AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT, SENIOR SECURED CONVERTIBLE NOTES, WARRANTS AND SECURITY AGREEMENT
Exhibit
4.5
AMENDMENT
NO. 1 TO SECURITIES PURCHASE AGREEMENT, SENIOR
SECURED
CONVERTIBLE NOTES, WARRANTS AND SECURITY AGREEMENT
This
AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT, SENIOR SECURED CONVERTIBLE
NOTES, WARRANTS AND SECURITY AGREEMENT (this “Amendment”) is made and entered
into as of October 3, 2007, by and among Biophan Technologies, Inc., a Nevada
corporation (the “Biophan”), and the purchasers identified on the signature
pages hereto (each, a “Purchaser” and, collectively, the
“Purchasers”).
RECITALS
Biophan
and the Purchasers are parties to a Securities Purchase Agreement, dated as
of
October 11, 2006 (the “Purchase Agreement”), pursuant to which Biophan issued
and sold to the Purchasers an aggregate of $7,250,000 of Notes and certain
Warrants (each as defined in the Purchase Agreement). Capitalized terms used
and
not defined in this Amendment shall have the respective meanings set forth
in
the Purchase Agreement.
In
connection with the Purchase Agreement, Biophan and the Purchasers entered
into
a Security Agreement, dated as of October 11, 2006 (the “Security Agreement”),
pursuant to which Biophan agreed to pledge and grant a security interest in
the
Collateral (as defined in the Security Agreement).
Biophan
and the Purchasers now wish to further modify certain of the terms of the
Purchase Agreement, Notes, Warrants and the Security Agreement.
NOW,
THEREFORE, in consideration of the foregoing Recitals and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Biophan and each Purchaser, severally and not jointly, agree
as
follows:
| 1. |
Amendments
to Purchase Agreement.
|
| 1.1. |
Biophan
and each Purchaser agree that Section 4.17 of the Purchase Agreement
shall
be deleted and replaced in its entirety as
follows:
|
“Section
4.17 SBI
Default. In
connection with the Stock Purchase Agreement dated May 27, 2005 (the “SBI
Purchase Agreement”) by and between the Company and SBI Brightline XI, LLC
(“SBI”), the Company shall (i) to the extent requested by a holders collectively
holding at least 50.1% of the aggregate principal amount outstanding under
the
Notes (the “Noteholder
Majority”),
enforce all of its rights and remedies thereunder in connection with the breach
by SBI, and (ii) not agree to any settlement, amendment, waiver or consent
under
the SBI Purchase agreement without the prior written consent of the Noteholder
Majority. The Company hereby covenants to file a Form 8-K with the Commission
relating to the default by SBI , in a form reasonably acceptable to the
Noteholder Majority, within 3 Trading Days following the Closing
Date.”
1.2 Biophan
and each Purchaser agree to insert the following Section 4.19 to the Purchase
Agreement:
“Section
4.19 Subsequent
Financings.
If
any
time prior to the date on which the Company has consummated one or more equity
financings following the Closing Date, the Company or any Subsidiary (other
than
Myotech, LLC and Biophan Europe) of the Company offers to issue or issues to
any
Person any security of the Company or any Subsidiary (other than Myotech, LLC
and Biophan Europe) of the Company, then the Company shall offer to each
Purchaser the right to exchange all or a portion of the outstanding principal
amount of the Notes then held by such Purchaser (the “Exchanged
Amount”),
plus
(i) accrued but unpaid interest thereon and (ii) an exchange premium issued
to
such Purchaser equal to 20% of the Exchanged Amount, for such security. Such
offer shall be made at the same time and in the same manner as if such offer
is
being made to any other potential purchaser of such security. Each Purchaser
shall have 20 Trading Days to review the offer and determine whether it wants
to
exchange all or any portion of the Notes.”
| 2. |
Amendments
to Notes.
|
| 2.1. |
Biophan
and each Purchaser agree to insert the following clause (i) in Section
2
of the Notes:
|
“(i)
Notwithstanding anything to the contrary, in the event the Company elects to
pay
the Monthly Installment in cash, the Holder shall have the right to convert
any
portion of the Notes and apply the number of shares such Holder would have
received had the Company elected to pay in Common Stock towards the Monthly
Installment in lieu of receiving such cash payment.”
| 2.2. |
Biophan
and each Purchaser agree that the Monthly Installments (as defined
in the
Notes) due in February 2007, March 2007, April 2007 and May 2007
totaling
an aggregate amount of $753,244.81, plus accrued interest and penalties
thereon, which total $652,500 (collectively, the “Past Due Monthly
Amount”) shall be paid to the Purchasers in accordance with this Section
2.2.
