certain photoreactive compounds. Such issued U.S. patents expire from 2006
through 2014. Certain of the foregoing patents and patent applications are
subject to certain governmental rights. The exclusive license to the Company
under various drug patents, including patents relating to its leading drug
candidate SnET2, provides that the licensors may elect that the license become
non-exclusive if the Company fails to satisfy certain development and
commercialization objectives. Although the Company believes it should be able
to achieve such objectives, there can be no assurance that the Company will be
successful. The patent position of pharmaceutical and medical device firms
generally is highly uncertain and involves complex legal and factual questions.
There can be no assurance that the patent applications owned by or licensed to
the Company will result in issued patents, that any issued patents will provide
the Company with proprietary protection or competitive advantages, will not be
infringed upon or designed around by others, will not be challenged by others
and held to be invalid or unenforceable or that the patents of others will not
have a material adverse effect on the Company.
The Company is aware that its competitors and other companies, institutions
and individuals have been issued patents relating to photodynamic therapy. In
addition, the Company's competitors and other companies, institutions and
individuals may have filed patent applications or been issued patents relating
to other potentially competitive products of which the Company is not aware.
Further, the Company's competitors and other companies, institutions and
individuals may in the future file applications for, or be granted or license or
otherwise obtain proprietary rights to, patents relating to other potentially
competitive products. There can be no assurance that these existing or future
patents or patent applications will not conflict with the Company's or its
licensors' patents or patent applications. Such conflicts could result in a
rejection of the Company's or its
7
<PAGE>
licensors' patent applications or the invalidation of their patents, which could
have a material adverse effect on the Company's competitive position. In the
event of such conflicts, or in the event the Company believes that such
competitive products may infringe the patents owned by or licensed to the
Company, the Company may pursue patent infringement litigation or interference
proceedings against, or may be required to defend against litigation involving,
holders of such conflicting patents or competing products. Such proceedings may
materially adversely affect the Company's competitive position, and there can be
no assurance that the Company will be successful in any such proceeding.
Litigation and other proceedings relating to patent matters, whether initiated
by the Company or a third party, can be expensive and time consuming, regardless
of whether the outcome is favorable to the Company, and can result in the
diversion of substantial financial, managerial and other resources from the
Company's other activities. An adverse outcome could subject the Company to
significant liabilities to third parties or require the Company to cease any
related research and development activities or product sales. The Company does
not have contractual indemnification rights against the licensors of the various
drug patents. In addition, if patents that contain dominating or conflicting
claims have been or are subsequently issued to others and such claims are
ultimately determined to be valid, the Company may be required to obtain
licenses under patents or other proprietary rights of others. No assurance can
be given that any licenses required under any such patents or proprietary rights
would be made available on terms acceptable to the Company, if at all. If the
Company does not obtain such licenses, it could encounter delays or could find
that the development, manufacture or sale of products requiring such licenses is
foreclosed.
The Company also seeks to protect its proprietary technology and processes
in part by confidentiality agreements with its collaborative partners, employees
and consultants. There can be no assurance that these agreements will not be
breached, that the Company will have adequate remedies for any breach, or that
the Company's trade secrets will not otherwise become known or be independently
discovered by competitors. Certain of the research activities relating to the
development of certain of the patents owned by or licensed to the Company were
funded, in part, by agencies of the United States government. When the United
States government participates in research activities, it retains certain rights
that include the right to use the resulting patents for government purposes
under a royalty-free license.
DEPENDENCE UPON KEY PERSONNEL AND CONSULTANTS
The Company's ability to successfully develop its products, manage growth
and maintain a competitive position will depend in large part on its ability to
attract and retain highly qualified scientific, management and other personnel
and to develop and maintain relationships with leading research institutions and
consultants. The Company is highly dependent upon principal members of its
management, key employees, scientific staff and consultants which the Company
may retain from time to time. Competition for such personnel and relationships
is intense, and there can be no assurance that the Company will be able to
continue to attract and retain such personnel. The Company's consultants may be
affiliated or employed by others, and some have consulting or other advisory
arrangements with other entities that may conflict or compete with their
obligations to the Company. Inventions or processes discovered by such persons
will not necessarily become the property of the Company and may remain the
property of such persons or others.
DEPENDENCE UPON SUPPLIERS
The Company currently depends upon outside suppliers, contracted or
otherwise, for certain raw materials and components for its products. There can
be no assurance that such raw materials or components will continue to be
available to the Company's standards or on acceptable terms, if at all, or that
alternative suppliers will be available to the Company on acceptable terms, if
at all. Further, there can be no assurance that the Company will be able to
produce needed materials or components in-house in a timely manner or in
sufficient quantities to meet the needs of the Company, if at all. Although most
of the Company's raw materials and components are available from various
sources, the Company is currently dependent on single, contracted sources for
certain key materials or services used by the Company in its drug development,
light producing and light delivery device development and production
operations. Although the Company has entered into agreements with these
suppliers, there can be no assurance that these arrangements will be successful
or that the Company will not encounter delays or other problems which may
materially adversely affect its business.
ENVIRONMENTAL MATTERS
The Company is subject to federal, state, county and local laws and
regulations relating to the protection of the environment. In the course of its
business, the Company is involved in the handling, storage and disposal of
materials that are classified as hazardous. The Company's safety procedures for
handling, storage and disposal
8
<PAGE>
of such materials are designed to comply with the standards prescribed by
applicable laws and regulations. However, there can be no assurance that the
Company will not be involved in contamination or injury from these materials. In
the event of such an occurrence, the Company could be held liable for any
damages that result, and any such liability could materially and adversely
affect the Company. Further, there can be no assurance that the cost of
complying with these laws and regulations will not increase materially in the
future.
CONTROL BY OFFICERS AND DIRECTORS
As of November 24, 1997, the Company's officers and directors beneficially
own approximately 18.4% of the outstanding Common Stock (approximately 27.5% is
beneficially owned if all options granted to such officers and directors become
vested and are exercised). These shareholders will be able to elect a
substantial number of the Company's directors and will have the ability to
influence significantly the Company and the direction of its business and
affairs. Such concentration of ownership may have the effect of delaying or
preventing a change in control of the Company, which could adversely affect the
market price for the Common Stock.
OUTSTANDING OPTIONS AND WARRANTS
As of November 24, 1997, there were outstanding options to purchase
2,148,609 shares of Common Stock at a weighted average exercise price of $15.40
per share, and warrants to purchase 3,122,677 shares of Common Stock at a
weighted average exercise price of $36.43 per share. The exercise of these
options and warrants would result in significant book value and earnings
dilution to existing shareholders.
LIABILITY AND RECALL EXPOSURE
The use of the Company's products in clinical trials and the sale of such
products may expose the Company to liability claims. These claims could be made
directly by patients or consumers or by companies, institutions or others using
or selling such products. In addition, the Company is subject to the inherent
risk that a government authority or third party may require the recall of one or
more of the Company's products. The Company has not obtained liability insurance
that would cover a claim relating to the use or recall of its products. In the
absence of such insurance, claims made against the Company or a product recall
could have a material adverse effect on the Company. In addition, there can be
no assurance that, if the Company seeks insurance coverage in the future, such
coverage will be available at all or, if available, at reasonable cost and in
amounts sufficient to protect the Company against claims that could have a
material adverse effect on the financial condition and prospects of the Company.
Further, liability claims relating to the use of the Company's products or a
product recall could negatively affect the Company's ability to obtain or
maintain regulatory approvals for its products. The Company has agreed to
indemnify certain of its collaborative partners against certain potential
liabilities relating to the manufacture and sale of SnET2 and PhotoPoint light
devices.
POSSIBLE ADVERSE EFFECTS OF FUTURE LEGISLATION OR REGULATIONS
Heightened public awareness and concerns regarding the growth in overall
health care expenditures in the United States, combined with the continuing
efforts of governmental authorities to contain or reduce costs of health care,
may result in the enactment of national health care reform or other legislation
or regulations that impose limits on the number and type of medical procedures
which may be performed or which have the effect of restricting a physician's
ability to select specific products for use in certain procedures. Such new
legislation or regulations may materially adversely affect the demand for the
Company's products. In the United States, there have been, and the Company
expects that there will continue to be, a number of federal and state
legislative proposals and regulations to implement greater governmental control
in the health care industry. For example, the Clinton Administration and certain
members of Congress have proposed health care reform legislation that may impose
pricing or profitability limitations or other restrictions on companies in the
health care industry. The announcement of such proposals may materially
adversely affect the Company's ability to raise capital or to form
collaborations, and the enactment of any such reforms could have a material
adverse effect on the Company. In certain foreign markets, the pricing and
profitability of health care products are subject to governmental influence or
control. In addition, legislation or regulations that impose restrictions on the
price that may be charged for health care products or medical devices may
adversely affect the Company's results of operations. From time to time,
legislation or regulatory proposals are considered that could alter the review
and approval process relating to pharmaceutical or medical device products. The
Company is unable to predict the likelihood of adverse effects which might arise
from future legislative or administrative action, either in the United States or
abroad.
9
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Sales of Common Stock in the public market following this offering,
pursuant to Rule 144 under the Securities Act, or upon the exercise of
outstanding options or warrants under Rule 701 or pursuant to the Company's
Registration Statements on Form S-8, could materially adversely affect
prevailing market prices and may have a material and adverse effect on the
Company's ability to raise the capital necessary to fund its future operations.
Additionally, certain holders of shares of Common Stock are entitled to have
their shares registered for sale under the Securities Act by the Company under
certain circumstances. The exercise of these rights and the sale of such shares
could have a material adverse effect on the market price for the Common Stock.
POTENTIAL VOLATILITY OF STOCK PRICE; NO DIVIDENDS
The market prices for securities of emerging pharmaceutical and medical
device companies have historically been highly volatile. Future announcements
concerning the Company or its collaborators, competitors or industry, including
but not limited to the results of testing, technological innovations or new
commercial products, the achievement of or failure to achieve certain
milestones, governmental regulations, rules and orders, developments concerning
patents or other proprietary rights, litigation or public concern about the
safety of the Company's products, may have a material adverse effect on the
market price of the Common Stock. In addition, the stock market has experienced
extreme price and volume fluctuations. This volatility has significantly
affected the market prices of securities of many emerging pharmaceutical and
medical device companies for reasons frequently unrelated or disproportionate to
the performance of the specific companies. These broad market fluctuations may
materially adversely affect the market price of the Common Stock. Except for
the three for two split of the Common Stock declared for stockholders of record
at July 24, 1995, the Company has never paid dividends, cash or otherwise, on
its capital stock and does not anticipate paying any such dividends in the
foreseeable future. The Company's bank credit line prohibits the payment of
dividends on its Common Stock.
PRICE PROTECTION PROVISIONS OF SECURITIES PURCHASE AGREEMENTS
The Securities Purchase Agreements relating to the sales by the Company to
the Selling Shareholders of the Shares offered hereby (the "Securities Purchase
Agreements") provide that if on the first anniversary of the closing of such
purchases, the 30 day average closing bid price of the Common Stock for the
period ending on the trading day prior to the anniversary date is less than the
closing price paid by the Selling Shareholders, then the Company shall pay each
Selling Shareholder additional cash or stock, or a combination of both, as
determined by the Company at its sole option. In the event that the price of
the Common Stock is significantly below the closing price at the anniversary
date, such payment, if made in cash, would have a material adverse impact on the
liquidity and financial condition of the Company, or would, if made in shares of
Common Stock, result in dilution to existing shareholders.
