Document:

EXHIBIT 10.3

 

AMENDMENT TO SERIES C WARRANTS TO PURCHASE
COMMON STOCK

 

This Amendment to Series
C Warrants to Purchase Common Stock (the “Amendment”) by and between Arch Therapeutics, Inc., a Nevada corporation
(the “Company”), and Cranshire Capital Master Fund, Ltd. (“Cranshire”) is made as of March
13, 2015 (the “Effective Date”).

 

RECITALS

 

WHEREAS, on
January 30, 2014, the Company entered into that certain Securities Purchase Agreement (the “Securities Purchase Agreement”)
with the investors named on the Schedule of Buyers attached thereto (collectively, the “Holders”) pursuant to
which, among other things, the Company issued to the Holders shares of the Company’s common stock, $0.001 par value per share
(the “Common Stock”), and the Series C Warrants (as defined in the Securities Purchase Agreement, the “Series
C Warrants”);

 

WHEREAS, Section
9 of the Series C Warrants provides that the provisions of the Series C Warrants may be amended only with the written consent
of the Company and the Significant Buyers (as defined in the Securities Purchase Agreement);

 

WHEREAS, Cranshire
is the only Significant Buyer; and

 

WHEREAS, the
Company and Cranshire, in its capacity as the only Significant Buyer, now wish to amend the Series C Warrants as of the Effective
Date as set forth herein.

 

NOW, THEREFORE,
in consideration of the foregoing and for good and valuable consideration, the receipt and sufficiency which are hereby acknowledged,
the Parties hereby agree as follows:

 

		1.	Definitions. Capitalized terms not otherwise defined in this Amendment shall have the meaning given to them in the Series
C Warrants.

 

		2.	Amendments to Series C Warrants. Section 16(h) to the Series C Warrants is hereby amended as of the Effective
Date as follows:

 

“(h)“Expiration
Date” means 5:00 p.m., New York time, on June 2, 2015.”

 

		3.	Representations and Warranties of the Company. The Company represents and warrants to Cranshire
that, after giving effect to the Amendment, the Warrant Shares shall remain eligible for resale under the Company’s resale
registration statement on Form S-1 (File Number 333-194745) that became effective July 2, 2014.

 

    	 

    	 

    

 

		4.	Miscellaneous. To the extent
                                         that there are any inconsistencies between the terms of any Series C Warrant and the
                                         terms of this Amendment, the terms of this Amendment shall prevail in effect. This Amendment
                                         may be executed by the Parties in counterparts and may be executed and delivered by facsimile
                                         or other means of electronic communication and all such counterparts, taken together,
                                         shall constitute one and the same agreement. A signed copy of this Amendment delivered
                                         by facsimile, e-mail or other means of electronic transmission shall be deemed to have
                                         the same legal effect as delivery of an original signed copy of this Amendment. It is
                                         expressly understood and agreed that (i) this Amendment shall be a Transaction Document
                                         and (ii) the Transaction Documents are hereby amended to give full force and effect to
                                         the transactions contemplated by this Amendment. Except as otherwise expressly provided
                                         herein, (1) the Series C Warrants and each other Transaction Document is, and shall continue
                                         to be, in full force and effect and is hereby ratified and confirmed in all respects,
                                         except that on and after the Effective Date (A) all references in the Series C Warrants
                                         to “this Warrant,” “hereto,” “hereof,” “hereunder”
                                         or words of like import referring to the Series C Warrants shall mean the Series C Warrants
                                         as amended by this Amendment, (B) all references in the other Transaction Documents to
                                         the “Warrants,” “thereto,” “thereof,” “thereunder”
                                         or words of like import referring to the Series C Warrants shall mean the Series C Warrants
                                         as amended by this Amendment and (C) all references in Transaction Documents to the “Transaction
                                         Documents,” “thereto,” “thereof,” “thereunder”
                                         or words of like import referring to the Transaction Documents shall mean the Transaction
                                         Documents as amended by this Amendment and (2) the execution, delivery and effectiveness
                                         of this Amendment shall not operate as an amendment or waiver of any right, power, benefit
                                         or remedy of any Holder under any Transaction Document, nor constitute an amendment of
                                         any provision of any Transaction Document and all of them shall continue in full force
                                         and effect, as amended or modified by this Amendment. The
                                         Company shall, on or before 8:30 a.m., New York time, on the first (1st) Business
                                         Day after the date of this Agreement,
                                         file a Current Report on Form 8-K describing all the material terms of
                                         the transactions contemplated by this Amendment in the form required by the 1934 Act
                                         and attaching this Amendment.

