exv10w1



 







Exhibit 10.1




SECOND AMENDMENT TO SECURED CONVERTIBLE

PROMISSORY NOTES AND WARRANTS




     THIS SECOND AMENDMENT TO SECURED CONVERTIBLE PROMISSORY NOTES AND WARRANTS (the “Second
Amendment”) is entered into as of March 30, 2006, by and among Sutura, Inc., a Delaware corporation
(the “Company”), Pandora Select Partners L.P., a British Virgin Islands limited partnership
(“Pandora”), Whitebox Hedged High Yield Partners L.P., a British Virgin Islands limited partnership
(“WHHY”), Whitebox Convertible Arbitrage Partners L.P., a British Virgin Islands limited
partnership (“WCAP”), Whitebox Intermarket Partners L.P., a British Virgin Islands limited
partnership (“WIP”) and Gary S. Kohler (“Kohler”) and Scot W. Malloy (“Malloy”), each residents of
the State of Minnesota.



     WHEREAS, the Company, Pandora, WHHY, WCAP, WIP, Kohler and Malloy are parties to a Purchase
Agreement dated September 17, 2004 (the “Original Purchase Agreement”), pursuant to which the
Investors each purchased a convertible promissory note (each, an “Original Note” and together, the
“Original Notes”) and a warrant to purchase shares of the Company’s Common Stock (each, an
“Original Warrant” and together, the “Original Warrants”) from the Company in consideration of a
collective $6,550,000 loan.



     WHEREAS, the Company, Pandora, WHHY and WIP are parties to a second Purchase Agreement dated
March 24, 2005 (the “Second Purchase Agreement”), pursuant to which Pandora, WHHY and WIP each
purchased an additional convertible promissory note (each, a “March 2005 Note” and together, the
“March 2005 Notes”) and an additional warrant to purchase the Company’s Common Stock (each, a
“March 2005 Warrant” and together, the “March 2005 Warrants”) in consideration of a collective
$3,000,000 new loan.



     WHEREAS, the Company, Pandora, WHHY, WCAP, WIP, Kohler and Malloy are parties to an Amendment
to Secured Convertible Promissory Notes and Warrants dated September 7, 2005 (the “First
Amendment”), pursuant to which the parties agreed to amend certain provisions of the Original
Notes, Original Warrants, March 2005 Notes and March 2005 Warrants.



     WHEREAS, the Company, Pandora, WHHY, WCAP and WIP are parties to a third Purchase Agreement
dated September 7, 2005 (the “Third Purchase Agreement”), pursuant to which Pandora, WHHY, WCAP and
WIP each purchased an additional convertible promissory note (each, a “September 2005 Note” and
together, the “September 2005 Notes”) and an additional warrant to purchase the Company’s Common
Stock (each, a “September 2005 Warrant” and together, the “September 2005 Warrants”) in
consideration of a collective $7,000,000 new loan.



     WHEREAS, the parties desire to amend certain provisions of the Original Notes, March 2005
Notes, September 2005 Notes, March 2005 Warrants and September 2005 Warrants.



     NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, hereby agree as follows:



 









 





     SECTION 1. Amendment to Original Notes. Each of the Original Notes is amended as
follows:




	 	(a)	 	Section 1 is amended to read its entirety as follows:
	 
	 	 	 	“1. Interest. The unpaid principal balance hereof from time to time
outstanding shall bear interest at the rate of twelve percent (12%) per
annum. Notwithstanding the preceding, if Maker raises $10 million or more
in equity financing on or before July 31, 2006, the interest rate shall be
eight percent (8%) commencing on the last day of the month in which such
financing is raised. Further, if Maker raises at least $10 million in
capital on or before July 31, 2006 but such capital consists of less than
$10 million of equity financing, the interest rate shall be nine percent
(9%) per annum commencing on the last day of the month in which such capital
is raised. If Maker fails to raise $10 million of capital by July 31, 2006,
the interest rate shall be twelve percent (12%) per annum.”
	 
	 	(b)	 	Section 2(a) is amended to read in its entirety as follows:
	 
	 	 	 	“(a) Interest only is payable in cash quarterly in arrears on the last day
of each calendar quarter, except that the interest payment due and payable
on March 31, 2006 shall be deferred to July 31, 2006.”
	 
	 	(c)	 	Section 2(b) is amended to change the maturity date of “March 17, 2006” to “July 1, 2007.”





