AMENDMENT AND WAIVER OF 6% SERIES B CONVERTIBLE NOTES
Exhibit
99.2
AMENDMENT
AND WAIVER OF
6%
SERIES B CONVERTIBLE NOTES
This
Amendment and Waiver, dated as of November 30, 2007 (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 (i) 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”); and
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
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 (as defined in the Securities
Purchase Agreement) or any other agreement, document, certificate or other
instrument delivered in connection with the transactions contemplated hereby
and
thereby to which the Holder 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.
E. Section
13(b) of the Notes requires the
Company to get the prior written consent of the Holders of 75% of the then
outstanding Notes prior to incurring additional indebtedness, other than
Permitted Indebtedness. The Company and the Investors acknowledge and
agree that the Company incurred additional indebtedness of $940,000, which
was
not Permitted Indebtedness, without the prior approval of the Holders of
75% of
the then outstanding Notes and the Company is therefore in breach of such
Section 13(b) of the Notes.
F. Each
of Items D and E above constitutes
a “Trigger Event” as that term is defined in the Notes.
G. The
Investors desire to waive the
Trigger Events set forth in Items D and E above.
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:
a.
changing the Conversion Price set forth in Section 3(c)(ii) of
the Notes from $0.40 to $0.25, subject to further adjustment as set forth
therein; and
b. adding
the following Section 4(a)(xiv) in the Notes:
“(xiv) any
quarterly reports on Form 10-Q or Form 10-QSB filed by the Company with the
Commission for the three months ending on the following dates which disclose
“Net Cash Used in Operating Activities” in excess of the numbers set forth next
to each:
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March
31, 2008:
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$850,000.00
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June
30, 2008:
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$700,000.00
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September
30, 2008 – March 31, 2010:
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$450,000.00”
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3. The
Company and the Investors
acknowledge and agree that the change in the Conversion Price of the
Notes set forth in Section 2(a) above, and the resulting increase in the
number
of shares issuable upon conversion thereof, 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. Additionally,
the Company and the Investors acknowledge and agree that any Trigger Event
occurring prior to the execution of this Amendment 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 Events set
forth in Items D and E 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.
[Signature
Pages Follow]
2
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
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X.X.
Xxx 00
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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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_________________________________
_________________________________
_________________________________
_________________________________
