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Exhibit
10.5
SECOND AMENDMENT TO
GUARANTEE FEE, REIMBURSEMENT
AND INDEMNIFICATION
AGREEMENT
This SECOND AMENDMENT
dated as of May 18, 2007 (this “ Second Amendment
”) to the Guarantee Fee, Reimbursement Agreement and
Indemnification Agreement dated as of March 16, 2007, as
amended on April 17, 2007 (as amended, the “
Guarantee Fee Agreement ”), by and between MEDICAL
SOLUTIONS MANAGEMENT INC ., a corporation organized and
existing under the laws of the State of Nevada (the “
MSMI ”), ORTHOSUPPLY MANAGEMENT, INC., a
Delaware corporation (the “ Guarantor ”) and
VICIS CAPITAL MASTER FUND , a sub-trust of Vicis Capital
Series Master Trust, a unit trust organized and existing under the
laws of the Cayman Islands (the “ Fund ”). All
capitalized terms used herein and not otherwise defined shall have
the meaning ascribed to them in the Guarantee Fee
Agreement.
WITNESSETH:
WHEREAS, MSMI proposes to
(i) enter into the amendment, in the form of Exhibit A
attached hereto, to the Revolving Line of Credit Agreement dated as
of March 16, 2007 by and between MSMI and Sovereign Bank
(“ Sovereign ”) (as amended and in effect from
time to time, including pursuant to the Revolving Line of Credit
Amendment (as hereinafter defined) the “ Revolving Credit
Agreement ”) with Sovereign (the “ Revolving
Line of Credit Amendment ”) pursuant to and in connection
with which it shall, among other things, (A) have the ability
to borrow up to an additional principal amount of $1,500,000, for
an original principal total of $3,000,000, from Sovereign,
(B) issue to Sovereign an amended and restated promissory note
in the original principal amount of $3,000,000, and (ii) enter
into an amendment, in the form of Exhibit B attached hereto,
to the Irrevocable Standby Letter of Credit No. 00034 in favor
of the Bank (as amended and in effect from time to time, the
“ Letter of Credit ”) to increase the maximum
drawing amount from $1,530,000 to $3,060,000 (the “ Letter
of Credit Amendment ”).
WHEREAS, pursuant to the
terms of the Guarantee Fee Agreement, MSMI may not amend the
Revolving Credit Agreement and the Letter of Credit without the
prior written consent of the Fund; and
WHEREAS, as consideration for
the Fund’s consent to the Revolving Line of Credit Amendment
and Letter of Credit Amendment, MSMI has agreed to issue to the
Fund warrants, in the form attached hereto as Exhibit B (the
“ May 2007 Warrants ”) to purchase an aggregate
of 3,060,000 shares of Common Stock (the “ May 2007
Warrant Shares ”).
Accordingly, in consideration
of the mutual promises and covenants hereinafter set forth, the
parties hereto agree as set forth below.
OPERATIVE
PROVISIONS
1. Issuance of Warrants .
Immediately upon execution of this Second Amendment, MSMI shall
issue the May 2007 Warrants to the Fund.
2. Representations and Warranties
. MSMI and Guarantor hereby, jointly and severally, represent and
warrant to the Fund as of the date of this Second Amendment as
follows:
(a) Issuance of
Securities . MSMI has authorized the issuance of the May 2007
Warrants, and the May 2007 Warrants have been validly issued, fully
paid and nonassessable and are free from all taxes, Liens and
charges with respect to the issue thereof. MSMI has authorized and
reserved 3,060,000 shares of Common Stock for the issuance upon
exercise of the May 2007 Warrants. The May 2007 Warrant Shares,
when issued and paid for upon exercise of the May 2007 Warrants,
will be validly issued, fully paid and nonassessable and free from
all taxes, Liens and charges with respect to the issue thereof,
with the holders being entitled to all rights accorded to a holder
of the Common Stock. All actions by the board of directors of MSMI,
MSMI, and its stockholders necessary for the valid issuance of the
May 2007 Warrants and the May 2007 Warrant Shares have been
taken.
(b) Authorization;
Enforcement; Validity . The Company has the requisite corporate
power and authority to enter into and perform its obligations under
this Second Amendment, the May 2007 Warrants, and each of the other
agreements or instruments entered into by the parties hereto in
connection with the transactions contemplated by this Second
Amendment (collectively, the “Transaction Documents”).
The Transaction Documents have been duly executed and delivered by
MSMI, and constitute the legal, valid and binding obligations of
the Company enforceable against the Company in accordance with
their respective terms, except (i) as such enforceability may
be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies, and
(ii) as any rights to indemnity or contribution hereunder may
be limited by federal and state securities laws and public policy
consideration.
(c) No Conflicts . The
execution, delivery and performance of the Transaction
Documents
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