AMENDMENTTO DEBENTURES AND WARRANTS, AGREEMENT AND WAIVER

THIS AGREEMENT AND WAIVER (this “Agreement”) is entered into on February 19, 2009, and is effective as of January 27, 2009 (the “Agreement Effective Date”) by and among Cryoport, Inc., a Nevada corporation (the “Company”) and the Company’s subsidiary Cryoport Systems, Inc., a California corporation on the one hand, and Enable Growth Partners LP (“EGP”), Enable Opportunity Partners LP (“EOP”), Pierce Diversified Strategy Master Fund LLC, Ena (“Pierce”, together with EGP, EOP and Pierce, the “Enable Funds”), and BridgePointe Master Fund Ltd. (“BridgePointe,” together with the Enable Funds, each individually referred to as a “Holder” and collectively as the “Holders” or the “Investors”), on the other hand.  Capitalized terms not defined in this Agreement shall have the meanings ascribed to such terms in each of the Securities Purchase Agreements (each as defined below) or in each of the Debentures (each as defined below).

 

WHEREAS, pursuant to a Securities Purchase Agreement dated on or about September 27, 2007 (the “September 2007 Securities Purchase Agreement”) by and among the Company and EGP, EOP, Pierce and BridgePointe (collectively, the “September 2007 Investors”), the Company issued to the September 2007 Investors (a) an aggregate principal amount equal to $4,707,705 of the Company’s Original Issue Discount 8% Senior Secured Convertible Debentures, due February 27, 2010 (the “September 2007 Debentures”), and (b) common stock purchase warrants to purchase an aggregate of 8,406,617 shares of Common Stock, with initial exercise prices of $0.90, $0.92 and $1.60 per share (the “September 2007 Warrants” and together with the September 2007 Debentures, collectively referred to herein as the “September 2007 Securities”);

 

WHEREAS, pursuant to a Securities Purchase Agreement dated on or about May 30, 2008 (the “May 2008 Securities Purchase Agreement,” together with the September 2007 Securities Purchase Agreement, collectively referred to herein as the “Securities Purchase Agreements”) by and among the Company and BridgePointe (the “May 2008 Investor”), the Company issued to the May 2008 Investor (a) an aggregate principal amount equal to $1,250,000 of the Company’s Original Issue Discount 8% Secured Convertible Debentures, due December 1, 2010 (the “May 2008  Debenture,” and, together with the September 2007 Debentures, collectively referred to herein as the “Debentures”), and (b) common stock purchase warrants to purchase an aggregate of 2,976,190 shares of Common Stock, with initial exercise prices of $0.92 and $1.35 per share (the “May 2008 Warrants,” which together with the September 2007 Warrants, are collectively referred to herein as the “Warrants,” and the May 2008 Warrants together with the May 2008 Debenture, are collectively referred to herein as the “May 2008 Securities, ” and the September 2007 Securities together with the May 2008 Securities are collectively referred to herein as the “Securities”);

 

 

WHEREAS, pursuant to Section 6(b) of the September 2007 Debentures, on each Monthly Redemption Date, beginning February 1, 2008, the Company was required to redeem the Monthly Redemption Amount (the “September 2007 Monthly Redemption”);

 

WHEREAS, pursuant to the Amendment to Debentures, Agreement and Waivers entered into on or about April 30, 2008 (the “April 30, 2008 Waiver”) and the Amendment to Debentures, Agreement and Waivers entered into on or about August 29, 2008 (the “August 29, 2008 Waiver”), the September 2007 Monthly Redemption Amounts originally due on May 1, 2008 through and including December 1, 2008 (the “Deferred September 2007 Monthly Redemption Payments”) were deferred until January 1, 2009;

 

WHEREAS, pursuant to Section 6(b) of the May 2008 Debentures, on each Monthly Redemption Date, beginning on January 31, 2009, the Company was required to redeem the Monthly Redemption Amount (the “May 2008 Monthly Redemption” and, together with the September 2007 Monthly Redemption, collectively referred to herein as the “Monthly Redemption”);

 