10
<PAGE>
USE OF PROCEEDS
The Company will receive none of the proceeds from the sale of the Shares
by the Selling Shareholders, but will receive the exercise prices payable upon
the exercise of the Warrants, if exercised for cash. Such proceeds will be used
for working capital and general corporate purposes.
SELLING SHAREHOLDERS
The following table sets forth information with respect to the number of
Shares beneficially owned by each of the Selling Shareholders, the number of
Shares that may be offered hereby by each Selling Shareholder and the number of
shares of Common Stock to be owned after the offering, assuming all the Shares
offered hereby are sold to persons not affiliated with the Selling Shareholders.
None of the Selling Shareholders has, or in the past has had, any position,
office or relationship with the Company (other than as a security holder) or any
of its affiliates. As of November 24, 1997 there were 14,045,983 shares of
Common Stock issued and outstanding.
<TABLE>
<CAPTION>
Number of
Shares Beneficially Number of Number of
Owned Prior To Shares Shares Owned
Name Offering(1)(2) Being Offered(1)(2) After The Offering
- -------------------------------------- ------------------ ------------------- ------------------
<S> <C> <C> <C>
Elliott Associates, L.P. 400,000 400,000 0
Westgate International, L.P. 400,000 400,000 0
Shepard Investments International, Ltd. 474,000 474,000 0
Stark International 474,000 474,000 0
Staro Partners 52,000 52,000 0
St. Cloud Investments, Ltd. 333,334 333,334 0
Bomoseen Investments, Ltd. 331,334 331,334 0
Dandelion Investments, Ltd. 333,332 333,332 0
Stanley Arkin 2,000 2,000 0
Bayview Investors, Ltd. 32,000 32,000 0
------- ------- -
2,832,000 2,832,000 0
</TABLE>
(1) Such shares are subject to a Lock-Up Agreement prohibiting any offer or
sale until September 22, 1998 with respect to the first nine Selling
Shareholders set forth above and until October 16, 1998 with respect to
the last Selling Shareholder. The Lock-Up Agreement is subject to earlier
termination in certain limited circumstances, and the prohibition on sales
is subject to certain limited exceptions.
(2) With respect to each Selling Shareholder, 50% of the amounts shown
represent Shares issuable upon the exercise of the Warrants (the "Warrant
Shares"). Of such Warrant Shares, 50% are exercisable at $55 per share
and 50% are exercisable at $60 per share. 708,000 Shares that may become
issuable pursuant to the anti-dilution provisions of the Warrants, as
such number may be adjusted in accordance with Rule 416, or the price
protection provisions of Section 5.3 of the Securities Purchase
Agreement, may also be offered hereby. See "Risk Factors - Price
Protection Provisions of Securities Purchase Agreements." The
Registration Rights Agreements among the Company and the Selling
Shareholders require the Company to register an amount equal to 125% of
the Shares (including Shares issuable upon exercise of the Warrants) held
by the Selling Shareholders.
11
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Shareholders or
their pledgees or donees, subject to the Lock-Up Agreement described above. See
"Selling Shareholders." Such sales may be made on the NNM or in negotiated
transactions, at prices and on terms then prevailing or at prices related to the
then current market price or at negotiated prices. The methods by which the
Shares may be sold may include, but not be limited to, the following: (a) block
trades in which the broker or dealer will attempt to sell the Shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction; (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; (d) privately negotiated
transactions; (e) short sales; and (f) a combination of any such methods of
sale. In effecting sales, brokers or dealers engaged by the Selling
Shareholders may receive commissions or discounts from the Selling Shareholders
or from the purchasers in amounts to be negotiated immediately prior to the
sale.
The Company has agreed to maintain the effectiveness of the registration of
the Shares offered hereby until the earlier of the date upon which all of the
Shares offered hereby have been sold without restriction on resale, or the date
on which the Shares offered hereby, in the opinion of counsel, may be
immediately sold by the Selling Shareholders without registration or restriction
on resale. There can be no assurance that the Selling Shareholders will sell
any or all of the Shares offered hereby.
The Company is bearing all of the costs relating to the registration of the
Shares. Any commissions, discounts or other fees payable to a broker, dealer,
underwriter, agent or market maker in connection with the sale of any of the
Shares will be borne by the Selling Shareholders. The Company will not receive
any of the proceeds from this offering, but will receive the exercise price
payable upon the exercise of the Warrants if the Warrants are exercised for
cash.
Pursuant to the registration rights granted to the Selling Shareholders in
connection with the sale by the Company of the Shares, the Company has agreed to
indemnify the Selling Shareholders, any person who controls a Selling
Shareholder, and any underwriters for the Selling Shareholders, against certain
liabilities and expenses arising out of or based upon the information set forth
or incorporated by reference in this Prospectus, and the Registration Statement
of which this Prospectus is a part, including liabilities under the Securities
Act and the Exchange Act. The Selling Shareholders and any brokers
participating in such sales may be deemed to be underwriters within the meaning
of the Securities Act. Any commissions paid or any discounts or concessions
allowed to any broker, dealer, underwriter, agent or market maker and, if any
such broker, dealer, underwriter, agent or market maker purchases any of the
Shares as principal, any profits received on the resale of such Shares, may be
deemed to be underwriting commissions or discounts under the Securities Act.
LEGAL MATTERS
The validity of the issuance of the Shares of Common Stock offered hereby
has been passed upon for the Company by Nida & Maloney, a Professional
Corporation, Santa Barbara, California.
EXPERTS
The consolidated financial statements of Miravant Medical Technologies and
subsidiaries at December 31, 1996 and 1995, and for each of the three years in
the period ended December 31, 1996 incorporated by reference in this Prospectus
and Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
12
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses to be incurred in
connection with the issuance and distribution of the securities being registered
hereby:
SEC registration fee. . . . . . . . . . . . . $ 60,072.73
Nasdaq National Market listing fee. . . . . . 17,500
Accounting fees and expenses. . . . . . . . . 10,000
Legal fees and expenses . . . . . . . . . . . 30,000
Printing expenses . . . . . . . . . . . . . . 10,000
Miscellaneous . . . . . . . . . . . . . . . . 5,000
--------
TOTAL . . . . . . . . . . . . . . . $132,572.73
----------
----------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the Delaware General Corporation Law (the "Delaware
Law") permits a corporation to provide in its certificate of incorporation that
directors of the corporation shall not be personally liable to the corporation
or its shareholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its shareholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for payments of unlawful dividends or unlawful stock repurchases or
redemptions, or (iv) for any transaction from which the director derived an
improper personal benefit. The Company's Certificate of Incorporation contains
such a provision.
Section 145 of the Delaware Law provides that a corporation may indemnify
directors and officers as well as other employees and individuals against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement in connection with specified actions, suits or proceedings, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation - a "derivative action"), if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard is applicable in the case of derivative actions, except that
indemnification only extends to expenses (including attorneys' fees) incurred in
connection with defense or settlement of such action, and the statute requires
court approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation. Under Section 145, a
corporation shall indemnify an agent of the corporation for expenses actually
and reasonably incurred if and to the extent such person was successful on the
merits in a proceeding or in defense of any claim, issue or matter therein.
The Registrant is presently subject to Section 2115 of the California
Corporations Code (the "California Code"), according to which Section 317 of the
California Code applies to the indemnification of officers and directors of the
Registrant. Under Section 317 of the California Code, permissible
indemnification by a corporation of its officers and directors is substantially
the same as permissible indemnification under Section 145 of the Delaware Law,
except that (i) permissible indemnification does not cover actions the person
reasonably believed were not opposed to the best interests of the corporation,
as opposed to those the person believed were in fact in the best interests of
the corporation, (ii) the Delaware Law permits advancement of expenses to agents
other than officers and directors only upon approval of the board of directors,
(iii) in a case of stockholder approval of indemnification, the California Code
requires certain minimum votes in favor of such indemnification and excludes the
vote of the potentially indemnified person, and (iv) the California Code only
permits independent counsel to approve indemnification if an independent quorum
of directors is not obtainable, while the Delaware Law permits the directors in
any circumstance to appoint counsel to undertake such determination.
II-1
<PAGE>
The Registrant in its Bylaws has provided for indemnification of its
officers, directors, employees and other agents substantially identical to that
permitted under the California Code. Section 145 of the Delaware Law and
Section 317 of the California Code provide that they are not exclusive of other
indemnification that may be granted by a corporation's charter, bylaws,
disinterested director vote, shareholder vote, agreement or otherwise. The
limitation of liability contained in the Registrant's Certificate of
Incorporation and the indemnification provision included in the Registrant's
Bylaws are consistent with Delaware Law Sections 102(b)(7) and 145. The
Registrant has also entered into separate indemnification agreements with its
directors and officers that could require the Registrant, among other things, to
indemnify them against certain liabilities that may arise by reason of their
status or service as directors and officers and to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified, including liabilities that may arise under the Securities Act of
1933. In addition, the Company has purchased directors and officers insurance.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to such provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
ITEM 16. EXHIBITS.
Exhibit
Number
- -------
4.1 Form of $55 Common Stock Purchase Warrant issued to the Selling
Shareholders(1)
4.2 Form of $60 Common Stock Purchase Warrant issued to the Selling
Shareholders(1)
5.1 Opinion of Nida & Maloney, a Professional Corporation(1)
10.1 Form of Securities Purchase Agreement among the Company and the
Selling Shareholders
10.2 Form of Lock-Up Agreement among the Company and the Selling
Shareholders
10.3 Form of Registration Rights Agreement among the Company and the
Selling Shareholders(1)
23.1 Consent of Ernst & Young LLP
23.2 Consent of Nida & Maloney, a Professional Corporation (included in
Exhibit 5.1)(1)
24 Power of Attorney (set forth on Page II-4)(1)
(1) Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) That, for purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF SANTA BARBARA, STATE OF CALIFORNIA, ON
DECEMBER 4, 1997.
MIRAVANT MEDICAL TECHNOLOGIES
By: /S/ Gary S. Kledzik
---------------------------------------------------
Gary S. Kledzik, Ph.D., Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ Gary S. Kledzik Chairman of the Board, Director, DECEMBER 4, 1997
- ---------------------------- and Chief Executive Officer
Gary S. Kledzik (principal executive officer)
/S/ David E. Mai* Director and President DECEMBER 4, 1997
- ----------------------------
David E. Mai
/S/ John M. Philpott* Chief Financial Officer DECEMBER 4, 1997
- ---------------------------- (principal financial officer and
John M. Philpott principal accounting officer)
/S/ Michael D. Farney* Director DECEMBER 4, 1997
- ----------------------------
Michael D. Farney
/S/ Donald K. McGhan* Director DECEMBER 4, 1997
- ----------------------------
Donald K. McGhan
/S/ Raul E. Perez* Director DECEMBER 4, 1997
- ----------------------------
Raul E. Perez, M.D.