|
| a. |
Biophan
shall pay to the Purchasers, pro rata, an aggregate amount equal
to
$702,872.41 upon receiving the proceeds under the IP Assignment Agreement,
which shall be applied first to interest and penalties and then to
the
past due Monthly Installments.
|
| b. |
The
Past Due Monthly Amount, less the amount paid in clause (a) above
(the
“Outstanding Past Due Amount”),
shall be paid in 6 equal monthly installments commencing October
10, 2007
and on each of the next five monthly anniversaries (each, a “Monthly
Payment Date”). Biophan shall pay the Outstanding Past Due Amount on each
Monthly Payment Date in freely tradable shares of Common Stock, without
any restrictive legends, and delivered to the respective Purchaser’s
account with The Depository Trust Company (“DTC”) (or by physical
certificate if the Purchaser does not have an account with the
DTC).
|
| c. |
The
number of shares of Common Stock issuable on each Monthly Payment
Date
under clause (b) above shall be equal to the quotient of (x) one-sixth
of
the Outstanding Past Due Amount, divided by (y) lesser of (i) the
then
Conversion Price (as adjusted in accordance herewith) and (ii) 90%
of the
arithmetic average of the VWAP for each of the 20 Trading Days ending
immediately prior to the applicable Monthly Payment Date
(subject to adjustment for any stock dividend, stock split, stock
combination or other similar event affecting the Common Stock during
such
20 Trading Day period).
|
| 2.3. |
Biophan
and each Purchaser agree that the definition of “Conversion Price” in
Section 1 of the Notes shall be deleted and replaced in its entirety
as
follows:
|
““Conversion
Price”
means
$0.15, subject to adjustment from time to time pursuant to Section
10.”
| 2.4. |
Biophan
and each Purchaser agree that the last sentence in Section 10(c)
of the
Notes shall be deleted and replaced in its entirety as
follows:
|
“If
any
Fundamental Change constitutes or results in a Change of Control, then at the
request of the Holder delivered before the 45th day after such Fundamental
Change, the Company (or any such successor or surviving entity) will purchase
this Note from the Holder for a purchase price, payable in cash within five
Trading Days after such request (or, if later, on the effective date of the
Fundamental Transaction), equal to the greatest of (i) the Black Scholes value
of the remaining unexercised portion of this Note on the date of such request,
(ii) 125% of the outstanding principal amount, plus all accrued but unpaid
interest thereon through the date of payment, and (iii) the Event Equity
Value.”
| 3. |
Amendment
to Warrants.
|
| 3.1. |
The
Exercise Price (as defined in the Warrants) of the Warrant A, Warrant
B
and Warrant C shall each be reduced
$0.23.
|
| 3.2. |
Biophan
and each Purchaser agree that the Section 10 of Warrant A, Warrant
B and
Warrant C shall each be deleted and replaced in its entirety as
follows:
|
“10.Payment
of Exercise Price. The Holder shall pay the Exercise Price in immediately
available funds; provided, however, that if the Registration Statement is
not effective at the time of exercise, the Holder may satisfy its obligation
to
pay the Exercise Price through a “cashless exercise,” in which event the Company
shall issue to the Holder the number of Warrant Shares determined as
follows:
|
X
=
Y [(A-B)/A]
|
||
|
where:
|
||
|
|
X
=
the number of Warrant Shares to be issued to the Holder.
|
|
|
Y
=
the number of Warrant Shares with respect to which this Warrant is
being
exercised.
|
||
|
A
=
the arithmetic average of the VWAP for the twenty Trading Days immediately
prior to (but not including) the Exercise Date.
|
||
|
B
=
the Exercise Price.
|
For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced,
on
the date this Warrant was originally issued pursuant to the Purchase
Agreement.”
| 4. |
Other
Amendments and Agreements.
|
|
4.1.
|
Consent
Rights.
|
| a. |
Biophan
and each Purchaser agree that Biophan shall not appoint directors
to
Myotech, LLC’s Board of Directors without the prior written consent of the
Purchasers (other than Castlerigg Master Investments LTD, CAMOFI
Master
LLC, BridgePointe Master Fund Ltd., Xxxxxxxx Investment Master Fund
Ltd.
and Highbridge International LLC) collectively holding at least 60%
of the
aggregate principal amount outstanding under the Notes (not including
the
Notes held by Castlerigg Master Investments LTD, CAMOFI Master LLC,
BridgePointe Master Fund Ltd., Xxxxxxxx Investment Master Fund Ltd.