WHEREAS, pursuant to Section 2 of the September 2007 Debentures, the Company was required to make payments of interest, quarterly on each January 1, April 1, July 1 and October 1, beginning on January 1, 2008;

 

WHEREAS, pursuant to the August 29, 2008 Waiver, the interest payments due with respect to the September 2007 Debentures on October 1, 2008 and January 1, 2009 were rolled into the balance of the September 2007 Debentures;

 

WHEREAS, pursuant to Section 2 of the May Debentures, the Company was required to make payments of interest, quarterly on each January 1, April 1, July 1 and October 1, beginning on January 1, 2009;

 

WHEREAS, it is the intention of the Company and the Investors that the holding periods for the Debentures and the Warrants, in each case, as amended hereby, will tack to, and run from, the Original Issue Dates of the Debentures and the Warrants, respectively; and

 

WHEREAS, the Company and the Investors now desire that the terms of the Debentures and the Warrants be modified and have entered into this Agreement to document their agreement regarding such modifications.

 

NOW THEREFORE, in consideration of the mutual promises and agreements contained herein, and intending to be legally bound hereby, the undersigned parties hereby agree as follows:

Incorporation of Preliminary Statements. The Recitals set forth above by this reference hereto are hereby incorporated into this Agreement.

 

 

1. Issuance of Restricted Shares.  In consideration for forbearance of the principal and interest payments of the Debentures described in this Agreement, the Company shall issue 200,000 restricted shares of common stock to BridgePointe and 200,000 restricted shares of common stock, in the aggregate, to the Enable Funds collectively.  The Holders agree that such issuance of restricted common stock for the forbearance of the principal and interest payments shall not cause a further reset in the conversion price of the Debentures or the related warrants and waive the reset provisions for these issuances.

2. Increase in Authorized Shares.  In addition to any existing obligations of the Company under the Transaction Documents (as defined in the Securities Purchase Agreements, respectively), the Company shall hold a shareholders meeting and put before the shareholders a proposal to increase authorized shares from 125,000,000 to 250,000,000, following the requirements set forth in the Company’s by-laws, within 9 months from the date of this agreement. The Company shall use its best efforts to obtain stockholder approval of an increase in such authorized number of shares.  Should the available amount of authorized, unissued and unreserved shares fall below 5,000,000 then the Company shall accelerate these efforts and put the proposal before the shareholders within 90 days from such date of said event.

 

3. Confirmation of Outstanding Principal Amounts of the Debentures.  The Company and the Holders acknowledge that the outstanding principal amounts of the respective September 2007 Convertible Debentures and May 2008 Convertible Debentures, as of January 1, 2009, are as set forth in Schedule “A” hereto.

 

4. Adjustment to Conversion Price of the Debentures.  The definition of “Conversion Price” in Section 4(b) of each of the Debentures is hereby deleted and replaced in its entirety with the following:

“Conversion Price.  The conversion price in effect on any Conversion Date shall be equal to $0.51, subject to adjustment herein (the “Conversion Price”).”

5. Definition of Monthly Interest Payment Date.  The definition of “Monthly Interest Payment Date” shall be added, in alphabetical order, to Section 1 of each of the Debentures, and have the following meaning:

“Monthly Interest Payment Date shall have the meaning set forth in Section 2 (f).”

6. Deferral of Interest Payments; Payment of Interest in Common Shares.

Section 2 “Interest” of the Debentures shall be amended by adding the following language as a new paragraph to the end of subsection (a) of such Section 2 as follows:

 

 

