AMENDMENT, CONSENT AND WAIVER
Exhibit
10.12
This
AMENDMENT, CONSENT AND WAIVER (this “Amendment,
Consent and Waiver”)
is
dated as of March 31, 2008, by and between MDWERKS, INC., a Delaware corporation
(the “Company”),
and
GOTTBETTER CAPITAL MASTER, LTD. (IN LIQUIDATION), a Cayman Islands company
(the
“Consenting
Holder”).
WITNESSETH
WHEREAS,
pursuant to a Securities Purchase Agreement, dated as of October 19, 2006 (as
amended, the “Securities
Purchase Agreement”),
the
Consenting Holder purchased (i) Senior Secured Convertible Notes in the
aggregate principal amount of $5,000,000 (as amended and restated, the
“Notes”),
(ii)
warrants to purchase an aggregate of 375,000 shares of the Company’s common
stock, $.001 par value per share (the “Common
Stock”),
initially at an exercise price of $2.25 per share subject to adjustment (the
“Series
D Warrants”),
and
(iii) warrants to purchase an aggregate of 375,000 shares of Common Stock
initially at an exercise price of $3.25 per share subject to adjustment (the
“Series
E Warrants”);
WHEREAS,
defined terms used herein but not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Securities Purchase
Agreement;
WHEREAS,
Section 4(k) of the Securities Purchase Agreement prohibits the Company from
issuing or selling rights, warrants or options to subscribe for or purchase
Common Stock at a price less than the then applicable Conversion Price or
Exercise Price;
WHEREAS,
Section 4(o) of the Securities Purchase Agreement grants the Consenting Holder
the right of first refusal to purchase additional securities upon a Subsequent
Placement;
WHEREAS,
Section 4(s) of the Securities Purchase Agreement requires that the Company
obtain the Consenting Holder’s prior written consent to, among other things, the
issuance of certain equity securities of the Company;
WHEREAS,
Section 7 of the Notes provides for adjustment of the Conversion Price (as
defined in the Notes) upon certain issuances of Common Stock, Options or
Convertible Securities at a price less than the Applicable Price;
WHEREAS,
Section 15(c) of the Notes contains a negative covenant regarding the existence
of Liens (as defined in the Notes);
WHEREAS,
Section 15(e) of the Notes contains a negative covenant regarding the issuance
or sale of certain equity securities of the Company;
WHEREAS,
Section 28(o) of the Notes sets forth the definition of the term “Excluded
Securities”;
WHEREAS,
Section 2(a) of the Warrants provides for adjustment of the exercise price
and
number of Warrant Shares (as defined in the Warrants) upon certain issuances
of
Common Stock, Options or Convertible Securities at a price less than the
Applicable Price;
WHEREAS,
in distinct transactions on September 28, 2007, and January 18, 2008, the
Company, with the consent of the Consenting Holder, sold
and issued
to
Vicis Capital Master Fund (“Vicis”)
the
following securities in the aggregate (collectively, the “Bridge
Securities”;
such
sale and issuance, the “Bridge
Issuance”):
(i) 250 shares (the “Bridge
Preferred Shares”)
of the
Company’s Series B Convertible Preferred Stock, par value $.001 per share (the
“Series
B Preferred Stock”);
(ii) warrants to purchase an aggregate of 1,875,000 shares of Common Stock
initially at an exercise price of $2.25 per share (the “Bridge
$2.25 Warrants”);
and
(c) warrants to purchase an aggregate of 1,250,000 shares of Common Stock
initially at an exercise price of $2.50 per share (the “Bridge
$2.50 Warrants”,
and
together with the Bridge $2.25 Warrants, the “Bridge
Warrants”);
WHEREAS,
on September 28, 2007, with the consent of the Consenting Holder, the Company
and Vicis
entered
into that certain Registration Rights Agreement (as heretofore amended, the
“Registration
Rights Agreement”),
which
was amended on January 18, 2008, with the consent of the Consenting
Holder;
WHEREAS,
in consideration for the Consenting Holder’s agreement to that certain
Amendment, Consent and Waiver, dated as of September 28, 2007, regarding, among
other things, the Bridge Issuance, the Company issued to the Consenting Holder
a
Series D Warrant to purchase 500,000 shares of Common Stock;
WHEREAS,
on the date hereof, the Company proposes to
sell
and issue
to
Vicis the following securities (collectively, the “March
2008 Securities”;
such
sale and issuance, the “March
2008 Issuance”;
and
the Securities Purchase Agreement pursuant to which the March 2008 Securities
are being purchased, the “March
Securities Purchase Agreement”):
(i) 750 shares (the “March
2008 Preferred Shares”)
of
Series B Preferred Stock; and (ii) warrants to purchase an aggregate of
53,333,334 shares of Common Stock initially at an exercise price of $0.75 per
share (the “March
2008 Warrants”),
which
exercise price is less than the now applicable Conversion Price or Exercise
Price;
WHEREAS,
on the date hereof, in connection with the March 2008 Issuance, the Bridge
Warrants will be surrender to the Company for cancellation (the “Bridge
Warrant Cancellation”);
WHEREAS,
on the date hereof, the Company proposes to amend and restate its Certificate