and
Highbridge International LLC) (the “Participating Majority”). The
Participating Majority hereby consents to the initial appointment
of Xxxx
Xxxxxxx, Xxxx Xxxxxxxxx and Xxxxxx Xxxxxxx as Biophan’s representatives on
Myotech, LLC’s Board of Directors.
|
| b. |
Biophan
and the Participating Majority agree that the Participating Majority,
upon
delivering written notice to Biophan, shall have the right to cause
Biophan to exercise its rights pursuant to the Myotech Operating
Agreement
to immediately remove any of the directors it has appointed to Myotech,
LLC’s Board of Directors.
|
| c. |
Without
the prior written approval of the Purchasers collectively holding
60% of
the aggregate principal amount outstanding under the Notes (the “Majority
In Interest”), Biophan agrees that (i) neither it nor any director on the
Myotech, LLC Board of Directors appointed by Biophan will vote in
favor or
approve, directly or indirectly, any offer, sale, grant of any option
to
purchase, or otherwise dispose of (or announce any offer, sale, grant
or
any option to purchase or other disposition of) any of its equity
or
equity equivalent securities including without limitation any debt,
preferred stock or other instrument or security that is, at any time
during its life and under any circumstances, convertible into or
exchangeable or exercisable for Common Stock or Common Stock Equivalents,
and (ii) it shall not invest more than $3,200,000 in Myotech, LLC.
Clause
(i) above shall not apply to the issuance of securities in connection
with
(a) any option plan that has been approved by Myotech, LLC’s Board of
Directors, pursuant to which Myotech LLC’s securities may be issued to any
employee, officer or director for services provided to Myotech, LLC,
or
(b) the exercise of any options or warrants issued by Myotech, LLC
prior
to the date hereof.
|
| 4.2 |
Release
of Collateral.
Biophan and each Purchaser agree that Iroquois Master Fund, Ltd
(“Iroquois”), as agent under the Security Agreement, shall release (i) the
Stock Collateral (as defined in the Security Agreement) consisting
of
10,000 shares of New Scale Technologies, Inc. to Biophan, and (ii)
release
the intellectual property set forth on the Consent and Authorization
Agreement dated October 2, 2007 (the “Consent
Letter”).
|
| 4.3 |
Use
of Proceeds.
In connection with the proceeds received by Biophan pursuant to the
sale
of the intellectual property under the Intellectual Property Assignment
Agreement dated as of August 6, 2007 (the “IP Assignment Agreement”), by
and among Biophan and Medtronic, Inc., Biophan covenants to use the
proceeds as follows: (i) to make an investment in Myotech, LLC up
to
$3,200,000, (ii) to fund working capital in an amount no less than
$4,200,000, (iii) to not pay more than $600,000 in expenses (as defined
under GAAP) for each of the next 7 quarters commencing October 1,
2007
(excluding any litigation expenses approved by the Majority In Interest)
(the “Budget Amount”), (iv) with the written approval of the Majority In
Interest, to invest in existing and new technologies up to $1,800,000,
and
(v) to make the payments set forth on Schedule 4.3 hereto. In connection
with clause (ii) and (iii) above, at the request of any Purchaser,
Biophan
agrees to send such Purchaser proper documentation that its quarterly
expenses are within the Budget Amount. Biophan acknowledges that
this
covenant is a material inducement for the Purchasers entering into
this
Amendment.
|
| 4.4 |
Resignation
of Mr. Xxxxxxx Xxxxxx.
Notwithstanding anything to the contrary, this Amendment shall not
be
effective unless Biophan delivers to the Purchasers evidence acceptable
to
the Purchasers that Mr. Xxxxxxx Xxxxxx has resigned from Biophan’s
Management Committee and any other director or officer position held
by
him at Biophan. In no event shall Biophan give Mr. Xxxxxxx Xxxxxx
a
xxxxxxxxx package greater than $100,000 in cash and $250,000 in shares
of
Biophan Common Stock
|
| 4.5 |
Continued
Validity of Transaction Documents under Purchase
Agreements.
The parties hereto agree that the Purchase Agreement and the Transaction
Documents entered into in connection therewith (as amended by this
Amendment), remain in full force and effect, modified to the extent
and
only to the extent necessary to give effect to this Amendment and
the
transactions herein contemplated.
|
| 5. |
Miscellaneous.
|
5.1. Fees
and Expenses.
At the
Closing, Biophan shall pay to Iroquois an aggregate of $25,000 for their legal
fees and expenses incurred in connection with the preparation and negotiation
of
this Amendment.
