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THIRD AMENDMENT TO GUARANTEE FEE, REIMBURSEMENT AND INDEMNIFICATION AGREEMENT

Reimbursement Agreement

THIRD AMENDMENT TO GUARANTEE FEE, REIMBURSEMENT AND INDEMNIFICATION AGREEMENT | Document Parties: MEDICAL SOLUTIONS MANAGEMENT INC. | Caledonian Bank & Trust Limited | ORTHOSUPPLY MANAGEMENT, INC | Vicis Capital Series Master Trust You are currently viewing:
This Reimbursement Agreement involves

MEDICAL SOLUTIONS MANAGEMENT INC. | Caledonian Bank & Trust Limited | ORTHOSUPPLY MANAGEMENT, INC | Vicis Capital Series Master Trust

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Title: THIRD AMENDMENT TO GUARANTEE FEE, REIMBURSEMENT AND INDEMNIFICATION AGREEMENT
Governing Law: Nevada     Date: 11/23/2007

THIRD AMENDMENT TO GUARANTEE FEE, REIMBURSEMENT AND INDEMNIFICATION AGREEMENT, Parties: medical solutions management inc. , caledonian bank & trust limited , orthosupply management  inc , vicis capital series master trust
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Exhibit 10.1

THIRD AMENDMENT TO GUARANTEE FEE,

REIMBURSEMENT AND INDEMNIFICATION AGREEMENT

This THIRD AMENDMENT dated as of November 16, 2007 (this “ Third Amendment ”) to the Guarantee Fee, Reimbursement Agreement and Indemnification Agreement dated as of March 16, 2007, as amended on April 17, 2007 and on May 16, 2007 (as amended, the “ Guarantee Fee Agreement ”), by and among 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 enter into an amendment, in the form of Exhibit A 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 change the expiration date from March 15, 2008 to March 15, 2009 (the “ Letter of Credit Amendment ”).

WHEREAS, pursuant to the terms of the Guarantee Fee Agreement, MSMI may not amend the Letter of Credit without the prior written consent of the Fund; and

WHEREAS, as consideration for the Fund’s consent to the Letter of Credit Amendment, MSMI has agreed to issue to the Fund warrants, in the form attached hereto as Exhibit B (the “ LC Amendment Warrant ”) to purchase an aggregate of 3,060,000 shares of Common Stock (the “ LC Amendment Warrant Shares ”), upon the terms and conditions hereinafter set forth.

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 LC Amendment Warrant . Reference is hereby made to that certain letter agreement, of even date herewith, by and between MSMI and the Fund (the “ Letter Agreement ”) providing for the issuance of the LC Amendment Warrant by MSMI to the Fund. Pursuant to the terms of the Letter Agreement, immediately upon and subject to the effectiveness in the State of Nevada of the amendment to MSMI’s Amended and Restated Articles of Incorporation (as so amended and restated, the “ Articles of Incorporation ”) increasing the number of authorized but unissued shares of Common Stock (the “ Charter Amendment ”), MSMI shall issue the LC Amendment Warrant 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 Third Amendment as follows:

(a) Issuance of Securities . Subject to the effectiveness of the Charter Amendment as described in Section 1 hereof, MSMI has authorized the issuance of the LC Amendment Warrant,

 


and, if and when so issued, the LC Amendment Warrant will be validly issued, fully paid and nonassessable and will be free from all taxes, Liens and charges with respect to the issue thereof. Subject to the effectives of the Charter Amendment as described in Section 1 hereof, MSMI will have authorized and reserved 3,060,000 shares of Common Stock for the issuance upon exercise of the LC Amendment Warrant. The LC Amendment Warrant Shares, if and when issued and paid for upon exercise, if any, of the LC Amendment Warrant, 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 thereupon being entitled to all rights accorded to a holder of the Common Stock. All requisite corporate action by and on the part of MSMI necessary for the valid issuance of the LC Amendment Warrant and the LC Amendment Warrant Shares has been taken.

(b) Authorization; Enforcement; Validity . MSMI has the requisite corporate power and authority to enter into and perform its obligations under this Third Amendment, the LC Amendment Warrant (subject to the effectiveness of the Charter Amendment as described in Section 1 hereof), and each of the other agreements or instruments entered into by the parties hereto in connection with the transactions contemplated by this Third 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 MSMI enforceable against MSMI 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 by MSMI and the consummation by MSMI of the transactions contemplated hereby and thereby (including, without limitation, the reservation for issuance of the LC Amendment Warrant Shares) will not (i) subject to the effectiveness of the Charter Amendment as described in Section 1 hereof, result in a violation of the Articles of Incorporatoin or bylaws of MSMI or the certificate of incorporation or bylaws of the Guarantor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which MSMI or the Guarantor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to MSMI or the Guarantor or by which any property or asset of MSMI or the Guarantor is bound or affected, except in the case of clauses (ii) and (iii), for such breaches or defaults as would not be reasonably expected to have a Material Adverse Effect.