of
Designations to, among other things, reduce the conversion price of the Series
B
Preferred Stock to $0.75 per share (the “Series
B Conversion Price Reduction”);
WHEREAS,
the Consenting Holder desires to consent to (i) the March 2008 Issuance, (ii)
the Bridge
Warrant Cancellation
and
(iii) the Series B Conversion Price Reduction;
2
WHEREAS,
the Consenting Holder desires to waive (i) any rights to purchase any of the
March 2008 Securities or other securities as part of or in connection with
the
March 2008 Issuance, (ii) any anti-dilution adjustments arising from the March
Issuance and to which the Consenting Holder may be entitled under the Notes,
the
Series D Warrants, the Series E Warrants or otherwise, and (iii) any potential
breach of any representations, warranties, covenants or agreements that restrict
the Company’s ability to issue and sell additional securities or that preclude
the existence of any Liens in favor of Vicis, to the extent such breach results,
in whole or in part, from the March 2008 Issuance;
WHEREAS,
the Company has requested that the definition of “Excluded Securities” set forth
in the Notes be clarified;
WHEREAS,
the Company and Vicis desire to further amend the Rights Agreement to encompass
any Common Stock issuable upon the conversion of all or any part of the March
2008 Preferred Shares or upon the exercise of all or any portion of the March
2008 Warrants;
WHEREAS,
the Consenting Holder desires to consent to such further amendment of the
Registration Rights Agreement;
WHEREAS,
the Company desires to issue to Xxxxx Xxxxxxx options or warrants to purchase
an
aggregate of 75,000 shares of Common Stock, initially at an exercise price
of
$0.67 per share, which options or warrants are to be issued outside of a Company
Approved Stock Plan (as defined in the Notes) in substitution for options
previously granted to Xxxxx Xxxxxxx to purchase an aggregate of 75,000 shares
of
Common Stock, initially at an exercise price of $0.67 per share, (such new
options or warrants, the “Xxxxxxx
Options”,
and
such issuance, the “Xxxxxxx
Issuance”);
WHEREAS,
the Consenting Holder desires to consent to the Xxxxxxx Issuance and to waive
(i) any rights to purchase any of the Xxxxxxx Options as part of or in
connection with the Xxxxxxx Issuance, (ii) any anti-dilution adjustments arising
from the Xxxxxxx Issuance and to which the Consenting Holder may be entitled
under the Notes, the Series D Warrants, the Series E Warrants or otherwise
and
(iii) any potential breach of any representations, warranties, covenants or
agreements that restrict the Company’s ability to issue and sell additional
securities, to the extent such breach results from the Xxxxxxx
Issuance;
WHEREAS,
the Company desires to issue to Medical Solutions Management Inc., a Nevada
corporation (“MSMI”),
2,000,000 shares of Common Stock in consideration of the Company’s recent
acquisition from MSMI of that certain Management Agreement, dated April 30,
2007, between OrthoSupply Management, Inc. and Deutsche Medical Services, Inc.
(such shares, the “MSMI
Shares”,
and
such issuance, the “MSMI
Issuance”);
WHEREAS,
the Consenting Holder desires to consent to the MSMI Issuance and to waive
(i) any rights to purchase any of the MSMI Shares as part of or in connection
with the MSMI Issuance, (ii) any anti-dilution adjustments arising from the
MSMI
Issuance and to which the Consenting Holder may be entitled under the Notes,
the
Series D Warrants, the Series E Warrants or otherwise and (iii) any potential
breach of any representations, warranties, covenants or agreements that restrict
the Company’s ability to issue and sell additional securities, to the extent
such breach results from the MSMI Issuance;
3
WHEREAS,
Vicis and the Company anticipate that Vicis will provide to the Company (and/or
one or more of the Company’s Subsidiaries) additional financing of up to
$5,000,000 secured by assets of the applicable entities (the “Proposed
Financing”);
WHEREAS,
the Consenting Holder desires to consent to the Proposed Financing and to waive
(i) any rights to purchase any securities that may be issued and sold by
the Company as part of or in connection with the Proposed Financing, (ii) any
anti-dilution adjustments arising from the Proposed Financing and to which
the
Consenting Holder may be entitled under the Notes, the Series D Warrants, the
Series E Warrants or otherwise and (iii) any potential breach of any
representations, warranties, covenants or agreements that restrict the Company’s
ability to issue and sell additional securities or that preclude the existence
of any Liens in favor of Vicis, to the extent such breach results, in whole
or
in part, from the Proposed Financing; and
WHEREAS,
in consideration for the Consenting Holder’s agreement to this Amendment,
Consent and Waiver, the Company has agreed to issue to the Consenting Holder
a
warrant to purchase an aggregate of 1,000,000 shares of Common Stock initially
at an exercise price of $0.75 per share.
NOW,
THEREFORE, in consideration of the mutual promises of the parties hereto and
of
the mutual benefits to be gained by the performance thereof, and for other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledge, the parties hereto hereby agree as follows:
1. The
Consenting Holder hereby consents to
the
March
2008 Issuance and the Bridge
Warrant Cancellation
and,
irrevocably and for an unlimited duration, hereby waives (i) its right to
purchase additional securities of the Company upon the March 2008 Issuance;
(ii)
any potential breach of covenants, representations, warranties or agreements,
that restrict the Company’s ability to issue and sell additional securities, to
the extent such breach results from the March 2008 Issuance; (iii) any potential
breach of representations, warranties, covenants or agreements that preclude
the
existence of any Liens in favor of other Persons, to the extent such breach
results , in whole or in part, from the Liens in favor of Vicis in connection
with the March 2008 Issuance; (iv) any adjustments to the Exercise Price or
number of shares to which the Consenting Holder is entitled upon exercise of
the
Series D Warrants and the Series E Warrants to the extent such adjustment
otherwise would result from the March 2008 Issuance (including the exercise
of
the March 2008 Warrants and the conversion of the March 2008 Preferred Shares);
and (v) any adjustments to the Conversion Price or number of shares to which
the
Consenting Holder is entitled upon conversion of the Notes to the extent such
adjustment otherwise would result from the March 2008 Issuance.
4
2. Section
4(o)(iii)(1) of the Securities Purchase Agreement is hereby deleted
and replaced in its entirety with the following:
“(1) The
Company shall deliver to each Buyer who still holds Notes a written notice
(the
“Offer
Notice”)
of any
proposed or intended issuance or sale or exchange (the “Offer”)
of the
securities being offered (the “Offered
Securities”)
in a
Subsequent Placement, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms upon which such
Offered Securities are to be issued, sold or exchanged, and the number or amount
of the Offered Securities to be issued, sold or exchanged, (y) identify the
persons or entities (if known) to which or with which the Offered Securities
are
to be offered, issued, sold or exchanged and (z) offer to issue and sell to
or
exchange with such Buyers on a pro
rata,
pari
passu
basis
with Vicis Capital Master Fund (“Vicis”)
(based
upon Vicis’s and Buyer’s aggregate initial and subsequent subscription amounts
of $10,000,000 and $5,000,000, respectively), collectively, up to 100% of the
Offered Securities. The Offered Securities that may be purchased by Buyers
shall
be allocated among such Buyers (a) based on each such Buyer’s pro rata
portion of the aggregate principal amount of Notes purchased hereunder (the
“Basic
Amount”),
and
(b) with respect to each such Buyer that elects to purchase its Basic Amount,
any additional portion of the Offered Securities attributable to the Basic
Amounts of other Buyers as such Buyer shall indicate it will purchase or acquire
should the other Buyers subscribe for less than their Basic Amounts (the
“Undersubscription
Amount”).”
3. (a) The
Consenting Holder hereby agrees that subpart (i) of the definition of
“Excluded
Securities” set forth in Section 28(o) of each of the Notes shall be deleted and
replaced in its entirety with the following:
“(i)
in
connection with any Approved Stock Plan up to a maximum of the greater of (x)
five million (5,000,000) shares of Common Stock or (y) ten percent (10%) of
the
Common Stock outstanding at the time of issuance of such Common Stock and/or
Options, Warrants or other Common Stock Purchase Rights (provided that
securities issued in connection with an Approved Stock Plan that are outstanding
as of March 31, 2008, and shares of Common Stock issuable pursuant to exercise
or conversion of such outstanding securities shall not be included for purposes
of calculating such maximum number under (x) or (y));”
(b) The
Consenting Holder hereby agrees that the defined term “Excluded
Securities” in the Series D Warrants, the Series E Warrants, the Series I
Warrants and any other Transaction Documents refers to such term as heretofore
amended and hereby amended.