 

[signature page
follows]

  

    	-2-

    	 

    

 

IN WITNESS WHEREOF, Cranshire
and the Company have caused their respective signature page to this Amendment to be duly executed as of the date first written
above.

 

	 	ARCH THERAPEUTICS, INC.	 
	 	 	 	 
	 	 	 	 
	 	By:		 
	 	Name: Terrence W. Norchi, M.D	 
	 	Title:  President, Chief Executive Officer	 
	 	 	 	 
	 	 	 	 
	 	SIGNIFICANT BUYER:	 
	 	 	 	 
	 	 	 	 
	 	CRANSHIRE CAPITAL MASTER FUND, LTD.	 
	 	 	 	 
	 	 	 	 
	 	By: Cranshire Capital Advisors, LLC	 
	 	Its: Investment Manager	 
	 	 	 	 
	 	 	 	 
	 	 	 
	 	By: Keith Goodman	 
	 	Its:  Authorized SignatoryEXHIBIT 4.23

 

AMENDMENT NO. 1 TO TRUST INDENTURE

 

THIS AMENDMENT NO.
1 TO TRUST INDENTURE, dated as of October 24, 2014 (this “Amendment”), amends the Trust Indenture dated as of
October 2, 2007 (as amended and supplemented from time to time, the “Trust Indenture”), by and among, BABCOCK
& BROWN AIR FUNDING I LIMITED, a Bermuda exempted company (the “Issuer”), DEUTSCHE BANK TRUST COMPANY AMERICAS,
a New York banking corporation in its capacity as trustee (the “Trustee”), and as the operating bank and the cash
manager, BNP PARIBAS, a société anonyme under French law, acting through its New York branch (together with
its successors and permitted assigns, the “Initial Liquidity Facility Provider”) and AMBAC ASSURANCE CORPORATION,
a Wisconsin stock insurance company (the “Policy Provider”). Unless otherwise defined in or amended by the terms
of this Amendment, capitalized terms used in this Amendment shall have the meanings assigned in the Trust Indenture.

 

W I T N E S S E T H:

 

WHEREAS, the parties
hereto have previously entered into the Trust Indenture;

 

WHEREAS, the parties
hereto and the Holders of a majority of the Outstanding Principal Balance of the Notes on September 18, 2014 (voting as a single
class) have agreed to amend certain provisions of the Trust Indenture pursuant to Section 9.01 on the terms set forth herein;

 

WHEREAS, in accordance
with Section 9.01 of the Trust Indenture, this Amendment shall apply equally to every Holder whether or not notation thereof is
made on any Note held by such Holder and whether or not such Holder consented or agreed to this Amendment; and

 

WHEREAS, the Issuer
hereby confirms that this Amendment has been authorized by a Board Resolution and that a Rating Agency Confirmation has been received.

 

NOW THEREFORE, for
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

Section 1.               
Amendment to Trust Indenture. The Trust Indenture shall be amended as follows:

 

1.01         
Section 1.01 (Definitions) is hereby amended as follows:

 

(a)         
Insert a new definition of “Aircraft Portfolio” after the definition of “Aircraft Interest” which such
definition shall state:

 

“‘Aircraft Portfolio’ means
more than one aircraft sold concurrently pursuant to one or more Aircraft Agreements, whether to one or more buyers, for which
the Net Sale Proceeds and Note Target Price are calculated on an aggregate basis.”

