FIFTH AMENDMENT TO SECURITIES PURCHASE AGREEMENT
Exhibit
10.17
FIFTH
AMENDMENT TO SECURITIES PURCHASE AGREEMENT
THIS
FIFTH AMENDMENT TO SECURITIES PURCHASE AGREEMENT is made on October 13, 2010
(this “Agreement”),
by and between Bison Capital Equity Partners II-A, L.P., a Delaware limited
partnership, and Bison Capital Equity Partners II-B, L.P., a Delaware limited
partnership (collectively, “Purchaser”),
on the one hand, and The Center for Wound Healing, Inc., a Nevada corporation
(the “Company”),
on the other hand. Any capitalized term used but not otherwise
defined herein shall have the same meaning as set forth in the Securities
Purchase Agreement dated as of March 31, 2008 by and between Purchaser and the
Company, as amended by the First Amendment to Securities Purchase Agreement
dated as of April 16, 2009, the Second Amendment to Securities Purchase
Agreement dated February 12, 2010, the Third Amendment to Securities Purchase
Agreement dated May 24, 2010 and the Fourth Amendment to Securities Purchase
Agreement dated September 17, 2010 (as otherwise amended, the “Securities
Purchase Agreement”).
WHEREAS,
the Company has requested certain covenant adjustments from Purchaser;
and
WHEREAS,
the parties desire to waive and amend certain provisions of the Securities
Purchase Agreement subject to the terms and conditions set forth
herein.
NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. The
definition of “Consolidated
Adjusted EBITDA” set forth in Section 1.1 of the
Agreement is hereby amended and restated in its entirety to read as
follows:
The
definition of “Consolidated
Adjusted EBITDA” set forth in Section 1.1 of the
Agreement is hereby amended and restated in its entirety to read as
follows:
“Consolidated
Adjusted EBITDA" shall mean, with respect to the Company and its
Subsidiaries during a specified period of time, the sum of the following, each
calculated for such period:
(a)
Consolidated Net Income before taxes for such period (excluding (i) pre-tax
gains on the sale of assets, (ii) other pre-tax extraordinary or non-recurring
gains and (iii) any non-cash adjustments resulting from the existence of any
embedded derivatives contained in the Warrant Agreement or arising from the
issuance of Warrant Securities as may be required by FASB Statement No. 133 or
EITF Issue No. 00-19);
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plus
(b) the
sum of the following without duplication and to the extent reflected as a charge
in the statement of such net income for such period: (i) interest
expense, (ii) depreciation, (iii) amortization, (iv) any non-cash stock
compensation expense, (v) any non-cash expense resulting from the issuance of
the Warrant and the Note, (vi) solely for purposes of measuring the Consolidated
Adjusted EBITDA for any quarter in fiscal year 2008, up to $1,000,000 in
the aggregate of non-recurring expenses that are identified in amounts of
the end of each quarter of fiscal year 2008 when publicly filed that are
reasonably approved (as non-recurring expenses) by Purchaser and that were
included in the calculation of Consolidated Net Income during such quarter,
and (v) each of the following amounts (without duplication) (collectively, the
“Addbacks”),
provided, that
each Addback shall only be taken into account in the calculation of Consolidated
Adjusted EBITDA (1) for purposes of determining compliance with Section 9.18(a) and
(2) for the month in which the expense related to such Addback (as described
below) was recognized:
(A) up to
$358,859 related to expense recognized in the quarter ended June 30, 2009 to
write off receivables from revenue recognized prior to December 31, 2008 and due
from St. John’s and St. Mary’s hospitals;
(B) up to
$900,000 related to expense recognized in the quarter ended June 30, 2009 to
write off receivables from revenue recognized prior to December 31, 2008 and due
from parties other than St. John’s and St. Mary’s hospitals;
(C) up to
$133,445 related to expense recognized in the quarter ended September 30, 2009
associated with the Xxxxxx litigation;
(D) up to
$8,865 related to expense recognized in the quarter ended September 30, 2009 and
$40,368 in the quarter ended December 31, 2009 associated with Med Air legal
expenses;
(E) up to
$118,747 related to expense recognized in the quarter ended December 31, 2009
associated with the Xxxxxx and Xxxxx settlement;
(F) up to
$155,872 related to expense recognized in the quarter ended December 31, 2009
associated with the Company’s financial statement restatement;
(G) up to
$41,369 related to expense recognized in the quarter ended December 31, 2009
associated with the Company’s tax disclosure footnote restatement and
correction;
(H) up to
$45,612 related to expense recognized in the quarter ended December 31, 2009
associated with capital raising activities;
(I)
$500,000 in the quarter ended March 31, 2010;
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(J)
$1,800,000 related to expense recognized in the quarter ended March 31, 2010 to
write off receivables from revenue recognized prior to July 1,
2009;
(K)
$88,000 related to expense recognized in the quarter ended March 31, 2010 to
write off receivables from revenue recognized within the fiscal year ended June
30, 2010 prior to the quarter ended March 31, 2010; and
(L)
$63,000 related to expense recognized in the quarter ended June 30, 2010 to
write off receivables from revenue recognized within the fiscal year ended June
30, 2010 prior to the quarter ended December 31, 2009.
minus
(c) each
of the following:
(i)
interest income calculated in determining net income for such
period;
(ii) for
the quarter ended December 31, 2009, the amount of the Addback described in
clause (b)(v)(K) immediately above;
(iii) for
the quarter ended September 30, 2009 the amount of the Addback described in
clause (b)(v)(L) immediately above;
provided, that
(A) the Consolidated Adjusted EBITDA of any Person or business disposed of
for consideration by any Credit Party during such period shall be excluded for
such period (the consummation of such disposition and the repayment of any
Indebtedness in connection therewith shall be assumed to have occurred on the
first day of such period); (B) Consolidated Adjusted EBITDA shall not include
any income of a Person that is not consolidated with the Company or that cannot
be distributed to the Company due to any Contractual Obligation or Requirement
of Law; and (C) all amounts included in or excluded from this definition shall
be calculated in accordance with GAAP.”