4. The
Consenting Holder hereby consents to the execution and delivery by the Company
of the Amended and Restated Registration Rights Agreement (the “Amended
and Restated Registration Agreement”)
delivered to Vicis contemporaneously with this Amendment, Consent and Waiver
with respect to the Common Stock issuable upon the conversion of all or any
part
of the March 2008 Preferred Shares or upon the exercise of all or any portion
of
the March 2008 Warrants, with such Amended and Restated Registration Rights
Agreement to be in such form as the Company’s Board of Directors determines to
be reasonable and appropriate. The Consenting Holder hereby consents to the
Company’s performance of its obligations under the Amended and Restated
Registration Rights Agreement, as amended.
5
5. The
Consenting Holder hereby consents to the Xxxxxxx Issuance and,
irrevocably and for an unlimited duration, waives (i) its right to
purchase additional securities of the Company upon the Xxxxxxx
Issuance, (ii) any potential breach of any representations, warranties,
covenants or agreements that restrict the Company’s ability to issue and sell
additional securities, to the extent such breach results from the Xxxxxxx
Issuance, (iii) any adjustments to the Exercise Price or number of shares
to which the Consenting Holder is entitled upon exercise of the Series D
Warrants, the Series E Warrants or the Series I Warrants to the extent triggered
by the Xxxxxxx Issuance and (iv) any adjustments to the Conversion
Price or number of shares to which the Consenting Holder is entitled upon
conversion of the Notes to the extent triggered by the Xxxxxxx
Issuance.
6. The
Consenting Holder hereby consents to the MSMI Issuance and,
irrevocably and for an unlimited duration, waives (i) its right to
purchase additional securities of the Company upon the MSMI
Issuance, (ii) any potential breach of any representations, warranties,
covenants or agreements that restrict the Company’s ability to issue and sell
additional securities, to the extent such breach results from the MSMI Issuance,
(iii) any adjustments to the Exercise Price or number of shares to which
the Consenting Holder is entitled upon exercise of the Series D
Warrants, the Series E Warrants or the Series I Warrants to the extent
such adjustment otherwise would result from the MSMI Issuance and (iv) any
adjustments to the Conversion Price or number of shares to which the
Consenting Holder is entitled upon conversion of the Notes to the extent such
adjustment otherwise would result from the MSMI Issuance.
7. The
Consenting Holder hereby consents to the Proposed Financing in
the maximum aggregate principal amount of $5,000,000 in one or more
transactions secured by such collateral as agreed to by Vicis and the Company
and, irrevocably and for an unlimited duration, waives (i) its right to
purchase additional securities of the Company that may be issued and
sold by the Company as part of or in connection with the Proposed
Financing, (ii) any potential breach of any representations, warranties,
covenants or agreements that restrict the Company’s ability to issue and sell
additional securities or that preclude the existence of any Liens in favor
of
Vicis, to the extent such breach results from the Proposed Financing, (iii)
any
adjustments to the Exercise Price or number of shares to which the
Consenting Holder is entitled upon exercise of the Series D Warrants, the Series
E Warrants or the Series I Warrants to the extent such adjustment otherwise
would result from the Proposed Financing and (iv) any adjustments to
the Conversion Price or number of shares to which the Consenting Holder is
entitled upon conversion of the Notes to the extent such adjustment otherwise
would result from the Proposed Financing.
8. Except
as
expressly amended hereby, the Securities Purchase Agreement is hereby ratified
and confirmed in every respect and shall remain in full force and effect in
accordance with its terms.
6
9. In
consideration for the Consenting Holder’s agreement to this Amendment, Consent
and Waiver, the Company hereby agrees to issue to the Consenting Holder a
warrant to purchase an aggregate of 1,000,000 shares of Common Stock initially
at an exercise price of $0.75 per share subject to adjustment (the “Series
I Warrant”).
The
Company herewith delivers to the Consenting Holder such Series I Warrant in
substantially the form attached hereto as Exhibit
A.
10. This
Amendment, Consent and Waiver shall be construed and enforced in accordance
with
the laws of the State of New York.
11. This
Amendment, Consent and Waiver may be executed in two counterparts, both of
which
shall together constitute a single agreement. A facsimile or other electronic
transmission of an executed counterpart signature page shall be deemed to
constitute an original executed counterpart signature page.
[SIGNATURE
PAGE FOLLOWS]
7
IN
WITNESS WHEREOF, the parties hereto have duly executed this
Amendment,
Consent
and Waiver as of the day and year first above written.
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By:
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/s/ Xxxxxx X. Xxxx |
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Name: Xxxxxx
X. Xxxx
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Title: Chief
Executive Officer
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GOTTBETTER
CAPITAL MASTER, LTD.
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(IN
LIQUIDATION)
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By:
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/s/ Xxxxxx Xxxxxxxx |
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Name:
Xxxxxx
Xxxxxxxx
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Title:
Liquidator
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8
EXHIBIT
A
FORM
OF SERIES I WARRANT
9
