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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-25544
Miravant Medical Technologies
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(Exact name of Registrant as specified in its charter)
Delaware 77-0222872
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7408 Hollister Avenue, Santa Barbara, California 93117
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(Address of principal executive offices, including zip code)
(805) 685-9880
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at October 31, 1997
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Common Stock, $.01 par value 14,064,288
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
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Page
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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheets as of September 30, 1997 and
December 31, 1996...................................................3
Consolidated statements of operations for the three months ended
September 30, 1997 and 1996, and for the nine months ended
September 30, 1997 and 1996.........................................4
Consolidated statements of cash flows for the nine months ended
September 30, 1997 and 1996.........................................5
Notes to consolidated financial statements............................6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.................................8
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................14
SIGNATURES............................................................15
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PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
MIRAVANT MEDICAL TECHNOLOGIES
CONSOLIDATED BALANCE SHEETS
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September 30, December 31,
1997 1996
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(Unaudited)
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Assets
Current assets:
Cash and cash equivalents............................................... $ 61,676,000 $ 31,498,000
Investments in short term marketable securities......................... 13,000,000 20,600,000
Accounts receivable..................................................... 1,179,000 1,966,000
Prepaid expenses and other current assets............................... 807,000 390,000
------------------- ------------------
Total current assets....................................................... 76,662,000 54,454,000
Property, plant & equipment:
Vehicles................................................................ 28,000 28,000
Furniture and fixtures.................................................. 1,004,000 943,000
Equipment............................................................... 3,144,000 2,444,000
Leasehold improvements.................................................. 1,835,000 1,072,000
Capital lease equipment................................................. 184,000 184,000
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6,195,000 4,671,000
Accumulated depreciation and amortization............................... 2,481,000 1,806,000
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3,714,000 2,865,000
Investment in affiliate.................................................... 1,255,000 2,000,000
Patents and other assets................................................... 626,000 567,000
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Total assets............................................................... $ 82,257,000 $ 59,886,000
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Liabilities and shareholders' equity
Current liabilities:
Accounts payable........................................................ $ 3,629,000 $ 2,716,000
Accrued payroll and expenses............................................ 546,000 352,000
Current portion of long term obligations................................ - 42,000
Current portion of capital lease obligations............................ 27,000 38,000
--------------------- ------------------
Total current liabilities.................................................. 4,202,000 3,148,000
Capital lease obligations, less current portion............................ - 21,000
Shareholders' equity:
Common stock, 50,000,000 shares authorized;
13,488,016 and 12,337,876 shares
issued and outstanding at September 30, 1997 and
December 31, 1996, respectively........................................ 148,267,000 108,974,000
Deferred compensation................................................... (604,000) (1,612,000)
Accumulated deficit..................................................... (69,608,000) (50,645,000)
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Total shareholders' equity................................................. 78,055,000 56,717,000
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Total liabilities and shareholders' equity................................. $ 82,257,000 $ 59,886,000
===================== ==================
See accompanying notes.
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MIRAVANT MEDICAL TECHNOLOGIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended September 30, Nine months ended September 30,
1997 1996 1997 1996
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Revenues:
Product sales............................... $ -- $ 1,000 $ -- $ 5,000
Grants, licensing and royalty income........ 694,000 844,000 1,418,000 2,225,000
-------------------- ------------------ ------------------ -----------------
694,000 845,000 1,418,000 2,230,000
Costs and expenses:
Cost of goods sold.......................... -- 1,000 -- 5,000
Research and development.................... 5,761,000 4,002,000 13,991,000 12,052,000
Selling, general and administrative......... 3,056,000 1,844,000 7,326,000 4,351,000
Loss in investment in affiliate............. 273,000 -- 745,000 --
-------------------- ------------------ ------------------ -----------------
Total costs and expenses....................... 9,090,000 5,847,000 22,062,000 16,408,000
Loss from operations........................... (8,396,000) (5,002,000) (20,644,000) (14,178,000)
Interest income (expense):
Interest income............................. 607,000 856,000 1,686,000 1,566,000
Interest expense............................ (1,000) (9,000) (5,000) (27,000)
------------------ ------------------ ---------------- -----------------
Total interest income.......................... 606,000 847,000 1,681,000 1,539,000
-------------------- ------------------ ------------------ -----------------
Net loss....................................... $ (7,790,000) $ (4,155,000) $ (18,963,000) $ (12,639,000)
==================== ================== ================== =================
Net loss per share............................. $ (0.63) $ (0.33) $ (1.53) $ (1.10)
==================== ================== ================== =================
Shares used in computing net loss per share.... 12,410,110 12,438,069 12,382,409 11,519,785
==================== ================== ================== =================
See accompanying notes.
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MIRAVANT MEDICAL TECHNOLOGIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30,
1997 1996
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Operating activities:
Net loss........................................................... $ (18,963,000) $ (12,639,000)
Adjustments to reconcile net loss to net cash used by operating
activities:
Depreciation and amortization................................... 689,000 412,000
Amortization of deferred compensation........................... 1,008,000 1,961,000
Changes in operating assets and liabilities:
Accounts receivable.......................................... 787,000 (1,873,000)
Inventories.................................................. -- (5,000)
Prepaid expenses and other assets............................ (490,000) (78,000)
Accounts payable and accrued payroll and expenses............ 1,107,000 (334,000)
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Net cash used in operating activities.............................. (15,862,000) (12,556,000)
Investing activities:
Purchases of marketable securities................................. (2,900,000) (123,700,000)
Sales of marketable securities..................................... 10,500,000 103,600,000
Investment in affiliate............................................ 745,000 --
Purchases of property, plant and equipment......................... (1,524,000) (1,253,000)
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Net cash provided by (used in) investing activities................ 6,821,000 (21,353,000)
Financing activities:
Proceeds from issuance of Common Stock, less issuance costs........ 43,609,000 66,152,000
Purchases of Common Stock.......................................... (4,316,000) (250,000)
Payments of capital lease obligations.............................. (32,000) (33,000)
Payments of long term obligations.................................. (42,000) (30,000)
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Net cash provided by financing activities.......................... 39,219,000 65,839,000
Net increase in cash and cash equivalents.......................... 30,178,000 31,930,000
Cash and cash equivalents at beginning of period................... 31,498,000 8,886,000
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Cash and cash equivalents at end of period......................... $ 61,676,000 $ 40,816,000
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Supplemental disclosures:
State taxes paid................................................... $ 92,000 $ 12,000
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Interest paid...................................................... $ 6,000 $ 27,000
================== ===================
See accompanying notes.
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MIRAVANT MEDICAL TECHNOLOGIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The information contained herein has been prepared in accordance with Rule
10-01 of Regulation S-X. The information at September 30, 1997, and for
the three and nine month periods ended September 30, 1997 and 1996, is
unaudited. In the opinion of management, the information reflects all
adjustments necessary to make the results of operations for the interim
periods a fair statement of such operations. All such adjustments are of a
normal recurring nature. Interim results are not necessarily indicative of
results for a full year. For a presentation including all disclosures
required by generally accepted accounting principles, these financial
statements should be read in conjunction with the audited consolidated
financial statements for the year ended December 31, 1996 included in the
Miravant Medical Technologies Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
2. Description of Business
Miravant Medical Technologies is engaged in the research and development
of drugs and medical device products for use in PhotoPoint(TM), the
Company's proprietary technologies for photodynamic therapy. Effective
September 15, 1997, the Company changed its name from PDT, Inc. to
Miravant Medical Technologies.
3. Reclassifications
Certain reclassifications have been made to the 1996 financial statements
to conform to the 1997 presentation.
4. Employee Stock Ownership Plan
On December 9, 1996, the Board of Directors approved the Miravant Medical
Technologies 401(k) - Employee Stock Ownership Plan (the "ESOP") which
provides substantially all employees with the opportunity for long term
benefits. The ESOP was implemented by management on July 1, 1997 and
operates on a calendar year basis. In conjunction with the ESOP, the
Company registered with the Securities and Exchange Commission 300,000
shares of the Company's Common Stock for purchase by the ESOP. The ESOP
provides for eligible employees to allocate pre-tax deductions from
payroll which are used to purchase the Company's Common Stock on a
bi-weekly basis. The ESOP also provides for a discretionary contribution
made by the Company based on the amounts contributed by the participants.
The amount to be contributed by the Company is determined by the Board of
Directors prior to the start of each plan year. Company contributions,
which can be made in cash or other property as determined by the Board of
Directors, will be made on a quarterly basis and vest over a five year
period. For the 1997 plan year, the Board of Directors has directed the
Company to contribute half of the amounts contributed by the participants.
5. Per Share Data
Net loss per share is computed using the weighted average number of shares
outstanding during the periods, as adjusted pursuant to the rules of the
Securities and Exchange Commission for certain matters for which
adjustments would not be required to be presented under Accounting
Principles Board Opinion No. 15, for the periods prior to the Company's
public offerings.
In February 1997, the Financial Accounting Standards Board issued
"Statement of Financial Accounting Standards No. 128, Earnings per Share."
("SFAS No. 128") SFAS No. 128 specifies new standards designed to improve
the earnings per share ("EPS") information provided in financial
statements by simplifying the existing computational guidelines, revising
the disclosure requirements and increasing the comparability of EPS data
on an international basis. This statement also requires all prior periods
to be restated to conform with this new standard. Under the new
requirements, primary and fully diluted EPS will be replaced with basic
and diluted EPS. Basic EPS excludes the dilutive effect of common stock
equivalents which were included in the primary EPS calculation. Diluted
EPS is essentially the same as fully diluted EPS amounts as calculated
under the principles currently used. Other changes consist of the
elimination of the modified treasury stock method and the three percent
materiality provision and the revision of the contingent share provision
and the supplemental EPS data requirements. SFAS No. 128 is effective for
financial statements issued for periods ending after December 15, 1997.
Neither the basic nor diluted EPS are expected to differ materially from
the current presentation of EPS.
6. Advertising
In September 1997, the Company commenced a name change awareness and
product branding program pursuant to which advertising costs were
incurred. Costs incurred for producing and communicating advertising are
generally expensed when incurred. Advertising expense was $1.4 million and
$7,000 for the nine months ended September 30, 1997 and 1996,
respectively. The amount incurred in 1997 was directly associated with the
name change awareness and product branding program.
7. Shareholders' Equity
In September 1997, the Company completed a private equity placement
totaling $45 million, which provided proceeds of $42.6 million, net of
offering costs. The transaction included the issuance of 900,000 shares of
Common Stock as well as one detachable Common Stock warrant for each share
of Common Stock purchased. With respect to the warrants issued in
connection with this placement, 50% are exercisable at $55 per share and
50% are exercisable at $60 per share. Both the Common Stock and warrants
to purchase Common Stock are subject to a Lock-Up Agreement which
prohibits any offer or sale for a one-year period. The Lock-Up Agreement
is subject to earlier termination in certain limited circumstances, and
the prohibition on sales is subject to certain limited exceptions.
Additionally, the securities purchase agreements provide that if on the
first anniversary of the closing of the purchase, 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,
then the Company shall pay additional cash or stock, or a combination of
both, as determined by the Company at its sole option.