Payment of Interest Due January 1, 2009 through July 1, 2009.  For purposes hereof, “Monthly Interest Payment Date” shall mean the first trading day of each calendar month, beginning on March 1, 2009.  Notwithstanding the above, no interest payment shall be due on January 1, 2009.  Commencing on March 1, 2009, through and including July 1, 2009 (the “Monthly Interest Payment Period”), the Company shall pay all accrued and unpaid interest to the Holder on each Monthly Interest Payment Date.  Each payment of interest during the Monthly Interest Payment Period shall be made in duly authorized, validly issued, fully paid and non-assessable shares of Common Stock, which shall not contain any restrictive legends, at the conversion rate of rate of $0.40 per share (the dollar amount to be paid in shares, also referred to as the “Interest Share Amount); provided, however, that payment of interest in shares of Common Stock during the Monthly Interest Payment Period may occur only if (i) the average daily trading volume for the twenty (20) trading days immediately preceding the applicable Monthly Interest Payment Date exceeds $15,000 (ii) the average of the VWAPs for the 10 consecutive trading days immediately preceding the applicable Monthly Interest Payment Date, equals or exceeds $0.40 and (iii) the Interest Payment Shares are freely tradeable without volume limitations under Rule 144(d)(i)(1).  If any one or more of the above conditions are not satisfied, then the interest amounts otherwise due on such Monthly Interest Payment Date shall be added to the principal balances of the Debentures.  If the conditions are met for payment of the interest in shares during the Monthly Interest Payment Period, the appropriate number of shares are to be issued by the Company and delivered to the Holder’s account with The Depository Trust Company on the applicable Monthly Interest Payment Date.   The Holders agree that such issuances of stock for the payment of interest shall not cause a further reset in the conversion price of the Debentures or the related warrants and waive the reset provisions for these issuances.

 

 

 

The parties to this Agreement agree and acknowledge that the amount of accrued and unpaid interest for each of the Debentures as of March 1, 2009 (the “March 1 2009 Interest Amount”), will be the amount set forth in the Schedule “A” attached hereto, and that such amount will be paid by the Company, in accordance with the terms hereof, on the March 1, 2009.

 

7.  Amendment to Monthly Redemption Date of the Debentures. The definition of “Monthly Redemption Date” in Section 1 of each Debenture and in the Amendment to Original Issue Discount 8% Senior Secured Convertible Debentures, dated the 19th of February 2008, is hereby deleted and replaced in its entirety with the following:

“Monthly Redemption Date” means the 1st of each month, commencing immediately upon August 1, 2009, and terminating upon the full redemption of this Debenture.

 

 

8.  Amendment to Monthly Redemption Amount of the Debentures. The definition of “Monthly Redemption Amount” in Section 1 of each Debenture and in the Amendment to Original Issue Discount 8% Senior Secured Convertible Debentures, dated the 19th of February 2008, is hereby deleted and replaced in its entirety with the following:

“Monthly Redemption Amount” means an amount equal to the outstanding amount of such Holder’s Debenture as of August 1, 2009, divided by 12.”

 

9.         Amendment to Maturity Date of Debentures.  The “Maturity Date,” as defined in the second paragraph of each of the Debentures, is hereby amended to mean July 1, 2010.

 

10. Equity Dilution Adjustment to Number of Warrants.  In consideration of the terms hereof, so long as any of the Debentures remain outstanding, anytime that the Company issues equity securities or securities that are convertible or exchangeable into equity securities (as applicable, a “Triggering Issuance”), and immediately following such offering, the sum of all of the Holders’ Deemed Holder Fully Diluted Amounts (as defined below) is less than 31.5% of Company Fully Diluted Amount (as defined below), the Company shall issue to each Holder a number of warrants (the “Makeup Warrants”) equal to (a) the Holder’s Pro Rata Share (as defined below) of the Minimum Fully Diluted Amount, where the “Minimum Fully Diluted Amount” shall mean 31.5% of the Company Fully Diluted Amount (as defined below)  immediately following the Triggering Issuance, less (b) the Holder’s Deemed Fully Diluted Amount immediately prior to the Triggering Issuance.

 

For purposes hereof,

 

 “Company Fully Diluted Amount” shall mean the fully diluted number of shares of common stock of the Company at the time in question.

 

“Deemed Holder Fully Diluted Amount,” for each Holder as of a given date, shall mean the sum of (i) the Holder’s Initial Fully Diluted Amount (as defined below), plus (ii) the increased number of Warrants, if any, that have been added to any of Holder’s Warrants since March 1, 2009 by virtue of the antidilution provisions of the Warrants, plus (iii) the number of Makeup Warrants, if any, previously issued to the Holder hereunder.

