FIRST AMENDMENT TO SENIOR CONVERTIBLE PROMISSORY NOTE
Exhibit
4.2
FIRST
AMENDMENT TO
SENIOR
CONVERTIBLE PROMISSORY NOTE
THIS
FIRST AMENDMENT TO SENIOR CONVERTIBLE PROMISSORY NOTE (“Amendment”)
is
entered into as of March __, 2008, by and between VIOQUEST
PHARMACEUTICALS, INC.,
a
Delaware corporation (the “Company”),
and
the undersigned, constituting the holders of not less than a majority of
the
then outstanding principal amount of those certain Senior Convertible Promissory
Notes (as amended, the “Notes”),
issued on June 29, 2007 and July 3, 2007, on behalf of all of the holders
of the
Notes or their assigns (“Holders”),
to
amend, as set forth herein, the terms of all of the outstanding
Notes.
A. The
Company issued the Notes pursuant to the terms of that certain Note and Warrant
Purchase Agreement (the “Purchase
Agreement”),
dated
June 29, 2007 or July 3, 2007, by and between the Company and each of the
Holders.
B. Section
13 of the Notes provides that any section of the Notes may be amended by the
consent of the Holders of not less than a majority of the then outstanding
principal amount of the Notes (the “Majority
Holders”)
except
for any amendment, modification or waiver of the terms and conditions of the
Notes that would adversely affect the Holders’ rights with respect to: (i) the
date by which the Notes must be repaid, or (ii) the rate at which interest
accrues under the Notes, or any amendment or modification to Section 4.1 of
the
Notes.
C. The
Company wishes to amend the Notes, upon receipt of the consent of the Majority
Holders, to, among other things, amend the mandatory conversion provisions
contained in Section 2 of the Notes.
D. The
Company and the Holders wish to reduce their agreement to writing in the form
of
this Amendment.
NOW,
THEREFORE,
the
parties hereto hereby agree as follows:
1. Amendment.
Section
2 of the Notes is hereby deleted in its entirety and replaced with the following
text:
2. Mandatory
Conversion.
2.1 Upon
the
closing of a New Securities Offering, (i) all principal and accrued but unpaid
interest on this Note shall be automatically converted into shares of the
Company’s newly-designated Series B Convertible Preferred Stock, par value
$0.001 per share (the “Series
B Preferred Stock”),
at a
conversion ratio of one (1) share of Series B Preferred Stock for every $1,000
of unpaid principal and accrued interest due under this Note as of the closing
of the New Securities Offering, and (ii), each holder of shares of Series B
Preferred Stock (each, a “Series
B Holder”)
shall
be granted the right, exercisable at any time on and after the closing of the
Offering but on or prior to April 1, 2008 (the “Exercise
Period”),
to
convert shares of Series B Preferred Stock into New Securities pursuant to
Section 2.2 hereof (the “Series
B Participation Right”).
2.2 At
any
time during the Exercise Period, a Series B Holder may elect to exercise such
holder’s Series B Participation Right by delivering to the Company a duly
executed binding subscription agreement for the purchase of New Securities,
including the additional signature page thereto, duly completed in accordance
with the terms of such subscription agreement (together with the applicable
purchase price for such New Securities), and upon such delivery the Company
shall convert shares of Series B Preferred Stock held by, or deliverable by
the
Company upon surrender by the Holder of the Note to, such Series B Holder into
New Securities on the following basis: for every $1,000 of New Securities
purchased by such Series B Holder in the New Securities Offering during the
Exercise Period, the Company shall convert, for no additional consideration,
one
(1) share of Series B Preferred Stock into one (1) share of Series A Preferred
Stock and a warrant to purchase a number of shares of the Common Stock (as
defined below) equal to 50% of the number of shares of Common Stock into which
one (1) share of Series A Preferred Stock may be converted as of the closing
of
the New Securities Offering.
2.3 Upon
conversion of this Note in accordance with the terms of this Sections 2.1 and/or
2.2, the applicable amount of outstanding principal and accrued unpaid interest
of the Note shall be converted without any further action by the Holder and
whether or not the Note is surrendered to the Company or its transfer agent.
The
Company shall not be obligated to issue certificates evidencing the New
Securities or Series B Preferred Stock, as applicable, unless the Note is either
delivered to the Company or its transfer agent, or the Holder notifies the
Company or its transfer agent that such Note has been lost, stolen or destroyed
and executes an agreement satisfactory to the Company to indemnify the Company
from any loss incurred by it in connection with such Note. The Company shall,
as
soon as practicable after such delivery, or such agreement and indemnification,
issue and deliver to such Holder of such Note, a certificate or certificates
for
the securities to which the Holder shall be entitled. Such conversion shall
be
deemed to have been made upon the close of the New Securities Offering. The
person or persons entitled to receive securities issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
securities on such date.
2.4 For
purposes of this Note, the term “New
Securities Offering”
shall
mean the Company’s private offering to a limited number of “accredited
investors,” as that term is defined by Rule 501(a) of Regulation D of the
Securities Act, of shares of the Company’s newly-designated Series A Convertible
Preferred Stock, par value $0.001 per share (the “Series
A Preferred Stock”),
and
warrants (“Warrants”
and,
together with the Series A Preferred Stock, the “New
Securities”)
to
purchase shares of Common Stock, for an aggregate purchase price of at least
$500,000, pursuant to that certain Confidential Private Placement Memorandum,
dated as of February 28, 2008, as it may be amended, restated, supplemented
or
otherwise modified from time to time.
2. Pursuant
to the Section 13 of the Notes, this Amendment shall only be effective upon
the
Company’s receipt of executed counterparts by the Majority Holders, and upon
such receipt this Amendment shall be binding upon all of the Holders as if
they
had executed a counterpart hereto. Any Holder executing this Amendment shall
be
deemed to have consented to its terms and provisions with respect to the
original principal balance of all the Notes nominally held by such Holder,
whether or not such Holder exercises, in whole or in part, the Series B
Participation Rights granted herein.
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3. Except
as
explicitly amended by this Amendment, all of the terms and conditions of the
Notes shall remain in full force and effect.
4. Upon
execution hereof by the Majority Holders, the Company will distribute a fully
executed copy of this Amendment, and each of the Holders shall permanently
attach this Amendment to its respective Note(s), making it a part thereof.
Notwithstanding Section 6.12(b) of the Purchase Agreement, the Majority Holders,
by executing and delivering this Amendment, hereby consent to the distribution
of their executed counterparts to all of the Holders.
5. This
Amendment may be executed in any number of counterparts, each of which when
so
executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same instrument.
Delivery by fax or an e-mail file attachment of any counterpart signature to
this Amendment shall be deemed to be an original and considered valid and
binding to the same extent as delivered original signatures.
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of page intentionally left blank; signature page follows]
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IN
WITNESS WHEREOF, the undersigned parties have executed this First Amendment
to
Senior Convertible Promissory Note as of the date first written
above.
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Holder:
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