EXHIBIT 4.11
FIRST AMENDMENT TO
REGISTRATION RIGHTS AGREEMENT
THIS FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT (this "First
Amendment") is made and effective as of the effective date set forth on the
signature page hereof, by and between BIOGAN INTERNATIONAL, INC., a Delaware
corporation (the "Company"), and THOMSON KERNAGHAN & CO., LIMITED, a Canadian
limited liability company (the "Investor").
R E C I T A L S
A. The Company entered into a Registration Rights Agreement dated March
8, 2000 (the "RRA") with CALP II, a Bermuda limited partnership ("CALP II"), and
Carbon Mesa Partners, LLC, a Nevada limited liability company ("Carbon Mesa").
B. On June 1, 2000, CALP II assigned all of its right, title and
interest in the RRA to the Investor.
C. The Company has failed to meet some of its obligations under the
terms of the RRA and is, therefore, liable for certain Late Filing Penalties and
Late Effective Date Penalties (as those terms are defined in Section 2(b) of the
RRA). As of the date hereof, the aggregate amount of penalties claimed by the
Investor to be due from the Company in connection with such failures is $956,450
(the "Outstanding Penalties").
D. The Company is also in default under the terms of the 8% Secured
Convertible Debenture Due February 28, 2002 issued by the Company to CALP II
(and later assigned by CALP II to Investor) on or about March 30, 2000 (the
"Debenture"). Concurrently with the execution of this First Amendment, the
Company and the Investor are entering into the First Amendment to 8% Secured
Convertible Debenture due February 28, 2002 ("Debenture Amendment") in
connection with such defaults.
E. The Company and the Investor desire to settle all of their
disagreements concerning the Company's defaults under the terms of the RRA and
the Debenture, and to amend the RRA on the terms and conditions set forth
herein.
A G R E E M E N T
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
1. PAYMENT BY COMPANY TO INVESTOR.
(a) The Debenture Amendment shall amend the Debenture to
increase the principal amount by Six Hundred Fifty Thousand Dollars
($650,000) (the "Settlement Amount"), as full settlement for the
outstanding defaults and Outstanding Penalties under the RRA. The
Settlement Amount shall be payable according to the terms and
conditions of the Debenture Amendment, and the conversion price for the
Settlement Amount, as calculated under the terms of the Debenture
Amendment, shall not be less than $0.025 per share.
(b) On or before September 30, 2001, the Company shall pay to
the Investor Six Hundred Ninety Dollars ($690) as reimbursement for
fees associated with the lapsed letter of credit.
2. WAIVER OF DEFAULTS BY INVESTOR.
(a) Section 2(a) of the RRA is hereby amended to delete the
30-day and 120-day time period requirements contained in Section 2(a)
relating to the filing and effectiveness of a registration statement
covering the Registrable Securities (as defined in the RRA).
(b) Investor hereby waives all rights to enforcement and any
remedies under the RRA including, but not limited to, rights to collect
the Outstanding Penalties, pursuant to Section 2(b) of the RRA that
existed or may exist prior to, as of and after the date of this First
Amendment. Section 2(b) of the RRA is hereby amended and restated to
read in its entirety as follows:
"(b) PAYMENTS BY THE COMPANY.
(i) On or prior to November 30, 2001, the
Company shall (x) file with the Securities and Exchange
Commission (the "SEC") any and all securities filings required
to be filed with the SEC by the Company under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), including,
but not limited to, any and all filings that were or are
required to be filed by the Company with the SEC under the
1934 Act prior to the date hereof (collectively, the
"Securities Filings") and (y) secure and maintain exchange or
NASD's OTC Electronic Bulletin Board authorization and
quotation for its common stock ("Relisting").
