SERIES B AMENDMENT AND INTEREST SHARES AGREEMENT
Exhibit
99.2
SERIES
B AMENDMENT AND INTEREST SHARES AGREEMENT
This
Series B Amendment and Interest Shares Agreement, dated as of January 7,
2008
(this “Amendment”), is entered into by and
among nCOAT, Inc., a Delaware corporation (the “Company”), and the investors
listed on the signature pages hereto (each, an “Investor” and collectively, the
“Investors”). Capitalized terms that are used herein without
definition shall have the meanings ascribed to them in the Transaction Documents
(as defined below).
A. The
Company and the Investors are parties to that certain Securities Purchase
Agreement dated as of May 31, 2007 (the “SPA”);
B. Pursuant
to the terms of the SPA, the Company issued to the Investors (i) 6% Series
B
Convertible Notes due May 31, 2010 (the “Notes”), and (ii) Warrants to Purchase
Common Stock (the “Warrants” and together with the SPA and Notes, the
“Transaction Documents”);
C. The
Investors hold at least seventy-five percent (75%) of the aggregate principal
amount of the Notes outstanding as of the date of this Amendment;
D. Section
(2) of the Notes provides that the Company has the option to pay interest
accrued on the Notes in cash or shares of the Company’s common stock;
E. Section
4(a)(iv) of the Notes states that the failure by the Company to pay to the
holders of the Notes any amount of Principal (including, without limitation,
any
redemption payments), Interest, Late Charges or other amounts when and as
due
under the Notes or any other Transaction Document or any other agreement,
document, certificate or other instrument delivered in connection with the
transactions contemplated thereby to which a
holder of the Notes is a party,
except, in the case of a failure to pay any Interest and Late Charges when
and
as due, in which case only if such failure continues for a period of at least
five (5) Business Days, constitutes a “Trigger Event,” giving rise to Redemption
Rights as set forth in the Notes;
F. Item
E above constitutes a “Trigger Event” as that term is defined in the Notes; and
G. The
Investors desire to waive the Trigger Event set forth in Item E above only
with
respect to the payment of interest on the Notes due January 1,
2008.
NOW,
THEREFORE, in consideration of the premises set forth above, by their execution
below, each Investor and the Company hereby agrees as follows:
1. Pursuant
to Section 15 of the Notes, the Notes shall be amended by adding the following
Section (2)(a) to Section (2) of the Notes:
"
(a) Solely
with respect to the interest to be paid on January 1, 2008, the following
terms
and conditions shall apply:
(i) The
Company shall pay the interest due on January 1, 2008, by issuing Interest Shares (the "January
2008 Interest Shares").
(ii) The
January 2008 Interest Shares to be issued
will be “restricted securities” as defined in Rule 144 under the Securities Act
of 1933, as amended.
(iii) On
or after February 15, 2008, the Company will cause its counsel to issue legal
opinions relating to the sale of the January 2008
Interest Shares pursuant to Rule 144,
upon (A) the request of the Holder, and (B) receipt by the Company or
its
counsel of the usual and customary paperwork (including representation letters,
broker representations, and Form 144) relating to sales under Rule
144. The Holder and the Company
acknowledge and agree that counsel for the Company cannot issue opinions
under
Rule 144 prior to February 15, 2008, because such date is the effective date
of
amendments to Rule 144 which will shorten the holding period of restricted
securities.
(iv) The
issuance price of the January 2008 Interest
Shares will be 90% of the 5-day Weighted Average
Price of the Common Stock ending on December 31, 2007.
(v) With
respect to the January 1, 2008, interest payment, no other conditions (including
but not limited to those set forth above in Section (2)) shall be
applicable."
2. By
signing below, the Investor agrees that the payment by the Company of the
interest due on January 1, 2008, pursuant to the terms of this Agreement
shall
not constitute a Trigger Event under the Note, and that by entering into
this
Agreement, the Investor is waiving any right to claim a Trigger Event with
respect to the January 1, 2008, interest payment.
3. The
Company and the Investors acknowledge and agree that the waiver of any of
the
requirements in the Notes relating to the payment of the January 1, 2008,
interest payment by the Company, shall not cause an adjustment of the Exercise
Price or the number of Warrant Shares issuable upon exercise of the Warrants
as
provided for in Section 2 of the Warrants.
4. The
Company and the Investors acknowledge and agree that the waivers set forth
in
this Amendment relate only to the Trigger Event described in Items
E and G
above and that no Investor is waiving
any subsequent breaches of the SPA,
Notes and/or Warrants by the Company occurring on or after the date of this
Amendment.
5. The
Company and the Investors acknowledge and agree that, except as specifically
waived or modified by the terms of this Amendment, the SPA, Notes, and Warrants
shall remain unmodified and in full force and effect, and shall not in any
way
be changed, modified or superseded by the terms set forth in this
Amendment.
6. The
Company hereby agrees that it will disclose its entry into this Amendment
by
filing a Current Report on Form 8-K with the U.S. Securities and Exchange
Commission within the time prescribed by applicable securities laws and
rules.
Please
indicate your agreement to the foregoing Amendment and Waiver by signing
a copy
of this Amendment and Waiver where indicated below.
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By:
_________________________
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Name:
Xxxx Xxxxxxx
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Title:
Chief Executive Officer
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0000
Xxxx Xxxxx
X.X.
Xxx 00
Xxxxxxxx,
XX 00000
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Acknowledged
and Agreed:
Name
of
Investor: _________________________________________
By:
___________________________
Name:
Title:
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Address:
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_________________________________
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_________________________________
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_________________________________
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_________________________________
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_________________________________
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