WAIVER AGREEMENT
Exhibit 10.38
WAIVER AGREEMENT (this “Agreement”) is made as of the 18th day of October 2007, by
and among Remedent, Inc., a Nevada corporation (the “Company”), and the holders set forth on the
signature pages affixed hereto (each a “Consenting Holder” and, collectively, the “Consenting
Holders”).
Recitals
A. The Company, the Consenting Holders and certain other investors (the “Other Investors”)
entered into a Purchase Agreement, dated June 20, 2007 (the “Purchase Agreement”), pursuant to
which the Company issued (i) an aggregate of 6,000,000 shares (the “Shares”) of the Company’s
Common Stock, par value $0.001 per share (the “Common Stock”), and (ii) warrants to purchase an
aggregate of up to 4,500,000 shares of Common Stock (subject to adjustment) (the “Warrants”).
B. In connection with the transactions contemplated by the Purchase Agreement, the Company,
the Consenting Holders and the Other Investors (collectively, the “Holders”) entered into a
Registration Rights Agreements, dated June 20, 2007 (the “Registration Rights Agreement”), pursuant
to which the Company agreed to provide the Holders with certain registration rights with respect to
the Shares and the shares of Common Stock issuable upon the exercise of the Warrants (collectively,
the “Registrable Securities”).
C. In accordance with the terms of the Registration Rights Agreement, on July 20, 2007, the
Company filed a registration statement on Form SB-2 (file no. 333-144745) (the “Registration
Statement”) with the Securities and Exchange Commission (the “Commission”) seeking to register the
Registrable Securities for resale or other disposition by the Holders pursuant to the Securities
Act of 1933, as amended (the “Act”).
D. By letter, dated August 14, 2007 (the “First Comment Letter”), the staff of the Commission
(the “Staff”) requested that the Company advise the Staff as to the Company’s basis for determining
that the resale or disposition of the Registrable Securities by the Investors as contemplated by
the Registration Statement was eligible to be made on a shelf basis under Rule 415(a)(1)(i).
E. In response to the comments raised by the Staff in the First Comment Letter, on September
14, 2007, the Company filed Amendment No. 1 to the Registration Statement (the “First Amendment”)
and submitted a response letter to the Staff in which, among other things, the Company set forth
its analysis of its ability to use Rule 415(a)(1)(i) to effect the registration of the Registrable
Securities.
F. By letter, dated September 25, 2007 (the “Second Comment Letter”), the Staff advised the
Company that the Staff disagreed that the Registrable Securities were eligible to be registered on
a shelf basis pursuant to Rule 415(a)(1)(i).
G. The Company and the Consenting Investors believe that the Staff’s interpretation of Rule
415 as set forth in the Second Comment Letter (the “Staff Interpretation”) is incorrect.
H. The Company and the Consenting Investors believe that the appropriate response to the Staff
Interpretation is to seek review of the Staff Interpretation by the Commission.
I. If the Commission agrees with the Staff Interpretation, the Company and the Consenting
Investors desire to obtain judicial review of the Commission’s position in accordance with Section
9 of the Act.
J. The Company and the Consenting Holders believe it is just and equitable for the Investors
to waive any right to liquidated damages under the Registration Rights Agreement resulting from the
Staff Interpretation so long as the Company is diligently pursuing a review of the Staff
Interpretation.
K. The Consenting Holders constitute the “Required Investors” as defined in the Registration
Rights Agreement.
In consideration of the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and intended to be
legally bound, the parties hereto hereby agree as follows:
1. Not later than 5:30 p.m., New York time, on October 19, 2007, the Company shall file with
the Commission (i) an amendment to the Registration Statement (“Amendment No. 2”), (ii) a response
to the Second Comment Letter (the “Second Response Letter”) and (iii) a request for acceleration of
the effectiveness of the Registration Statement (as amended by Amendment No. 1 and Amendment No. 2)
to 12:00 p.m., New York time, on October 23, 2007 or as soon thereafter as practicable, each in
substantially the forms previously reviewed by the Consenting Holders.
2. If the amended Registration Statement is not declared effective on or prior to 2:00 p.m.,
New York time, on October 23, 2007, then no later than 5:30 p.m., New York time, on October 24,
2007 the Company shall file with the Commission a further amendment to the Registration Statement
(the “Section 8 Amendment”) to remove the delaying legend placed on the Registration Statement
pursuant to Rule 473(a), which Section 8 Amendment shall include the legend specified in Rule
473(b) to the effect that the amended Registration Statement shall thereafter become effective in
accordance with the provisions of Section 8(a) of the Act.
3. In the event that (i) the Commission issues a refusal order pursuant to Section 8(b) of the
Act refusing to declare the amended Registration Statement effective or (ii) the Commission issues
a stop order pursuant to Section 8(d) of the Act, the Company shall, at its own expense, file a
petition for judicial review of any such order in a timely fashion in accordance with the
provisions of Section 9(a) of the Act. Any such petition shall be filed with the United States
Court of Appeals for the District of Columbia Circuit unless the Consenting Holders otherwise
consent in writing. The Company shall diligently prosecute such petition to a final, nonappealable
determination by appropriate proceedings.
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4. In the event that the Commission commences an investigation, examination or other
proceeding with respect to the Registration Statement pursuant to Section 8(e) of the Act, the
Company and, if required, the Consenting Investors, shall cooperate therewith in good faith and
shall take such action as shall be necessary to prohibit the issuance of a stop order pursuant to
Section 8(d) of the Act on the grounds that any of them have failed to cooperate with any such
investigation, examination or other proceeding; provided, however, that no party shall be required
to waive any attorney-client privilege or attorney work product privilege in connection therewith.