(d) Placement Agent’s Fees . No brokerage or finder’s fee or commission are or will be payable to any Person with respect to the transactions contemplated by this Third Amendment based upon arrangements made by MSMI or any of its affiliates. MSMI agrees that it shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for persons engaged by the Fund) relating to or arising out of the transactions contemplated hereby. MSMI shall pay, and hold the Fund harmless against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any claim for any such fees or commissions.

(e) Confirmation of Representation, Warranties, Covenants . Except as disclosed in the reports, schedules, forms, statements and other documents filed by MSMI since March 16, 2007 with the Securities and Exchange Commission pursuant to the reporting requirements of the

 

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Securities Exchange Act of 1934, as amended, (i) each representation and warranty made by MSMI or the Guarantor in the Guaranty Fee Agreement is true and correct in all material respects as if made as of the date hereof, except for those made with reference to a certain date which has now passed and except that OrthSupply Management LLC, a Massachusetts limited liability company, is no longer a subsidiary of the Guarantor, and (ii) MSMI and the Guarantor have fully complied in all material respects with each covenant in the Guaranty Fee Agreement.

3. Section 9.1 Events of Default . The following are added to the end of Section 9.1, as additional Events of Default:

(i) if MSMI fails to file the Charter Amendment with the State of Nevada and issue the LC Amendment Warrant by February 15, 2008; or

(j) if, without written consent of the Fund, the Letter of Credit is extended beyond March 15, 2009, whether by automatic renewal, request of MSMI, or otherwise.

4. Consent . By its signature below, the Fund hereby consents to the Letter of Credit Amendment.

5. Ratification of Agreement . The terms and conditions of the Guarantee Fee Agreement that have not been modified by this Third Amendment shall remain in full force and effect against MSMI, Guarantor, and the Fund.

6. Counterparts . This Third Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

[signature page to follow on next page]

 

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IN WITNESS WHEREOF, this Third Amendment has been executed by the parties hereto the day and year first above written.

 

MSMI:
MEDICAL SOLUTIONS MANAGEMENT INC.,
a Nevada Corporation
By:  

/s/ Brian Lesperance

  Brian Lesperance, Chief Executive Officer
GUARANTOR:
ORTHOSUPPLY MANAGEMENT, INC.,
a Delaware corporation
By:  

/s/ Brian Lesperance

  Brian Lesperance, Chief Executive Officer
FUND:
VICIS CAPITAL MASTER FUND, a sub-trust of Vicis Capital Series Master Trust
By:   Caledonian Bank & Trust Limited,
  Trustee of Vicis Capital Series Master Trust
By:  

/s/ Keith W. Hughes

Name:   Keith W. Hughes
Title:   Chief Financial Officer

 


EXHIBIT A

IRREVOCABLE STANDBY LETTER OF CREDIT NO. 00034

AMENDMENT NO. 2

AMENDMENT DATE: NOVEMBER 16, 2007

 

BENEFICIARY :   APPLICANT :

SOVEREIGN BANK

3 FRIENDS LANE, 3 RD FLOOR

NEWTOWN, PA 18940

ATTENTION: STANDBY LETTER OF CREDIT DEPARTMENT

 

MEDICAL SOLUTIONS MANAGEMENT INC.

237 CEDAR HILL STREET

MARLBOROUGH, MA 01752

GENTLEMEN/LADIES:

WE HEREBY, BY MEANS OF THIS AMENDMENT NO. 2, AMEND OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. 00034 ORIGINALLY ISSUED ON MARCH 16, 2007 (AS AMENDED BY AMENDMENT NO. 1 THERETO DATED AS OF MAY 15, 2007, THE “ LETTER OF CREDIT ”) AS FOLLOWS:

 

  (A) BY AMENDING AND RESTATING THE “EXPIRATION DATE” SECTION THEREOF IN ITS ENTIRETY TO READ AS FOLLOWS:

 

“EXPIRATION DATE:   

MARCH 15, 2008, SUBJECT TO AUTOMATIC ONE-YEAR RENEWAL AS SET FORTH BELOW, BUT IN ANY EVENT NO LATER THAN MARCH 15, 2009.

 

THIS LETTER OF CREDIT SHALL BE DEEMED AUTOMATICALLY EXTENDED, WITHOUT AMENDMENT, FOR AN ADDITIONAL PERIOD OF ONE (1) YEAR FROM THE EXPIRATION DATE, UNLESS AT LEAST THIRTY (30) DAYS PRIOR TO THE EXPIRATION DATE WE NOTIFY YOU IN WRITING, BY REGISTERED MAIL, AT YOUR ADDRESS STATED ABOVE OR SUCH OTHER ADDRESS OF WHICH YOU NOTIFY US IN WRITING BY REGISTERED MAIL FROM TIME TO TIME, OF OUR INTENTION NOT TO RENEW THIS LETTER OF

 


   CREDIT FOR ANY SUCH ADDITIONAL PERIOD. SUCH NOTICE OF OUR INTENTION TO NOT RENEW THIS LETTER OF CREDIT SHALL AUTHORIZE YOU TO DRAW UPON THIS LETTER OF CREDIT WITHOUT THE NEED TO DELIVER THE WRITTEN STATEMENT DESCRIBED BELOW.”; AND

 

 

(B)

BY DELETING THE PHRASE “THIS LETTER OF CREDIT EXPIRES ON MARCH 15, 2008” CONSTITUTING THE 2 ND PARAGRAPH THEREOF.