/S/ Charles T. Foscue* Director DECEMBER 4, 1997
- ----------------------------
Charles T. Foscue
/S/ Jonah Shacknai* Director DECEMBER 4, 1997
- ----------------------------
Jonah Shacknai
* By /s/ Gary S. Kledzik
- ----------------------------
Gary S Kledzik
Attorney-in-fact
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------- ------- ----
4.1 Form of $55 Common Stock Purchase Warrant issued to the
Selling Shareholders(1)
4.2 Form of $60 Common Stock Purchase Warrant issued to the
Selling Shareholders(1)
5.1 Opinion of Nida & Maloney, a Professional Corporation(1)
10.1 Form of Securities Purchase Agreement among the Company
and the Selling Shareholders
10.2 Form of Lock-Up Agreement among the Company and the Selling
Shareholders
10.3 Form of Registration Rights Agreement among the Company and
the Selling Shareholders(1)
23.1 Consent of Ernst & Young LLP
23.2 Consent of Nida & Maloney, a Professional Corporation
(included in Exhibit 5.1)(1)
24 Power of Attorney (set forth on Page II-4)(1)
(1) Previously filed.
II-5
<PAGE>
SCHEDULE OF INFORMATION OMITTED FROM EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS 4.1 AND 4.2--COMMON STOCK PURCHASE WARRANTS
HOLDER'S NAME NUMBER OF $55.00 WARRANTS NUMBER OF $60.00 WARRANTS GRANT DATE EXPIRATION DATE
------------- ------------------------- ------------------------- ---------- ---------------
<S> <C> <C> <C>
Elliott Associates, L.P. 100,000 100,000 9/25/97 12/25/01
Westgate International, L.P. 100,000 100,000 9/25/97 12/25/01
Shepard Investments International, Ltd. 118,500 118,500 9/25/97 12/25/01
Stark International 118,500 118,500 9/25/97 12/25/01
Staro Partners 13,000 13,000 9/25/97 12/25/01
St. Cloud Investments, Ltd. 83,334 83,333 10/3/97 12/25/01
Bomoseen Investments, Ltd. 82,833 82,834 10/3/97 12/25/01
Dandelion Investments, Ltd. 83,333 83,333 10/3/97 12/25/01
Stanley Arkin 500 500 10/3/97 12/25/01
Bayview Investors, Ltd. 8,000 8,000 10/16/97 12/31/01
<CAPTION>
EXHIBIT 10.3-- SECURITIES PURCHASE AGREEMENT
NUMBER OF
PURCHASER'S NAME NUMBER OF SHARES WARRANTS DATE SECTION 2.10 SECTION 4.5
---------------- ---------------- --------- ---- ------------ -----------
<S> <C> <C> <C> <C> <C>
Elliott Associates, L.P. 200,000 200,000 9/22/97 $35,000,000 (1)
Westgate International, L.P. 200,000 200,000 9/22/97 $35,000,000 (1)
Shepard Investments International, Ltd. 237,000 237,000 9/22/97 $35,000,000 (1)
Stark International 237,000 237,000 9/22/97 $35,000,000 (1)
Staro Partners 26,000 26,000 9/22/97 $35,000,000 (1)
St. Cloud Investments, Ltd. 166,667 166,667 10/3/97 $10,000,000 $45,000,000
Bomoseen Investments, Ltd. 166,667 165,667 10/3/97 $10,000,000 $45,000,000
Dandelion Investments, Ltd. 166,666 166,666 10/3/97 $10,000,000 $45,000,000
Stanley Arkin 1,000 1,000 10/3/97 $10,000,000 $45,000,000
Bayview Investors, Ltd. 16,000 16,000 10/16/97 $ 9,200,000 $70,000,000
</TABLE>
- -----------------------------------------------------
(1) Bracketed text not included in these agreements.
<PAGE>
EXHIBIT 10.4-- LOCK-UP AGREEMENT
<TABLE>
<CAPTION>
PURCHASER'S NAME DATE LOCK-UP RELEASE DATE
---------------- ---- --------------------
<S> <C> <C>
Elliott Associates, L.P. 9/22/97 9/22/98
Westgate International, L.P. 9/22/97 9/22/98
Shepard Investments International, Ltd. 9/22/97 9/22/98
Stark International 9/22/97 9/22/98
Staro Partners 9/22/97 9/22/98
St. Cloud Investments, Ltd. 10/3/97 9/22/98
Bomoseen Investments, Ltd. 10/3/97 9/22/98
Dandelion Investments, Ltd. 10/3/97 9/22/98
Stanley Arkin 10/3/97 9/22/98
Bayview Investors, Ltd. 10/16/97 10/16/98
EXHIBIT 10.5-- REGISTRATION RIGHTS AGREEMENT
PURCHASER'S NAME DATE NUMBER OF SHARES
---------------- ---- ----------------
(2) (2) (3)
</TABLE>
- ----------------------------------------
(2) See Schedule to Exhibit 10.4
(3) See Schedule to Exhibit 10.3
<PAGE>
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT ("Agreement") is entered into as of
_______________, 1997, by and between MIRAVANT MEDICAL TECHNOLOGIES, a
Delaware corporation (the "Company"), with headquarters located at 7408
Hollister Avenue, Santa Barbara, California 93117 and the purchaser (the
"Purchaser") set forth on the execution pages hereof, with regard to the
following:
RECITALS
A. The Company and Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D"), as promulgated
by the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act").
B. Purchaser desires to (a) purchase, upon the terms and conditions
stated in this Agreement, shares of the Company's Common Stock, par value
$.01 per share (the "Common Stock"), and (b) to receive, in consideration for
such purchase, Stock Purchase Warrants (the "Warrants"), in the form attached
hereto as Exhibit A, to acquire shares of Common Stock. The shares of Common
Stock issuable upon exercise of or otherwise pursuant to the Warrants are
referred to herein as "Warrant Shares". The shares of Common Stock issued to
the Purchaser hereunder (exclusive of the Warrant Shares) are referred to
herein as the "Common Shares." The Common Shares, the Warrants, and the
Warrant Shares are collectively referred to herein as the "Securities."
C. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement in the form attached hereto as Exhibit B (the "Registration
Rights Agreement"), pursuant to which the Company has agreed to provide
certain registration rights under the Securities Act, the rules and
regulations promulgated thereunder and applicable state securities laws.
D. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Lock-Up
Agreement in the form attached hereto as Exhibit C (the "Lock-Up Agreement"),
pursuant to which each Purchaser has agreed to limit the disposition of the
Common Shares purchased by it hereunder in accordance with the terms
specified in such agreement, as well as the Warrant Shares.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and Purchaser hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF COMMON STOCK
1.1 Purchase of Common Stock. Subject to the terms and conditions of
this Agreement, the issuance, sale and purchase of the Common Shares shall be
consummated in a "Closing". The purchase price (the "Purchase Price") per
share of Common Stock shall be $50.00. On the date of the Closing, subject
to the satisfaction or waiver of the conditions set forth in Articles VI and
VII, the Company shall issue and sell to each Purchaser, and each Purchaser
severally agrees to purchase from the Company, the number of shares of Common
Stock set forth on the signature page executed by such Purchaser. Each
Purchaser's obligation to purchase Common Shares hereunder is distinct and
separate from each other
<PAGE>
Purchaser's obligation to purchase, and no Purchaser shall be required to
purchase hereunder more than the number of Common Shares set forth on such
Purchaser's signature page. The obligations of the Company with respect to
each Purchaser shall be separate from the obligations of each other Purchaser
and shall not be conditioned as to any Purchaser upon the performance of
obligations of any other Purchaser.
1.2 Form of Payment. Each Purchaser shall pay the aggregate Purchase
Price for the Common Shares being purchased by such Purchaser by wire
transfer to the account designated by the Company.
1.3 Closing Date. Subject to the satisfaction (or waiver) of the
conditions set forth in Articles VI and VII below, the date and time of the
issuance, sale and purchase of the Common Shares and Warrants pursuant to
this Agreement shall be at 10:00 a.m. California time, on ____________, 1997.
1.4 Warrants. In consideration of the purchase by Purchaser of the
Common Shares, the Company shall at the Closing issue to each Purchaser, in
the aggregate, Warrants to acquire, for each One Thousand (1,000) Common
Shares purchased by such Purchaser hereunder, (a) Five Hundred (500) shares
of Common Stock at an exercise price of $55.00 per share of Common Stock and
(b) Five Hundred (500) shares of Common Stock at an exercise price of $60.00
per share of Common Stock.
ARTICLE II
PURCHASER'S REPRESENTATIONS AND
WARRANTIES
Each Purchaser represents and warrants as of the date hereof and as of
the Closing, severally and solely with respect to itself and its purchase
hereunder and not with respect to any other Purchaser or the purchase
hereunder by any other Purchaser (and no Purchaser shall be deemed to make or
have any liability for any representation or warranty made by any other
Purchaser), to the Company as set forth in this Article II. No Purchaser
makes any other representations or warranties, express or implied, to the
Company in connection with the transactions contemplated hereby and any and
all prior representations and warranties, if any, which may have been made by
a Purchaser to the Company in connection with the transactions contemplated
hereby shall be deemed to have been merged in this Agreement and any such
prior representations and warranties, if any, shall not survive the execution
and delivery of this Agreement.
2.1 Investment Purpose. Purchaser is purchasing the Common Shares and
the Warrants for Purchaser's own account for investment only and not with a
view toward or in connection with the public sale or distribution thereof.
Purchaser will not, directly or indirectly, offer, sell, pledge (subject to
Section 4.11) or otherwise transfer its Common Shares or Warrants or any
interest therein except pursuant to transactions that are exempt from the
registration requirements of the Securities Act and/or sales registered under
the Securities Act. Purchaser understands that Purchaser must bear the
economic risk of this investment indefinitely, unless the Securities are
registered pursuant to the Securities Act and any applicable state securities
laws or an exemption from such registration is available, and that the
Company has no present intention of registering any such Securities other
than as contemplated by the Registration Rights Agreement. By making the
representations in this Section 2.1, Purchaser does not agree to hold the
Securities for any minimum or other specific term (except as provided in the
Lock-Up Agreement) and reserves the right to dispose of the Securities at any
time in accordance with or pursuant to a registration statement or an
exemption from registration under the Securities Act and any applicable state
securities laws.
2.2 Accredited Investor Status. Purchaser is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D.
2.3 Reliance on Exemptions. Purchaser understands that the Common
Shares and Warrants are being offered and sold to Purchaser in reliance upon
specific exemptions from the registration
<PAGE>
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and Purchaser's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of Purchaser to acquire
the Common Shares and Warrants.
2.4 Information. Purchaser or its counsel have been furnished all
materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Securities which have
been specifically requested by Purchaser, including without limitation the
Company's Annual Report on Form 10-K for the Year ended December 31, 1996,
Quarterly Reports on Form 10-Q for the periods ended March 31, 1997 and June
30, 1997, filed with the Securities and Exchange Commission ("SEC") and Proxy
Statement dated April 25, 1997 (such documents collectively, the "SEC
Documents"). Purchaser has been afforded the opportunity to ask questions of
the Company and has received what Purchaser believes to be complete and
satisfactory answers to any such inquiries. Neither such inquiries nor any
other due diligence investigation conducted by Purchaser or any of its
representations shall modify, amend or affect Purchaser's right to rely on
the Company's representations and warranties contained in Article III.
Purchaser understands that Purchaser's investment in the Securities involves
a high degree of risk, including without limitation the risks and
uncertainties disclosed in the SEC Documents. Purchaser acknowledges the
disclosures presented under the caption "Risk Factors" in the Company's Form
10-K filed on March 31, 1997, and the incorporation of those disclosures by
reference herein.
