Exhibit 10.4

 

AMENDMENT AND WAIVER

 

This Amendment and Waiver (this “Amendment”), dated as of September 18, 2013, is
made to the Securities Purchase Agreement, dated as of February 22, 2011, as
amended by an Amendment and Waiver to Securities Purchase Agreement dated as of
July 2, 2012, as amended by an Amendment and Waiver to Securities Purchase
Agreement dated as of January 16, 2013 and as further amended on February 22,
2013 (the “Purchase Agreement”), between PLC Systems Inc., a Yukon Territory
corporation (the “Company”) and GCP IV LLC (the “Holder”) and the Transactions
Documents entered into in connection with the Purchase Agreement.  The Holder is
the “Purchaser” under the Purchase Agreement.  Terms used as defined terms
herein and not otherwise defined shall have the meanings provided therefor in
the Purchase Agreement.

 

WHEREAS, pursuant to the Purchase Agreement, the Company issued (i) at the First
Closing, the 5% Senior Secured Convertible Debenture due on June 30, 2015 in the
aggregate principal amount of $4,000,000 (the “2011 Debenture”) and Common Stock
purchase warrants to purchase up to 40,000,000 shares of Common Stock (the “2011
Warrants”), (ii) at the Second Closing, the 5% Senior Secured Convertible
Debenture due on July 2, 2015 in the aggregate principal amount of $1,000,000
(the “2012 Debenture”) and Common Stock purchase warrants to purchase up to
10,000,000 shares of Common Stock (the “2012 Warrants” and collectively with the
2011 Warrants, the “Warrants”) and (iii) at the Third Closing, the 5% Senior
Secured Convertible Debenture due on  January 16, 2016 (the “2013 Debenture” and
collectively with the 2011 Debenture and the 2012 Debenture, the “Debentures”). 
For the purposes of clarification, the additional Common Stock purchase warrants
to purchase up to 10,000,000 shares of Common Stock issued at the Second Closing
(the “2012 Additional Warrants”) and Common Stock purchase warrants to purchase
up to 2,500,000 shares of Common Stock (the “2013 Warrants”) issued at the Third
Closing were not amended but were cancelled;

 

WHEREAS, the Company wishes to engage in a private offering wherein the Company
will issue to certain investors (the “New Investors”) up to $2,500,000, in the
aggregate, of Common Stock and Common Stock purchase warrants (the “Initial New
Investment Warrants”), along with the additional issuances of shares of Common
Stock and warrants to purchase shares of Common Stock (the “Additional
Investment Warrants” and collectively with the Initial New Investment Warrants,
the “New Investment Warrants”) pursuant to the terms and conditions of that
certain Securities Purchase Agreement dated as of the date hereof and
substantially in the form attached hereto as Exhibit A (the “New Investment
Agreement,”  such issuance and sale, the “New Investment”).  For the avoidance
of doubt, the term “New Investment” shall be deemed to include the Palladium
Warrants (as defined on Schedule 3.1(g) of the New Investment Agreement) (the
“Palladium Warrants”) and the Rights to Shares Letter Agreements between the
Company and each of the signatories thereto, dated as of September 18, 2013 (the
“New Rights Agreements”) and securities issued or issuable pursuant to such
warrants or the New Rights Agreements; and

 

WHEREAS, the Company and the Holder wish to amend and waive certain terms and
conditions of the Transaction Documents pursuant to the terms hereof;

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Company and the Holder agree as follows:

 

13.                               Waivers.

 

(a)                                 Waiver of Variable Rate Transactions. 
Solely for the purposes of enabling the consummation of the New Investment, the
Holder hereby waives the Company’s prohibition of effecting or entering into an
agreement to effect any issuance by the Company of Common Stock or Common Stock
Equivalents for cash consideration (or a combination of units thereof) involving
a Variable Rate Transaction.

 

(b)                                 Waiver of Negative Covenants of the
Debentures.

 

i.                              Solely for the purpose of issuing shares of
Common Stock to Mark R. Tauscher in the event of termination of his employment
pursuant to the rights set forth in that letter

 

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agreement dated as of August 16, 2013, a copy of which is attached hereto as
Exhibit B (the “Tauscher Employment Amendment”), the Holder hereby waives
Section 7(i) of the Debentures.