8. Subsequent Events
In October 1997, the Company completed two additional private equity
placements totaling $25.8 million, which provided proceeds of $25.7
million, net of offering costs. The transactions included the issuance of
516,000 shares of Common Stock as well as one detachable Common Stock
warrant for each share of Common Stock purchased. Aside from the number of
shares issued in connection with these placements, the terms and
provisions of the placement agreements are substantially similar to the
placement agreements entered into in September 1997 (See Note 7).
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto. This Quarterly Report on
Form 10-Q may be deemed to include forward looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 that involve risk and uncertainty, including financial,
clinical, business environment and trend projections. Although Miravant Medical
Technologies believes that its expectations are based on reasonable assumptions,
it can give no assurance that its goals will be achieved. The important factors
that could cause actual results to differ materially from those in the forward
looking statements herein include, without limitation, the early stage of
development of both the Company and its products, the timing and uncertainty of
results of both research and regulatory processes, the extensive government
regulation applicable to the Company's business, the unproven safety and
efficacy of the Company's drug and device products, the Company's significant
additional financing requirements, the uncertainty of future capital funding,
the highly competitive environment of the international pharmaceuticals and
medical device industries and the presence of a number of competitors with
significantly greater financial, technical and other resources and extensive
operating histories, the Company's potential exposure to product liability or
recall, uncertainties relating to patents and other intellectual property,
including whether the Company will obtain sufficient protection or competitive
advantage therefrom, and the Company's dependence upon a limited number of key
personnel and consultants and its significant reliance upon its collaborative
partners for achieving its goals, and other factors detailed in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
GENERAL
Since its inception, the Company has been principally engaged in the
research and development of drugs and medical device products for use in
PhotoPoint (TM), the Company's proprietary technologies for photodynamic
therapy. The Company has been unprofitable since its founding and has incurred a
cumulative net loss of approximately $69.6 million as of September 30, 1997. The
Company expects to continue to incur substantial and increasing operating losses
for the next several years due to continued and increased spending on research
and development programs, the funding of preclinical and clinical testing and
regulatory activities and the costs of manufacturing, marketing, sales,
distribution and administrative activities.
The Company's revenues primarily reflect income earned from licensing
agreements, contracts, grants and device product sales. Product sales represent
limited sales of PhotoPoint devices (e.g., light producing devices and light
delivery and measurement devices), sold both domestically and internationally,
to researchers and an OEM distributor. To date, the Company has received no
revenue from the sale of drug products, and the Company is not permitted to
engage in commercial sales of drugs or devices until such time, if ever, as the
Company receives requisite regulatory approvals. As a result, the Company does
not expect to record significant product sales until such approvals are
received.
Until it commercializes its product(s), the Company expects revenues to
continue to be attributable to licensing agreements, contracts, grants and
device product sales for research use. The Company anticipates that future
revenues and results of operations may continue to fluctuate significantly
depending on, among other factors, the timing and outcome of applications for
regulatory approvals, the Company's ability to successfully manufacture, market
and distribute its drug and device products and/or the establishment of
collaborative arrangements for the manufacturing, marketing and distribution of
some of its products. The Company anticipates its operating activities will
result in substantial net losses for several more years.
The Company is conducting Phase II/III clinical trials for two
indications in the oncology area and one indication in dermatology; is
conducting a Phase I/II clinical trial in ophthalmology, is preparing to
initiate additional Phase I/II clinical trials in the urology, oncology and
dermatology areas; and is conducting preclinical studies in oncology,
ophthalmology, urology, dermatology, gynecology and cardiology.
The Company has awarded stock options that vest upon the achievement of
certain milestones. Under Accounting Principles Board Opinion No. 25, such
options are accounted for as variable stock options. As such, until the
milestone is achieved (but only after it is determined to be probable), deferred
compensation is recorded in an amount equal to the difference between the fair
market value of the Common Stock on the date of determination less the option
exercise price, and is adjusted from period to period to reflect changes in the
market value of the Common Stock. Deferred compensation, as it relates to a
particular milestone, is amortized over the period between when achievement of
the milestone becomes probable and when the milestone is estimated to be
achieved. Amortization of deferred compensation could result in significant
additional stock compensation expense being recorded in future periods based on
the market value of the Common Stock from period to period.
Effective June 21, 1996, the Compensation Committee of the Board of
Directors adjusted the future vesting periods of the variable stock options
covering 400,000 shares of Common Stock. These variable stock options were
adjusted to change the vesting periods to specific dates as opposed to the
original vesting periods which were based upon the achievement of milestones; no
change was made to the exercise prices of these variable stock options. This
change in the vesting periods provides for the options to be accounted for as
non-variable options and therefore alleviates the impact of deferred
compensation expense fluctuation in future periods based on the changes in the
per share market value from period to period. As of September 30, 1997, options
covering 227,500 shares with an exercise price of $34.75 per share have vested,
75,000 options have been canceled and 75,000 shares are expected to vest during
the remainder of 1997. The remaining unvested shares will vest in the years 1998
through 2000.
RESULTS OF OPERATIONS
The following table provides a summary of the Company's revenues for
the three and nine months ended September 30, 1997 and 1996:
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THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
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CONSOLIDATED REVENUES
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Product sales.................. $ -- $ 1,000 $ -- $ 5,000
Grants and contracts........... -- 206,000 -- 462,000
Royalties...................... 62,000 24,000 186,000 28,000
License........................ 632,000 614,000 1,232,000 1,735,000
----------------- ----------------- ----------------- ----------------
Total revenue.................. $ 694,000 $ 845,000 $ 1,418,000 $ 2,230,000
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REVENUES. For the three months ended September 30, 1997, revenues
decreased to $694,000 from $845,000 for the three months ended September 30,
1996. Total revenues for the nine months ended September 30, 1997 decreased to
$1.4 million from $2.2 million for the first nine months of 1996. The decrease
in revenues for the three month period ended September 30, 1997 as compared to
the same period in 1996 relates primarily to the decrease in grant income from
$206,000 for the three months ended September 30, 1996 to no grant income
received through the three months ended September 30, 1997. This decrease in
revenues was partially offset by increased royalty income earned from a license
agreement entered into in 1992 with Laserscope which provides royalties from the
sale of the Company's previously designed device products. The decrease in
revenues for the nine month period ended September 30, 1997 compared to the same
period in 1996 relates to a decrease of $462,000 in grant income and decreased
license income revenue related to the billing for the reimbursement of clinical
costs in conjunction with the license agreement entered into in July 1995 with
Pharmacia and Upjohn, Inc. ("Pharmacia & Upjohn"). This decrease in 1997
revenues was partially offset by increased royalty income related to the
Laserscope license agreement. The decrease in grant income for the three and
nine months ended September 30, 1997 was due to all grants previously awarded
having been fully utilized during 1996. The Company has been awarded two grants
for a total of $1.2 million which commence October 1, 1997 and end September 29,
1999. The Company anticipates recording license income for the reimbursement of
clinical costs throughout 1997 and expects to continue to receive royalties and
grant income in the future. The level of such license, grant and royalty income
is likely to fluctuate materially from period to period and in the future
depending on the amount of clinical costs incurred and/or reimbursed and the
extent of development activities under the Pharmacia & Upjohn Agreement, the
amount of grant income awarded and expended and the amount of device products
sold by Laserscope. In 1996 and continuing through 1997, the Company decreased
its custom device order activities so as to direct its resources toward device
production in support of its preclinical and clinical trials and drug product
development, which resulted in decreased device product sales.
COST OF GOODS SOLD. Cost of goods sold for the three and nine months
ended September 30, 1997 and 1996 was considered insignificant. These minimal
amounts are reflective of the Company's decrease in custom device order activity
due to its decision to allocate its manufacturing resources to support its
preclinical and clinical testing. The Company expects gross margins to be
insignificant until the Company commences commercial sales of its products.
RESEARCH AND DEVELOPMENT. The Company's research and development
expenses for the three months ended September 30, 1997 increased to $5.8 million
from $4.0 million for the three months ended September 30, 1996. Research and
development expenses for the nine months ended September 30, 1997 increased to
$14.0 million from $12.1 million for the nine months ended September 30, 1996.
The increase in research and development expenses for the three and nine months
ended September 30, 1997 compared to the same periods in 1996 relate primarily
to increased costs associated with the screening and treatment of qualified
individuals for participation in the clinical trials, the preparation for the
Company's first New Drug Application ("NDA") filing and the preclinical work
associated with the development of new clinical programs. In addition, research
and development expenses continue to increase in conjunction with the Company's
progression through the various stages of preclinical and clinical trials and
the increased costs associated with the purchase of raw materials and supplies
for the production of clinical devices and drug product for use in these
preclinical and clinical trials. The Company anticipates future research and
development expenses to increase as the Company continues to prepare for its NDA
filing and expands its research and development programs, which include the
increased hiring of personnel and continued expansion of preclinical and
clinical testing. See "--General."
SELLING, GENERAL AND ADMINISTRATIVE. The Company's selling, general and
administrative expenses for the three months ended September 30, 1997 increased
to $3.1 million from $1.8 million for the comparable period in 1996. Total
selling, general and administrative expenses for the first nine months of 1997
increased to $7.3 million from $4.4 million for the first nine months of 1996.
The increase in selling, general and administrative expenses for the three
months ended September 30, 1997 compared to the same period in 1996 is primarily
due to increased expenses associated with the Company's name change awareness
and product branding program. These expenses were incurred, and will continue to
be incurred through the remainder of 1997, in order to create an awareness of
the Company's emerging PhotoPoint technologies and begin to establish name brand
recognition. In addition to increased costs associated with the Company's name
change awareness and product branding program, selling, general and
administrative costs for the nine months ended September 30, 1997 increased as
compared to same period in 1996 due to increases in (i) costs associated with
professional services received from public and media relations, financial and
investor consultants and attorneys, and (ii) payroll and facility costs due to
the addition of administrative and corporate personnel. The Company expects
future selling, general and administrative expenses to continue to grow as a
result of the increased support required for research and development
activities, continuing corporate development and professional services,
compensation expense associated with stock options and financial consultants,
and general corporate matters as well as the other factors described above. See
"--General" and "--Research and Development."
LOSS IN INVESTMENT IN AFFILIATE. For the three and nine month periods
ended September 30, 1997, the Company recorded as expense $273,000 and $745,000,
respectively, in connection with its investment in Ramus Medical Technologies,
Inc. in December 1996. The amounts recorded represent the full amount of the
affiliate's loss for the three and nine month periods ended September 30, 1997.
The affiliate's losses from operations are expected to be ongoing throughout
1997 and beyond, and the level of such losses are expected to fluctuate
depending on research and development activities and preclinical and clinical
trial progress.
INTEREST INCOME. For the three months ended September 30, 1997,
interest income decreased to $607,000 from $856,000 for the three months ended
September 30, 1996. Interest income for the nine months ended September 30, 1997
increased to $1.7 million from $1.6 million for the nine months ended September
30, 1996. The decrease in interest income for the three months ended September
30, 1997 is due to higher cash investment balances throughout the three months
ended September 30, 1996 related to the Company's secondary public offering in
April 1996. The increase in interest income for the nine months ended September
30, 1997 is due to the proceeds from the secondary offering generating interest
income over a nine month period for the first nine months of 1997 as compared to
only a five month period for the first nine months of 1996.
The Company does not believe that inflation has had a material impact
on its results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Since inception through September 30, 1997, the Company has accumulated
a deficit of approximately $69.6 million and expects to continue to incur
substantial and increasing operating losses for the next several years. The
Company has financed its operations primarily through private placements of
common and preferred stock, private placements of convertible notes and short
term notes, its initial public offering, Pharmacia & Upjohn's purchase of Common
Stock and a secondary public offering. As of September 30, 1997, the Company has
received proceeds from the sale of equity securities and convertible notes of
approximately $155.7 million. The Company has available a $1.0 million bank line
of credit which has a variable rate of interest based on the bank's lending rate
(7.35% as of September 30, 1997), which expires on January 31, 1998, and is
collateralized by the Company's cash balances. The credit agreement subjects the
Company to certain customary restrictions, including a prohibition on the
payment of dividends. The Company presently has no outstanding borrowings under
the bank line of credit.
In July 1996, the Company's Board of Directors authorized the purchase
of up to 600,000 shares of the Company's Common Stock. During 1996, the Company
repurchased, and subsequently retired, 138,500 shares at a cost of $3.9 million.
Through the first nine months of 1997, the Company has repurchased an additional
167,500 shares at a cost of $4.3 million. As of September 30, 1997, all shares
repurchased were retired.
In connection with the licensing agreement with Pharmacia & Upjohn, the
Company has recorded as license income the reimbursement of clinical costs of
$632,000 for the third quarter of 1997 and $1.2 million for the nine months
ended September 30, 1997. The Company anticipates recording license income for
the reimbursement of clinical costs throughout the remainder of 1997, although
the level of such income is likely to fluctuate materially in the future
depending on the amount of clinical costs incurred and/or reimbursed and the
extent of development activities under the licensing agreement.
For the first nine months of 1997, the Company required cash for
operations of approximately $15.9 million compared to $12.6 million for the same
period in 1996. The increase in cash used in operations was primarily due to an
increase in operating activities associated with the continued expansion of
preclinical and clinical testing, the increase in research and development
programs, the name change awareness and product branding program, personnel and
general corporate activities. For the first nine months of 1997, the Company
received cash from its financing activities of approximately $39.2 million as
compared to net cash received from its financing activities of $65.8 million for
the same period in 1996. On September 25, 1997, the Company completed a Common
Stock private placement of $42.6 million, net of offering costs. Aside from the
net proceeds of $42.6 million received from the private placement and the $65.3
million received from the Company's secondary offering which closed in April
1996, the increase in cash used in financing activities during the first nine
months of 1997 is primarily related to the repurchases made by the Company of
its Common Stock. Subsequently, in October 1997, the Company completed two
additional Common Stock private placements for a total of $25.7 million, net of
offering costs. In connection with the three private placements in 1997,
pursuant to the securities purchase agreements, the Company may be required to
provide additional cash or stock, or a combination of both, at the Company's
sole option, 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 purchasers in such private placements. In the event that the price
of the Common Stock is significantly below the 30 day average closing bid 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 (See Notes 7 and 8 to the consolidated financial statements).
The Company invested a total of $1.5 million in property, plant and
equipment during the first nine months of 1997 compared to $1.3 million during
the same period in 1996. During 1996, the Company entered into two new lease
agreements for additional facilities. The addition of these new facilities
increased the Company's equipment costs due to the expansion of its laboratories
and office space and the purchase of equipment for this new space. The Company
expects to continue to incur costs relating to leasehold improvements and to
purchase property and equipment during 1997 and beyond as the Company expands
its preclinical, clinical and research and development activities and continues
laboratory and office construction in its new facilities. Since inception, the
Company has entered into capital lease agreements for approximately $184,000 of
equipment, consisting primarily of laboratory equipment. The Company may lease
equipment from time to time as needed.
The Company's capital requirements will depend on numerous factors,
including the progress and magnitude of the Company's research and development
programs and preclinical testing and clinical trials, the time involved in
obtaining regulatory approvals, the cost involved in filing and maintaining
patent claims, technological advances, competitive and market conditions, the
ability of the Company to establish and maintain collaborative partners and
arrangements, the cost of manufacturing scale-up and the cost and effectiveness
of commercialization activities and arrangements.
The Company may require substantial funding to continue its research
and development activities, preclinical and clinical testing, manufacturing
activities, commence or expand marketing, sales and distribution activities, to
pursue acquistion opportunities or to meet its obligations under the price
protection provisions of the securities purchase agreements described above. The
Company has raised funds in the past through the public or private sale of
securities, and may contemplate raising funds in the future through public or
private financings, collaborative arrangements or from other sources. The
success of such efforts will depend in large part upon continuing developments
in the Company's preclinical and clinical testing. The Company continues to
explore and, as appropriate, enter into discussions with other companies
regarding the potential for equity investment, collaborative arrangements,
license agreements or development or other funding programs with the Company in
exchange for manufacturing, marketing, distribution or other rights to products
developed by the Company. However, there can be no assurance that discussions
with other companies will result in any investments, collaborative arrangements,
agreements or funding, or that the necessary additional financing through debt
or equity financing will be available to the Company on acceptable terms, if at
all. Further, there can be no assurance that any arrangements resulting from
these discussions will successfully reduce the Company's funding requirements.
Additionally, there can be no assurance that the current collaborative partners
will continue to pursue the development and commercialization of the Company's
products or that such development will result in marketable products. If
additional funding is not available to the Company when needed, the Company will
be required to scale back its research and development programs, preclinical and
clinical testing and administrative activities and may not be able to expand or
commence manufacturing, marketing, sales and distribution activities and the
Company's business and financial results and condition would be materially
adversely affected.
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In August 1997, the Company initiated a consent solicitation for all
shareholders of record as of July 24, 1997 to amend the Certificate of
Incorporation to change the name of the Company to Miravant Medical
Technologies. This amendment to the Certificate of Incorporation became
effective on September 12, 1997 after the Company received the necessary
majority approval from the shareholders. The results of the consent solicitation
were as follows:
Votes Votes Broker
For Against Abstained Non-Votes
------------- ------------- --------------- --------------
6,548,962 28,967 2,400 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
See Exhibit Index on page 16.
(b) Reports on Form 8-K. The Company filed two reports on
Form 8-K during the quarter ended September 30, 1997.
These reports are summarized below:
Form 8-K dated September 15, 1997, Other Events -
Item 5: announcing that shareholder approval had been
received to change the name of the Company to
Miravant Medical Technologies.
Form 8-K dated September 26, 1997, Other Events -
Item 5: announcing that the Company had completed a
private equity placement which included the issuance
of 900,000 shares of Common Stock and warrants for a
total offering price of $45 million.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
Miravant Medical Technologies
Date: November 13, 1997 By:/S/ John M. Philpott
--------------------
John M. Philpott
Chief Financial Officer
(on behalf of the Company and as
Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
INCORPORATING
EXHIBIT REFERENCE
NUMBER DESCRIPTION (IF APPLICABLE)
- ------ ----------- ---------------
<S> <C>
3.1 Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant
filed with the Delaware Secretary of State on September 12, 1997.
3.2 Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant [C][3.11]
filed with the Delaware Secretary of State on July 24, 1995.
3.3 Restated Certificate of Incorporation of the Registrant filed with the Delaware Secretary [B][3.1]
of State on December 14, 1994.
3.4 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.2]
the Delaware Secretary of State on March 17, 1994.
3.5 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.3]
the Delaware Secretary of State on October 7, 1992.
3.6 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.4]
the Delaware Secretary of State on November 21, 1991.
3.7 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.5]
the Delaware Secretary of State on September 27, 1991.
3.8 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.6]
the Delaware Secretary of State on December 20, 1989.
3.9 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.7]
the Delaware Secretary of State on August 11, 1989.
3.10 Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with [A][3.8]
the Delaware Secretary of State on July 13, 1989.
3.11 Certificate of Incorporation of the Registrant filed with the Delaware Secretary of State [A][3.9]
on June 16, 1989.
3.12 Amended and Restated Bylaws of the Registrant.
4.1 Specimen Certificate of Common Stock. [B][4.1]
4.2 Form of Convertible Promissory Note. [A][4.3]
4.3 Form of Indenture. [A][4.4]
4.4 Special Registration Rights Undertaking. [A][4.5]
4.5 Undertaking Agreement dated August 31, 1994. [A][4.6]
4.6 Letter Agreement dated March 10, 1994. [A][4.7]
4.7 Form of $55 Common Stock Purchase Warrant. [E][4.1]
4.8 Form of $60 Common Stock Purchase Warrant [E][4.2]
10.1 Form of Non-employee Director Option Agreement.*
10.2 Form of Securities Purchase Agreement. [E][10.1]
10.3 Form of Lock-Up Agreement. [E][10.2]
10.4 Form of Registration Rights Agreement [E][10.3]
11.1 Statement regarding computation of net loss per share.
27.1 Financial Data Schedule.
- --------------
[A] Incorporated by reference from the exhibit referred to in brackets
contained in the Registrant's Registration Statement on Form S-1
(File No. 33-87138).
[B] Incorporated by reference from the exhibit referred to in brackets
contained in Amendment No. 2 to the Registrant's Registration
Statement on Form S-1 (File No. 33-87138).
[C] Incorporated by reference from the exhibit referred to in brackets
contained in the Registrant's Form 10-Q for the quarter ended June
30, 1995, as amended on Form 10-Q/A dated December 6, 1995 (File No.
0-25544).
[D] Incorporated by reference from the exhibit referred to in brackets
contained in the Registrant's Form 10-Q for the quarter ended
September 30, 1996 (File No. 0-25544).
[E] Incorporated by reference from the exhibit referred to in brackets
contained in the Registrant's Registration Statement on Form S-3
(File No. 333-39905).
* Management contract or compensatory plan or arrangement.
</TABLE>
<PAGE>
Exhibit 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
PDT, INC.
PDT, INC., a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting duly
convened and held, adopted the following resolution:
RESOLVED: That the Board of Directors hereby declares it
advisable and in the best interest of the Company that Article FIRST of the
Certificate of Incorporation be amended to read as follows:
FIRST: The name of this corporation shall be MIRAVANT
MEDICAL TECHNOLOGIES.
SECOND: That the said amendment has been consented to and authorized by the
holders of a majority of the issued and outstanding stock entitled to vote by
written consent given in accordance with the provisions of Section 228 of the
General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Sections 242 and 228 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by GARY S. KLEDZIK, its Chairman and Chief Executive Officer, and JOSEPH
E. NIDA, its Secretary, this 12th day of September, 1997.
/S/ GARY S. KLEDZIK
-------------------
Gary S. Kledzik
Chairman and Chief Executive Officer
ATTEST:
/S/ JOSEPH E. NIDA
- ------------------
Joseph E. Nida
Secretary
<PAGE>
EXHIBIT 3.12
AMENDED AND RESTATED
BYLAWS OF
MIRAVANT MEDICAL TECHNOLOGIES,
A DELAWARE CORPORATION
ARTICLE I
SHAREHOLDERS' MEETINGS
Section 1. PLACE OF MEETINGS.
All meetings of the shareholders of this corporation
("Corporation") shall be held at the principal executive office of the
Corporation in the State of Delaware, or such other place within or without the
State as may be designated from time to time by the Board of Directors or as may
be consented to in writing by all of the persons entitled to vote thereat and
not present at the meeting.
Section 2. ANNUAL MEETING.
The annual meeting of the shareholders shall be held within
one hundred fifty (150) days after the closing of the accounting year, at which
time the shareholders shall elect a Board of Directors, consider reports of the
affairs of the Corporation, and transact such other business as may properly be
brought before the meeting. In the event the annual meeting of shareholders is
not held within the time above specified, the Board of Directors shall cause a
meeting in lieu thereof to be held as soon thereafter as is convenient, and any
business transacted or election held at such meeting shall be as valid as if the
meeting had been held on the date above specified.
Section 3. SPECIAL MEETINGS.
Special meetings of the shareholders, for the purpose of
taking any action permitted to be taken by the shareholders under the Delaware
General Corporation Law and the Certificate of Incorporation, may be called at
any time by the Chairman of the Board, the President, the Board of Directors, or
by any two or more members thereof, or by one or more shareholders holding not
less than ten percent (10%) of the voting power of the Corporation.
Section 4. NOTICE OF MEETINGS.
Notice of meetings, annual or special, shall be given in
writing to each shareholder entitled to vote at that meeting by the Secretary or
Assistant Secretary, or, if there be no such officers, by the Chairman of the
Board or the President, or in the case of neglect or refusal, by any person or
persons entitled to call a meeting, not less than ten (10) nor more than ninety
(60) days before such meeting.
Such written notice shall be given either personally or by
other means of written communication, addressed to the shareholder at the
address of the shareholder appearing on the books of the Corporation or given by
the shareholder to the Corporation for the purpose of notice; or if no such
address appears or is given, at the place where the principal office of the
Corporation is located or by publication at least once in a newspaper of general
circulation in the county in which the principal executive office is located.
The giving of notice as provided by these Bylaws may be omitted only to the
extent and in the manner expressly permitted by the Delaware General Corporation
Law.
Section 5. NOTICE OF ADJOURNMENT.
When a meeting is adjourned for more than forty-five (45) days
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given as in the case of an
original meeting. Except as stated above, it shall not be necessary to give any
notice of the adjourned meeting, other than by announcement of the time and
place thereof at the meeting at which such adjournment is taken, and the
Corporation may transact at the adjourned meeting any business which might have
been transacted at the original meeting.
Section 6. CONTENTS OF NOTICE.
Notice of any meeting of shareholders shall specify:
a. The place, the date and the time of the meeting;
b. Those matters which the Board, at the time of the mailing
of the notice, intends to present for action by the shareholders;
c. If directors are to be elected, the names of nominees
intended at the time of the notice to be presented by management for election;
d. The general nature of any proposal to take action with
respect to the approval of (i) a contract or other transaction with an
interested director, (ii) an amendment of the Certificate of Incorporation,
(iii) the reorganization of the Corporation within the meaning of the Delaware
General Corporation Law, (iv) the voluntary dissolution of the Corporation, or
(v) a distribution in dissolution other than in accordance with the rights of
any outstanding preferred shares; and
e. Such other matters, if any, as may be expressly required by
statute.
Section 7. CONSENT TO SHAREHOLDER'S MEETING.
The transactions of any meeting of shareholders, however
called and noticed, shall be valid as those had at a meeting duly held after
regular call and notice, if a quorum is present either in person or by proxy,
and if, either before or after the meeting, each of the persons entitled to
vote, not present in person or by proxy, signs a written waiver of notice or a
consent to the holding of the meeting or an approval of the minutes of the
meeting. All such waivers, consents and approvals shall be filed with the
corporate records or made a part of the minutes of the meeting. A waiver of
notice or a consent to the holding of any meeting of shareholders need not
specify the business transacted at or the purpose of any regular or special
meeting, other than any proposal approved or to be approved at such meeting, the
general nature of which was required by Section 6.d. of these Bylaws to be
stated in the notice of the meeting.
Section 8. ACTION WITHOUT A MEETING.
Unless otherwise provided in the Certificate of Incorporation,
any action which may be taken at any annual or special meeting of the
shareholders, other than the election of directors, may be taken without a
meeting and without prior notice, if a consent in writing, setting forth the
action so taken shall be signed by the holders of outstanding shares having not
less than the minimum number of votes necessary to authorize or take such action
at a meeting at which all shareholders entitled to vote were present and voted.
Unless the consents of all shareholders entitled to vote have
been solicited in writing, prompt notice shall be given of the taking of any
corporate action approved by shareholders without a meeting by less than
unanimous written consent to those shareholders entitled to vote who have not
consented in writing, and, as to any action with respect to (i) a contract or
other transaction with an interested director, (ii) the indemnification of any
present or former agent of the Corporation within the meaning of Section 145 of
the Delaware General Corporation Law, (iii) any reorganization within the
meaning of the Delaware General Corporation Law, or (iv) a distribution in
dissolution other than in accordance with the rights of any outstanding
preferred shares, such notice shall be given at least ten (10) days before the
consummation of such action.
A director may be elected at any time to fill a vacancy not
filled by the Board by the written consent of persons holding a majority of the
outstanding shares entitled to vote for the election of directors, and any
required notice of any such election shall promptly be given as provided above.
Directors may not otherwise be elected without a meeting unless a consent in
writing, setting forth the action so taken, is signed by all of the persons who
would be entitled to vote for the election of directors.
Section 9. QUORUM; ADJOURNMENT.
The holders of a majority of the shares entitled to vote,
represented in person or by proxy, shall be required and shall constitute a
quorum at all meetings of the shareholders for the transaction of business,
except as otherwise provided by the Certificate of Incorporation. The
shareholders present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment notwithstanding the
withdrawal of enough shareholders to leave less than a quorum, if any action
taken (other than adjournment) is approved by at least a majority of the shares
required to constitute a quorum. If a quorum shall not be present or represented
at any meeting of the shareholders, the meeting may be adjourned from time to
time by majority vote of the shares entitled to vote at the meeting who are
present in person or represented by proxy, until the requisite number of voting
shares shall be present.
Section 10. VOTING RIGHTS; CUMULATIVE VOTING.
Subject to the provisions of Sections 212 through 218,
inclusive, of the Delaware General Corporation Law, only persons in whose names
shares entitled to vote stand on the stock records of the Corporation on the
record date shall be entitled to vote at meetings of the shareholders. Every
shareholder entitled to vote shall be entitled to one vote for each of such
shares, and the affirmative vote of a majority of the shares represented at the
meeting and entitled to vote on any matter shall be the act of the shareholders,
unless the vote of a greater number or voting by classes is required by the
Delaware General Corporation Law or by the Certificate of Incorporation.
Every shareholder entitled to vote at any election of
directors shall have the right to cumulate his votes to the extent and in the
manner provided by Section 214 of the Delaware General Corporation Law.
Section ll. PROXIES.
Every shareholder entitled to vote or to execute consents may
do so either in person or by written proxy executed in accordance with the
provisions of the Delaware General Corporation Law and filed with the Secretary
or Assistant Secretary of the Corporation.
Section 12. INSPECTORS OF ELECTION.
Before any meeting of shareholders, the Board of Directors may
appoint any persons other than nominees for office to act as Inspectors of
Election at such meeting or any adjournment thereof. If no Inspectors of
Election are appointed, or if an appointment is vacated by an Inspector who
fails to appear or fails or refuses to act, the Chairman of any such meeting
may, and on the request of any shareholder or his proxy shall, make such
appointment or fill such vacancy at the meeting.
ARTICLE II
DIRECTORS
Section 1. POWERS.
Subject to the limitations of the Certificate of
Incorporation, the Bylaws, and of the Delaware General Corporation Law as to
action to be authorized or approved by the shareholders, all corporate powers
shall be exercised by or under the authority of, and the business and affairs of
the Corporation shall be controlled by, the Board of Directors.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS.
The authorized number of directors of this Corporation will be
not less than five (5) nor more than nine (9), and the exact number of directors
will be seven (7) until changed, within the limits specified above, by a
resolution amending such exact number, duly adopted by the Board of Directors or
by the stockholders. Subject to the provisions of the Certificate of
Incorporation, the minimum and maximum number of directors may be changed, or a
definite number may be fixed without provision for an indefinite number, by a
duly adopted amendment to the Certificate of Incorporation or by an amendment to
this ByLaw duly adopted by the vote or written consent of holders of a majority
of the outstanding shares entitled to vote; provided, however, that no decrease
will shorten the term of any incumbent director unless such director is
specifically removed pursuant to Section 5 of this Article II of these ByLaws at
the time of such decrease. (Section 2 was amended in its entirety at the July
17, 1996 Annual Meeting of Stockholders, and subsequently by Written Consent by
the Board of Directors effective May 21, 1997.)
Section 3. ELECTION OF DIRECTORS.
The directors shall be elected by ballot at the annual meeting
of the shareholders to hold office until the next annual meeting and until their
successors are elected and qualified. Their term of office shall begin
immediately after election.
Section 4. VACANCIES.
A vacancy in the Board of Directors shall be deemed to exist
in the case of the death, resignation or removal of any director, if a director
has been declared of unsound mind by order of Court or convicted of a felony, if
the authorized number of directors is increased, or if the shareholders shall
fail, either at a meeting at which an increase in the number of directors is
authorized, or at an adjournment thereof, or at any other time, to elect the
full number of authorized directors.
Vacancies in the Board of Directors, except for a vacancy
created by the removal of a director, may be filled by a majority of the
remaining directors, and each director so elected shall hold office until his
successor is elected at an annual or special meeting of the shareholders. A
vacancy created by the removal of a director may be filled only by a vote of the
majority of the shares entitled to vote at a duly held meeting of the
shareholders, or by the written consent of the holders of a majority of the
outstanding shares.
The shareholders may at any time elect a director or directors
to fill any vacancies not filled by the directors.
If any director tenders his resignation to the Board of
Directors to take effect at a future time, the Board or the shareholders shall
have the power to elect a successor to take office at such time as the
resignation shall become effective.
No reduction of the authorized number of directors shall have
the effect of removing any director prior to the expiration of his term of
office.
Section 5. REMOVAL OF DIRECTORS.
The entire Board of Directors, or any individual director, may
be removed from office in the manner provided by the Delaware General
Corporation Law.
Section 6. PLACE OF MEETING.
Meetings of the Board of Directors shall be held at the
principal executive office of the Corporation, or as designated from time to
time by resolution of the Board of Directors or written consent of all of the
members of the Board. Any meeting shall be valid wherever held if held with the
written consent of all members of the Board of Directors, given either before or
after the meeting and filed with the Secretary or Assistant Secretary of the
Corporation.
Section 7. ANNUAL MEETING.
A regular annual meeting of the Board of Directors shall be
held without notice at the place of the annual meeting of shareholders
immediately following the adjournment thereof, for the purpose of organization,
election of officers, and the transaction of such other business as may properly
come before the meeting.
Section 8. OTHER REGULAR MEETINGS.
