THIRD AMENDMENT TO SENIOR SECURED NOTES AND SUBSCRIPTION AGREEMENT
Exhibit
10.3
THIRD
AMENDMENT TO SENIOR SECURED NOTES AND SUBSCRIPTION AGREEMENT
This
THIRD AMENDMENT TO SENIOR SECURED NOTES AND SUBSCRIPTION AGREEMENT (this “Amendment”),
dated as of September 18, 2009, is by and among Advance Nanotech, Inc., a
Delaware corporation (the “Company”), and the holder of Notes listed on the
signature page hereto (the “Holder”).
W
I T N E S S E T H
A. Company
and Holder have entered into a Senior Secured Note dated as of September 18,
2009 (the “Note”) and a Subscription Agreement dated as of April 9, 2009 (the
“Subscription Agreement”), as each has been amended by that certain First
Amendment to Senior Secured Notes and Subscription Agreement, dated as of June
15, 2009 (“First
Amendment”), and that certain Second Amendment to Senior Secured Notes and
Subscription Agreement, dated as of June 24, 2009 (“Second Amendment”) (as each
of the same may hereafter be amended, modified, extended and/or restated from
time to time, collectively, the “Senior Note Agreements”).
B. Company
has requested that Holder modify the Senior Note Agreements to extend the
Maturity Date and provide that interest on the Note may be payable in shares of
common stock of Company’s subsidiary, Owlstone Nanotech Inc., a Delaware
corporation (“Owlstone”), and Holder has requested that Owlstone grant a
security interest in additional collateral for the benefit of the
Holder.
C. Company
and Holder have agreed to amend the Senior Note Agreements as set forth below
and in connection with the execution and delivery of this
Amendment.
NOW,
THEREFORE, in consideration of the premises and the agreements, conditions and
covenants contained herein and other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the parties hereto hereby agree
as follows:
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1.
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Defined
Terms. All capitalized terms used but not defined herein
shall have the meanings set forth therefor in the Senior
Agreements.
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2.
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Amendment.
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a.
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Paragraph
1 of the Note is hereby amended by substituting the following for the
Maturity Date of “August 31, 2009” appearing therein: “October
15, 2009”; provided, however, that if, prior to October 15, 2009, (A) the
holders of all outstanding Senior Secured Convertible Notes issued by
Company during the calendar years 2007 and 2008 (the “Prior Notes”) shall
have executed and delivered to Company a waiver (the “Waiver”) to (i) give
up all rights with respect to the price protection anti-dilution
provisions in the Prior Notes and the warrants issued with the Prior Notes
and (ii) modify the mandatory conversion provision of the Prior Notes to
provide for mandatory conversion thereof upon the conversion of the Senior
Secured Note, or (B) the Company closes on a capital investment of at
least 1,000,000 dollars, then such Maturity Date shall be amended to be
“November 15, 2009”.
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1
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b.
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Option
1 and Option 2 of the Subscription Agreement are hereby amended by
substituting the following for the Maturity Date of “August 31, 2009”
appearing therein: “October 15, 2009”; provided, however, that
if, prior to October 15, 2009, (A) the holders of all Prior Notes shall
have executed a Waiver, or (B) the Company closes on a capital
investment of at least 1,000,000 dollars, then such Maturity Date shall be
amended to be “November 15,
2009”.
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c.
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Section
1.2(b) of the Note is hereby amended and restated in its entirety as
follows:
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(b) All
accrued interest will be payable in shares of common stock, par value
$0.001 per share, of Owlstone Nanotech, Inc., a Delaware corporation
(“Owlstone Common Stock”). The number of shares of Owlstone Common
Stock to be issued shall be determined by dividing the aggregate accrued
interest on the Note by $0.25.
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d.
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Section
4 of each Note is hereby amended and restated in its entirety as
follows:
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4. Security
Interest. This Note is secured by a first priority
security interest granted to a collateral agent for the benefit of the holders
of Notes pursuant to (i) a Pledge and Security Agreement, dated as of April 9,
2009, between the Company and the Collateral Agent and (ii) a Security
Agreement, dated as of September 18, 2009, between Owlstone and the Collateral
Agent.
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3.
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Amendments
to New Subscription Documents. On or about the date hereof,
Holder is entering into a new subscription agreement with Company (the
“New Subscription Agreement”) and Company is issuing a new note to Holder
(the “New Note”), each substantially similar to the Subscription Agreement
and Note previously executed and delivered. Holder and Company
hereby agree that the New Subscription Agreement and New Note shall, upon
their execution and delivery, immediately be amended by the applicable
provisions in the First Amendment, Second Amendment and this Amendment, in
seriatim, as though the New Subscription Agreement and New Note were a
“Subscription Agreement” and “Senior Secured Note” referred to therein,
respectively.
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4.
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Waiver
of Defaults. In consideration of the issuance of the warrants
contemplated by Section 4.c hereof, Holder hereby waives any and all
Events of Default that exist under the Senior Note Agreements excluding
the Company’s requirement to reduce the number of Board Members to five
(5) people.
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5.
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Conditions
Precedent. The satisfaction of the following shall be
conditions precedent to the effectiveness of this
Amendment:
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a.
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Amendment. This
Amendment shall have been duly executed by Holder and
Company.
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2
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b.
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Security
Agreement. A Security Agreement shall have been duly
executed by Owlstone and a collateral agent for the benefit of
Holder.
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c.
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Owlstone
Warrants. Owlstone shall have issued warrants to Holder
equal to one share of Owlstone Common Stock for each $1.00 of Note held by
Holder, which warrants shall have a per share exercise price of $0.25 and
a term of five years.
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6.
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No Other
Changes. Except as explicitly amended by this Amendment, all of the
terms and conditions of the Senior Note Agreements shall remain in full
force and effect.
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7.
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Governing
Law. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of New
York.
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8.
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Counterparts; Multiple
Originals. This Amendment may be executed in any number
of counterparts, all of which together shall constitute an agreement
binding on each of the signatories hereto. Each signed copy
shall be an original, but all of them together shall represent the same
agreement.
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9.
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Headings. The
headings of this Amendment have been inserted only for convenience to
facilitate reference and are not intended to describe, interpret, define
or limit the scope, extent or intent of this Amendment or any provision
hereof.
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[SIGNATURE
PAGE FOLLOWS]
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IN WITNESS WHEREOF, Company
and Holder have signed this Amendment as of the date first set forth
above.
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“COMPANY”
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| ADVANCE NANOTECH INC, a Delaware corporation | |||
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By:
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇ | ||
| Its: | Chief Financial Officer | ||
| “HOLDER” | |||
| { } | |||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||
| ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLC | |||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||
| Its: | Manager | ||
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