 

ii.                           Solely for the purpose of issuing the New
Investment Warrants and the Palladium Warrants to Palladium Capital Advisors,
LLC (or its designees) on the terms and conditions of such warrants, as of the
date hereof, the Holder hereby waives Section 7(f) of the Debentures.

 

14.                               Amendments.

 

(a)                                 Amendment to Conversion Price.  The Holder
and the Company hereby agree to reduce the Conversion Price of the Debentures to
$0.06, subject to adjustment therein.  As such, Section 4(b) of the Debentures
is hereby amended and restated in its entirety to read as follows:

 

“Conversion Price.  The conversion price in effect on any Conversion Date shall
be equal to $0.06, subject to adjustment herein (the “Conversion Price”).”

 

(b)                                 Amendment to Cashless Exercise. 
Section 2(c) of the 2011 Warrants and the 2012 Warrants shall be amended such
that part “(A)” of the cashless exercise formula which currently reads as “0.155
(subject to adjustment for reverse and forward stock splits and the like)” is
hereby amended to read “0.3705 (subject to adjustment for reverse and forward
stock splits and the like.”; provided, however, that if the Initial Closing of
the New Investment with gross cash proceeds of at least $1,750,000 is not
consummated on or by the New Investment Closing Date, then this Section shall no
longer be applicable and Section 2(c) shall remain unchanged and in full force
and effect.

 

(c)                                  Amendment to Definition of Exempt
Issuance.  The definition of Exempt Issuance shall be amended to include the
shares of Common Stock issuable to the pursuant to the New Rights to Shares
Letter Agreements, the Tauscher Employment Amendment and the Palladium
Warrants.  As such, the definition of Exempt Issuance is amended by inserting
the following new clause (f) at the end of such definition:

 

“and (f) shares of Common Stock issuable pursuant to the New Rights to Shares
Letter Agreements, the Tauscher Employment Amendment, and the Palladium
Warrants.”

 

(d)                                 Amendment to Schedule J to Security
Agreement.  Schedule J to the Security Agreement shall be amended to include
thereon the agreements listed on Schedule I attached hereto.

 

15.                               Deferral of Interest.  The Holder and the
Company hereby agree that all interest payments due and payable pursuant to
Section 2(a) of the Debentures shall continue to accrue and all such payments
shall be deferred until the earliest of (i) each Debenture’s Maturity Date or
(ii) such earlier date as the Debentures are repaid or required to be repaid;
provided, however, upon an Event of Default, such accrued interest shall become
immediately due and payable.

 

16.                               Consummation of New Investment. 
Notwithstanding the foregoing, in the event that the Initial Closing (as defined
in the New Investment Agreement) of the New Investment with gross cash proceeds
of at least $1,750,000 is not consummated on or before September 18, 2013 (the
“New Investment Closing Date”), (a) the waivers made in Section 1 shall no
longer be applicable and in effect, (b) the amendments made in Section 2 shall
no longer be applicable and in effect and (c) the deferral of interest payments
of the Debentures pursuant to Section 3 shall no longer be applicable and in
effect.

 

17.                               Additional Amendment Agreements. 
Notwithstanding the foregoing, in the event that the Company has not entered
into waiver and amendment agreements, on similar terms and conditions as this
Agreement, with the other holders of the Debentures on or before the New
Investment Closing Date (the “Additional Amendment Agreements”), the deferral of
interest payments of the Debentures pursuant to Section 3 shall no longer be
applicable and in effect.

 

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18.                               Additional Company Representations.  The
Company has the requisite corporate power and authority to enter into this
Amendment and otherwise to carry out its obligations hereunder.  The execution
and delivery of this Amendment by the Company and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company, the Board of Directors or the Company’s stockholders in connection
therewith.  This Amendment has been duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law. 
The waivers, agreements and obligations of the Holders set forth herein shall be
null and void in the event (i) the New Investment with gross cash proceeds of at
least $1,750,000 is not consummated by the New Investment Closing Date and
(ii) the Company has not entered into the Additional Amendment Agreements on or
before the New Investment Closing Date.

 

19.                               Right of Participation.  The Holder hereby
acknowledges that with regard to the New Investment as a Subsequent Financing,
the Company is not in breach of its obligations in Section 4.12 of the Purchase
Agreement, including timely delivering all required notices, and that each
holder of Debentures and Warrants has been provided the right to participate in
the New Investment.