(ii) On or prior to January 31, 2002 (the
"Required Filing Date"), the Company shall file a registration
statement with SEC on Form SB-2 (the "Registration
Statement"), which Registration Statement shall include, inter
alia, the registration of (w) the 13,200,000 shares of the
Company's common stock issuable to the Investor upon
conversion of the 1,100 shares of the Company's Series A
Convertible Preferred Stock held by the Investor (which shall
be converted as soon as reasonably possible in accordance with
the terms of the Certificate of Designation covering the
Company's Series A Convertible Preferred Stock), (x) the
2,500,000 shares of the Company's common stock issued to the
Investor pursuant to the Debenture Amendment, (y) the Warrant
Shares, and (z) the Conversion Shares. The Registration
Statement also shall cover such indeterminate number of
additional shares of common stock as may necessary to prevent
dilution resulting from stock splits or stock dividends.
(iii) If the Company fails to comply with
its obligations under Section 2(b)(i) or Section 2(b)(ii) of
this Agreement, then the principal amount of the Debenture
shall be increased in an amount equal to Fifty Thousand
Dollars ($50,000) for each period of thirty (30) calendar days
that the Company has not complied in full with the
requirements of Section 2(b)(i) and/or Section 2(b)(ii) (the
"Default Penalties"), up to a maximum amount equal to the
$350,000 (the "Maximum Penalty"). Any and all Default
Penalties incurred pursuant to this Section 2(b)(iii) shall be
added to the principal amount of the Debenture and shall be
payable and convertible according to the same terms and
conditions as the Settlement Amount. In no event shall the
aggregate increase in the principal amount of the Debenture
due to the Settlement Amount and the Default Penalties exceed
One Million Dollars ($1,000,000). The remedy provided in this
Section 2(b)(iii) shall be in lieu of any other remedies
otherwise available under the Transaction Agreements with
respect to the Company's obligations to make the Securities
Filings or other filings under the 1934 Act, to obtain
Relisting and to file, obtain and maintain effectiveness of
the Registration Statement; provided, however, that the
Investor retains its right under Section 15 of the Debenture
to declare the Debenture immediately due and payable if an
Event of Default occurs under Section 15(k) or Section 15(m)
of the Debenture.
3. OTHER AMENDMENTS TO THE RRA.
(a) Section 10 of the RRA is hereby amended and restated to
read in its entirety as follows:
"10. AMENDMENT OR WAIVER OF RIGHTS. Any provision of
this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and
either retroactively or prospectively), only with the written
consent of the Company and Investors who beneficially own
collectively eighty percent (80%) of the Registrable
Securities. Any amendment or waiver effected in accordance
with this Section 10 shall be binding upon each Investor and
the Company."
(b) Section 11(b) of the RRA is hereby amended to reflect that
the address for notices to the Investors is:
c/o Thomson Kernaghan & Co., Limited
000 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
4. MISCELLANEOUS.
(a) All other terms and provisions of the RRA not expressly
modified by this First Amendment shall remain in full force and effect;
provided, however, that to the extent any provisions of the RRA or any of the
other Transaction Agreements (as defined in the Securities Purchase Agreement)
are in conflict with the provisions of this First Amendment, the provisions of
this First Amendment shall control.
(b) This First Amendment, along with the other Transaction
Agreements and the Debenture Amendment, shall constitute and contain the
complete understanding and agreement of the parties hereto, and cancel and
supersede any and all prior negotiations, correspondence, understandings and
agreements, whether written or oral, between the parties with respect to the
subject matter hereof.
(c) The parties acknowledge and agree that this First
Amendment is binding upon Carbon Mesa in accordance with Section 10 of the RRA.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
be effective as of the date upon which this First Amendment has been executed by
both signatories to this First Amendment.
Dated: September 24, 2001 BIOGAN INTERNATIONAL, INC.
By: /S/ X. Xxxxxxxxxx
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Its: President
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Dated: September 24, 2001 THOMSON KERNAGHAN & CO., LIMITED
By: /S/ Xxxxx Xxxxxx
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Its: Sr. VP & Director
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