 

(b)         
Insert a new definition of “Allocable Debt Balance” after the definition of “Aircraft Portfolio” which
such definition shall state:

 

“‘Allocable
Debt Balance’ means for any Aircraft on any date, the product of (i) the aggregate Outstanding Principal Balance of the Notes
Outstanding and (ii) the percentage obtained by dividing (x) the Assumed Base Value of such Aircraft by (y) the Assumed Portfolio
Value.”

 

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(c)         
Insert a new definition of “Anti-Money Laundering Laws” after the definition of “Annual Report” which
such definition shall state:

 

“‘Anti-Money
Laundering Laws’ means any Applicable Law issued by the United States, the United Nations Security Council, the European Union
or Her Majesty’s Treasury of the United Kingdom relating to bribery, corruption, money laundering or terrorist financing,
including, without limitation, the Bank Secrecy Act, 31 U.S.C. sections 5311 et seq.; Title III of the USA Patriot Act; 18 U.S.C.
section 1956; 18 U.S.C. section 1957; and the Financial Recordkeeping and Reporting of Currency and Foreign Transactions Regulations,
31 C.F.R. Part 103.”

 

(d)         
The definition of “Assumed Base Value” shall be amended by replacing it in its entirety with the following:

 

“‘Assumed
Base Value’ means, for any Aircraft on any date, the lesser of the mean and median of the
Base Values in respect of such Aircraft rendered by each of the Appraisers as of the most recent appraisal of such Aircraft conducted
pursuant to Section 5.03(i) hereof.”

 

(e)         
The definition of “Assumed Portfolio Value” shall be amended by replacing it in its entirety with the following:

 

“‘Assumed
Portfolio Value’ means, in respect of any Payment Date and for all Aircraft in the Portfolio (not including any Aircraft acquired
by way of a contribution), the sum of the Assumed Base Values of such Aircraft.”

 

(f)         
The definition of “Average Base Value” shall be amended by replacing it in its entirety with the following:

 

“‘Average
Base Value’ means, for any Aircraft on any date, an amount equal to the Assumed Base Value of such Aircraft.”

 

(g)         
The definition of “Note Target Price” shall be amended by replacing “107%” with “100%”.

 

(h)         
Insert a new definition of “OFAC” after the definition of “Obligations” which such definition shall
state:

 

“‘OFAC’
means the United States Department of the Treasury Office of Foreign Assets Control.”

 

(i)         
Insert a new definition of “OFAC SDN List” after the definition of “OFAC” which such definition shall
state:

 

“‘OFAC SDN
List’ means the list of ’Specially Designated Nationals and Blocked Persons’ maintained from time to time by OFAC.”

 

(j)         
Insert a new definition of “Sanctions” after the definition of “Rule 144A Global Note” which such definition
shall state:

 

“‘Sanctions’
means any Applicable Law issued by the United States, the United Nations Security Council, the European Union or Her Majesty’s
Treasury of the United Kingdom relating to the economic sanctions programs administered by such governmental Person, including
without limitation, the International Emergency Economic Powers Act, 50 U.S.C. sections 1701-1705; the Trading with the Enemy Act,
50 U.S.C. App. sections 1-44; the Office of Foreign Assets Control, Department of the Treasury Regulations, 31 C.F.R. Parts 500
et seq. (implementing the economic sanctions programs administered by OFAC); any European Union restrictive measures implemented
pursuant to any European Union Council or Commission Regulation or Decision adopted pursuant to a Common Position in furtherance
of the European Union’s Common Foreign and Security Policy; United Kingdom sanctions adopted by the Terrorist-Asset Freezing
Etc. Act 2010 or other legislation and statutory instruments enacted pursuant to the United Nations Act 1946 or the European Communities
Act 1972 or enacted by or pursuant to other laws; and any other sanctions laws and regulations applicable to the Issuer and/or
to the Aircraft or any part thereof.”

