AGREEMENT AND AMENDMENT TO 15% SECURED CONVERTIBLE PROMISSORY NOTES DATED JANUARY 13, 2006
EXHIBIT
4.2
AGREEMENT
AND AMENDMENT TO
15%
SECURED CONVERTIBLE PROMISSORY NOTES DATED JANUARY 13, 2006
This
Agreement and Amendment is executed and delivered on this 22nd day of January
2007 by the undersigned holders of at least a majority in outstanding principal
amount of those certain 15% Secured Convertible Promissory Notes issued by
Matritech, Inc. (the “Borrower”)
on
January 13, 2006 (the “Series
A Notes”)
pursuant to the Securities Purchase Agreement, dated as of January 13, 2006,
by
and among the Borrower and the purchasers party thereto (the “Series
A Purchase Agreement”).
The
undersigned holders of at least a majority in outstanding principal amount
of
the Series A Notes shall be referred to as the “Majority
Holders.”
All
capitalized terms used in this Agreement and Amendment but not otherwise defined
herein shall have the meanings ascribed to such terms in the Series A Purchase
Agreement.
WHEREAS,
the
parties have determined that it is in the best interests of the Borrower and
all
the holders of the Series A Notes that the following agreements and amendments
be made.
NOW,
THEREFORE,
for
good and valuable consideration, the receipt and legal sufficiency of which
is
hereby acknowledged, the parties agree as follows:
1. The
provisions of Article VI.A(viii)(c) of the Series A Notes are hereby deleted
in
their entirety and replaced with the following:
“(c) either
(i) fail to repay in full all amounts due under the Borrower’s 7.5% Convertible
Debentures on the maturity date thereof, (ii) fail to pay, when due, or within
any applicable grace period, any payment with respect to any indebtedness of
the
Borrower in excess of $250,000 due to any third party, other than payments
contested by the Borrower in good faith, or otherwise be in breach or violation
of any agreement for monies owed or owing in an amount in excess of $250,000
which breach or violation permits the other party thereto to declare a default
or otherwise accelerate amounts due thereunder, or (ii) suffer to exist (A)
any
Event of Default under and as defined in the Series B 15% Secured Convertible
Promissory Notes issued by the Borrower on or around January 22, 2007 (the
“Series
B Notes”);
or
(B) any other default or event of default under any agreement (including,
without limitation, the Series B Notes) binding the Borrower which default
or
event of default would or is likely to have a material adverse effect on the
business, operations, properties, prospects or financial condition of the
Borrower;”
2. For
purposes of the Series A Notes, the term “Security
Agreement”
shall
refer to the Amended and Restated Security Agreement, by and between the
Borrower and the Collateral Agent (for itself and the holders of the Series
A
Notes and the Series B Notes), dated on or around the date hereof.
3. For
purposes of the Series A Notes, the term “Contingent
License Agreement”
shall
refer to the Amended and Restated Contingent License Agreement, by and between
the
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Borrower
and the Collateral Agent (for itself and the holders of the Series A Notes
and
the Series B Notes), dated on or around the date hereof.
4. For
purposes of the Series A Notes, the term “Security
Documents”
shall
include the Security Agreement, the Contingent License Agreement and any other
document securing the Series A Notes.
5. For
purposes of the Series A Notes, the term “NASDAQ”
means
whichever, if any, of the Nasdaq Global Market, the Nasdaq Global Select Market
or the Nasdaq Capital Market on which the shares of Common Stock are
traded.
6. The
provisions of Article VII.E of the Series A Notes are hereby deleted in their
entirety and replaced with the following:
“E. Distributions.
In case
the Borrower shall fix a payment date for the making of a distribution to all
holders of Common Stock (including any such distribution made in connection
with
a consolidation or merger in which the Borrower is the continuing corporation)
of evidences of indebtedness or assets (other than cash dividends or cash
distributions payable out of consolidated earnings or earned surplus or
dividends or distributions referred to in subsection C of this Article VII),
or
subscription rights or warrants, the Conversion Price to be in effect after
such
payment date shall be determined by multiplying the Conversion Price in effect
immediately prior to such payment date by a fraction, the numerator of which
shall be the total number of shares of Common Stock outstanding multiplied
by
the Closing Sales Price (as defined below) per share of Common Stock immediately
prior to such payment date, less the fair market value (as determined by the
Borrower’s Board of Directors in good faith) of said assets or evidences of
indebtedness so distributed, or of such subscription rights or warrants, and
the
denominator of which shall be the total number of shares of Common Stock
outstanding multiplied by such Closing Sales Price per share of Common Stock
immediately prior to such payment date. Such adjustment shall be made
successively whenever such a payment date is fixed.”