5.2. Entire
Agreement.
This
Amendment and the Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.
5.3. Equal
Treatment of Purchasers.
No
consideration shall be offered or paid to any person to amend or consent to
a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration is also offered to all of the parties to the
Transaction Documents. For clarification purposes, this provision constitutes
a
separate right granted to each Purchaser by Biophan and negotiated separately
by
each Purchaser, and is intended to treat for Biophan and the Purchasers as
a
class and shall not in any way be construed as the Purchasers acting in concert
or as a group with respect to the purchase, disposition or voting of Securities
or otherwise.
5.4. Public
Announcement.
Biophan
shall, by 8:30 a.m. Eastern time on October 5, 2007, issue a press release
disclosing the material terms of the transactions contemplated hereby and by
4:30 p.m. Eastern time on the first Business Day following the date hereof,
file
a Current Report on Form 8-K (the “8-K Filing”), attaching such press release,
this Amendment and the Consent Letter, each reasonably acceptable to each
Purchaser. From and after the filing of the 8-K Filing with the Commission,
the
Company represents that the Purchasers shall not be in possession of any
material, nonpublic information received from the Company, any of its
Subsidiaries or any of its respective officers, directors, employees or agents
that is not disclosed in the 8-K Filing. Biophan shall not, and shall cause
each
of its Subsidiaries and its and each of their respective officers, directors,
employees and agents, not to, provide any Purchaser with any material, nonpublic
information regarding the Company or any of its Subsidiaries from and after
the
filing of the 8-K Filing with the Commission without the express written consent
of such Purchaser. Biophan and each Purchaser shall consult with each other
in
issuing any other press releases with respect to the transactions contemplated
hereby, and neither Biophan nor any Purchaser shall issue any such press release
or otherwise make any such public statement without the prior consent of
Biophan, with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release of Biophan,
which consent shall not unreasonably be withheld, except if such disclosure
is
required by law, in which case the disclosing party shall promptly provide
the
other party with prior notice of such public statement or communication.
Notwithstanding the foregoing, Biophan shall not publicly disclose the name
of
any Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except (i) as required by federal securities law
in
connection with the registration statement contemplated by the Registration
Rights Agreement and (ii) to the extent such disclosure is required by law
or
Trading Market regulations, in which case Biophan shall provide the Purchasers
with prior notice of such disclosure permitted under subclause (i) or
(ii).
5.5. Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
as specified in the Purchase Agreement. The address for such notices and
communications shall be as set forth on the signature pages attached to the
Purchase Agreement.
5.6. Amendments;
Waivers.
No
provision of this Amendment may be waived or amended except in a written
instrument signed, in the case of an amendment, by Biophan and each Purchaser
or, in the case of a waiver, by the party against whom enforcement of any such
waiver is sought. No waiver of any default with respect to any provision,
condition or requirement of this Amendment shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right.
5.7. Amendment
Controls.
If any
topic is addressed both in the Purchase Agreement (or any document related
thereto) and in this Amendment, this Amendment shall control.
5.8. Construction.
The
headings herein are for convenience only, do not constitute a part of this
Amendment and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Amendment will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
5.9. Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Amendment shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. The parties agree that Section 7.9
of
the Purchase Agreement shall apply to this Amendment as if set forth in its
entirety herein.
5.10. Survival.
The
representations and warranties contained herein shall survive for the applicable
statue of limitations.
5.11. Execution.
This
Amendment may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same document and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart.
5.12. Severability.
If any
provision of this Amendment is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Amendment shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Amendment.
5.13. Independent
Nature of Purchasers’ Obligations and Rights.
The
obligations of each Purchaser hereunder are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in
any
way for the performance of the obligations of any other Purchaser. Nothing
contained herein, and no action taken by any Purchaser pursuant hereto, shall
be
deemed to constitute the Purchasers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated hereby. Each Purchaser shall be entitled to
independently protect and enforce its rights, including, without limitation,
the
rights arising out of this Amendment and it shall not be necessary for any
other
Purchaser to be joined as an additional party in any proceeding for such
purpose. The Purchasers have not relied upon the same legal counsel in their
review and negotiation of this Amendment. Biophan has elected to provide all
Purchasers with the same terms and form of Amendment for the convenience of
Biophan and not because it was required or requested to do so by the Purchasers.
Each Purchaser represents that it has been represented by its own separate
legal
counsel in its review and negotiations of this Amendment and each party
represents and confirms that Malhotra & Associates LLP represents only
Iroquois Master Fund, Ltd in connection with this Amendment.