2. Section
10.1(v) of the Securities Purchase Agreement is hereby amended to change the
reference of “March 31, 2011” in clause (a) of such Section 10.1(v) to “July 1,
2011”.
3. Each
of the Company, its subsidiaries, affiliates, officers, directors and
representatives (together, the “Releasing
Parties”) fully releases and discharges forever Purchaser and its current
and former agents, employees, officers, directors, owners, partners,
shareholders, trustees, representatives, attorneys, subsidiaries, divisions,
related corporations, assigns, successors, and affiliated organizations
(hereafter referred to collectively as the “Released
Parties”), and each and all of them, from any and all liabilities,
claims, causes of action, charges, complaints, obligations, costs, losses,
damages, injuries, attorneys’ fees, and other legal responsibilities, of any
form whatsoever, whether known or unknown, unforeseen, unanticipated,
unsuspected or latent, which the Releasing Parties have incurred or expect to
incur, or now own or hold, or have at any time heretofore owned or held, or may
at any time own, hold, or claim to hold by reason of any matter or thing arising
from any cause whatsoever prior to the date of this Agreement. This
Agreement does not purport to release claims that cannot be released as a matter
of law.
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Each
Releasing Party acknowledges and intends that the Released Parties are being
released from unknown and unforeseen claims to the fullest extent permitted by
law and each Releasing Party waives any defenses based thereon. Each
Releasing Party expressly waives and relinquishes all rights and benefits that
the Releasing Party may have under any statute or other applicable law
comparable to Section 1542 of the California Civil Code, which Section 1542 is
intended to protect against an inadvertent release of unknown or unsuspected
claims, and reads as follows:
“Section
1542. [General Release; extent.] A general release does not extend to claims
which the creditor does not know or suspect to exist in his or her favor at the
time of executing the release, which if known by him or her must have materially
affected his or her settlement with the debtor.”
Each
Releasing Party, being aware of said Section 1542, hereby expressly waives any
rights the Releasing Party may have under any statutes, other applicable law or
common law principles of similar effect, with respect to the claims purported to
be released hereby.
Each
Releasing Party covenants and agrees never to commence, prosecute or assist in
any way, or cause, permit or advise to be commenced or prosecuted, any action,
proceeding, or discovery against any Released Party based on any released
claim.
Each
Releasing Party agrees to indemnify and hold Purchaser and the other persons and
entities released by this Agreement harmless from and against any and all claims
arising from or in connection with any action or proceeding brought by it or for
its benefit or on its initiative contrary to the provisions of this
Agreement. This Agreement shall be deemed breached and a cause of
action shall accrue immediately upon the commencement of any action or
proceeding contrary to this Agreement, and in any such action or proceeding this
Agreement may be pleaded as a defense by any person or entity released by this
Agreement, or may be asserted by way of cross-complaint, counterclaim or
cross-claim in any such action or proceeding.
4. In
partial consideration of Purchaser’s agreement to enter into this Agreement, the
Company shall, within 3 business days of demand therefor, reimburse Purchaser
for all attorneys’ fees and expenses actually incurred by or on behalf of
Purchaser pursuant to, in respect of or otherwise in connection with this
Agreement or the Existing Default. The payment of all such amounts
shall be made by wire transfer of immediately available funds to an account
designated by Purchaser.
5. This
Agreement amends the Securities Purchase Agreement and all references to the
Securities Purchase Agreement shall be deemed to incorporate this
Agreement. All other terms and conditions of the Transaction
Documents shall remain in full force and effect and shall not be affected by
this Agreement.
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6. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original as against any party whose signature appears hereon,
and all of which shall together constitute one and the same
instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as the signatories.
7. Sections 14.5, 14.6, 14.7 and 14.8 of the
Securities Purchase Agreement are hereby incorporated by reference and made a
part of this Agreement mutatis
mutandis, except that the references therein to “this Agreement” shall
include this Agreement.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties hereto have each caused this Agreement to be duly
signed as of the date first above written.
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BISON
CAPITAL EQUITY PARTNERS
II-A,
L.P.
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By:
BISON CAPITAL PARTNERS II,
LLC,
its general partner
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By:
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/s/ Xxxxx X. Xxxxxxxxx
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Name:
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Xxxxx
X. Xxxxxxxxx
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Title:
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Managing
Member
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BISON
CAPITAL EQUITY PARTNERS
II-B,
L.P.
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By:
BISON CAPITAL PARTNERS II,
LLC,
its general partner
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By:
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/s/ Xxxxx X. Xxxxxxxxx
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Name:
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Xxxxx
X. Xxxxxxxxx
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Title:
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Managing
Member
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THE
CENTER FOR WOUND HEALING,
INC.
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By:
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/s/ Xxxxxx X. Xxxxxxx
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Name:
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Xxxxxx
X. Xxxxxxx
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Title:
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Chief
Executive Officer
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Signature
Page of Fifth Amendment