2.5 Governmental Review. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
2.6 Transfer or Resale. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been
and are not being registered under the Securities Act or any state securities
laws, and may not be offered, sold, pledged (subject to Section 4.11 of this
Agreement) or otherwise transferred unless subsequently registered thereunder
or an exemption from such registration is available (which exemption the
Company expressly agrees may be established as contemplated in clauses (b)
and (c) of Section 5.1 hereof); (ii) any sale of such Securities made in
reliance on Rule 144 under the Securities Act (or a successor rule) ("Rule
144") may be made only in accordance with the terms of Rule 144 and further,
if Rule 144 is not applicable, any resale of such Securities without
registration under the Securities Act under circumstances in which the seller
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities
Act or the rules and regulations of the SEC thereunder in order for such
resale to be allowed, and (iii) neither the Company nor any other person is
under any obligation to register such Securities under the Securities Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder (in each case, other than pursuant to this Agreement or
the Registration Rights Agreement).
2.7 Legends. Purchaser understands that, subject to Article V hereof,
the certificates for the Warrants and, until such time as the Common Shares
and Warrant Shares have been registered under the Securities Act as
contemplated by the Registration Rights Agreement or otherwise may be sold by
Purchaser pursuant to Rule 144 (subject to and in accordance with the
procedures specified in Article V hereof), the certificates for the Common
Shares and Warrant Shares and the Warrants will bear a restrictive legend
(the "Legend") in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
<PAGE>
2.8 Authorization: Enforcement. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and
delivered on behalf of Purchaser and are valid and binding agreements of
Purchaser enforceable in accordance with its respective terms, except to the
extent that such validity or enforceability may be subject to or affected by
any bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of,
creditors' rights or remedies of creditors generally, or by other equitable
principles of general application.
2.9 Residency. Purchaser is a resident of the jurisdiction set forth
under Purchaser's name on the signature page hereto executed by Purchaser.
2.10 Additional Financing. Each Purchaser acknowledges that the Company
expects to close, within 30 days of Closing, the sale of Common Stock and
warrants in addition to the Common Shares sold hereunder with at a sales
price of $50.00 per share at the time of such sale of up to $____________
(the "Additional Financing") in accordance with the terms attached hereto as
Schedule 2.10 and otherwise on substantially the same terms and conditions as
the financing hereunder. Each Purchaser acknowledges that the Company has
provided no assurances that the Additional Financing will be completed.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser as of the date hereof
and as of the Closing that:
3.1 Organization and Qualification. Each of the Company and its
subsidiaries is a corporation duly organized and existing in good standing
under the laws of the jurisdiction in which it is incorporated, and has the
requisite corporate power to own its properties and to carry on its business
as now being conducted. The Company and each of its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction where the failure so to qualify or be in good standing
would have a Material Adverse Effect. "Material Adverse Effect" means any
effect which, individually or in the aggregate with all other effects,
reasonably would be expected to be materially adverse to the business,
operations, properties, financial condition, operating results or prospects
of the Company and its subsidiaries, taken as a whole on a consolidated basis
or on the transactions contemplated hereby.
3.2 Authorization; Enforcement. (a) The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Lock-Up Agreement and the Registration Rights Agreement, and to issue, sell
and perform its obligations with respect to the Common Shares and Warrants in
accordance with the terms hereof and thereof and the terms of the Common
Shares and Warrants, and to issue Warrant Shares in accordance with the terms
and conditions of the Warrants; (b) the execution, delivery and performance
of this Agreement, the Lock-Up Agreement and the Registration Rights
Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including, without limitation, the issuance
of the Common Shares and the Warrants, and the issuance and reservation for
issuance of the Warrant Shares) have been duly authorized by all necessary
corporate action and, except as set forth on Schedule 3.2 hereof, no further
consent or authorization of the Company, its board of directors, or its
stockholders or any other person, body or agency is required with respect to
any of the transactions contemplated hereby or thereby (whether under rules
of the Nasdaq National Market ("Nasdaq"), the National Association of
Securities Dealers, Inc. or otherwise); (c) this Agreement, the Lock-Up
Agreement, the Registration Rights Agreement, certificates for the Common
Shares, and the Warrants have been duly executed and delivered by the
Company; and (d) this Agreement, the Registration Rights Agreement, the
Common Shares, and the Warrants constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms, except (i) to the extent that such validity or
enforceability may be subject to or affected by any bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting
<PAGE>
generally the enforcement of, creditors' rights or remedies of creditors
generally, or by other equitable principles of general application, and (ii)
as rights to indemnity and contribution under the Registration Rights
Agreement may be limited by Federal or state securities laws.
3.3 Capitalization. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued
and outstanding, the number of shares reserved for issuance pursuant to the
Company's stock option plans, the number of shares reserved for issuance
pursuant to securities (other than the Warrants) exercisable for, or
convertible into or exchangeable for, any shares of Common Stock and the
number of shares to be reserved for issuance upon exercise of the Warrants is
set forth on Schedule 3.3. All of such outstanding shares of capital stock
have been, or upon issuance will be, validly issued, fully paid and
nonassessable. No shares of capital stock of the Company (including the
Common Shares and the Warrant Shares) are subject to preemptive rights or any
other similar rights of the stockholders of the Company or any liens or
encumbrances. Except as disclosed in Schedule 3.3, as of the date of this
Agreement, (i) there are no outstanding options, warrants, scrip, rights to
subscribe for, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exercisable or exchangeable for,
any shares of capital stock of the Company or any of its subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company
or any of its subsidiaries is or may become bound to issue additional shares
of capital stock of the Company or any of its subsidiaries, (ii) issuance of
the Securities will not trigger antidilution rights for any other outstanding
or authorized securities of the Company, and (iii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated
to register the sale of any of its or their securities under the Securities
Act (except the Registration Rights Agreement). The Company has furnished to
Purchaser true and correct copies of the Company's Certificate of
Incorporation as in effect on the date hereof ("Certificate of
Incorporation"), and the Company's By-laws as in effect on the date hereof
(the "By-laws"). The Company has set forth on Schedule 3.3 all instruments
and agreements (other than the Certificate of Incorporation and By-laws)
governing securities convertible into or exercisable or exchangeable for
Common Stock of the Company (and the Company shall provide to Purchaser
copies thereof upon the request of Purchaser). The Company shall provide
Purchaser with a written update of this representation signed by the
Company's Chief Executive Officer or Chief Financial Officer on behalf of the
Company as of the date of the Closing.
3.4 Issuance of Shares. The Common Shares and Warrant Shares are duly
authorized and reserved for issuance, and, in the case of the Warrants, upon
the exercise of the Warrants in accordance with the terms thereof, as
applicable, will be validly issued, fully paid and non-assessable, and free
from all taxes, liens, claims and encumbrances imposed or suffered by the
Company and will not be subject to preemptive rights or other similar rights
of stockholders of the Company. The Common Shares and Warrants are duly
authorized and validly issued, fully paid and nonassessable, and free from
all liens, claims and encumbrances imposed or suffered by the Company and are
not and will not be subject to preemptive rights or other similar rights of
stockholders of the Company.
3.5 No Conflicts. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Company, and the
consummation by the Company of transactions contemplated hereby and thereby
(including, without limitation, the issuance and reservation for issuance, as
applicable, of the Common Shares, Warrants, and Warrant Shares) do not and
will not (a) result in a violation of the Certificate of Incorporation or
By-laws or (b) conflict with, or constitute a default (or an event which,
with notice or lapse of time or both, would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including U.S. federal and state
securities laws and regulations and the rules and regulations of NASDAQ)
applicable to the Company or any of its subsidiaries, or by which any
property or asset of the Company or any of its subsidiaries, is bound or
affected (except for such possible conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). Neither
the Company nor any of its subsidiaries is in violation of its Certificate of
Incorporation or other organizational documents, and neither the Company nor
any of its subsidiaries, is in default (and no event has occurred which has
not been
<PAGE>
waived which, with notice or lapse of time or both, would put the Company or
any of its subsidiaries in default) under, nor has there occurred any event
giving others (with notice or lapse of time or both) any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, except for possible violations, defaults or rights as would not,
individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its subsidiaries are not being conducted, and
shall not be conducted so long as a Purchaser owns any of the Securities, in
violation of any law, ordinance or regulation of any governmental entity,
except for possible violations the sanctions for which either individually or
in the aggregate would not have a Material Adverse Effect. Except as set
forth on Schedule 3.5, or except (A) such as may be required under the
Securities Act in connection with the performance of the Company's
obligations under the Registration Rights Agreement, (B) filing of a Form D
with the SEC, and (C) compliance with the state securities or Blue Sky laws
of applicable jurisdictions, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with,
any court or governmental agency or any regulatory or self-regulatory agency
in order for it to execute, deliver or perform any of its obligations under
this Agreement, the Lock-Up Agreement or the Registration Rights Agreement or
to perform its obligations in accordance with the terms hereof or thereof.
The Company is not in violation of the listing requirements of Nasdaq and
does not reasonably anticipate that the Common Stock will be delisted by
Nasdaq for the foreseeable future.
3.6 SEC Documents. Except as disclosed in Schedule 3.6, since December
31, 1995, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC
pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (all of the foregoing filed after
December 31, 1995 and all exhibits included therein and financial statements
and schedules thereto and documents incorporated by reference therein, being
referred to herein as the "SEC Documents"). The Company has delivered to each
Purchaser true and complete copies of the SEC Documents, except for exhibits,
schedules and incorporated documents. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time
they were filed with the SEC, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
statements made in any such SEC Documents which is required to be updated or
amended under applicable law has not been so updated or amended. The
financial statements of the Company included in the SEC Documents have been
prepared in accordance with U.S. generally accepted accounting principles,
consistently applied, and the rules and regulations of the SEC during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they do not include footnotes or are condensed or
summary statements) and present accurately and completely the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in a manner clearly
evident to a sophisticated institutional investor in the financial statements
or the notes thereto of the Company included in the SEC Documents, the
Company has no liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business consistent with past
practice subsequent to the date of such financial statements and (ii)
obligations under contracts and commitments incurred in the ordinary course
of business consistent with past practice and not required under generally
accepted accounting principles to be reflected in such financial statements,
in each case of clause (i) and (ii) next above which, individually or in the
aggregate, are not material to the financial condition, business, operations,
properties, operating results or prospects of the Company and its
subsidiaries. To the extent required by the rules of the SEC applicable
thereto, the SEC Documents contain a complete and accurate list of all
material undischarged written or oral contracts, agreements, leases or other
instruments to which the Company or any subsidiary is a party or by which the
Company or any subsidiary is bound or to which any of the properties or
assets of the Company or any subsidiary is subject (each a "Contract").
Except as set forth in Schedule 3.6, none of the Company, its subsidiaries
or, to the best knowledge of the Company,
<PAGE>
any of the other parties thereto, is in breach or violation of any Contract,
which breach or violation would have a Material Adverse Effect. No event,
occurrence or condition exists which, with the lapse of time, the giving of
notice, or both, would become a default by the Company or its subsidiaries
thereunder which would have a Material Adverse Effect. The Company has not
provided to any Purchaser any material non-public information or any other
information which, according to applicable law, rule or regulation, should
have been disclosed publicly by the Company but which has not been so
disclosed.
3.7 Absence of Certain Changes. Since December 31, 1996, there has
been no material adverse change and no material adverse development in the
business, properties, operations, financial condition, results of operations
or prospects of the Company, except as disclosed in Schedule 3.7 or clearly
evident to a sophisticated institutional investor from the SEC Documents.