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective authorized signatories as of the date first
indicated above.
|
BIOPHAN
TECHNOLOGIES, INC.
|
||
|
By:
|
/s/
Xxxx X. Xxxxxxxxx
|
|
|
Name:
Xxxx X. Xxxxxxxxx
|
||
|
Title:
Chief Executive Officer
|
||
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASERS FOLLOWS]
IN
WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed
by their respective authorized signatories as of the date first indicated
above.
Name
of
Investing Entity:
BridgePointe Master Fund
Ltd.
Signature
of Authorized Signatory of Investing Entity: /s/
Xxxx
Xxxxxx
Name
of
Authorized Signatory: Xxxx
Xxxxxx
Title
of
Authorized
Signatory:
Email
Address of Authorized
Entity:
Name
of
Investing Entity:
CAMOFI Master
LDC
Signature
of Authorized Signatory of Investing Entity:
/s/
Xxxxxxx X.
Xxxx
Name
of
Authorized Signatory:
Xxxxxxx X.
Xxxx
Title
of
Authorized
Signatory:
Email
Address of Authorized
Entity:
Name
of
Investing Entity:
Castlerigg Master Investments
Ltd.
Signature
of Authorized Signatory of Investing Entity:
/s/
Xxxxxxx X.
Xxxxx
Name
of
Authorized Signatory:
Xxxxxxx X.
Xxxxx
Title
of
Authorized
Signatory:
Email
Address of Authorized
Entity:
Name
of
Investing Entity:
Cranshire Capital
LP
Signature
of Authorized Signatory of Investing Entity:
/s/
Xxxxxxxx X.
Xxxxx
Name
of
Authorized Signatory:
Xxxxxxxx X.
Xxxxx
Title
of
Authorized
Signatory:
Email
Address of Authorized
Entity:
Name
of
Investing Entity:
Crescent International
Ltd.
Signature
of Authorized Signatory of Investing Entity:
/s/
Maxi
Brezzi
Name
of
Authorized Signatory:
Maxi
Brezzi
Title
of
Authorized
Signatory:
Email
Address of Authorized
Entity:
Name
of
Investing Entity:
Harborview Master
Fund
Signature
of Authorized Signatory of Investing Entity:
/s/
Xxxxxx Xxx
Xxxxxx
Name
of
Authorized Signatory:
Xxxxxx Xxx
Xxxxxx
Title
of
Authorized
Signatory:
Email
Address of Authorized
Entity:
Name
of
Investing Entity:
Highbridge International
LLC
Signature
of Authorized Signatory of Investing Entity:
/s/
Xxxx
Chill
Name
of
Authorized Signatory:
Xxxx
Chill
Title
of
Authorized
Signatory:
Email
Address of Authorized
Entity:
Name
of
Investing Entity:
Iroquois Master Fund
Ltd.
Signature
of Authorized Signatory of Investing Entity:
/s/
Xxxxxx
Xxxxxxxxx
Name
of
Authorized Signatory:
Xxxxxx
Xxxxxxxxx
Title
of
Authorized
Signatory:
Email
Address of Authorized
Entity:
Name
of
Investing Entity:
Xxxxxxxx Investment Master Fund
Ltd.
Signature
of Authorized Signatory of Investing Entity:
/s/
Xxxxx
Xxxxxxxxx
Name
of
Authorized Signatory:
Xxxxx
Xxxxxxxxx
Title
of
Authorized
Signatory:
Email
Address of Authorized
Entity:
SCHEDULE
4.3
|
Category
|
Amount
|
|
Nanoset
IP Purchase, Medtronic transaction
|
$250,000
|
|
Xxxxxxx
& Xxxxxxxx - legal, licensing
|
$25,000
|
|
Sichenzia
- legal
|
$25,000
|
|
Iroquois
- legal
|
$25,000
|
|
Myotech
- legal
|
$15,000
|
|
Unterberg
|
$50,000
|
|
Deal-related
incremental travel, August-September
|
$10,000
|
|
Incremental
IP costs, Medtronic transaction
|
$50,000
|
|
Bonus,
Xxxxxxxxx
|
$100,000
|
|
Severance,
Weiner
|
$100,000
|
|
Biophan
Europe allocation
|
$100,000
|
|
Payables
- GGK
|
$270,000
|
|
Payables
- Xxxxx Xxxxxxx
|
$80,000
|
|
Payables
misc smaller accounts
|
$110,000
|
|
Closing
costs and one time fees, Sub total
|
$1,210,000
|
