AtheroNova exchanges 2.5% senior secured convertibles for new notes

Investors extend right to force purchase of $1.5 million more notes

By Devika Patel

Knoxville, Tenn., June 20 - AtheroNova Inc. settled an exchange agreement with three investors on June 15, according to an 8-K filed Wednesday with the Securities and Exchange Commission.

The investors were W-Net Fund I, LP, Europa International Inc. and MKM Opportunity Master Fund, Ltd.

The exchange agreements amended the May 13, 2010 private placement agreement under which the investors purchased some of the company's 2.5% senior secured convertible notes, which are convertible into common shares at about $0.29 per share.

In the exchange agreements, each investor agreed to extend by two months the company's right to cause them to buy $1.5 million more notes if it meets two operating benchmarks.

The company agreed to extend by two months the investors' rights to cause it to sell $1.5 million of additional notes to them if it fails to meet the benchmarks.

Each investor also agreed to exchange the existing notes for amended and restated 2.5% senior secured convertible notes.

The conversion terms of the amended notes provide for no price-based anti-dilution protection and automatic conversion of the notes and remove the applicable beneficial ownership limitation upon the later of (a) 61 days after the company delivers notice that it has applied to list its securities on a national securities exchange and (b) the date immediately prior to the effective date of that listing.

AtheroNova is a Van Nuys, Calif., development-stage company that is developing products to address the treatment of atherosclerosis through the use of natural compounds and their derivatives.

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