Other regular meetings of the Board of Directors shall be held
on the last Thursday of each calendar quarter.
Section 9. SPECIAL MEETINGS; NOTICES.
Special meetings of the Board of Directors for any purpose or
purposes may be called at any time by the Chairman of the Board, the President,
any Vice-President, the Secretary, or by any two (2) directors.
Written notice of the time and place of special meetings shall
be delivered or communicated personally to each director by telephone, or by
telecopy or mail, charges prepaid, addressed to him at his address as it is
shown upon the records of the Corporation, or if such address is not readily
ascertainable, at the place in which the meetings of the directors are regularly
held. If such notice is mailed or telecopied, it shall be deposited in the
United States mail or delivered at least forty-eight (48) hours prior to the
time of the holding of the meeting. In case such notice is delivered personally
or by telephone, it shall be so delivered at least twenty-four (24) hours prior
to the time of holding the meeting. Such mailing, telecopying or delivery,
personally or by telephone, as above provided shall be due, legal and personal
notice to such director.
Section 10. WAIVER OF NOTICE.
The transactions of any meeting of the Board of Directors,
however called and noticed or wherever held, are as valid as though had at a
meeting regularly called and noticed if all the directors are present and sign a
consent to the holding of the meeting on the records of the meeting, or if a
majority of the directors are present and each of those not present, either
before or after the meeting, signs a written waiver of notice, or a consent to
holding the meeting, or an approval of the minutes of the meeting. All such
waivers, consents, or approvals shall be filed with the corporate records or
made a part of the minutes of the meeting.
Section ll. ACTION OF DIRECTORS WITHOUT MEETING.
Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting, if all members of the Board shall
individually or collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the proceedings of the
Board, and shall have the same force and effect as a unanimous vote of the
directors.
Section 12. ACTION AT A MEETING; QUORUM.
A majority of the authorized number of directors shall be
necessary to constitute a quorum for the transaction of business, and the action
of a majority of the directors present at a meeting duly held at which a quorum
is present, when duly assembled, is valid as a corporate act unless a greater
number is required by the Certificate of Incorporation, these Bylaws, or the
Delaware General Corporation Law. Directors may participate in a meeting through
the use of conference telephone or similar communications equipment as long as
all members participating in the meeting can hear one another, and such
participation shall constitute the presence in person at the meeting.
Section 13. ADJOURNMENT.
A majority of the directors present, whether or not a quorum,
may adjourn from time to time by fixing a new time and place prior to taking
adjournment, but if any meeting is adjourned for more than twenty-four (24)
hours, notice of any adjournment to another time or place shall be given prior
to the time of the adjourned meeting to any directors not present at the time
the adjournment was taken.
Section 14. COMMITTEES.
The Board of Directors may, by resolutions adopted by a
majority of the authorized number of directors, establish one or more
committees, including an Executive Committee, each consisting of two or more
directors, to serve at the pleasure of the Board. The Board of Directors may
delegate to any such committee any of the powers and authority of the Board of
Directors in the business and affairs of the Corporation, except those powers
specifically reserved to the Board of Directors by the provisions of Section 141
of the Delaware General Corporation Law. The Board shall prescribe the manner in
which the proceedings of the Executive Committee or any other Committee shall be
conducted, and may designate one or more alternate directors to replace any
absent committee members at any meeting of the Committee.
ARTICLE III
OFFICERS
Section l. OFFICERS.
The officers of the Corporation shall be elected by and shall
hold office at the pleasure of the Board of Directors. These officers shall
include a President, one or more Vice Presidents, a Secretary and a Chief
Financial Officer, and may include a Chairman of the Board of Directors.
Section 2. ELECTION.
After their election, the Board of Directors shall meet and
organize by electing a President, one or more Vice Presidents, a Secretary and a
Chief Financial Officer, who may be, but need not be, members of the Board of
Directors, and such additional officers provided by these Bylaws as the Board of
Directors shall determine to be appropriate. Any two or more offices may be held
by the same person.
Section 3. COMPENSATION AND TENURE OF OFFICE.
The compensation and tenure of office of all of the officers
of the Corporation shall be fixed by the Board of Directors.
Section 4. REMOVAL AND RESIGNATION.
Any officer may be removed, either with or without cause, by a
majority of the directors at the time in office, at any regular or special
meeting of the Board, or except in the case of an officer chosen by the Board of
Directors, by any officer upon whom such power of removal may be conferred by
the Board of Directors, subject in each case, however, to any rights of an
officer under any contract of employment.
Any officer may resign at any time by giving written notice to
the Board of Directors or to the President, or to the Secretary or an Assistant
Secretary of the Corporation without prejudice, however, to any rights of the
Corporation under any contract to which such officer is a party.
Any such resignation shall take effect at the date of receipt
of such notice or at any later time specified in the notice; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 5. VACANCIES.
Any vacancy in an office occurring because of death,
resignation, removal, disqualification or any other cause may be filled by the
Board of Directors at any regular or special meeting of the Board, or in such
manner as may otherwise be prescribed in the Bylaws for appointment to such
office.
Section 6. CHAIRMAN OF THE BOARD.
The Chairman of the Board, if there be one, shall, when
present, preside at all meetings of the shareholders and of the Board of
Directors, and shall have such other powers and duties as from time to time
shall be prescribed by the Board of Directors.
Section 7. PRESIDENT.
The President shall be the general manager of the Corporation
and, subject to the control of the Board of Directors, shall be chief executive
officer of the Corporation and shall have general supervision, direction and
control of the business and affairs of the Corporation. If the Corporation has
no Chairman of the Board, the President shall also have the duties prescribed
above for the Chairman of the Board.
Section 8. VICE PRESIDENTS.
In the absence or the disability of the President, the Vice
Presidents, in order of their rank as fixed by the Board of Directors, or if not
ranked, the Vice President designated by the directors, or if no such
designation is made by the Board of Directors, the Vice President designated by
the President, shall perform the duties and exercise the powers of the
President, and shall perform such other duties and have such other powers as the
Board of Directors shall prescribe.
Section 9. SECRETARY.
The Secretary shall keep, or cause to be kept, a book of
Minutes at the principal executive office or such other place as the Board of
Directors may order, of all the proceedings of its shareholders and the Board of
Directors and Committees of the Board, with the time and place of holding of
meetings, whether regular or special, and if special, how authorized, the notice
thereof given, the names of those present at directors' meetings, the number of
shares present or represented at shareholders' meetings, and the proceedings of
these meetings.
The Secretary shall keep, or cause to be kept, at the
principal executive office or at the office of the Corporation's transfer agent,
a share register or a duplicate share register, showing the names of the
shareholders and their addresses, the number and classes of shares held by each,
the number and date of certificates issued for the same, and the number and date
of cancellation of every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all
the meetings of the shareholders and of the Board of Directors required by the
Bylaws or by law to be given; he shall keep the seal of the Corporation and
affix the seal to all documents requiring a seal; and he shall have such other
powers and perform such other duties as may be prescribed by the Board of
Directors or the Bylaws.
Section 10. ASSISTANT SECRETARY.
The Assistant Secretary, if there is one, shall have all the
same rights, duties, powers and privileges as the Secretary and may act in his
place and stead whenever necessary or desirable.
Section ll. CHIEF FINANCIAL OFFICER.
The Chief Financial Officer shall keep and maintain, or cause
to be kept and maintained, adequate and correct accounts of the properties and
business transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus and
shares. The books of account shall at all reasonable times be open to inspection
by any director.
The Chief Financial Officer shall deposit all moneys and other
valuables in the name and to the credit of the Corporation with such
depositories as may be designated by the Board of Directors. He shall disburse
the funds of the Corporation as may be ordered by the Board of Directors, shall
render to the President and directors, whenever they so request, an account of
all his transactions as Chief Financial Officer and of the financial condition
of the Corporation, and shall have such other powers and perform such other
duties as may be prescribed by the Board of Directors or the Bylaws.
Section 12. SUBORDINATE OFFICERS.
Subordinate Officers, including but not limited to, Assistant
Secretaries, Treasurers and Assistant Treasurers, or agents, as the business of
the Corporation may require, may from time to time be appointed by the Board of
Directors, the President, or by any officer empowered to do so by the Board of
Directors, and shall have such authority and shall perform such duties as are
provided in the Bylaws or as the Board of Directors may from time to time
determine.
ARTICLE IV
CORPORATE RECORDS, INSPECTION, VOTING SHARES
IN NAME OF CORPORATION
Section l. RECORDS.
The Corporation shall maintain adequate and correct books and
records of account of its business and properties. All of such accounts, books
and records shall be kept at its principal business office, or at such other
location as may be fixed by the Board of Directors from time to time.
Section 2. INSPECTION.
The accounting books and records and Minutes of the
proceedings of the shareholders and the Board of Directors and its Committees
shall be open to inspection by the shareholders from time to time and in the
manner provided in Section 220 of the Delaware General Corporation Law, and
every director shall have the right to inspect and copy all books, records and
documents of the Corporation, and to inspect its properties, in the manner
provided by Section 220 of the Delaware General Corporation Law.
Section 3. VOTING SHARES IN NAME OF CORPORATION.
Shares standing in the name of this Corporation may be voted
or represented and all rights incident to those shares may be exercised on
behalf of the Corporation by the President, or if he is unable or refuses to
act, by a Vice President or by such other person as the Board of Directors may
determine.
ARTICLE V
CERTIFICATES AND TRANSFER OF SHARES
Section l. CERTIFICATES FOR SHARES.
Every holder of shares in the Corporation shall be entitled to
have a certificate, in such form and device as the Board of Directors may
designate, certifying the number of shares and the classes or series of shares
owned by the shareholder, and containing a statement setting forth the office or
agency of the Corporation from which the shareholder may obtain, upon request
and without charge, a copy of the statement of any rights, preferences,
privileges, and restrictions granted to or imposed upon each class or series of
shares authorized to be issued and upon the holders of those shares, and any
other legend or statement as may be required under the Delaware General
Corporation Law and federal and state corporate securities laws.
Every certificate for shares shall be signed in the name of
the Corporation by the President or Vice President and the Secretary or an
Assistant Secretary. Any signature on the certificate may be by facsimile,
provided that at least one signature, which may but need not be that of the
Corporation's registrar or transfer agent, if any, shall be manually signed.
Section 2. TRANSFER ON THE BOOKS.
Upon surrender to the Secretary or Assistant Secretary or to
the transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 3. LOST OR DESTROYED CERTIFICATES.
A new certificate may be issued without the surrender and
cancellation of an old certificate that is lost, apparently destroyed or
wrongfully taken when: (a) the request for the issuance of a new certificate is
made within a reasonable time after the owner of the old certificate has notice
of its loss, destruction or theft; and (b) such request is received by the
Corporation prior to its receipt of notice that the old certificate has been
acquired by a bona fide purchaser; and (c) the owner of the old certificate
gives an indemnity bond or other adequate security sufficient in the judgment of
the Corporation to indemnify it against any claim, expense or liability
resulting from the issuance of a new certificate. In the event of the issuance
of a new certificate, the rights and liabilities of the Corporation, and of the
holders of the old and new certificates, shall be governed by the provisions of
the Delaware General Corporation Law.
Section 4. TRANSFER AGENTS AND REGISTRARS.
The Board of Directors may appoint one or more transfer agents
or transfer clerks, and one or more registrars, which shall be banks or trust
companies, either domestic or foreign, at such times and places as the
requirements of the Corporation may necessitate and the Board of Directors may
designate.
Section 5. RECORD DATE.
The Board of Directors may fix, in advance, a record date for
the purpose of determining shareholders entitled to notice of and to vote at any
meeting of shareholders, to consent to corporate action in writing without a
meeting, to receive any report, to receive any dividend or other distribution or
allotment of any right or to exercise rights with respect to any change,
conversion or exchange of shares. The record date so fixed shall not be more
than ninety (60) days prior to any event for the purpose for which it is fixed,
and shall not be less than ten (10) days prior to the date of any meeting of the
shareholders. If no such record date is fixed by the Board of Directors, then
the record date shall be that date prescribed by Section 213 of the Delaware
General Corporation Law.
ARTICLE VI
CORPORATE SEAL
The corporate seal shall be circular in form, and shall have inscribed thereon
the name of the Corporation, the date of its incorporation, and the words
"INCORPORATED DELAWARE".
ARTICLE VII
AMENDMENTS
Section l. BY SHAREHOLDERS.
The Bylaws may be repealed or amended, or new Bylaws may be
adopted, by the affirmative vote of a majority of the outstanding shares
entitled to vote or by the written consent of shareholders entitled to vote such
shares, except as otherwise provided by the Delaware General Corporation Law or
by the Certificate of Incorporation.
Section 2. BY DIRECTORS.
Subject to the right of shareholders as provided in Section l
of this Article VII to adopt, amend or repeal Bylaws, the Board of Directors may
adopt, amend or repeal Bylaws; provided, however, that no Bylaw or amendment
changing the number of directors of the Corporation shall be adopted other than
in the manner provided by Section 2 of Article II of these Bylaws.
Section 3. RECORDS OF AMENDMENTS.
Any amendment or new Bylaw adopted by the shareholders or
Board of Directors shall be copied in the appropriate place in the Minute book
with the original Bylaws, and the repeal of any Bylaw shall be entered on the
original Bylaws together with the date and manner of such repeal. The original
or a copy of the Bylaws as amended to date shall be open to inspection by the
shareholders at the Corporation's principal executive office at all reasonable
times during office hours.
ARTICLE VIII
WAIVER OF ANNUAL REPORT
The requirement that this Corporation send an annual report to its shareholders
is hereby expressly waived.
ARTICLE IX
INDEMNIFICATION OF OFFICERS, DIRECTORS, AND AGENTS
Section 1. DEFINITIONS.
For the purposes of this Article IX the following definitions
shall apply:
a. "Agent" means any person who (a) is or was a director,
officer, employee or other agent of the Corporation, or (b) is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another foreign or domestic corporation, joint venture, trust or other
enterprise, or (c) was a director, officer, employee or agent of a foreign or
domestic corporation which was a predecessor corporation of the Corporation or
of another enterprise at the request of such predecessor corporation.
b. "Proceeding" means any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative.
c. "Expenses" includes without limitation attorneys' fees and
any expenses of establishing a right to indemnification under Section 5 of this
Article IX below.
d. "Independent Legal Counsel" means an attorney mutually
agreeable to the Corporation and the agent seeking indemnification, with such
attorney to be designated within ten (10) days after notice by one party to the
other. If the Corporation and the agent seeking indemnity cannot agree upon the
selection of such attorney within such ten (10) day period, an attorney shall be
selected by the Corporation from among five (5) attorneys designated in a
writing by the agent delivered to the Corporation within five (5) days after the
end of the ten (10) day period; provided, however, that the attorneys so
designated have a minimum of ten (10) years experience in corporate law, and are
each full partners (or the equivalent) in a law firm with at least five (5)
attorneys. If the Corporation and the agent cannot agree upon the selection of
the attorney, and if the agent fails to designate his selection of five (5)
attorneys within the five (5) day period, the Corporation alone shall choose the
attorney.
Section 2. PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION.
The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the Corporation to procure a judgment in its favor)
by reason of the fact that such person is or was an agent of the Corporation
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding if such person acted in
good faith and in a manner such person reasonably believed to be in the best
interest of the Corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of such person was unlawful. The
termination of any proceeding by judgment, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which the
person reasonably believed to be in the best interests of the Corporation or
that the person had reasonable cause to believe that the person's conduct was
unlawful.
Section 3. PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION.
The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that such person is or was an agent of the
Corporation, against expenses actually and reasonably incurred by such person in
connection with the defense or settlement of such action if such person acted in
good faith, in a manner such person reasonably believed to be in the best
interest of the Corporation and its shareholders.
Section 4. DETERMINATION OF RIGHT TO INDEMNIFICATION.
To the extent that a person who is or was an agent of the
Corporation has been successful on the merits in defense of any proceeding
referred to in Section 2 or 3 of this Article IX above or in the defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses actually and reasonably incurred by such person in connection
therewith.
Except as provided in the first paragraph of this Section 4
above, any indemnification under Section 2 or 3 of this Article IX above shall
be made by the Corporation only if authorized in the specific case, upon a
determination that indemnification of the agent is proper in the circumstances
because the agent has met the applicable standard of conduct set forth in
Section 2 or 3 of this Article IX above, by any of the following: (a) a majority
vote of a quorum consisting of directors who are not parties to such action or
proceeding; (b) if such a quorum of directors is not obtainable, by independent
legal counsel in a written opinion; (c) approval or ratification by the
affirmative vote of a majority of the shares represented and voting at a duly
held meeting at which a quorum is present (which shares voting affirmatively
also constitute at least a majority of the required quorum); (d) written consent
of the shareholders under Section 228 of the Delaware General Corporation Law;
(e) the affirmative vote or written consent of such greater proportion
(including all) of the shares of any class or series as may be provided in the
Certificate of Incorporation or in the Delaware General Corporation Law, for all
or any specified shareholder action; or (f) the court in which such proceeding
is or was pending upon application made by the Corporation or the agent or the
attorney or other person rendering service in connection with the defense,
whether or not such application by the agent, attorney or other person is
opposed by the Corporation.
The shares owned by the person to be indemnified shall not be
entitled to vote on any written consent or affirmative vote set forth in the
second paragraph of Section 4 of this Article IX above.
Section 5. INDEMNITY FOR EXPENSES OF ESTABLISHING RIGHT TO INDEMNIFICATION.
To the extent that a person who is or was an agent of the
Corporation has been successful on the merits in defense of any proceeding
referred to in Section 2 or 3 of this Article IX above, or in defense of any
claim, issue or matter therein, such person shall also be indemnified against
expenses of establishing a right to indemnification actually and reasonably
incurred by such person in connection therewith.
If authorized in the specific case, upon a determination that
indemnification of such person is proper in the circumstances because such
person has met the applicable standard of conduct set forth in Section 2 or 3 of
this Article IX above, by any of the following: (a) approval or ratification by
the affirmative vote of a majority of the shares represented and voting at a
duly held meeting at which a quorum is present (which shares voting
affirmatively also constitute at least a majority of the required quorum); (b)
written consent of the shareholders under Section 228 of the Delaware General
Corporation Law, or (c) the affirmative vote or written consent of such greater
proportion (including all) of the shares of any class or series as may be
provided in the Certificate of Incorporation or in the Delaware General
Corporation Law, for all or any specified shareholder action; such person shall
also be indemnified against any expenses of establishing a right to
indemnification actually and reasonably incurred therewith.
The shares owned by the person to be indemnified shall not be
entitled to vote on any written consent or affirmative vote set forth in the
second paragraph of Section 5 of this Article IX above.
Section 6. PROCEDURE FOR INDEMNIFICATION.
Any indemnification under Section 2, 3, or 5 of this Article
IX above, or advance under Section 7 of this Article IX below, shall be made
promptly, and in any event within ninety (60) days, upon the written request of
the agent. The right to indemnification or advances as granted by this Article
IX shall be enforceable by the agent in any court of competent jurisdiction, if
the Corporation denies such request in whole or in part or if no disposition
thereof is made within ninety (60) days. It shall be a defense to any such
action that the agent has not met the standard of conduct set forth in Section
2, 3, or 5 of this Article IX above, or regarding a claim for advances the agent
has not delivered the required undertaking under Section 7 of this Article IX
below, but the burden of proving the defense is on the Corporation.
Section 7. ADVANCES.
Expenses incurred in defending any proceeding shall be
advanced by the Corporation prior to the final disposition of such proceeding
upon receipt of any undertaking by or on behalf of the person claiming a right
to be indemnified under this Article IX to repay such amount if it shall be
determined ultimately that the agent is not entitled to be indemnified as
authorized in this Article IX.
Section 8. OTHER RIGHTS AND CONTINUATION OF RIGHTS TO INDEMNIFICATION.
The indemnification provided by this Article IX shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any bylaw, agreement, approval of shareholders or
disinterested directors or otherwise, both as to action in an official capacity
and as to action in any other capacity while holding such office, to the extent
such additional rights to indemnification are authorized in the Certificate of
Incorporation. The rights to indemnity hereunder shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors, and administrators of the person. Nothing
contained in this Article IX shall affect any right to indemnification to which
persons other than such directors and officers may be entitled by contract or
otherwise.
Section 9. INSURANCE.
This Corporation may purchase and maintain insurance on behalf
of any agent of the Corporation against any liability asserted or incurred by
the agent in such capacity or arising out of the agent's status as such whether
or not the Corporation would have the power to indemnify the agent against such
liability under the provisions of this Article IX. The fact that the Corporation
owns all or a portion of the shares of the company issuing a policy of insurance
shall not render this Section 9 inapplicable if either of the following
conditions are satisfied: (a) if authorized in the Certificate of Incorporation,
any policy issued is limited to the extent not in conflict with the Delaware
General Corporation Law, or (b) the company issuing the insurance policy is
organized, licensed, and operated in a manner that complies with the insurance
laws and regulations applicable to its jurisdiction of organization, the company
issuing the policy provides procedures for processing claims that do not permit
that company to be subject to the direct control of the Corporation that
purchased that policy, and the policy issued provides for some manner of risk
sharing between the issuer and purchaser or the policy, on one hand, and some
unaffiliated person or persons, on the other, such as by providing that a
portion of the coverage furnished will be obtained from some unaffiliated
insurer or reinsurer.
Section 10. SAVINGS CLAUSE.
If this Article IX or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each person as to any expenses, judgments, fines,
settlements and other amounts incurred by such person in connection with any
proceeding, to the fullest extent permissible under applicable law.
Section 11. SUBSEQUENT AMENDMENT.
If the Delaware General Corporation Law or any other
applicable law is amended after approval by the shareholders of this Article IX
to further expand the indemnification permitted to directors, officers and
agents of the Corporation, then the Corporation shall indemnify such person to
the fullest extent permissible under the Delaware General Corporation Law or
other applicable law, as so amended.
Section 12. CONTRACT.
The rights to indemnification conferred in this Article shall
be deemed to be a contract between the Corporation and each person who serves in
the capacities described above at any time while this Article is in effect. Any
repeal or modification of this Article shall not in any way diminish any rights
to indemnification of such person or the obligations of the Corporation arising
hereunder.