7. The
provisions of Article VIII.C(iii) of the Series A Notes are hereby deleted
in
their entirety and replaced with the following:
“(iii) redeem,
repurchase or otherwise acquire, or declare or pay any cash dividend or
distribution on, any securities of the Borrower, except pursuant to any equity
compensation plan approved by the Borrower’s Board of Directors or as expressly
required by the terms of the Series A Notes or the Series B Notes;”
8. The
provisions of Article XI.L of the Series A Notes are hereby deleted in their
entirety and replaced with the following:
“L. “Interest
Installment Amount”
means,
as to any Quarterly Installment Date, an amount equal to the accrued and unpaid
interest on the outstanding Principal through such Quarterly Installment
Date.”
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9. The
provisions of Article XI.R of
the
Series A Notes are hereby deleted in their entirety and replaced with the
following:
“R. “Scheduled
Maturity Date”
means
December 13, 2007.”
10. The
provisions of Article XI.T of the Series A Notes are hereby deleted in their
entirety and replaced with the following:
“T. “Stock
Payment Conditions”
means
that each of the following conditions is satisfied: (i) one or more registration
statements filed pursuant to the Registration Rights Agreement shall be
effective and available for the resale of the shares of Common Stock to be
issued in connection with the event requiring determination; (ii) any applicable
shares of Common Stock to be issued in connection with the event requiring
determination may be issued in full without violating Article IX.A hereof;
(iii)
if the Common Stock is selling at a price below $0.40 per share, no payment
of
Installment Conversion Shares may be made to the Holder pursuant to Article
VIII.C without the Holder’s prior written consent within five (5) days of such
payment (it being acknowledged and agreed that if the Holder does not so consent
to receiving such payment in Installment Conversion Shares, that payment may
be
deferred by the Holder, at its option, until the next scheduled Installment
Date
or any other mutually agreed upon date); (iv) the Borrower has not issued any
notice relating to the redemption of any warrant(s) during the thirty (30)
day
period ending on and including the applicable date of determination; and (v)
any
issuances of Installment Conversion Shares will not result in the Holder’s
aggregate ownership interest of the Common Stock to rise above 9.99% unless
waived by such Holder under Article IX.”
11. The
Borrower hereby grants to ProMed Partners, L.P. the right to designate one
representative (the “Designated
Representative”)
to the
Borrower’s Board of Directors and, to the extent that there is no independence
or related party impediment to such representative serving on specific
committees of the Board of Directors, to any
Committee of the Board of Directors related to business development and other
strategic activities.
ProMed
Partners, L.P. hereby designates Xxxxx X. Xxxxxx to serve as the initial
Designated Representative. The Designated Representative’s service as a member
of the Board of Directors shall be on the same terms and conditions applicable
to other members of the Board of Directors, with compensation to be paid to
the
Designated Representative as a non-employee member of the Board of Directors.
If, due to lack of independence under rules of AMEX or the SEC, the Designated
Representative cannot serve as a member of any Committee of the Board of
Directors related to business development and other strategic activities, he
shall nonetheless be permitted to attend and participate in the Committee’s
meetings except to the extent, if any, that conflicts of interest (as determined
by the Nominating and Corporate Governance Committee or Audit Committee of
the
Board of Directors) bar such attendance and participation. The Borrower agrees
that its Board of Directors will nominate the Designated Representative for
reelection by the stockholders of the Borrower at its next Annual Meeting of
Stockholders.
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12. The
Borrower agrees to pay the expenses of counsel for SDS Capital Group SPC, Ltd.
in connection with the review, negotiation and preparation of documentation
to
effect this Agreement and Amendment, contemporaneously with execution of this
Agreement and Amendment by the Majority Holders, in an amount not to exceed
$10,000.
13. Except
as
expressly set forth herein or as set forth in any separate instrument that
may
be executed by the Majority Holders and the Borrower contemporaneously herewith,
(a) the original terms and conditions of the Series A Notes shall remain in
full
force and effect; (b) this Agreement and Amendment shall not be deemed to be
a
waiver, amendment or modification of, or consent to or departure from, any
provision of the Series A Notes or to be a waiver of any Event of Default
whether arising before or after the date hereof as a result of the transactions
contemplated hereby; and (c) this Agreement and Amendment shall not preclude
the
future exercise of any right, remedy, power or privilege available to the
holders of the Series A Notes whether under the Series A Notes or otherwise,
and
shall not be construed or deemed to be a satisfaction, novation, cure,
modification, amendment or release of the Series A Notes.
14. This
Agreement and Amendment (a) constitutes the entire understanding of the parties
with respect to the subject matter hereof, and any other prior agreements,
whether written or oral, with respect hereto or thereto are expressly superseded
hereby; (b) shall be governed by and construed in accordance with the laws
of
the State of Delaware without regard to principles of conflicts of laws; and
(c)
shall be binding upon and inure to the benefit of the successors and assigns
of
the Borrower and all of the holders of the Series A Notes.
15. This
Agreement and Amendment may be executed in multiple counterparts, each of which
shall be deemed an original but all of which together shall constitute one
and
the same instrument, and by facsimile transmission, which facsimile signatures
shall be considered original executed counterparts.
16. All
references to the “Notes” in the Series A Purchase Agreement or any documents or
instruments executed by Borrower in connection therewith shall be deemed to
refer to the Series A Notes as the same have been amended through the date
hereof.
17. Each
holder of the Series A Notes is directed to attach this Agreement and Amendment
to its Series A Note, provided
that the
failure to so attached this Agreement and Amendment to any Series A Note shall
not affect in any way the enforceability hereof or of any Series A
Note.
18. Any
provision of this Agreement and Amendment that is prohibited or unenforceable
in
any jurisdiction shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision
in
any other jurisdiction.
19. The
Borrower hereby represents and warrants to the Majority Holders of the Series
A
Notes as follows:
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(a) Borrower
has the corporate power and authority to execute, deliver, and perform this
Agreement and Amendment and all such action has been duly and validly authorized
by all necessary corporate proceedings on its part.
(b) The
Series A Notes, as amended hereby, constitute the legal, valid and binding
agreements of the Borrower, enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting creditors’ rights generally and by
general principles of equity.
(c) The
Borrower has, and will have after giving effect to this Agreement and Amendment,
no claims, defenses or set-offs to its obligations under the Series A
Notes.
[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF,
the
undersigned Borrower and the Majority Holders have caused this Agreement and
Amendment to be executed as of the day first above written.
Borrower:
Matritech,
Inc.
By:
/s/
Xxxxxxx X. Xxxxx
Name: Xxxxxxx
X. Xxxxx
Title: Chief
Executive Officer
[Signature
Page to Agreement and Amendment]
IN
WITNESS WHEREOF,
the
undersigned Borrower and the Majority Holders have caused this Agreement and
Amendment to be executed as of the day first above written.
Holders:
SDS
Capital Group SPC, Ltd.,
on
behalf of its Class D segregated portfolio
By:
/s/
Xxxxx Xxxxx
Name:
Xxxxxx Xxxxx
Title:
Director
Value
of
Series A Note: $1,656,667.00
ProMed
Partners, L.P.
By:
/s/
Xxxxx X. Xxxxxx
Name:
Xxxxx
X.
Xxxxxx
Title:
Managing
Director
Value
of
Series A Note: $159,155.21
ProMed
Offshore Fund, Ltd.
By:
/s/
Xxxxx X. Xxxxxx
Name:
Xxxxx
X.
Xxxxxx
Title:
Managing
Director
Value
of
Series A Note: $27,283.75
ProMed
Offshore Fund II, Ltd.
By:
/s/
Xxxxx X. Xxxxxx
Name:
Xxxxx
X.
Xxxxxx
Title:
Managing
Director
Value
of
Series A Note: $1,011,477.71
H&Q
Life Science Investors
By:
/s/
Xxxxxx X. Xxxxxxx
Name: Xxxxxx
X.
Xxxxxxx
Title: President
Principal
Amount of Series A Note: $1,916,667
The
name
H&Q Life Science Investors is the designation of the Trustees for the time
being under an Amended and Restated Declaration of Trust Dated April 21, 1987,
as amended, and all persons dealing with H&Q Life Science Investors must
look solely to the trust property for the enforcement of any claim against
H&Q Life Science Investors, as neither the Trustees, officers nor
shareholders assume any personal liability for obligations entered into on
behalf of H&Q Life Science Investors.
[Signature
Page to Agreement and Amendment]
IN
WITNESS WHEREOF,
the
undersigned Borrower and the Majority Holders have caused this Agreement and
Amendment to be executed as of the day first above written.
Alpha
Capital AG
By:
/s/
Xxxxxx Xxxxxxxx
Name: Xxxxxx
Xxxxxxxx
Title: Director
Value
of
Series A Note: $29,166.67
Bristol
Investment Fund, Ltd.
By:
/s/
Xxxx Xxxxxxx
Name: Xxxx
Xxxxxxx
Title: Director
Value
of
Series A Note: $465,336.67
[Signature
Page to Agreement and Amendment]