 

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1.02         
Section 2.16 (Holder Representations and Covenants) shall be replaced in its entirety with the following:

 

“Each
Holder and beneficial owner of a Note, by the purchase of such Note or beneficial interest therein, covenants and agrees that it
will (i) treat such Note as indebtedness for all purposes and will not take any action contrary to such characterization, including,
without limitation, filing any tax returns or financial statements inconsistent therewith and (ii) use commercially reasonable
efforts consistent with its internal practices regarding the handling of its own confidential information to keep information and
reports provided pursuant to Section 2.14 confidential, except that such information and reports may be disclosed to (x) other
beneficial owners of the Notes and (y) financiers of such Holder and providers of credit protection for such Holder’s holdings
of the Notes, provided that such financiers and credit protection providers acknowledge that they will use commercially reasonable
efforts consistent with their internal practices regarding the handling of confidential information to keep information and reports
provided pursuant to this clause (y) confidential; provided further, that, notwithstanding anything to the contrary in subclause
(ii) of this sentence, such information and reports may be disclosed by any recipient as required by law, regulation or judicial
order, and to the re-insurance providers, legal counsel, auditors and other third-party advisors of the recipient
for the specific purpose of the evaluation of such information.”

 

1.03         
Section 5.02 (General Covenants) is hereby amended as follows:

 

(a)         
Section 5.02(b) shall be amended by inserting a new clause (vii) at the end of the second paragraph as follows:

 

“and (vii) any lien for the
purpose of permitting a consignment in connection with any sale permitted under, and effected in accordance with, Section 5.02(g).”

 

(b)         Section 5.02(g)(ii)(C)(b) shall be replaced with the following:

 

“(b) does
not result in a Concentration Default without the prior written consent of the Policy Provider to such sale”

 

(c)         Section 5.02(g)(ii)(C)(c) shall be replaced with the following:

 

“(c) the Net Sale Proceeds
thereof are not less than the Note Target Price with respect to such Aircraft or Aircraft Portfolio.”

 

(d)         Section 5.02 (g)(ii)(E) shall be replaced in its entirety with the following:

 

(E) pursuant
to an Aircraft Agreement (including pursuant to a Purchase Option) the Net Sale Proceeds of which is less than the Note Target
Price, provided that (a) such sales must be for cash only; (b) if in any one calendar year such sales exceed 10% of the then Assumed
Portfolio Value, a resolution approved by the Directors shall be required; (c) prompt written notice has been provided to Moody’s
or such sales do not result in a Concentration Default; (d) prompt written notice has been provided to Standard & Poor’s; and
(e) the prior written consent of the Policy Provider shall have been obtained; provided, however, that any Aircraft for
which 25 years or more have elapsed since the date of manufacture or delivery shall not be subject to Policy Provider consent pursuant
to this subclause (e), or

 

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(e)         A new Section 5.02(s) shall be added as set forth below:

 

(s) OFAC;
Anti-Money Laundering Laws; Sanctions

 

(i) The Issuer
and each Issuer Group Member shall comply at all times in all material respects with the applicable requirements of Anti-Money
Laundering Laws. The Issuer and each Issuer Group Member shall promptly respond to any reasonable request by the Trustee or the
Initial Liquidity Facility Provider to provide to the Trustee or the Initial Liquidity Facility Provider, as the case may be, information
regarding the Issuer or any Issuer Group Member, and their respective Affiliates and subsidiaries necessary for the Trustee or
the Initial Liquidity Facility Provider, as the case may be, to comply with all Anti-Money Laundering Laws and “know your
customer” rules, guidelines, practices and policies observed by the Trustee or the Initial Liquidity Facility Provider, as
the case may be, in connection with the transactions contemplated by this Indenture.

 

(ii) The Issuer
agrees that it will not, directly or indirectly, use any proceeds of the Notes in any manner that would result in a violation of
the requirements of Sanctions by any Person, and shall comply at all times in all material respects with the applicable requirements
of U.S. export control and sanctions laws and regulations.