 

20.                               Fees and Expenses.  The Company agrees to
reimburse Genesis Capital Advisors LLC $7,500 for its legal fees and expenses in
connection herewith.  Except as expressly set forth in the Transaction Documents
to the contrary, each party shall pay the fees and expenses of its advisors,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and
performance of this Amendment.

 

21.                               Public Disclosure.  On or before 9:30 am (New
York City time) on the first Trading Day immediately following the date hereof,
the Company shall file a Current Report on Form 8-K, reasonably acceptable to
the Holder disclosing the material terms of the transactions contemplated hereby
and attaching this Amendment as an exhibit thereto. From and after the filing of
such Current Report, the Company represents to the Holder that it shall have
publicly disclosed all material, non-public information delivered to the Holder
by the Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated
by this Amendment.

 

22.                               Reference to the Purchase Agreement.  On and
after the date hereof, each reference to “this Agreement,” “hereunder,”
“hereof,” “herein,” or words of like import shall mean and be a reference to the
Purchase Agreement as amended hereby.  On and after the date hereof, each
reference to “the Debentures” shall mean and be a reference to the Debentures as
amended hereby.  On and after the date hereof, each reference to “the Warrants”
shall mean and be a reference to the Warrants as amended hereby.  No reference
to this Amendment need be made in any instrument or document at any time
referring to the Purchase Agreement, the Debentures or the Warrants, and a
reference to the Purchase Agreement, the Debentures or the Warrants in any such
instrument or document shall be deemed to be a reference to the Purchase
Agreement, the Debentures or the Warrants, all as amended hereby.

 

23.                               Effect on Transaction Documents.  Except as
expressly set forth above, all of the terms and conditions of the Purchase
Agreement and the Transaction Documents shall continue in full force and effect
after the execution of this Amendment and shall not be in any way changed,
modified or superseded by the terms set forth herein.  Notwithstanding the
foregoing, this Amendment shall be deemed for all purposes as an amendment to
the Purchase Agreement as required to serve the purposes hereof, and in the
event of any conflict between the terms and provisions of the Purchase
Agreement, on the one hand, and the terms and provisions of this Amendment, on
the other hand, the terms and provisions of this Amendment shall prevail.

 

24.                               Amendments and Waivers. The provisions of this
Amendment can be amended or waived in the manner permitted under the Purchase
Agreement.

 

25.                               Execution. This Amendment may be executed in
two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have
been

 

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signed by each party and delivered to the other party, it being understood that
both parties need not sign the same counterpart.  In the event that any
signature is delivered by facsimile transmission or by e-mail delivery of a
“.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

 

26.                               Governing Law.  All questions concerning the
construction, validity, enforcement and interpretation of this Amendment shall
be determined pursuant to the Governing Law provision of the Purchase Agreement.

 

27.                               Entire Agreement.  This Amendment contains the
entire understanding of the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into
this Amendment.

 

[SIGNATURE PAGE FOLLOWS]

 

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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.

 

 

 

 

PLC SYSTEMS INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Gregory W. Mann

 

 

 

Name: Gregory W. Mann

 

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

 

 

Agreed to and Accepted:

 

 

 

 

 

 

 

PLC MEDICAL SYSTEMS INC.

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Mark R. Tauscher

 

 

 

Name: Mark R. Tauscher

 

 

 

 

Title: President

 

 

 

 

 

 

 

PLC SYSTEMAS MEDICOS INTERNACIONAIS

 

 

 

(DEUTSCHLAND) GMBH

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Gregory W. Mann

 

 

 

Name: Gregory W. Mann

 

 

 

 

Title: Managing Director

 

 

 

 

[SIGNATURE PAGE OF HOLDER FOLLOWS]

 

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[SIGNATURE PAGE OF HOLDERS TO PLCSF AMENDMENT]

 

Name of Holder:

 

 

 

Signature of Authorized Signatory of Holder:

 

 

 

Name of Authorized Signatory:

 

 

 

Title of Authorized Signatory:

 

 

 

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Schedule I

 

Additions to Schedule J to Security Agreement

 

The New Investment Agreement.

 

The Escrow Agreement (as defined in the New Investment Agreement).

 

The Palladium Warrants

 

The Tauscher Employment Amendment

 

The Rights to Shares Letter Agreements

 

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