5. The Consenting Holders shall have the right to participate or have their counsel
participate in any meetings or discussions with the Staff or the Commission regarding the Staff
Interpretation and to comment or have their counsel comment on any written submission made to the
Staff, the Commission or any court with respect thereto. No such written submission shall be made
by the Company to which the Consenting Holders’ counsel reasonably objects.
6. So long as the Company is in compliance with the terms of this Agreement, the Consenting
Holders, on behalf of all of the Investors, hereby waive any right to liquidated damages accruing
pursuant to Section 2 of the Registration Rights Agreement solely as a result of the failure of the
amended Registration Statement to become effective due to the 415 Interpretation until the earliest
of (i) the date that the Registration Statement (as amended by Amendment No. 1 and Amendment No. 2
and, if necessary, the Section 8 Amendment) is declared effective by the Commission; provided,
however, that if the amended Registration Statement becomes effective automatically pursuant to
Section 8(a) of the Act after the Company has received written notice that the Commission has
ordered an examination, investigation or other proceeding pursuant to Section 8(e) of the Act, the
Registration Statement shall not be deemed to have become effective until such time as sales may be
made thereunder pursuant to Section 5(c) of the Act, (ii) the date which is 10 days after receipt
by the Company of written notice from any Consenting Holder that the Company is in material breach
of the terms hereof is such breach is not cured to the reasonable satisfaction of the Consenting
Holder providing notice of such breach prior thereto, or (iii) the date on which a court of
competent jurisdiction upholds the Staff Interpretation (or modifies the Staff Interpretation in
such a manner that all of the Registrable Securities are not able to be included in the
Registration Statement) by a final and nonappealable judgment.
7. In the event that the Staff Interpretation is upheld (or modified in a such a manner that
all of the Registrable Securities are not able to be included in the Registration Statement) by a
final and nonappealable judgment of a court of competent jurisdiction, the Company shall (i) remove
from the Registration Statement such portion of the Registrable Securities (the “Cut Back Shares”)
and/or (ii) agree to such restrictions and limitations on the registration and resale of the
Registrable Securities as the Staff Interpretation as then in effect may require to assure the
Company’s compliance with the requirements of Rule 415; provided, however, that the Company shall
not agree to name any Investor as an “underwriter” in such Registration Statement without the prior
written consent of such Investor (collectively, the “415 Restrictions”). Any cut-back imposed on
the Investors pursuant to this Section 7 shall be allocated among the Investors on a pro rata
basis, and shall be allocated first to any Warrant Shares, unless the 415 Restrictions otherwise
require or provide. No liquidated damages shall accrue on or as to any Cut Back Shares until such
time as the Company is able to effect the
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registration of the Cut Back Shares in accordance with any 415 Restrictions (such date, the
“Restriction Termination Date”). From and after the Restriction Termination Date, all of the
provisions of Section 2 of the Registration Rights Agreement (including the liquidated damages
provisions) shall again be applicable to the Cut Back Shares; provided, however, that for such
purposes, references to the Closing Date and the Filing Date, as applicable, shall be deemed to be
the Restriction Termination Date.
8. Except as expressly modified hereby, the Registration Rights Agreement shall remain in full
force and effect.
9. Each of the Consenting Holders hereby confirms that the representations and warranties made
by it in Section 5 of the Purchase Agreement are true and correct as of the date hereof and have
been true and correct at all times subsequent to the closing of the transactions contemplated by
the Purchase Agreement.
10. Promptly following the execution of this Agreement, the Company shall provide written
notice of this Agreement to the Investors who are not Consenting Holders, together with a summary
description of the terms hereof.
11. This Agreement shall be governed by, and construed in accordance with, the internal laws
of the State of New York, without reference to the choice of law principles thereof. The parties
agree that the remedy at law for any breach or threatened breach by a party may, by its nature, be
inadequate, and that the other parties shall be entitled, in addition to damages, to a restraining
order, temporary and permanent injunctive relief, specific performance, and other appropriate
equitable relief.
12. This Agreement may be executed in counterparts, each of which shall be deemed and original
and all of which together has constituted one and the same instrument.
[THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by the
undersigned, thereunto authorized, as of the date first set forth above.
| REMEDENT, INC. |
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| By: | /s/ Xxxxx List | |||
| Name: | Xxxxx List | |||
| Title: | Chief Executive Officer | |||
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| SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P. SPECIAL SITUATIONS CAYMAN FUND, L.P. SPECIAL SITUATIONS FUND III Q.P., L.P. |
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| By: | /s/ Xxxxxx X. Xxxxx | |||
| Name: | Xxxxxx X. Xxxxx | |||
| Title: | General Partner | |||
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| Lagunitas Partners L.P. |
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| By: | /s/X. Xxxxxxxxx XxXxxxx | |||
| Name: | on behalf of Xxxxxx & McBaine Capital | |||
| Management, General Partners | ||||
| Title: | ||||
| Xxxxxx & XxXxxxx International |
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| By: | /s/X. Xxxxxxxxx McBaine | |||
| Name: | ||||
| Title: | ||||
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| Potomac Capital Partners LP;
Potomac Capital International Ltd; Pleiades Investment Partners-R LP |
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| By: | ||||
| Name: | ||||
| Title: | ||||
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