3.8 Absence of Litigation. Except as disclosed in Schedule 3.8 or as
clearly evident to a sophisticated institutional investor from the SEC
Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, or self-regulatory
organization or body pending or, to the knowledge of the Company or any of
its subsidiaries, threatened against or affecting the Company, any of its
subsidiaries, or any of their respective directors or officers in their
capacities as such, which could reasonably be expected to result in an
unfavorable decision, ruling or finding which would have a Material Adverse
Effect or would adversely affect the transactions contemplated by this
Agreement or any of the documents contemplated hereby or which would
adversely affect the validity or enforceability of, or the authority or
ability of the Company to perform its obligations under, this Agreement or
any of such other documents. There are no facts known to the Company which,
if known by a potential claimant or governmental authority, could reasonably
be expected to give rise to a claim or proceeding which, if asserted or
conducted with results unfavorable to the Company or any of its subsidiaries,
could reasonably be expected to have a Material Adverse Effect.
3.9 Disclosure. No information relating to or concerning the Company
set forth in this Agreement contains an untrue statement of a material fact.
No information relating to or concerning the Company set forth in any of the
SEC Documents contains a statement of material fact that was untrue as of the
date such SEC Document was filed with the SEC. The Company has not omitted to
state a material fact necessary in order to make the statements made herein
or therein, in light of the circumstances under which they were made, not
misleading. Except for the execution and performance of this Agreement, no
material fact (within the meaning of the federal securities laws of the
United States and of applicable state securities laws) exists with respect to
the Company which has not been publicly disclosed.
3.10 Acknowledgment Regarding Purchaser's Purchase of the
Securities. The Company acknowledges and agrees that Purchaser is not acting
as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement or the transactions contemplated
hereby, that this Agreement and the transaction contemplated hereby, and the
relationship between each Purchaser and the Company, are "arms-length", and
that any statement made by Purchaser (except as set forth in Article II), or
any of its representatives or agents, in connection with this Agreement and
the transactions contemplated hereby is not advice or a recommendation, is
merely incidental to Purchaser's purchase of the Securities and has not been
relied upon as such in any way by the Company, its officers or directors. The
Company further represents to Purchaser that the Company's decision to enter
into this Agreement and the transactions contemplated hereby have been based
solely on an independent evaluation by the Company and its representatives.
3.11 S-3 Registration. The Company is currently eligible to
register the resale by Purchaser of the Warrant Shares and to register the
Common Shares on a registration statement on Form S-3 under the Securities
Act.
3.12 No General Solicitation. Neither the Company nor any distributor
participating on the Company's behalf in the transactions contemplated hereby
(if any) nor any person acting for the Company,
<PAGE>
or any such distributor, has conducted any "general solicitation," as
described in Rule 502(c) under Regulation D, with respect to any of the
Securities being offered hereby.
3.13 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers
to buy any security under circumstances that would prevent the parties hereto
from consummating the transactions contemplated hereby pursuant to an
exemption from the registration under the Securities Act pursuant to the
provisions of Regulation D. The transactions contemplated hereby are exempt
from the registration requirements of the Securities Act, assuming the
accuracy of the representations and warranties herein contained of each
Purchaser.
3.14 No Brokers. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by Purchaser relating to this Agreement or the transactions
contemplated hereby.
3.15 Intellectual Property. Each of the Company and its
subsidiaries owns or possesses adequate and enforceable rights to use all
material patents, patent applications, trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications, licenses,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) and other
similar rights and proprietary knowledge (collectively, "Intangibles") used
or necessary for the conduct of its business as now being conducted and as
described in the Company's Annual Report on Form 10-K for its most recently
ended fiscal year. Neither the Company nor any subsidiary of the Company
infringes on or is in conflict with any right of any other person with
respect to any Intangibles nor is there any claim of infringement made by a
third party against or involving the Company or any of its subsidiaries,
which infringement, conflict or claim, individually or in the aggregate,
could reasonably be expected to result in an unfavorable decision, ruling or
finding which would have a Material Adverse Effect.
3.16 Key Employees. Each Key Employee (as defined below) is
currently serving the Company in the capacity disclosed in Schedule 3.16. No
Key Employee, to the best of the knowledge of the Company and its
subsidiaries, is, or is now expected to be, in violation of any material term
of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant, and the continued employment of each
Key Employee does not subject the Company or any of its subsidiaries to any
liability with respect to any of the foregoing matters. No Key Employee has,
to the best of the knowledge of the Company and its subsidiaries, any
intention to terminate his employment with, or services to, the Company or
any of its subsidiaries. "Key Employee" means each of Gary S. Kledzik and
David E. Mai.
3.17 Rights Plan. The Company does not have in effect a shareholders
rights plan or similar plan in the nature of a "poison pill." If the Company
adopts such a plan, the Purchaser's Common Shares, Warrant Shares and Shares
receivable pursuant to Section 5.3 will not be deemed to trigger such plan.
ARTICLE IV
COVENANTS
4.1 Best Efforts. The parties shall use their best efforts to timely
satisfy each of the conditions described in Articles VI and VII of this
Agreement.
4.2 Securities Laws. The Company agrees to file a Form D with respect
to the Securities with the SEC as required under Regulation D and to provide
a copy thereof to each Purchaser within fifteen (15) days after the date of
Closing. The Company agrees to file a Form 8-K disclosing this Agreement and
the transactions contemplated hereby with the SEC within ten (10) business
days following the date of Closing. The Company shall, on or prior to the
date of Closing, take such action as is necessary to sell the Securities to
each Purchaser under applicable securities laws of the states of the United
States,
<PAGE>
and shall provide evidence of any such action so taken to each Purchaser on
or prior to the date of the Closing.
4.3 Reporting Status. So long as any Purchaser beneficially owns any
of the Securities, (a) the Company shall timely file all reports required to
be filed with the SEC pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination, and (b) the Company will maintain its ability to
register its Common Stock on Form S-3.
4.4 Restriction on Certain Issuances of Securities. (a) For a period
of one year following the date of Closing, the Company shall not issue or
agree to issue, (except (i) to Purchaser pursuant to this Agreement, (ii)
pursuant to any employee stock option, stock purchase or restricted stock
plan of the Company in effect on the date hereof up to the aggregate amounts
set forth on Schedule 4.5 hereto, (iii) pursuant to any existing security,
option, warrant, scrip, call or commitment or right in each case or disclosed
on Schedule 3.3 hereof, (iv) pursuant to any grant or exercise of any
consultant warrants or options granted or awarded in the reasonable
discretion of the Board of Directors, (v) beginning ninety (90) days
following the date of the Closing, pursuant to a strategic joint venture or
partnership entered into by the Company, undertaken at the reasonable
discretion of the Board of Directors of the Company, the primary purpose of
which is not to raise equity capital or (vi) the Additional Financing
reflected in Section 2.10), any equity securities of the Company (or any
security convertible into or exercisable or exchangeable, directly or
indirectly, for equity securities of the Company) if such securities are
issued at a price (or in the case of securities convertible into or
exercisable or exchangeable, directly or indirectly, for Common Stock such
securities provide for a conversion, exercise or exchange price) which may be
less than the current market price for Common Stock on the date of issuance
(in the case of Common Stock) or the date of conversion, exercise or exchange
(in the case of securities convertible into or exercisable or exchangeable,
directly or indirectly, for Common Stock).
4.5 Right of First Offer. From the date hereof until the day following
the six-month anniversary of the date of the Closing, the Company shall not
issue or sell, or agree to issue or sell any equity securities of the Company
or any of its subsidiaries (or any security convertible into or exercisable
or exchangeable, directly or indirectly, for equity securities of the Company
or any of its subsidiaries) ("Future Offerings") unless the Company shall
have first delivered to each Purchaser at least ten (10) business days prior
to the closing of such Future Offering, written notice describing the
proposed Future Offering, including the terms and conditions thereof, and
providing each Purchaser and its affiliates an option during the ten (10)
business day period following delivery of such notice to purchase up to the
full amount of the securities being offered in the Future Offering on the
same terms as contemplated by such Future Offering [on a pro-rata basis to
all other purchasers of the Company's Common Stock pursuant to the Agreement
between the Company and certain investors for $__________ and the Additional
Financing] (the limitations referred to in this sentence are collectively
referred to as the "Capital Raising Limitations"); provided that if
oversubscribed, the Future Offering will be allocated to the Purchaser pro
rata in proportion to the amount of its initial purchase of Securities
hereunder. The Capital Raising Limitations shall not apply to the Additional
Financing referred to in Section 2.10 or any transaction involving issuances
of securities in connection with a merger, consolidation, joint venture,
asset acquisition, license agreement, strategic alliance, grant or exercise
of options to or by employees, consultants or directors. In addition, the
Capital Raising Limitations also shall not apply to the issuance of
securities upon exercise or conversion of the Company's options, warrants or
other convertible securities outstanding as of the date hereof, the grant of
additional options or warrants, or the issuance of additional securities,
under any employee, director or consulting stock option, stock purchase or
restricted stock plan of the Company or any firm commitment underwritten
public offering. This Section 4.5 shall not limit the Company's obligations
under Section 4.4 above. The Company shall prohibit any Common Stock or other
security issued by the Company subject to the Capital Raising Limitations but
not purchased by any Purchaser from being converted, exercised or resold
until the day following the six-month anniversary of the date of the Closing
and shall take all actions necessary (including, without limitation, the
issuance of a stop transfer order) to effect such prohibition.
<PAGE>
4.6 Information. The Company agrees to send the following reports to
each Purchaser until such Purchaser transfers, assigns or sells all of its
Securities in transactions in which the transferee is (unless such transferee
is an affiliate of the Company) not subject to securities law resale
restrictions: (a) within three (3) business days after the filing with the
SEC, a copy of its Annual Report on Form 10-K, its Quarterly Reports on Form
10-Q, any proxy statements and any Current Reports on Form 8-K; and (b)
within one (1) business day after release, copies of all press releases
issued by the Company or any of its subsidiaries. The Company further agrees
to promptly provide to any Purchaser any information with respect to the
Company, its properties, or its business or Purchaser's investment as such
Purchaser may reasonably request; provided, however, that the Company shall
not be required to give any Purchaser any material nonpublic information. If
any information requested by a Purchaser from the Company contains material
nonpublic information, the Company shall inform the Purchaser in writing that
the information requested contains material nonpublic information and shall
in no event provide such information to Purchaser without the express written
consent of such Purchaser after being so informed.
4.7 Listing. The Company shall continue the uninterrupted listing and
trading of its Common Stock on the Nasdaq or the New York Stock Exchange or
the American Stock Exchange; and comply in all respects with the Company's
reporting, filing and other obligations under the By-laws or rules of the
Nasdaq or such Exchange, as applicable.
4.8 Prospectus Delivery Requirement. Each Purchaser understands that
the Securities Act may require delivery of a prospectus relating to the
Common Stock in connection with any sale thereof pursuant to a registration
statement under the Securities Act covering the resale by such Purchaser of
the Common Stock being sold, and each Purchaser shall comply with the
applicable prospectus delivery requirements of the Securities Act in
connection with any such sale.
4.9 Corporate Existence. So long as any Purchaser beneficially owns
any Warrants or Common Stock, the Company shall maintain its corporate
existence, except in the event of a merger, consolidation or sale of all or
substantially all of the Company's assets, as long as the surviving or
successor entity in such transaction (i) assumes the Company's obligations
hereunder and under the agreements and instruments entered into in connection
herewith and (ii) is a publicly traded corporation whose common stock is
listed for trading on the NASDAQ, the New York Stock Exchange or the American
Stock Exchange.
