AMENDMENT NO. 1 TO RESERVE EQUITY FINANCING AGREEMENT
AMENDMENT
NO. 1
TO
This
AMENDMENT NO. 1 TO the Amended and Restated RESERVE EQUITY FINANCING AGREEMENT,
dated as of January 18, 2010 (this "Amendment"),
is entered into by and between Neah
Power Systems, Inc., a Nevada corporation (the “Company”),
and AGS
Capital Group, LLC, a New York limited liability corporation (“AGS”
or the “Investor”).
Capitalized terms used but not otherwise defined herein shall have the meanings
set forth in the SPA (as defined below).
WITNESSETH:
WHEREAS,
the Company and the Investors entered into the Amended and Restated Securities
Purchase Agreement dated as of January 18, 2010 (the “SPA”),
pursuant to which, among other things, AGS agreed to purchase up to $5,000,000
shares of the Company’s registered and freely tradable common stock; and
WHEREAS,
AGS and the Company desire to amend the SPA.
NOW,
THEREFORE, in consideration of the foregoing and the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Parties, the Parties
covenant and agree as follows:
Section
1. Paragraph 1.16 of the Agreement is hereby amended and restated in its
entirety as follows:
Section 1.16. “Market
Price” shall mean the average of the two lowest Closing
Prices of the Common Stock during the Pricing Period.
Section 2. Paragraph 1.30 of the
Agreement is hereby amended and restated in its entirety as
follows:
Section 1.30. “Weighted
Average Closing Price” means, for the pricing period, the average of the
closing share price for each trading day weighted for the share daily trading
volume.
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Section 3. Section 2.3(b)(ii) of the
Agreement is hereby amended and restated in its entirety as
follows:
Section 2.3(b)(ii). Registration
of the Common Stock with the SEC. The Registration Statement filed
pursuant to the Registration Rights Agreement shall be effective and available
for the resale of all applicable shares of Common Stock to be issued in
connection with the Advance and certificates evidencing such
shares shall be free of restrictive legends; provided, however, that the
foregoing condition shall apply only to Advance Notices delivered after the
commitment fee of 1,015,000 shares of the Company’s unregistered stock issued to the Investor upon signing this
Agreement and after the commitment fee of 1,500,000 shares of the
Company’s unregistered stock issued as of the
date of the Second Amendment has been exhausted by prior purchases of Common
Stock under Section 2.1;
Section
4. Section 7.2 of the Agreement is hereby amended and restated in its entirety
as follows:
Section
7.2. (g) Maximum
Advance Amount. The amount of an Advance corresponding to the Advance
Notice shall not exceed the Maximum Advance Amount. In addition, the Advance
amount shall be automatically reduced by 50%, unless, if on any day during the
Pricing Period, the Weighted Average Closing Price for that day does not meet or
exceed the Floor Price. The Floor Price shall be 85% of the Weighted Average
Closing Price of the Common Stock for the five (5) Trading Days prior to the
Advance Notice Date, or any other price mutually agreed upon by the Company and
the Investor in writing. In addition, in no event shall the number of shares
issuable to the Investor pursuant to an Advance cause the aggregate number
of shares of Common Stock beneficially owned by the Investor and its affiliates
to exceed 9.99% of the then outstanding shares of Common Stock of the Company
(“Ownership
Limitation”). Any portion of an Advance that would cause the Investor to
exceed the Ownership Limitation shall automatically be withdrawn. For the
purposes of this section, beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act.
Section
5. Section 12.4 of the Agreement is hereby amended and restated in its entirety
as follows:
Section
12.4. Fees, Expenses
and Restricted Shares. Each of the parties shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection with this Agreement and the transactions
contemplated hereby, except that the Company shall pay a Due Diligence fee of
Three Thousand Three hundred and Fifty Dollars ($3,350) to Investor upon signing
this Agreement and Forty One Thousand Dollars ($41,000) which the Company
shall deliver to investor five days after signing
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this
Agreement or such amount may be realized by Investor selling the Company’s
common stock which it has in its possession. 30 days after the signing of the
Agreement, the Company shall pay to Investor 1% of the value of 950,000 shares
valued at the volume weighted average price (VWAP), calculated based upon the
ratio of the average value of the common stock of Company traded on the Trading
Market to the average volume of such stock traded on such market for such
date (or the nearest preceding date), for the 10 trading days immediately
preceding the Agreement date. The Company shall also pay a commitment fee of
1,015,000 shares of the Company’s unregistered stock upon signing this
Agreement. 500,000 of these shares shall be used as credit towards shares for
the Advance Notices which the Company shall include in the Registration
Statement. 450,000 shall be used for stock loan purposes where the Company shall
receive 65% Loan To Value less any and all fees and expenses. In addition, the
Company shall pay a commitment fee of in 1,545,000 shares of the Company’s
unregistered stock to investor upon the signing of the Second Amendment, of
which 1,500,000 will be used as credit towards shares for Advance Notices which
the Company shall include in the Registration Statement. Also, pertaining to the
Second Amendment, the Company will pay up to $8000, with a minimum of $5800, to
be paid to the investor from the proceeds issued after the date of the
Second Amendment.
Section
6. Effect of
Amendment. Except as amended hereby, the Agreement shall continue in full
force and effect and is hereby incorporated herein by this reference.
Section
7. Governing
Law. This Amendment shall be governed by and construed under the laws of
the State of New York.
Section
8. Titles and
Subtitles. The titles of the sections and subsections of this Amendment
are for convenience of reference only and are not to be considered in construing
this Amendment.
Section
9. Counterparts. This
Amendment may be executed in counterparts, each of which shall be deemed an
original, and all of which shall constitute one and the same instrument.
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IN
WITNESS WHEREOF, each of the undersigned has caused this Amendment to
Securities Purchase Agreement to be executed by their respective duly authorized
officer as of the date first above written.
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By:
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Name:
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Title:
CEO
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Address:
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AGS
CAPITAL GROUP, LLC
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By:
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Name:
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Title:
CEO
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Address:
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