Section 13. INDEMNITY AGREEMENTS.
The Corporation may from time to time enter into indemnity
agreements with the persons who are members of its Board of Directors and with
such officers or other agents of the Corporation as the Board may designate,
such indemnity agreements to provide in substance that the Corporation will
indemnify such persons to the fullest extent permitted by the provisions of this
Articles IX and the Certificate of Incorporation.
<PAGE>
EXHIBIT 10.1
Non-Employee Director Stock Option
Miravant Medical Technologies Stock Compensation Plan
MIRAVANT MEDICAL TECHNOLOGIES
STOCK COMPENSATION PLAN
NON-EMPLOYEE DIRECTOR OPTION AGREEMENT
THIS NON-EMPLOYEE DIRECTOR STOCK OPTION (the "Option") is made and
entered into at Santa Barbara, California, on the date hereinafter set forth by
and between Miravant Medical Technologies, a Delaware corporation, hereinafter
called the "Company", and the person whose name is set forth on the signature
page hereof, hereinafter called the "Optionee", who is a member of the Board of
Directors of the Company and is not an employee of the Company or one of its
subsidiaries.
WHEREAS:
A. The Board of Directors of the Company (the "Board") adopted on May
17, 1996 and amended and restated effective March 3, 1997, with subsequent
stockholder approval, the Miravant Medical Technologies 1996 Stock Compensation
Plan (the "Plan");
B. The Plan provides for the granting of mandatory Nonqualified Stock
Options ("NQSOs") by a committee to be appointed by the Board (the "Plan
Administrators") to Directors of the Company who are not employees of the
Company or one of its subsidiaries to purchase shares of the Common Stock of the
Company, par value $0.01 (the "Stock"), in accordance with the terms and
provisions of the Plan; and
C. The Plan Administrators consider the Optionee to be a person who is
eligible for a grant of compensatory options under the Plan and have determined
that it would be in the best interest of the Company to grant a NQSO as
documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions of the Plan and
as hereinafter set forth, the Company, with the approval and at the direction of
the Plan Administrators, hereby grants to the Optionee, as of the Date of Grant
set forth on the signature page hereof (the "Automatic Grant Date"), an option
to purchase SEVEN THOUSAND FIVE HUNDRED (7,500) shares of Stock at a price per
share set forth on the signature page hereof which shall be determined pursuant
to Section 11 hereof (the "Fair Market Value"). Such NQSO is hereinafter
referred to as the "Option" and the shares of stock purchasable upon exercise of
the Option are hereinafter referred to as the "Option Shares". The Option is not
intended by the parties hereto to be, or to be treated as, an incentive stock
option, as such term is defined under Section 422 of the Internal Revenue Code
of 1986.
2. VESTING OF OPTION. The Option will become 100% exercisable on grant
date.
3. EXERCISE OF OPTIONS.
(a). Except as provided in Section 4 hereof, the Optionee may
exercise the Option with respect to all or any part of the number of Option
Shares at anytime on or after the Automatic Grant Date by properly completing
and delivering to the Company at its principal office an exercise form
prescribed by the Plan Administrators and attached hereto as Exhibit 1,
specifying the number of Options Shares as to which the Option is to be
exercised and the date of exercise thereof. No NQSO may be exercised for a
fraction of a share of Stock.
(b). The purchase price of the Option Shares purchased shall
be paid in full, along with any applicable federal, state and local taxes due,
in cash or by certified cashier's check payable to the order of the Company or,
with prior written consent of the Plan Administrators, by shares of Stock or by
the surrender of all or part of an Award (including the NQSO being exercised),
or in other property, rights or credits deemed acceptable by the Plan
Administrators or, if permitted by the Plan Administrators, by a combination of
the foregoing, at the time of exercise of the NQSO. If any portion of the
purchase price is paid in shares of Stock, those shares shall be tendered at
their then Fair Market Value as determined by the Plan Administrators in
accordance with Section 22 of Article I of the Plan. Payment in shares of Stock
includes the automatic application of shares of Stock received upon the exercise
of an NQSO or other option or Award to satisfy the exercise price for additional
NQSOs.
(c). On the exercise date specified in the Optionee's notice
or as soon as thereafter practicable, the Company shall cause to be delivered to
the Optionee a certificate or certificates for the Option Shares then being
purchased upon full payment for such Option Shares; provided, however, that the
time of such delivery may be postponed by the Company for such period as may be
required for it, with reasonable diligence, to comply with any requirements of
any state or federal agency or any securities exchange.
(d). The obligation of the Company to deliver Stock hereunder
shall be subject to the condition that, if at any time the Plan Administrators
determine in their sole discretion that the listing, registration or
qualification of the Option or the Option Shares upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the Option or the issuance or purchase of the Option Shares thereunder,
the Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Plan Administrators.
(e). If the Optionee fails to pay for any of the Option Shares
specified in such notice of exercise or fails to accept delivery thereof, the
Optionee's right to purchase such Option Shares may be terminated by the
Company. The date specified in the Optionee's notice as the date of exercise
shall be deemed the date of exercise of the Option, provided that payment in
full for the Option Shares to be purchased upon such exercise shall have been
received by such date.
4. TERMINATION OF OPTION. Except as herein otherwise stated, this
Option, to the extent not theretofore exercised, shall terminate forthwith on
the earliest of the following:
(a). Ninety (90) days from the date on which the Optionee is
no longer a Director of the Company, for any reason other than death, the Option
shall immediately terminate and be of no further force and effect.
(b). If the Optionee dies while a Director of the Company or
any subsidiary, or within three (3) months after ceasing to be a Director of the
Company, the Option shall expire six (6) months after the date of death, but in
no event later than the expiration date specified in subparagraph (c) hereof.
During the six (6) month period, the Option may be exercised, to the extent that
it remains unexercised on the date of death, by the person or persons whom the
Optionee's rights under the Option shall pass by will or by laws of descent and
distribution and pursuant to Article I, Section 19 of the Plan.
(c). Ten (10) years from the Automatic Date of Grant.
5. ADJUSTMENTS. If the outstanding shares of Stock are increased,
decreased, changed into, or exchanged for a different number or kind of shares
or securities through merger, consolidation, combination, exchange of shares,
other reorganization, recapitalization, reclassification, stock dividend, stock
split or reverse stock split or other similar corporate transaction or event,
then: (i) the number and kind of shares which may thereafter be delivered in
connection with the Option; and (ii) the exercise price, grant price or purchase
price relating to the Option shall be proportionately and equitably adjusted by
the Plan Administrators, provided, however, that no such adjustment shall give
the Optionee any additional benefits under the Option. Any such adjustment made
by the Plan Administrators will be final and binding.
6. CHANGE OF CONTROL. If a Change of Control (as defined below) occurs
prior to vesting or settlement of the Option, then from and after the
Acceleration Date (as defined below), all outstanding and unexercised Options
shall be exercisable in full, whether or not otherwise exercisable and
certificates representing such Option Shares shall be delivered to the Optionee
no later than the fifth day following the Acceleration Date.
As defined herein, "Change of Control" shall mean the occurrence of any
of the following: (i) any "person" or "group" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act")), other than the Company, a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a company owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 20% or more of the
total combined voting power represented by the Company's then outstanding voting
securities; or (ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board and any new director (other
than a director designated by a person who has entered into an agreement with
the Company to effect a transaction described in clause (i), (iii) or (iv) of
this definition) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors who either were directors at the beginning of the two-year period
or whose election or nomination for election was previously so approved, cease
for any reason to constitute a majority thereof; (iii) any Reorganization as
defined below; or (iv) the stockholders of the Company adopt a plan of complete
liquidation of the Company.
The term "Reorganization" as used herein shall mean: (i) the approval
by the stockholders of the Company of any statutory merger, consolidation or
share exchange to which the Company is a party as a result of which the persons
who were stockholders of the Company immediately prior to the effective date of
such Reorganization shall have beneficial ownership of less than fifty percent
(50%) of the total combined voting power in the election of directors of the
surviving corporation following the effective date of such Reorganization; or
(ii) the approval by stockholders of an agreement for the sale or disposition by
the Company of all or substantially all of the assets of the Company.
For purposes of this definition of Reorganization, the term "sale or
disposition by the Company of all or substantially all of the assets of the
Company" shall mean a sale or other disposition transaction or series of related
transactions involving assets of the Company or any subsidiary thereof
(including the stock of any direct or indirect subsidiary of the Company) in
which the value of the assets or stock being sold or otherwise disposed of (as
measured by the purchase price being paid therefor or by such other method as
the Board of Directors of the Company determines is appropriate in a case where
there is no readily ascertainable purchase price) constitutes more than
two-thirds of the fair market value of the Company (as hereinafter defined). For
purposes of the preceding sentence, the "fair market value of the Company" shall
be the aggregate market value of the outstanding shares of Stock (on a fully
diluted basis) plus the aggregate market value of the Company's other
outstanding equity securities. The aggregate market value of the shares of Stock
shall be determined by multiplying the number of shares of Stock (on a fully
diluted basis) outstanding on the date of the execution and delivery of a
definitive agreement with respect to the transaction or series of related
transactions (the "Transaction Date") by the average closing price of the Stock
for the ten (10) trading days immediately preceding the Transaction Date. The
aggregate market value of any other equity securities of the Company shall be
determined in a manner similar to that prescribed in the immediately preceding
sentence for determining the aggregate market value of the shares of Stock or by
such other method as the Board shall determine is appropriate.
As defined herein, "Acceleration Date" shall mean the earliest date on
which any of the following events shall have first occurred: (i) the acquisition
described in clause (i) of the definition of Change of Control above; (ii) the
change in the composition of the Board of Directors of the Company described in
clause (ii) above; or (iii) the stockholder approval or adoption described in
clauses (iii) and (iv) above.
7. TRANSFERABILITY OF OPTION. During the lifetime of the Optionee, only
the Optionee (or such Optionee's legal representative) may exercise the Option;
provided, however, that the Plan Administrators may, in their sole discretion,
permit transfers of the Option for estate planning purposes if and to the extent
such transfers do not (a) cause the Optionee to lose the benefit of the
exemption under Rule 16b-3 relating to such Awards or (b) violate other rules or
regulations of the Securities and Exchange Commission (the "SEC") or the
Internal Revenue Service or (c) materially increase the cost of the Company's
compliance with such rules or regulations, including but not limited to, any
additional registration statements that the Company would be required to file
with the SEC if such transfer were allowed. The Option may not be sold, pledged,
assigned, transferred in any manner (except as provided above or elsewhere
herein), exchanged or otherwise encumbered or made subject to any creditor's
process, whether voluntarily, involuntarily or by operation of law, and any
attempt to do so shall be of no effect.
8. RIGHTS PRIOR TO EXERCISE OF OPTION. The Optionee shall have none of
the rights or privileges of a stockholder of the Company in respect of the
Option or any Option Shares issuable pursuant to the Option until certificates
representing the Option Shares have been issued and delivered. No Option Shares
shall be required to be issued and delivered upon any exercise of the Option
unless and until all of the requirements of law and of all regulatory agencies
having jurisdiction over the issuance and delivery of the securities shall have
been fully complied with.