 

(iii) No Issuer
Group Member shall use any proceeds of the Notes to fund, finance or facilitate any agreement, lease, transaction or dealing with
or for the benefit of any person or entity named in the OFAC SDN List or any person or entity included in, or to the knowledge
of such Issuer Group Member, owned by, controlled by, or acting for or on behalf of, any of the persons or entities referred to
or described in the OFAC SDN List. No Issuer Group Member shall sell, convey, lease or transfer an Aircraft, or allow an Aircraft
to be sold, conveyed, leased or transferred, to or for the benefit of any person or entity named in the OFAC SDN List or any person
or entity included in, or to the knowledge of such Issuer Group Member, owned by, controlled by, or acting for or on behalf of,
any of the persons or entities referred to or described in the OFAC SDN List.

 

1.04         
Section 5.03 (Operating Covenants) is hereby amended as follows:

 

(a)         Section 5.03 (a) Concentration Limits. shall be replaced in its entirety with the following:

 

“(a) Concentration Limits.
The Issuer may permit any Issuer Subsidiary to lease (including any renewal or extension of any existing Lease) any Aircraft; provided
that if entering into a new Lease with a new Lessee in respect of an Aircraft (but, for the avoidance of doubt, not if entering
into any renewal, extension or other modification of an existing Lease with the current Lessee of such Aircraft) would cause the
Portfolio (including after giving effect to the acquisition of any Substitute Aircraft) to exceed any of the Concentration Limits
set forth in Exhibit B hereto (the “Concentration Limits”), the Directors shall enter into a resolution approving
such Lease, the Policy Provider shall provide prior written consent to such Lease and the Issuer shall give written notification
thereof to the Rating Agencies; and provided further that, unless otherwise elected by the Administrative Agent, the Concentration
Limits shall be determined without giving effect to any Aircraft contributed (by way of Equity Contributions) to the Issuer Group.
The Issuer shall not permit any Issuer Group Member to (i) lease (including any renewal or extension of any existing Lease) any
Aircraft to any Lessee habitually based or domiciled in any of the jurisdictions set forth as “Prohibited” in the last
section of the Concentration Limits as set forth on Exhibit B hereto (each such jurisdiction, a “Prohibited Country”),
or (ii) enter into any Lease (including any renewal or extension of any existing Lease) or consent to a sublease that expressly
permits the Lessee to sublease an Aircraft to a sublessee habitually based or domiciled in a Prohibited Country, in each case without
a resolution of the Directors, the prior written consent of the Policy Provider and prior written notice provided to each of Moody’s
and Standard and Poor’s.”

 

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(b)         Section 5.03 (g)(i) shall be replaced in its entirety with the following:

 

“(i) airline
hull insurance (including hull war risks insurance) for each Aircraft in an amount at least equal to the higher of (x) the Assumed
Base Value of such Aircraft or (y) 107% of the Allocable Debt Balance for such Aircraft (or, in each case, the equivalent thereof
from time to time if such insurance is denominated in a currency other than U.S. dollars that is freely convertible into U.S. dollars),
provided that, with the prior written consent of the Policy Provider, if the amount calculated pursuant to clause (y) exceeds the
amount calculated pursuant to clause (x), hull insurance (including hull war risks insurance) for each Aircraft may be maintained
for a lesser amount, but in no event less than 105% of the Assumed Base Value adjusted to account for the half-life condition of
such Aircraft and”

 

1.05         
Section 9.01 (Modification with Consent of Holders, the Policy Provider, the Initial Liquidity Facility Provider and
each Hedge Provider) shall be modified by removing the words “and after the receipt of a Rating Agency Confirmation”
from the first sentence and inserting the following as the last paragraph of Section 9.01:

 

If any clause
of this Indenture requires Rating Agency Confirmation, it is understood and agreed that the Issuer will obtain Rating Agency Confirmation
pursuant to such clause.