4. 10 Hedging Transactions. No Purchaser has an existing short
position with respect to the Common Shares. Each Purchaser agrees not to,
directly or indirectly, enter into any short sales with respect to the Common
Shares prior to the date on which such Purchaser is entitled to sell,
transfer or dispose pursuant to the Lock-Up Agreement the number of shares of
Common Stock as to which such Purchaser proposes to establish a short
position. This Section 4.10 shall not prohibit Purchaser from at any time
entering into options contracts with respect to the Common Shares, including
puts and calls including delivering Common Stock in satisfaction of any
exercised options. Purchaser shall not, however, be permitted to deliver
Common Shares in satisfaction of any exercised options (unless, at the time
of such delivery, Disposition (as defined in the Lock-Up Agreement) of such
Common Shares is permitted under the Lock-Up Agreement).
4.11 Pledging and Margining. Notwithstanding anything in this Agreement
to the Contrary, Purchaser may pledge, margin or otherwise encumber the
Common Shares unless the result of any such activity would be that such
Common Shares would be available for lending and/or borrowing in connection
with short sales of the Common Stock by any third party.
4.12 Cash Maintenance Requirement. From the date of the Closing through
the first anniversary of the date of the Closing, the Company shall maintain,
as of the end of each fiscal quarter of the Company, cash or cash equivalents
(as reflected in the Company's quarterly financial statements) equal to at
least Twenty Million Dollars ($20,000,000).
<PAGE>
4.13 Use of Proceeds. The Company will use the proceeds of the sale of
the Securities for working capital or such other purposes as management or
the Company's Board of Directors shall determine.
4.14 Management Lock-Up. The Company will extend its current agreements
so that no person identified on Schedule 4.14 will be permitted to sell
shares of Common Stock prior to the Anniversary Date.
ARTICLE V
LEGEND REMOVAL, TRANSFER, CERTAIN SALES, ADDITIONAL SHARES
5.1 Removal of Legend. The Legend shall be removed and the Company
shall issue a certificate without such Legend to the holder of any Security
upon which it is stamped, and a certificate for a security shall be
originally issued without the Legend, if, (a) the sale of such Security is
registered under the Securities Act, (b) such holder provides the Company
with an opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions and reasonably satisfactory to
the Company and its counsel (the reasonable cost of which shall be borne by
the Company if neither an effective registration statement under the
Securities Act or Rule 144 is available in connection with such sale) to the
effect that a public sale or transfer of such Security may be made without
registration under the Securities Act pursuant to an exemption from such
registration requirements or (c) such Security can be sold pursuant to Rule
144 and the holder provides the Company with reasonable assurances that the
Security can be so sold without restriction or (d) such Security can be sold
pursuant to Rule 144(k). Each Purchaser agrees to sell all Securities,
including those represented by a certificate(s) from which the Legend has
been removed, or which were originally issued without the Legend, pursuant to
an effective registration statement, in accordance with the manner of
distribution described in such registration statement and to deliver a
prospectus in connection with such sale, or in compliance with an exemption
from the registration requirements of the Securities Act. In the event the
Legend is removed from any Security or any Security is issued without the
Legend and the Security is to be disposed of other than pursuant to the
registration statement or pursuant to Rule 144, then prior to, and as a
condition to, such disposition such Security shall be relegended as provided
herein in connection with any disposition if the subsequent transfer thereof
would be restricted under the Securities Act. Also, in the event the Legend
is removed from any Security or any Security is issued without the Legend and
thereafter the effectiveness of a registration statement covering the resale
of such Security is suspended or the Company determines that a supplement or
amendment thereto is required by applicable securities laws, then upon
reasonable advance notice to Purchaser holding such Security, the Company may
require that the Legend be placed on any such Security that cannot then be
sold pursuant to an effective registration statement or Rule 144 or with
respect to which the opinion referred to in clause (b) next above has not
been rendered, which Legend shall be removed when such Security may be sold
pursuant to an effective registration statement or Rule 144 or such holder
provides the opinion with respect thereto described in clause (b) next above.
5.2 Transfer Agent Instructions. The Company shall instruct its transfer
agent to issue certificates, registered in the name of each Purchaser or its
nominee, for the Common Shares and for the Warrant Shares in such amounts
determined in accordance with the terms of the Warrants. Such certificates
shall bear the Legend only to the extent provided by Section 5.1 above and
the Lock-Up Agreement. The Company covenants that no instruction other than
such instructions referred to in this Article V, and stop transfer
instructions to give effect to Section 2.6 hereof in the case of the Common
Shares and Warrant Shares prior to registration of the Common Shares and
Warrant Shares under the Securities Act, will be given by the Company to its
transfer agent and that the Securities shall otherwise be freely transferable
on the books and records of the Company. Nothing in this Section shall affect
in any way each Purchaser's obligations and agreement set forth in Section
5.1 hereof to resell the Securities pursuant to an effective registration
statement and to deliver a prospectus in connection with such sale or in
compliance with an exemption from the registration requirements of applicable
securities laws. If (a) a Purchaser provides the Company with an opinion of
counsel, which opinion of counsel shall be in form, substance and scope
<PAGE>
customary for opinions of counsel in comparable transactions and reasonably
satisfactory to the Company and its counsel (the reasonable cost of which
shall be borne by the Company if neither an effective registration statement
under the Securities Act or Rule 144 is available in connection with such
sale), to the effect that the Securities to be sold or transferred may be
sold or transferred pursuant to an exemption from registration or (b) a
Purchaser transfers Securities to an affiliate which is an accredited
investor (within the meaning of Regulation D under the Securities Act) and
which delivers to the Company in written form the same representations,
warranties and covenants made by Purchaser hereunder or pursuant to Rule 144,
the Company shall permit the transfer, and, in the case of the Common Shares
and Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denomination as specified by such
Purchaser. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to a Purchaser by vitiating the intent
and purpose of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under
this Article V will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Article V, that a
Purchaser shall be entitled, in addition to all other available remedies, to
an injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond
or other security being required.
5.3 Additional Shares or Cash Payment. If on the first anniversary of the
date of the Closing (the "Anniversary Date") the 30 day average closing bid
price of the Common Stock (as reported by Bloomberg L.P.) for the period
ending on the trading day prior to the Anniversary Date (the "Anniversary
Price") is less than $50.00 (the "Closing Price"), then the Company shall,
at the Company's sole option, either:
(a) Pay to each Purchaser, within 10 days of the Anniversary Date, in
cash, an amount determined in accordance with the following formula:
P = (C - A)*S
where:
P = the aggregate payment to be made to such Purchaser, expressed in
dollars;
C = the Closing Price;
A = the Anniversary Price; and
S = the aggregate number of the Common Shares purchased by the Purchaser
and not sold or assigned (other than to an affiliate of the Purchaser)
in accordance with Section 1.2 of the Lock-Up Agreement during the
period from the date of the Closing through the Anniversary Date; or
(b) Issue, within 10 days of the Anniversary Date, to each Purchaser a
number of additional shares of Common Stock equal to the product of (i) the
dollar amount calculated pursuant to Section 5.3(a) with respect to such
Purchaser divided by (ii) the Anniversary Price.
The foregoing P, C, A and S shall be equitably adjusted to reflect the effect
of any stock dividends, stock splits, reverse stock splits, discounted equity
offerings or actions similar to any of the foregoing.
If the Company intends to satisfy its obligations under this Section 5.3
through the issuance of additional Common Stock pursuant to Section 5.3(b),
the following conditions shall apply: (u) the issuance of Common Stock will
only be permitted to the extent that such issuance will not result in any
Purchaser, or any group which such entity will be deemed under the Securities
Act to be a part of, solely as a result of the issuance of such additional
shares, the Common Shares and the Warrant Shares, having beneficial
<PAGE>
ownership (as defined in Section 13(d) of the Securities Act) of more than
9.9% of the Common Stock; (w) Common Stock shall be listed on NASDAQ, NYSE or
AMEX; (x) the Company shall issue only freely tradable, registered and
unlegended Common Stock; (y) the Company must provide each Purchaser on or
before the Anniversary Date of its election to so issue Common Stock; and (z)
the Company must satisfy its obligations under Section 5.3 through the
issuance of Common Stock to each of the Purchaser who continues to hold
Common Shares. Notwithstanding anything in this Section 5.3 to the contrary,
no holder of any shares of Common Stock other than the initial Purchaser
signatory hereto and any permitted assignee who receives restricted
securities pursuant to Section 8.7 shall be entitled to payments or
additional shares of Common Stock from the Company pursuant to this Section
5.3. The Company will have no obligations under this Section 5.3 with
respect to the Warrants or the Warrant Shares.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 Conditions to the Company's Obligation to Sell. The obligation of the
Company hereunder to issue and sell the Common Shares and Warrants to a
Purchaser at the Closing is subject to the satisfaction, as of the date of
the Closing and with respect to such Purchaser, of each of the following
conditions thereto, 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:
(i) Such Purchaser shall have executed and delivered the signature page
to this Agreement, the Registration Rights Agreement and the Lock-Up
Agreement.
(ii) Such Purchaser shall have wired to the account designated by the
Company.
(iii) The representations and warranties of such Purchaser shall be true
and correct in all material respects as of the date when made and as of the
Closing as though made at that time (except for representations and warranties
that speak as of a specific date), and such Purchaser shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or
complied with by the applicable Purchaser at or prior to the Closing.
(iv) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which restricts or prohibits the consummation of any of the
transactions contemplated by this Agreement.
ARTICLE VII
CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE
7.1 The obligation of each Purchaser hereunder to purchase the Common
Shares and Warrants to be purchased by it on the date of the Closing is
subject to the satisfaction of each of the following conditions, provided
that these conditions are for each Purchaser's sole benefit and may be waived
by such Purchaser at any time in such Purchaser's sole discretion:
(i) The Company shall have executed and delivered the signature page to
this Agreement, the Registration Rights Agreement and the Lock-Up Agreement.
(ii) The Company shall have delivered to the Purchaser's counsel duly
issued certificates for the Common Shares being so purchased by Purchaser and
Warrants being issued to such Purchaser at the Closing.
(iii) The Common Stock shall be listed on the Nasdaq and trading in the
Common Stock shall not have been suspended by the Nasdaq or the SEC or other
regulatory authority.
<PAGE>
(iv) The representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of the
Closing as though made at that time and the Company shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing.
Purchaser shall have received a certificate, executed by the Chief Executive
Officer or Chief Financial Officer of the Company, dated as of the Closing to
the foregoing effect.
(v) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(vi) Purchaser shall have received the officer's certificate described
in Section 3.3, dated as of the Closing.
(vii) Purchaser shall have received opinions of Nida & Maloney, a
Professional Corporation, counsel to the Company, dated as of the Closing, in
the form attached hereto as Exhibit D.
ARTICLE VIII
GOVERNING LAW; MISCELLANEOUS
8.1 Governing Law: Jurisdiction. This Agreement shall be governed by and
construed in accordance with the Delaware General Corporation Law (in respect
of matters of corporation law) and the laws of the State of California (in
respect of all other matters) applicable to contracts made and to be
performed in the State of California. The parties hereto irrevocably consent
to the jurisdiction of the United States federal courts and state courts
located in the County of New Castle in the State of Delaware in any suit or
proceeding based on or arising under this Agreement or the transactions
contemplated hereby and irrevocably agree that all claims in respect of such
suit or proceeding may be determined in such courts. The Company and each
Purchaser irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding in such forum. The Company and each
Purchaser further agrees that service of process upon the Company or such
Purchaser, as applicable, mailed by the first class mail in accordance with
Section 8.6 shall be deemed in every respect effective service of process
upon the Company or such Purchaser in any suit or proceeding arising
hereunder. Nothing herein shall affect Purchaser's right to serve process in
any other manner permitted by law. The parties hereto agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on such judgment or in any
other lawful manner. The parties hereto irrevocably waive any right to a
trial by jury under applicable law.
8.2 Counterparts. This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all
of which counterparts 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. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause
additional original executed signature pages to be delivered to the other
parties as soon as practicable thereafter.
8.3 Headings. The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.
8.4 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
or the validity or enforceability of this Agreement in any other jurisdiction.
<PAGE>
8.5 Entire Agreement: Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with
respect to the maters covered herein and therein and, except as specifically
set forth herein or therein, neither the Company nor any Purchaser makes any
representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived other than by an
instrument in writing signed by the party to be charged with enforcement and
no provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and each Purchaser.
8.6 Notice. Any notice herein required or permitted to be given shall
be in writing and may be personally served or delivered by
nationally-recognized overnight courier or by facsimile machine confirmed
telecopy, and shall be deemed delivered at the time and date of receipt
(which shall include telephone line facsimile transmission). The addresses
for such communications shall be:
if to the Company:
Miravant Medical Technologies
7408 Hollister Avenue
Santa Barbara, CA 93117
Attention: Gary S. Kledzik
Facsimile: (805) 685-2959
with copy to:
Nida & Maloney, a Professional Corporation
800 Anacapa Street
Santa Barbara, CA 93101
Attention: Joseph E. Nida, Esq.
Facsimile: (805) 568-1955
if to the Purchaser:
_____________________________
_____________________________
_____________________________
Attention:
Facsimile:
If to any other Purchaser, to such address set forth under such Purchaser's
name on the signature page hereto executed by such Purchaser. Each party
shall provide notice to the other parties of any change in address.
8.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor any Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, each Purchaser may assign its rights and
obligations hereunder to any of its "affiliates," as that term is defined
under the Securities Act, without the consent of the Company so long as such
affiliate is an accredited investor (within the meaning of Regulation D under
the Securities Act) and agrees in writing to be bound by this Agreement. This
provision shall not limit each Purchaser's right to transfer the Securities
pursuant to the terms of this Agreement or to assign such Purchaser's rights
hereunder to any such transferee. In that regard, if Purchaser sells all or
part of its Common Shares to someone that acquires the shares subject to
restrictions on transferability (other than restrictions, if any,
<PAGE>
arising out of the transferee's status as an affiliate of the
Company), Purchaser shall be permitted to assign its rights hereunder, in
whole or in part, to such transferee.
8.8 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.
8.9 Survival. The representations and warranties of the Company and
the agreements and covenants shall survive the closing hereunder
notwithstanding any due diligence investigation conducted by or on behalf of
Purchaser. The Company agrees to indemnify and hold harmless each Purchaser
and each of each Purchaser's officers, directors, employees, partners, agents
and affiliates for loss or damage arising as a result of or related to any
breach or alleged breach by the Company of any of its representations or
covenants set forth herein, including advancement of expenses as they are
incurred. The representations and warranties of the Purchaser shall survive
the Closing hereunder and each Purchaser shall indemnify and hold harmless
the Company and each of its officers, directors, employees, partners, agents
and affiliates for any loss or damage arising as a result of the breach of
such Purchaser's representations and warranties.
8.10 Public Filings: Publicity. As soon as practicable following
Closing, the Company shall issue a press release with respect to the
transactions contemplated hereby. The Company and each Purchaser shall have
the right to approve before issuance any press releases, SEC or NASDAQ (or
other exchange) filings, or any other public statements with respect to the
transactions contemplated hereby (which approval shall not be unreasonably
withheld or delayed); provided, however, that the Company shall be entitled,
without the prior approval of any Purchaser, to make any press release or
SEC, NASDAQ, NASD or exchange filings with respect to such transactions as is
required by applicable law and regulations (although the Company shall make
all reasonable efforts to consult with each Purchaser in connection with any
such press release prior to its release and shall provide each Purchaser with
a copy thereof).
8.11 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.
8.12 Remedies. No provision of this Agreement providing for any remedy
to a Purchaser shall limit any remedy which would otherwise be available to
such Purchaser at law or in equity. Nothing in this Agreement shall limit any
rights a Purchaser may have with any applicable federal or state securities
laws with respect to the investment contemplated hereby. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Purchaser. Accordingly, the Company acknowledges that
the remedy at law for a material breach of its obligations under this
Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that a
Purchaser shall be entitled, in addition to all other available remedies, to
an injunction restraining any breach and requiring immediate compliance,
without the necessity of showing economic loss and without any bond or other
security being required.
8.13 Final Agreement. This Agreement, when executed by the parties
hereto, shall constitute the final agreement between the parties and upon
such execution the Purchaser and the Company accept the terms hereof and have
no cause of action against each other for prior negotiations preceding the
execution of this Agreement.
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
<PAGE>
PURCHASER:
________________________________
By:_____________________________
Name:
Title:
Aggregate Number Of Common Shares: __________
Date: ____________, 1997
COMPANY:
MIRAVANT MEDICAL TECHNOLOGIES:
By:_______________________________________
Name: Gary S. Kledzik
Title: Chief Executive Officer
Date: ____________, 1997
Exhibit A
To
Securities Purchase Agreement
STOCK PURCHASE WARRANT
Exhibit B
To
Securities Purchase Agreement
REGISTRATION RIGHTS AGREEMENT
Exhibit C
To
Securities Purchase Agreement
LOCK-UP AGREEMENT
Exhibit D
To
Securities Purchase Agreement
<PAGE>
This LOCK-UP AGREEMENT ("Agreement") is entered into as of __________, 1997,
by and between MIRAVANT MEDICAL TECHNOLOGIES, a Delaware corporation (the
"Company"), and _______________________________ (the "Purchaser").
RECITALS
A. The Company, Purchaser and certain other purchasers signatory thereto
("Other Purchasers") are executing and delivering the Securities Purchase
Agreement dated as of even date herewith (the "Purchase Agreement").
Capitalized terms used and not defined herein shall have the meanings given
to such terms in the Purchase Agreement.
B. The Company, Purchaser and the Other Purchasers are executing and
delivering the Registration Rights Agreement dated as of even date herewith
("Registration Rights Agreement").
C. As a condition to issuing the Common Stock to Purchaser pursuant to the
Purchase Agreement, the Company requires that Purchaser enter into this
Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and in the Purchase Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and Purchaser hereby agree as follows:
ARTICLE I
RESTRICTIONS ON SALE OF COMMON
STOCK
1.1 Restriction on Dispositions. Except as provided in Section 1.2, or
except for any option transaction permitted pursuant to Section 4.10 of the
Purchase Agreement, prior to the Termination Date (as defined below)
Purchaser shall not, directly or indirectly, offer, sell, transfer, assign,
contract to sell or otherwise dispose of (any such action, a "Disposition")
any Common Shares or Warrant Shares acquired by and beneficially owned by
Purchaser pursuant to the Purchase Agreement. A pledge of any such shares of
Common Stock shall not constitute a Disposition hereunder if effected in
compliance with Section 4.11 of the Purchase Agreement.
1.2 Permitted Dispositions. Upon and following the date that the Common
Shares are registered pursuant to the Registration Rights Agreement, and
prior to the Termination Date, Purchaser shall be permitted to effect
Dispositions of Common Shares and Warrant Shares if the weighted average bid
price for shares of Common Stock during the ten (10) trading days immediately
preceding the date of such Disposition (as reported by Bloomberg, L.P.) is
equal to or greater than $70.00 (such amount to be adjusted from time to
time to reflect the effect of any stock dividends, stock splits, reverse
stock splits discounted equity offerings or actions similar to any of the
foregoing), in an amount not to exceed, individually and in the aggregate
among the Purchasers signatory hereto, the greater of (i) ten percent (10%)
of the ten (10) day average trading volume (as reported by Bloomberg, L.P.)
on the date prior to the date of Disposition or (ii) on any trading day in
which the trading volume of the Common Stock (as reported by Bloomberg, L.P.)
is greater than 250,000 shares, ten percent (10%) of the daily trading volume
(as reported by Bloomberg, L.P.) on such date.
1.3 Term. The restrictions on Dispositions set forth herein shall remain in
full force and effect until the earlier of (a) __________, 1998 or (b) the
optional termination of the Agreement pursuant to Section 1.4 (such date of
termination, the "Termination Date").
<PAGE>
1.4 Option to Terminate. Notwithstanding any other provision of this
Agreement, Purchaser shall have the unilateral right to terminate this
Agreement if any of the following events involving the Company shall have
been announced as pending or planned, or shall have occurred:
(a) A Change in Control Transaction (as defined below);
(b) A "going private" transaction under Rule 13e-3 promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act");
(c) A tender offer by the Company under Rule 13e-4 promulgated
pursuant to the Exchange Act;
(d) The Company shall (1) become insolvent; (2) admit in writing
its inability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings for its
dissolution; or (4) apply for or consent to the appointment of a trustee,
liquidator or receiver for it or for a substantial part of its property or
business;
(e) Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings, or relief under any bankruptcy law or any
law for the relief of debt shall be instituted by or against the Company, or
the Company shall by any action or answer approve of, consent to, or
acquiesce in any such proceedings or admit to any material allegations of, or
default in answering a petition filed in any such proceedings.
(f) Any member of management of the Company subject to a lock-up
agreement pursuant to Section 4.14 of the Purchase Agreement shall sell or
dispose of shares of Common Stock in violation of the provisions of such
Section 4.14.
As used in this Agreement, a "Change of Control Transaction" shall mean,
(i) the sale, conveyance or disposition of all or substantially all of the
assets of the corporation, (ii) a consolidation or merger of the Company with
or into any other "Person" (whether or not the Company is the surviving
Person, but other than a merger or consolidation whereby the stockholders of
the Company immediately preceding the merger or consolidation continue to
own, in such merger or consolidation, greater than 50% of the voting power of
the capital stock of the surviving Person that is normally entitled to vote
in the election of directors, managers or trustees, as applicable), or, (iii)
any person or any "group" (as such term is used in Section 13(d) of the
Exchange Act), becomes the beneficial owner or is deemed to beneficially own
(as described in Rule 13d-3 under the Exchange Act without regard to the
60-day exercise period) in excess of 30% of the Company's voting power of the
capital stock of the Company normally entitled to vote in the election of
directors of the Company.
ARTICLE II
LEGEND; REMOVAL
2.1 Legends. Purchaser understands that, subject to Section 2.2
hereof, until the earlier of (a) such time as the Common Shares and Warrant
Shares acquired by Purchaser pursuant to the Purchase Agreement are subject
to a permitted Disposition in accordance with the terms of Section 1.2
hereof, or (b) the Termination Date, the certificates for the Common Shares
and Warrant Shares will bear a restrictive legend (the "Stock Legend") in the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR DISPOSED OF, EXCEPT IN ACCORDANCE WITH THE TERMS OF THE LOCK-UP
AGREEMENT DATED AS OF __________, 1997 ("LOCK-UP AGREEMENT") AMONG MIRAVANT
MEDICAL TECHNOLOGIES AND THE PURCHASER PARTIES THERETO. A TRUE AND CORRECT
COPY OF THE LOCK UP AGREEMENT IS AVAILABLE FROM THE COMPANY UPON REQUEST.