9. COMPLIANCE WITH SECURITIES LAWS. Shares of Stock shall not be issued
with respect to the Option, unless the exercise of the Option and the issuance
and delivery of the Option Shares pursuant thereto shall comply with all
applicable provisions of foreign, state and federal law including, without
limitation, the Securities Act of 1933, as amended, and the Exchange Act, and
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which shares of Stock may then be listed. The Plan
Administrators may require the Optionee to furnish evidence satisfactory to the
Company, including a written and signed representation letter and consent to be
bound by any transfer restriction imposed by law, legend, condition or
otherwise, that the Option Shares are being purchased only for investment and
without any present intention to sell or distribute the Option Shares in
violation of any state or federal law, rule or regulation, if required by the
Company. Further, the Optionee shall consent to the imposition of a legend on
the Option Shares issued under the Option and the imposition of stop-transfer
instructions restricting their transferability as may be required by the Plan
Administrators in their discretion to ensure compliance with such laws.
10. CONTINUED EMPLOYMENT. Nothing in the Plan or in the Option granted
hereunder shall confer upon any Optionee any right to serve on the Board of
Directors of the Company. In the discretion of the Plan Administrators, the
Optionee may also be required to agree to non-competition, non-disclosure,
non-solicitation or any other terms or provisions not inconsistent with the Plan
in consideration of the grant of the Option.
11. FAIR MARKET VALUE. As used herein, "Fair Market Value" shall be the
fair market value determined by the Plan Administrators on the basis of such
factors as they deem appropriate; provided, however, that Fair Market Value on
any day shall be deemed to be, if the Common Stock is traded on a national
securities exchange or the Nasdaq National Market, the closing price (or, if no
reported sale takes place on such day, the arithmetic mean of the reported bid
and asked prices) of the Common Stock on such day on the principal such exchange
or market, or, if the stock is reported on the composite tape, the closing price
as reported on the composite tape. In each case, the Plan Administrators'
determination of Fair Market Value in accordance with the Code shall be
conclusive.
12. WITHHOLDING. The grant or exercise of the Option or the sale and
issuance of any Option Shares to be purchased under the Option are subject to
the condition that if, at any time, the Company shall determine in its sole
discretion, that the satisfaction of withholding tax or other withholding
liabilities under any state or federal law is necessary or desirable as a
condition of, or in connection with, such grant or exercise or the delivery or
purchase of shares pursuant thereto, then in such event, the grant or exercise
of the Option or the sale and issuance of any Option Shares to be purchased
shall not be effective unless such withholding shall have been effected or
obtained in a manner acceptable to the Company. At the Plan Administrator's sole
and complete discretion, the Company may, from time to time unilaterally
withhold or voluntarily accept shares of Stock already issued to the Optionee
and/or stock subject to an Award as defined in the Plan as the source of payment
for such liabilities.
13. BINDING EFFECT; AMENDMENT. The Option shall be binding upon the
heirs, executors, administrators and successors of the parties hereto. The
Option may be amended by the Plan Administrators at any time (i) if the Plan
Administrators determine, in their sole discretion, that amendment is necessary
or advisable in the light of any addition to or change in the Code or in the
regulations issued thereunder, or any federal or state securities law or other
law or regulation, which change occurs after the Date of Grant and by its terms
applies to the Option; or (ii) other than in the circumstances described in
clause (i) above, with the written consent of the Optionee.
14. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally or by certified mail, return receipt requested, to the
Company's and the Optionee's addresses as set forth on the signature page
hereof.
15. INCORPORATION OF PLAN BY REFERENCE. The Option is granted pursuant
to the terms of the Miravant Medical Technologies 1996 Stock Compensation Plan,
the terms of which are incorporated herein by reference and the Option shall, in
all respects, be interpreted in accordance with the Plan. A copy of the Plan has
been given to the Optionee and the Optionee agrees to be bound by the Plan. The
Plan Administrators shall interpret and construe the Plan and the Option, and
their interpretations and determinations shall be conclusive and binding on the
parties hereto and any other person claiming an interest hereunder, with respect
to any issue arising hereunder or thereunder. In case of any conflict in the
terms of the Plan, or between the Plan and the Option agreement, the provisions
in Article III of the Plan shall control those in a different Article and the
provisions of the Plan shall control those in the Option agreement.
16. CHOICE OF LAW AND VENUE. The Option, Plan and all related documents
shall be governed by, and construed in accordance with, the laws of the State of
California (except to the extent the provisions of Delaware corporate law may be
applicable). Acceptance of the Option shall be deemed to constitute consent to
the jurisdiction and venue of the Superior Court of Santa Barbara County,
California and the United States District Court of the Central District of
California for all purposes in connection with any suit, action or other
proceeding relating to such Option, including the enforcement of any rights
under the Plan or any agreement or other document, and shall be deemed to
constitute consent to any process or notice of motion in connection with such
proceeding being served by certified or registered mail or personal service
within or without the State of California, provided a reasonable time for
appearance is allowed.
17. RESALE LIMITATIONS. Not withstanding anything to the contrary
contained herein, (a) the amount of Stock which may be sold, from time to time,
by the Optionee, upon exercise of this Option and together with all other sales
of Stock for the account of the Optionee in any week, shall not exceed 1.0% of
the average weekly trading volume of the Stock as reported by the Nasdaq
National Market for the prior sixty (60) days, and (b) the ask price of such
sale shall not be lower than the higher of (i) the highest independent current
bid or offer quotation or (ii) the last independent sale price, provided,
however, that the Plan Administrators may, in their sole discretion, permit a
greater amount of Stock to be sold in any given week.
SIGNATURES ON NEXT PAGE
<PAGE>
IN WITNESS WHEREOF, the Company has caused its duly authorized officers
to execute this Nonqualified Stock Option Agreement and the Optionee has placed
his or her signature hereon, effective as of the Automatic Grant Date.
- --------------------------------------------------------------------------------
THE OPTION: OPTION #
- --------------------------------------------------------------------------------
Optionee: Automatic Grant Date:
Number of Option Shares: Option Price Per Share: $ PER SHARE
Vesting: 100% AT DATE OF GRANT
The "Company"
Miravant Medical Technologies
By: _________________________________________
Gary S. Kledzik, Ph.D.
Title CEO and Chairman
Address: 7408 Hollister Avenue
Santa Barbara, California 93117
805/685-9880
ACCEPTED AND AGREED TO:
The "Optionee"
Signature: ___________________________________________
Address: ___________________________________________
___________________________________________
Social Security #: _____________________________________
<PAGE>
Exhibit 1
Notice of Exercise of Stock Option
<PAGE>
================================================================================
SECTION 1: PERSONAL DATA
================================================================================
1. Name: ________________________________________ 3. SSN: _____________________
2. Address for Stock Record: 4. Phone extension: ________
______________________________________________ 5. Company: ________________
______________________________________________
================================================================================
SECTION II: STATEMENT OF INTENT TO EXERCISE
================================================================================
6. I would like to exercise the following shares of Miravant Medical
Technologies Common Stock:
- --------------- ------------- ---------------- ---------------- ----------------
Option Plan Option # Date of Grant Option Price # of Shares
- --------------- ------------- ---------------- ---------------- ----------------
- --------------- ------------- ---------------- ---------------- ----------------
- --------------- ------------- ---------------- ---------------- ----------------
- --------------- ------------- ---------------- ---------------- ----------------
- --------------- ------------- ---------------- ---------------- ----------------
- --------------- ------------- ---------------- ---------------- ----------------
- --------------- ------------- ---------------- ---------------- ----------------
- --------------- ------------- ---------------- ---------------- ----------------
- --------------- ------------- ---------------- ---------------- ----------------
- --------------- ------------- ---------------- ---------------- ----------------
- --------------------------------------------------------------------------------
SECTION III: PAYMENT OF OPTION PURCHASE PRICE AND TAXES
================================================================================
7. I understand that for Non-Qualified Stock Option Exercises I am required to
pay withholding taxes on the gain as measured by the difference between the
option purchase price and the fair market value of the shares on the date
of exercise.
Check one:
___ I will submit to Miravant Medical Technologies a cashiers check in payment.
___ I will wire funds to Miravant Medical Technologies in payment.
___ I authorize my stock broker to send payment to Miravant Medical Technologies
in the form of a wire or a check on my behalf out of the net proceeds from a
same-day-sale or partial sale transaction for the option price and applicable
taxes owed. Complete and attach the Company's Securities Trading Report Form to
obtain prior approval for the shares to be sold .
Brokers name ____________________________________
Firm ____________________________________
Address ____________________________________
Phone/FAX ____________________________________
Account # ____________________________________
- --------------------------------------------------------------------------------
SECTION IV: ADMINISTRATIVE INSTRUCTIONS
================================================================================
8. If this transaction is an option exercise only or a partial sale of the
options being exercised, please indicate how the certificate(s) for unsold
shares should be issued:
Name certificate(s) should be issued to: ______________________________________
Issue certificate(s) as follows: ___ certificate for ________________ shares
___ certificate for ________________ shares
Mailing address for certificate(s) if different than Stock Record address:
- ---------------------------------------------
- ---------------------------------------------
- ---------------------------------------------
- --------------------------------------------------------------------------------
9. Signature: _____________________________ Date:__________________
Verified and Approved by: ___________________ Date:__________________
================================================================================
================================================================================
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11.1
Computation of Net Loss Per Share
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Primary
Net loss.................................. $ (7,790,000) $ (4,155,000) $(18,963,000) $ (12,639,000)
============= ============= ============= ==============
Weighted average common shares outstanding 12,410,110 12,438,069 12,382,409 11,519,785
============= ============= ============= ==============
Net loss per share........................ $ (0.63) $ (0.33) $ (1.53) $ (1.10)
============= ============= ============= ==============
Fully diluted
Net loss.................................. $ (7,790,000) $ (4,155,000) $(18,963,000) $ (12,639,000)
============= ============= ============= ==============
Weighted average common shares outstanding 12,410,110 12,438,069 12,382,409 11,519,785
============= ============= ============= ==============
Net loss per share........................ $ (0.63) $ (0.33) $ (1.53) $ (1.10)
============= ============= ============= ==============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOUND IN THE COMPANY'S FORM 10-Q FOR THE PERIOD ENDING SEPTEMBER 30, 1997, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-1-1997
<PERIOD-END> Sep-30-1997
<CASH> 61,676
<SECURITIES> 13,000
<RECEIVABLES> 1,179
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 76,662
<PP&E> 6,195
<DEPRECIATION> (2,481)
<TOTAL-ASSETS> 82,257
<CURRENT-LIABILITIES> 4,202
<BONDS> 0
0
0
<COMMON> 148,267
<OTHER-SE> (70,212)
<TOTAL-LIABILITY-AND-EQUITY> 82,257
<SALES> 0
<TOTAL-REVENUES> 1,418
<CGS> 0
<TOTAL-COSTS> 22,062
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> (18,963)
<INCOME-TAX> 0
<INCOME-CONTINUING> (18,963)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,963)
<EPS-PRIMARY> (1.53)
<EPS-DILUTED> (1.53)
</TABLE>