 

“Holder’s Initial Fully Diluted Amount” shall mean the number of shares of common stock that would be issuable upon the full conversion of Holder’s Debentures (including principal amounts and accrued and unpaid interest) and upon the full exercise of Holder’s Warrants as of March 1, 2009, including the issuance of restricted shares set forth in Section 1 above, in each case without regard to any contractual limitations on the amount that can be converted or exercised.

 

“Pro Rata Share” shall mean the principal amount of Debentures held by Holder as of the date hereof, divided by the aggregate principal amount of Debentures held by all Holders as of the date hereof.

 

 

Each Holder’s Pro Rata Share and Initial Fully Diluted Amount shall be as follows (the amounts set forth in the following table shall govern absent manifest error):

 

 

It is further understood that any issuance of shares of common stock, warrants, securities convertible or exchangeable into common stock or options to employees, officers, directors or consultants of the Company shall be subject to the 31.5% Agreement calculation above and not considered an Exempt Issuance (as further defined in the Securities Purchase Agreement dated September 27, 2007) for the purpose of this section and calculating the 31.5% only.  It is also understood that the rights afforded to the Company under the definition of Exempt Issuance in each of the Securities Purchase Agreements remain, provided that no right is granted hereby to issue any securities which the Transaction Documents otherwise prohibit.

 

It is expressly understood that this section does not modify the full ratchet anti-dilution rights (including but not limited to Section 5 of the Debenture and Section 3 of the Warrants) currently afforded to the Holders of the existing Debentures and Warrants (as defined herein).   The exempt issuances under Section 5 (b) of the Debentures are not exempt for the purposes of the 31.5% calculation above.

 

The Makeup Warrants shall be in the same form as the original Warrants issued, except that the Exercise Price of the Makeup Warrants shall equal the issuance price per share of the equity securities that triggered the issuance of the Makeup Warrants (the “Triggering Issuance”) and the “Termination Date” of each Makeup Warrant shall be five (5) years from its date of issuance.   Each of the Transaction Documents is hereby amended such that any reference to “Warrants” therein shall include the Makeup Warrants and any reference to “Warrant Shares” shall include the shares issuable upon exercise of the Makeup Warrants.

 

 

11.       Renumbering of Miscellaneous Section. “Section 9 – Miscellaneous” of the Debentures shall be retitled as “Section 10 Miscellaneous.

 

12. Additional Covenants to the Debenture.  A new section entitled “Section 9 Additional Covenants” shall be added to each of the Debentures in the correct numerical order as follows:

 

“Section 9 Additional Covenants. The Company agrees to abide by the following covenants.  Such covenants which will remain effective until June 30, 2009 except for covenants b, d, e and f which will remain effective until the earlier of (x) June 30, 2009 or (y) the date that Company successfully completes an otherwise allowable additional funding, after February 10, 2009,  in an amount of at least $2.5 million dollars, provided that such funding is not otherwise prohibited by the terms of this Debenture or by the terms of any of the Transaction Documents:

 

a. The Company shall maintain a total cash balance of no less than $85,000 at all times from the date hereof through June 30, 2009.  

 

b. The Company shall have an average monthly operating cash burn of no more than $185,000 for the three month periods ended March 31, 2009 and June 30, 2009.  Operating cash burn is defined by taking net income (or loss) and adding back all non-cash items, and excludes changes in assets, liabilities and financing activities (i.e. the top section of the Consolidated Statement of Cash Flows as publicly reported in the Company’s Consolidated Financial Statements).

 

c. The Company shall have a minimum current ratio of 1 to 1 at all times from the date hereof through March 31, 2009 and .8 to 1 for the period from April 1, 2009 through June 30, 2009. This calculation is to be made by excluding the current interest and current portions of notes payable from current liabilities for the current ratio for the reporting periods ending March 31, 2009 and June 30, 2009.

 

d. Accounts Payable shall not exceed $310,000 at any time during the period from the date hereof through March 31, 2009 and shall not exceed $340,000 at any time during the period from April 1, 2009 through June 30, 2009. Accrued Salaries shall not exceed $306,000 at any time during the period from the date hereof through March 31, 2009 and shall not exceed $360,000 at any time during the period from April 1, 2009 through June 30, 2009.