<PAGE>
2.2 Removal of Legend. The Stock Legend shall be removed and the
Company shall issue a certificate without such Stock Legend to the holder
("Holder") of any Security upon which it is stamped, and a certificate for a
security shall be originally issued without the Stock Legend, if such holder
provides a certificate in the form attached to this Agreement as Exhibit A (a
"Disposition Certificate"), (a) designating the number of Securities from
which holder requests that the Stock Legend be removed and (b) certifying
that Disposition of the Securities specified in such Disposition Certificate
is permitted pursuant to Section 1.2 of this Agreement. Notwithstanding
anything in this Section 2.2 or any other Section of this Agreement to the
contrary, the Stock Legend shall be removed from all of the Common Shares and
Warrant Shares on, and shall not be placed on Warrant Shares on and after,
the Termination Date. In order to effect issuance of a certificate without
the Stock Legend a Holder shall: (a) fax (or hand deliver) a copy of the
fully executed Disposition Certificate to the Company (unless the Termination
Date has occurred) and (b) surrender the certificates representing the Common
Shares or Warrant Shares to be delegended and the original Disposition
Certificate (if applicable) as soon as practicable thereafter. Upon receipt
by the Company of the fax copy of a Disposition Certificate, the Company
shall, no later than the later of (x) the third business day following such
receipt or (y) the first business day following the date of receipt of the
certificates representing the Common Shares or Warrant Shares and the
original Disposition Certificate, issue and deliver to the Holder (or at its
direction) (i) the number of unlegended shares to be issued pursuant to the
Disposition Certificate and (ii) a certificate representing the number of
Common Shares or Warrant Shares, if any, from which the Stock Legend is not
being removed. No Disposition Certificate is required to be submitted in
connection with removal of the Stock Legend at the Termination Date. The
person or persons entitled to receive unlegended Common Shares or Warrant
Shares issuable pursuant to a Disposition Certificate under this Section 2.2
shall be treated for all purposes as the record holder of such unlegended
shares at the close of business on the date of the Disposition Certificate
submitted with respect thereto.
2.3 Transfer Agent Instructions. The Company shall irrevocably instruct its
transfer agent to issue certificates, registered in the name of each
Purchaser or its nominee, for the Common Shares and Warrant Shares. Such
certificates shall bear the Stock Legend only to the extent provided by
Sections 2.1 and 2.2 above. The Company covenants that no instruction other
than such instructions referred to in this Section 2.3 (and instructions
relating to compliance with the Securities Act as provided in Section 5.2 of
the Purchase Agreement) will be given by the Company to its transfer agent
and that the Common Shares and Warrant Shares shall otherwise be freely
transferable on the books and records of the Company. On the earlier to
occur of (a) receipt by the Company of a duly executed Disposition
Certificate, or (b) the Termination Date so required by Section 2.2 the
Company shall, subject to applicable laws affecting the transfer of
securities, permit the transfer, and, promptly instruct its transfer agent to
issue within the time period specified in Section 2.2 one or more
certificates without the Stock Legend in such name and in such denomination
as specified by such Purchaser. The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to a Purchaser by
vitiating the intent and purpose of the transaction contemplated hereby and
by the Purchase Agreement. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 2 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 2, that a Purchaser shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required. In addition and not in lieu of the foregoing remedies, if
the Company fails to be issue Common Shares or Warrant Shares without the
Stock Legend within three (3) trading days of the date when such issuance is
required pursuant to Section 2.2 hereof (the "Required Issuance Date"), the
Company shall pay to Purchaser an amount equal to two percent (2%) of the
purchase price paid for the Common Shares and Warrant Shares required to be
issued for the first month or 30 days following the Required Issuance Date,
and three percent (3%) of said purchase price for each month or thirty (30)
days thereafter, continuing through the date the Common Shares and Warrant
Shares are issued without the Stock Legend. These payments will be prorated
on a daily basis for partial months and will be paid to the Purchaser in cash
within five (5) business days following the earlier of: (i)
<PAGE>
the end of each month following the Required Issuance Date, or (ii) the date
of issuance of the unlegended shares.
2.4 Dispute Resolution. If there is a dispute as to Purchaser's calculation
of the number of Common Shares and Warrant Shares properly subject to a
Disposition Certificate, the Company shall proceed with the issuance of the
number of unlegended Common Shares not in dispute. The matter shall then,
within two (2) business days, be submitted by the Company to an accounting
firm mutually acceptable to the Company and Purchaser for resolution, and
such firm shall issue a determination of the proper calculation within three
(3) business days of submission. The calculation of such accounting firm
shall be final and binding on the parties. If the accounting firm determines
that any of the disputed Common Shares or Warrant Shares were not
appropriately subject to a Disposition Certificate under Section 1.2
("Non-Disposable Shares"), the Company shall be relieved of its obligation to
pay damages accruing pursuant to Section 2.3 during the dispute solely with
respect to such Non-Disposable Shares.
ARTICLE III
MISCELLANEOUS
3.1 Governing Law: Jurisdiction. This Agreement shall be governed by and
construed in accordance with the Delaware General Corporation Law (in respect
of matters of corporation law) and the laws of the State of California (in
respect of all other matters) applicable to contracts made and to be
performed in the State of California. The parties hereto irrevocably consent
to the jurisdiction of the United States federal courts and state courts
located in the County of New Castle in the State of Delaware or the County of
Santa Barbara in the State of California in any suit or proceeding based on
or arising under this Agreement or the transactions contemplated hereby and
irrevocably agree that all claims in respect of such suit or proceeding may
be determined in such courts. The Company and each Purchaser irrevocably
waives the defense of an inconvenient forum to the maintenance of such suit
or proceeding in such forum. The Company and each Purchaser further agrees
that service of process upon the Company or such Purchaser, as applicable,
mailed by the first class mail in accordance with Section 3.5 shall be deemed
in every respect effective service of process upon the Company and such
Purchaser in any suit or proceeding arising hereunder. Nothing herein shall
affect Purchaser's right to serve process in any other manner permitted by
law. The parties hereto agree that a final non-appealable judgment in any
such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner. The
parties hereto irrevocably waive any right to a trial by jury under
applicable law.
3.2 Counterparts. This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all
of which counterparts 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. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause
additional original executed signature pages to be delivered to the other
parties.
3.3 Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
3.4 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
or the validity or enforceability of this Agreement in any other jurisdiction.
3.5 Notice. Any notice herein required or permitted to be given shall be
in writing and may be delivered in accordance with the terms of Section 8.6
of the Purchase Agreement.
<PAGE>
3.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and assigns. Neither the
Company nor any Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, each Purchaser may assign its rights and
obligations hereunder to any of its "affiliates," as that term is defined
under the Securities Act, without the consent of the Company so long as such
affiliate is an accredited investor (within the meaning of Regulation D under
the Securities Act) and agrees in writing to be bound by this Agreement.
3.7 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.
3.8 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.
3.9 Remedies. No provision of this Agreement providing for any remedy to a
Purchaser shall limit any remedy which would otherwise be available to such
Purchaser at law or in equity. Nothing in this Agreement shall limit any
rights a Purchaser may have with any applicable federal or state securities
laws with respect to the investment contemplated hereby.
3.10 Future Benefits. Purchaser will receive the identical, pro rata
benefit offered to other purchasers entering into substantially similar
Lock-Up Agreements with the Company as of the date hereof in the event the
Company terminates such other agreements or otherwise waives, refrains from
enforcing, favorably modifies or amends, or otherwise provides benefits to
such other purchasers thereunder.
[Signatures to Follow]
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused this
Lock-Up Agreement to be duly executed as of the date first above written.
MIRAVANT MEDICAL TECHNOLOGIES
By:________________________________________
Name: Gary S. Kledzik
Title: Chief Executive Officer
Date: __________, 1997
PURCHASER:
_________________________________
By:______________________________
Name:
<PAGE>
Title:
Date: October ___, 1997
EXHIBIT A
DISPOSITION CERTIFICATE
[DATE]
Via Facsimile & Overnight Courier
Mr. Gary S. Kledzik
Chief Executive Officer
John Philpott
Chief Financial Officer
Miravant Medical Technologies
7408 Hollister Avenue
Santa Barbara, CA 93117
[TRANSFER AGENT NAME]
[ADDRESS]
Joseph E. Nida, Esq.
Nida & Maloney, a Professional Corporation
800 Anacapa Street
Santa Barbara, CA 93101
Gentlemen:
Pursuant to Section 1.2 of the Lock-Up Agreement dated as of October ___,
1997 (the "Lock-Up Agreement") entered into by and between Miravant Medical
Technologies (the "Corporation") and the undersigned registered holder of the
Corporation's common stock (the "Holder"), Holder hereby irrevocably elects
to effect the "Disposition" (as that term is defined in the Lock-Up
Agreement) of __________________________________ (________) shares of the
Corporation's common stock (the "Shares"), as represented by stock
certificate No(s). _______________________________ copies of which
certificate(s) are attached for your reference and the originals thereof
which shall be delivered to you together with the original of this
Disposition Certificate.
By Holder's signature below, Holder certifies that the Disposition of Shares
requested hereby is made in accordance with Section 1.2 of the Lock-Up
Agreement insofar as:
(i) the weighted average bid price of the Corporation's common stock (as
reported by Bloomberg, L.P.) over the Ten (10) trading days immediately
preceding the date of this Disposition Certificate has been equal or greater
than $70.00; and
(ii) the number of Common Shares set forth above which the undersigned
intends to dispose of hereby does not exceed the greater of:
(a) five percent (5%) of the ten (10) day average trading volume of
the Corporation's common stock (as reported by Bloomberg, L.P.) on the date
prior to this Disposition Certificate; and
(b) five percent (5%) of the daily trading volume of the Corporation's
common stock (as reported by Bloomberg, L.P.) on the date of this Disposition
Certificate, if and only if such daily trading volume is greater than 250,000
common shares.
<PAGE>
In accordance with the foregoing and Section 2.2 of the Lock-Up Agreement,
please re-issue, within the time period specified in the Lock-Up Agreement,
the number of Shares indicated above to the undersigned without the "Stock
Legend" (as defined in the Lock-Up Agreement), at the delivery address and in
the denominations indicated below.
If you have any questions, please call me.
Very truly yours,
_______________________________
By:____________________________
Name:
Title:
Address for Delivery of Shares:
______________________________
______________________________
______________________________
Attention:
Please issue Shares in the form of ___________ certificates each representing
___________ common shares.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendent No. 1 to the Registration Statement (Form S-3 No. 333-39905) and
related Prospectus of Miravant Medical Technologies for the registration of up
to 3,540,000 shares of its common stock and to the incorporation by reference
therein of our report dated February 5, 1997, with respect to the consolidated
financial statements of Miravant Medical Technologies included in its Annual
Report (Form 10-K) for the year ended December 31, 1996, filed with the
Securities and Exchange Commission.
Woodland Hills, California
December 4, 1997 /s/ ERNST & YOUNG LLP
-------------------------
ERNST & YOUNG LLP