 

1.06         
Exhibit B (Concentration Limits) shall be modified by adding the following language:

 

Undesignated
& Prohibited Countries Limits

 

	Number of Aircraft in Portfolio	Maximum Percentage of combined Undesignated & Prohibited Countries (in the aggregate)
	More than 15 Aircraft	25%
	15 or fewer Aircraft	33%

 

For the purposes
of calculating the Maximum Percentage of combined Undesignated & Prohibited Countries (in the aggregate), (i) the numerator
in such calculation shall disregard each Aircraft for which 20 years or more have elapsed between the date of such calculation
and the date of manufacture or delivery of such Aircraft, and (ii) the denominator in such calculation shall disregard each Aircraft
for which 20 years or more have elapsed between the date of such calculation and the date of manufacture or delivery of such Aircraft,
provided that such Aircraft is on lease to a lessee that is habitually based or domiciled in an Undesignated or Prohibited country.  

 

Notwithstanding
anything to the contrary set forth in Section 5.03(a), in no event may the Maximum Percentage of combined Undesignated & Prohibited
Countries (in the aggregate) set forth under “Undesignated & Prohibited Countries Limits” be exceeded in connection
with the entrance into any new Lease with a new Lessee (but, for the avoidance of doubt, not if entering into any renewal, extension
or other modification of an existing Lease with the current Lessee of such Aircraft) except with the consent of (i) the Policy
Provider and (ii) Holders of a majority of the Outstanding Principal Balance of the Notes on the date of any vote of such Holders
(voting as a single class).  

 

For the avoidance
of doubt, the restrictions set forth under “Undesignated & Prohibited Countries Limits” shall not apply to sales
or dispositions permitted pursuant to, and effected in accordance with, Section 5.02(g).

 

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1.07         
Exhibit D (Form of Monthly Report to each Noteholder) shall be modified by adding the following language:

 

(7)            Regarding
each Aircraft:

 

(a)            manufacturer
serial number;

 

(b)            Aircraft
make and model;

 

(c)            date
of manufacture;

 

(d)            Lessee
name;

 

(e)            Lessee
country;

 

(f)            Sublessee
name (if applicable);

 

(g)            Sublessee
country (if applicable);

 

(h)            Lease
start date;

 

(i)             Lease
expiry date;

 

(j)             Lease
payment frequency; and

 

(k)            Assumed
Base Value as of the most recent appraisal.

 

(8)            Notional
schedules for each Hedge Agreement.

 

Section 2.               
Miscellaneous.

 

2.01         
Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

 

2.02            Captions. Captions and section headings appearing herein are included solely for convenience of reference and are
not intended to affect the interpretation of any provision of this Amendment.

 

2.03            Counterparts. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute
one and the same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. The terms
and conditions of this Amendment shall be, and be deemed to be, part of the terms and conditions of the Trust Indenture for any
and all purposes.

 

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2.04            Governing Law. This Amendment shall be deemed a contract under the State of New York and for all purposes shall be
governed by and construed in accordance with the laws of the State of New York.

 

2.05            The Trustee. The recitals contained herein shall be taken as the statements of the Issuer, and the Trustee shall
have no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Amendment.

 

[Intentionally Left Blank]

 

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IN WITNESS WHEREOF,
the parties hereto have caused this Amendment to be duly executed by their respective officers as of the day and year first above
written.

 

	 	BABCOCK &
BROWN AIR FUNDING I LIMITED, as Issuer
	 	 	 
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

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	 	DEUTSCHE
BANK TRUST COMPANY AMERICAS, not in its individual capacity but solely as Trustee
	 	 	 
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 	 
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

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	 	AMBAC ASSURANCE
CORPORATION, as the Policy Provider
	 	 	 
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

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	 	BNP PARIBAS,
as the Initial Liquidity Facility Provider
	 	 	 
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 	 
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

    	11

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