 

e. The Company shall suspend all note payments due for January 2009 through June 2009 under the Note Payable to Officer (as defined in the Company’s Form 10-Q for the period ended September 30, 2008) and shall use its best efforts to immediately secure a signed waiver from the note holder.

 

f. The Company shall not make any revisions to the terms of the existing contractual agreements for the Notes Payable to Officer (other than required in 9e above), Related Party Notes Payable (as defined in the Company’s Form 10-Q for the period ended September 30, 2008) and the Line of Credit (as defined in the Company’s Form 10-Q for the period ended September 30, 2008).

 

 

 

 

13. Amendment to Securities Purchase Agreement to Add Right to Appoint a Board Member.  A new “Section 4.19 Right to Appoint of Board Member” shall be added to the  May 2008 Securities Purchase Agreement, immediately following Section 4.18 thereof, as follows:

 

“Section 4.19 Right to Appoint Board Member.  At any time after the date hereof that there is not a nominee of BridgePointe Master Fund Ltd. (“BridgePointe”) serving on the Company’s Board of Directors, until such time as the Company has paid six (6) consecutive monthly principal and interest payments in full and on time,  BridgePointe (either itself or through its investment manager, Roswell Capital Partners, LLC (“RCP”)), at its option, may recommend a nominee, chosen at BridgePointe’s own discretion (the “BridgePointe Nominee”) to the Company’s Board of Directors.  The Company agrees that its Board of Directors, or the Nominating Committee of the Board, as applicable, shall appoint the BridgePointe Nominee as a member of the Company’s Board of Directors, provided that the BridgePointe Nominee meets the minimum qualifications for the position set forth in the Company’s Articles of Incorporation, By-Laws, Nominating Committee Charter, or any other document setting forth the requirements for qualification and appointment of such Nominee.  After such appointment, the Company and its Board of Directors shall cause the Committee responsible for electing the slate of directors to be presented to the shareholders for approval at the next annual shareholders meeting to include the BridgePointe Nominee, and shall use their best efforts to obtain shareholder ratification of the appointment of the Buyer’s Nominee at the next shareholder meeting.

 

 

 

 

14. Adjustment to Warrant Exercise Price, Antidilution Adjustment to Number of Warrants and Extension of Term of Warrants:

 

(a) In consideration for the terms hereof, the Exercise Price (as defined in each of the Warrants) of each of the Warrants (as “Warrants” is defined in the 2007 Securities Purchase Agreement and the May 2008 Securities Purchase Agreement, respectively) is hereby decreased to $0.60 (to the extent that such exercise price was previously above $0.60), subject to further adjustment therein.

 

(b) Related to the decrease of the Exercise Price of the Warrants to $0.60, the number of shares of the Warrants underlying the May 2008 Convertible Debenture Holders, respectively, are hereby proportionally increased as shown in the table attached as Schedule “B” hereto, and the number of Warrants underlying the September 2007 Debentures of the Enable Funds, respectively, are hereby proportionally increased by mutual agreement as shown in the table attached as Schedule “B” hereto.

 

(c) The terms of each of the existing Warrants are hereby amended such that on the “Termination Date” (as defined in each Warrant, respectively) shall mean January 1, 2014.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IN WITNESS WHEREOF, the parties have duly executed this Agreement to Debentures and Warrants, Agreement and Waiver as of the date first written above.

By:  /s/ Peter Berry            

Name: Peter Berry

Title: Chief Executive Officer

By: /s/ Peter Berry            

Name: Peter Berry

Title: Chief Executive Officer

 

 

[signature page Holders/Investors follows]

 

 

 

 

 

 By:  /s/ Eric S. Swartz            

 

Name: Eric S. Swartz              

 

Title: Director                

 

 

 

By:  /s/ Adam Epstein            

 

Name: Adam Epstein            

 

Title: Principal                

 

 

 

 

By:  /s/ Adam Epstein            

 

Name: Adam Epstein            

 

Title: Principal                

 

 

 

 

By: /s/ Adam Epstein            

 

Name: Adam Epstein            

 

Title: Principal