CORRECTION AMENDMENT NO. 1
TO
CALLABLE SECURED CONVERTIBLE NOTES
THIS CORRECTION AMENDMENT NO. 1 TO CALLABLE SECURED CONVERTIBLE NOTES (the
"Amendment") is made as of this 1st day of April, 2006, by and between Avitar
Inc., a Delaware corporation (the "Company"), and the holders of Callable
Secured Convertible Notes issued by the Company on September 22, 2005, October
21, 2005 and February 14 2006 set forth on the signature page hereof (each, a
"Holder" and, collectively, the "Holders"). Capitalized terms used herein and
not defined shall have the meanings given to them in the Notes (as defined
below).
W I T N E S S E T H:
WHEREAS, in connection with the closing of a private placement transaction,
the Company issued Callable Secured Convertible Notes in the aggregate principal
amount of $2,500,000 to the Holders on September 22, 2005, October 21, 2005 and
February 14, 2006 (each, a "Note" and, collectively, the "Notes");
WHEREAS, at the time of the above-described private placement in September
2005, the Company and the Holders had agreed and understood that any and all
payments of interest on the Notes were to be made, at the option of the Company
(and not of the Holder), in cash or in shares of Common Stock at the then
applicable Conversion Price; and
WHEREAS, the Company and the Holders desire to amend certain provisions of
the Notes to correct or to clarify the same; and
WHEREAS, Section 5.3 of the Notes permits an amendment of the terms upon
the written consent of the Company and the Holders of a majority of the
outstanding aggregate principal amount of such Notes.
NOW, THEREFORE, in consideration of the foregoing, which is incorporated
herein by reference, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Holders,
intending to be legally bound hereby, agree to amend the Notes as follows:
1. Payment of Interest on the Notes. The parties to this Amendment hereby
confirm and agree that, notwithstanding anything to the contrary contained in
the Notes, any and all payments of interest on the Notes shall be made, at the
option of the Company (and not of the Holder), in cash or in shares of Common
Stock at the then applicable Conversion Price.
2. Conflicts.
(a) To the extent there is any conflict between the terms of the Notes and
the terms hereof, the terms of this Amendment shall take precedence.
(b) Except as herein amended, the Notes shall remain unchanged and in full
force and effect. Each and every term, covenant and condition of the Notes, not
specifically preempted hereby, is incorporated herein such that the Notes and
this Amendment thereto shall be read and construed as one instrument.
3. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one (1) instrument.
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IN WITNESS WHEREOF, the Company and the Holders have caused this Amendment
to be duly executed by its officers, thereunto duly authorized as of the date
first above written.
AVITAR INC.,
a Delaware corporation
By: _________________________
Name: _________________________
Title: _________________________
AJW PARTNERS, LLC
By: _________________________
Name: _________________________
Title: _________________________
AJW QUALIFIED PARTNERS, LLC
By: _________________________
Name: _________________________
Title: _________________________
AJW OFFSHORE, LTD.
By: _________________________
Name: _________________________
Title: _________________________
NEW MILLENNIUM CAPITAL
PARTNERS II, LLC
By:
Name:
Title:
