AGREEMENT AND AMENDMENT
THIS AGREEMENT (this "Agreement") is made as of the __th day
of June, 1998, by and between MedCare Technologies, Inc., a corporation duly
organized and existing under the laws of the State of Delaware (the "Company"),
and the undersigned subscriber executing this Agreement ("Subscriber").
Recitals
WHEREAS, the Company issued and sold Series A Preferred Stock to the
Subscriber on or about July 8, 1997 (the "Initial Closing"); and
WHEREAS, the parties entered into a Regulation D Securities
Subscription Agreement (the "Subscription Agreement"), a Registration Rights
Agreement (the "Registration Rights Agreement") and an Irrevocable Instructions
to Transfer Agent (the "Irrevocable Instructions") in conjunction with the
placement of Series A Preferred Stock, each dated on or about July 8, 1997; and
WHEREAS, such Series A Preferred Stock was accompanied by a warrant
(the "Preferred Warrant") to purchase an amount of additional Series A Preferred
Stock up to the amount purchased by the Subscriber in the Initial Closing; and
WHEREAS, Subscriber hereby exercises its Preferred Warrant to purchase
additional Series A Preferred Stock, subject to the effectiveness of the
Registration Statement (as defined in the Registration Rights Agreement) as
further described below; and
WHEREAS, the parties desire to increase the maximum amount of Series A
Preferred Stock which may be issued from $3,000,000 to $3,300,000; and
WHEREAS, the parties desire to establish an escrow account (the "Escrow
Account") to hold the Series A Preferred Stock to be issued upon exercise of the
Preferred Warrants (the "New Preferred Stock") and the purchase price of the
Preferred Stock until the Registration Statement (as defined in the Registration
Rights Agreement) is declared effective;
NOW THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. The Subscription Agreement, the Registration Rights
Agreement and the Irrevocable Instructions are each hereby amended by this
Agreement (the "Amendment") to increase the aggregate maximum amount of Series A
Preferred Stock which can be offered and sold from $3,000,000 to $3,300,000.
Section 4.12 of the Subscription Agreement is hereby amended to allow the
closings of New Preferred Stock contemplated by this Agreement. Except with
respect to the above changes, the originals of the above agreements shall remain
in full force and effect.
Medcare (Final) Amendment and Agreement 1
2. The parties agree that, with respect to the New Preferred
Stock only, no Late Filing Payments and no Late Registration Payments shall be
deemed to have accrued prior to November 20, 1998, and Subscriber hereby waives
any right it may have now or in the future to receive payments which may have
accrued or may accrue prior to such date. Nothing in this section shall affect
the Subscriber's rights with respect to its Series A Preferred Stock that was
outstanding prior to the exercise of its Preferred Warrant.
3. The Subscriber hereby reasserts its representations and
warranties in Section 2 of the Subscription Agreement and its acknowledgments
in Section 3 of the Subscription Agreement as of the date hereof. The Company
hereby reasserts its representations and warranties in Section 4 of the
Subscription Agreement (except Section 4.12) as of the date hereof.
4. The Subscriber agrees to submit its executed Preferred
Warrant exercise form concurrently herewith and to wire the Exercise Price of
$10,000 per share of New Preferred Stock into the Escrow Account within two (2)
business days after the date of its execution of this Agreement.
The Company agrees to redeem the New Preferred Stock from the
Subscriber for $10,000 per share if the Registration Statement is not declared
effective and available for use for the resale of the Common Stock issuable upon
conversion of all Series A Preferred Stock held by Subscriber, including but not
limited to Subscriber's New Preferred Stock, by November 20, 1998.
5. The Last Closing Date for the Series A Preferred Stock,
including the New Preferred Stock, shall be deemed to be July 8, 1997, provided,
however, as follows:
A. With respect to the New Preferred Stock,
accretion, Premium, and "N," each as defined and described in
the Certificate of Designation of Series A Preferred Stock,
shall be deemed to accrue from the date (the "Date of
Exercise") that, in connection with the consummation of the
purchase by Subscriber of the New Preferred Stock from the
Company, the Escrow Agent (as defined in the Escrow Agreement)
first had in its possession funds representing full payment
for the shares of Series A Preferred Stock for which
conversion is being elected; provided, however, that if the
New Preferred Stock is redeemed pursuant to Section 4 above,
no accretion or Premium shall be payable; and
B. As set forth in the Preferred Warrant,
notwithstanding the rights and preferences of the Preferred
Stock set forth in the Certificate of Designation, Holder
hereby agrees to limit conversions of the New Preferred Stock
obtained upon exercise of this Warrant into Common Stock to a
maximum of twenty percent (20%) per month of the aggregate
number of shares of Preferred Stock issuable upon full
exercise of this Warrant for a period of five (5) months
following the Date of Exercise, as defined above (the number
of shares that may be converted at any given time, in the
aggregate, is referred to hereinafter as the "Preferred
Warrant Conversion Quota"); and provided, further, in the
event Holder elects not to convert its full Preferred Warrant
Conversion Quota during any one (1) month period, the
unconverted amount shall be carried forward and added to the
Preferred Warrant Conversion Quota, and thereafter Holder may,
from time to time, convert any portion of the Preferred
Warrant Conversion Quota; and provided further, that
subsequent to the date that is five (5) months following the
Date of Exercise, there shall be no restrictions on the number
of shares of Preferred Stock obtained upon exercise of this
Warrant that may be converted into Common Stock other than as
set forth in the Certificate of Designation, if applicable.
6. The Subscriber agrees and acknowledges that it is not
entitled to additional Preferred Warrants, Nine Month Warrants, Twelve Month
Warrants or Fifteen Month Warrants (each as defined in the Subscription
Agreement) in conjunction with the exercise of its Preferred Warrants and the
issuance of the New Preferred Stock.
7. Company hereby agrees to undertake any reasonable actions
necessary to facilitate the Subscribers' efforts after July 8, 1998 to convert
any or all of their respective shares of existing Series A Preferred Stock into
freely tradeable common stock in compliance with Rule 144.
8. The parties hereby agree to establish an escrow account,
pursuant to the Escrow Agreement and Instructions (the "Escrow Agreement")
attached hereto as Exhibit A, to hold the New Preferred Stock and the purchase
price of the Preferred Stock until the Registration Statement (as defined in the
Registration Rights Agreement) is declared effective; provided that if the
Registration Statement is not declared effective by November 20, 1998, then the
New Preferred Stock and the purchase price will each be returned to their
respective senders.
9. If the Registration Statement is declared effective as
required herein on or before November 20, 1998, the Company shall promptly upon
such effectiveness issue to Subscriber a warrant (the "3 Month Warrant"), in the
form attached hereto as Exhibit B, giving the Subscriber the right, for a term
of three (3) months after the effective date of the Registration Statement, to
purchase shares of Common Stock of the Company at a price of $7.346 per share.
The 3 Month Warrant shall cover the same number of shares of Common Stock
initially covered by the 15 Month Warrant issued to Subscriber dated on or about
June 20, 1998. The Common Stock issuable upon exercise of the 3 Month Warrant
shall not be registered and shall be restricted stock that may not be resold
absent an exemption from registration.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of June __, 1998.
MEDCARE TECHNOLOGIES, INC. SUBSCRIBER:
By:
Print Name: By:
Its: Print Name:
Its:
Medcare (Final) Amendment and Agreement 2