     SECTION 2. Amendment to March 2005 Notes. Each of the March 2005 Notes is amended as
follows:




	 	(a)	 	Section 1 is amended to read its entirety as follows:
	 
	 	 	 	“1. Interest. The unpaid principal balance hereof from time to time
outstanding shall bear interest at the rate of eight percent (8%) per annum.
Notwithstanding the preceding, if Maker raises at least $10 million in
capital on or before July 31, 2006 but such capital consists of less than
$10 million of equity financing, the interest rate shall be nine percent
(9%) per annum commencing on September 18, 2006. Further, if Maker fails to
raise $10 million of capital by July 31, 2006, the interest rate shall be
twelve percent (12%) per annum commencing on September 18, 2006.”
	 
	 	(b)	 	Section 2(a) is amended to read in its entirety as follows:
	 
	 	 	 	“(a) Interest only is payable in cash quarterly in arrears on the last day
of each calendar quarter, except that the interest payment due and payable
on March 31, 2006 shall be deferred to July 31, 2006.”
	 
	 	(c)	 	Section 2(b) is amended to change the maturity date of “September 18, 2006” to “July 1, 2007.”





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     SECTION 3. Amendment to September 2005 Notes. Each of the September 2005 Notes is
amended as follows:




	 	(a)	 	Section 1 is amended to read its entirety as follows:
	 
	 	 	 	“1. Interest. The unpaid principal balance hereof from time to time
outstanding shall bear interest at the rate of eight percent (8%) per annum.
Notwithstanding the preceding, if Maker raises at least $10 million in
capital on or before July 31, 2006 but such capital consists of less than
$10 million of equity financing, the interest rate shall be nine percent
(9%) per annum commencing on September 7, 2007. Further, if Maker fails to
raise $10 million of capital by July 31, 2006, the interest rate shall be
twelve percent (12%) per annum commencing on September 7, 2007.”
	 
	 	(b)	 	Section 2(a) is amended to add “;except that the interest payment due and payable on
March 31, 2006 shall be deferred to July 31, 2006” after “September 30, 2005.”
	 
	 	(c)	 	Section 2(b) is amended to change “April 30, 2007” to “July 1, 2007.”





     SECTION 4. Amendment to March 2005 Warrants. Each of the March 2005 Warrants is
amended as follows:




	 	(a)	 	Section 2(a) is amended in its entirety to read as follows:
	 
	 	 	 	“(a) The Warrant Exercise Price per share shall be equal to $0.45, subject
to adjustment as otherwise provided by this Warrant.”
	 
	 	(b)	 	Section 2(b) is deleted.





     SECTION 5. Amendment to September 2005 Warrant. Each of the September 2005 Warrants
is amended as follows:




	 	(a)	 	Section 2 is amended to change “$0.87” to “$0.45.”





     SECTION 6. Agreement With Respect to Registration. The Company agrees to file, at
its expense, with the Securities and Exchange Commission on or before April 10, 2006 a registration
statement under the Securities Act of 1933 covering all of the Registrable Securities, as that term
is defined in the Second Amended Registration Rights Agreement, dated September 7, 2005, among
Sutura, Pandora, WHHY, WCAP, WIP, Kohler and Malloy. If the Company fails to file such
registration statement by April 10, 2006, this Second Amendment shall automatically terminate and
all the terms and provisions of Original Notes, March 2005 Notes, September 2005 Notes, March 2005
Warrants and September 2005 Warrants shall remain in effect.



[Signature page follows.]




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     IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be executed and
delivered as of the date first written above.



	 	 	 	 	 
	 	SUTURA, INC.


	 
	 	By  	 	 
	 	 	Anthony A. Nobles 	 
	 	 	President and Chief Executive Officer 	 
	 
	 	PANDORA SELECT PARTNERS L.P.


	 
	 	By  	 	 
	 	 	Name 	 	 
	 	 	Its 	 	 
	 
	 	WHITEBOX HEDGED HIGH YIELD
PARTNERS L.P.

	 
	 	By  	 	 
	 	 	Name 	 	 
	 	 	Its 	 	 
	 
	 	WHITEBOX CONVERTIBLE ARBITRAGE PARTNERS L.P.


	 
	 	By  	 	 
	 	 	Name 	 	 
	 	 	Its 	 	 
	 
	 	WHITEBOX INTERMARKET PARTNERS L.P.


	 
	 	By  	 	 
	 	 	Name 	 	 
	 	 	Its 	 	 
	 



	 	 	 	 	 
	 	 	 
	 	Gary S. Kohler	 
	 	 	 
	 	 	 
	 	Scot W. Malloy	 
	 



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