THIS AMENDMENT NO. 2 TO THE LETTER OF CREDIT SHALL BE ATTACHED TO THE LETTER OF CREDIT, AND FORM ONE INSTRUMENT THEREWITH. EXCEPT AS MODIFIED EXACTLY AS SET FORTH IN THE IMMEDIATELY PRECEDING PARAGRAPH, ALL TERMS AND CONDITIONS OF THE LETTER OF CREDIT SHALL CONTINUE TO BE IN FULL FORCE AND EFFECT.

VERY TRULY YOURS,

CUSTODIAL TRUST COMPANY

 

 

BEN J. SZWALBENEST
PRESIDENT

 


Exhibit B

THIS WARRANT OR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF A NO-ACTION LETTER(S) FROM THE APPROPRIATE GOVERNMENTAL AUTHORITY(IES), OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THIS WARRANT.

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THAT CERTAIN LOCK-UP AND LEAK-OUT AGREEMENT, DATED AS OF JUNE 28, 2006, AS MAY BE AMENDED OR MODIFIED FROM TIME TO TIME, BY AND BETWEEN MEDICAL SOLUTIONS MANAGEMENT INC. AND THE HOLDER.

SERIES CS WARRANT TO PURCHASE SHARES

OF COMMON STOCK

 

Warrant Number

   CS-

Date of Grant

                                        , 200          (the “ Grant Date ”)

Exercise Term

   The purchase right represented by this Warrant is exercisable, in whole or in part, at any time from the Grant Date and from time to time thereafter through and including the close of business on the date five (5) years from the Grant Date (the “ Expiration Date ”); provided , however , that in the event that any portion of this Warrant is unexercised as of the Expiration Date, the terms of Section 2(b) of this Warrant shall apply.

Name of Holder

   Vicis Capital Master Fund

Right to Purchase the following number of shares of Common Stock of Medical Solutions Management Inc. (subject to adjustment as provided herein)

   3,060,000

Warrant Price

   $0.50

 

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Medical Solutions Management Inc., a Nevada corporation (the “ Company ”), hereby certifies that, for value received, the “ Holder ” identified in the table above, or its registered assigns, is the registered holder of a warrant (the “ Warrant ”) to subscribe for and purchase the number of fully paid and nonassessable Common Stock set forth in the table above (as adjusted pursuant to Section 4 hereof, the “ Warrant Shares ”) of the Company, at a price per share equal to $0.50 (such price and such other price as shall result, from time to time, from the adjustments specified in Section 4 hereof is herein referred to as the “ Warrant Price ”), subject to the provisions and upon the terms and conditions hereinafter set forth.

As used herein, (a) the term “ Common Stock ” shall mean the Company’s presently authorized Common Stock, par value $0.0001 per share, and any stock into or for which such Common Stock may hereafter be converted or exchanged, and (b) the term “ Other Warrants ” shall mean any warrant issued upon transfer or partial exercise of this Warrant. The term “ Warrant ” as used herein shall be deemed to include Other Warrants unless the context hereof or thereof clearly requires otherwise.

 

  1. Term . The term of the purchase right represented by this Warrant as set forth in the table above.

 

  2. Exercise; Expiration; Redemption .

a. Method of Exercise; Payment; Issuance of New Warrant . Subject to Section 1 hereof, the purchase right represented by this Warrant may be exercised by the Holder, in whole or in part and from time to time after the Initial Exercise Date, by the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit A duly executed) at the principal office of the Company and by the payment to the Company of an amount equal to the then applicable Warrant Price multiplied by the number of Warrant Shares then being purchased. The person or persons in whose name(s) any certificate(s) representing shares of Common Stock shall be issuable upon exercise of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for all purposes as the record holder(s) of, the shares represented thereby (and such shares shall be deemed to have been issued) immediately prior to the close of business on the date or dates upon which this Warrant is exercised. In the event of any exercise of the rights represented by this Warrant, certificates for the shares of stock so purchased shall be delivered to the Holder as soon as possible and in any event within thirty (30) days after such exercise and, unless this Warrant has been fully exercised, a new Warrant representing the portion of the Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder as soon as possible and in any event within such thirty (30)-day period.

 

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b. Expiration . In the event that any portion of this Warrant is unexercised as of the Expiration Date, such portion of this Warrant shall automatically expire, and the Holder shall have no rights with respect to such unexercised portion of this Warrant.

c. Maximum . In no event shall the Holder be entitled to exercise any Warrant Shares to the extent that, after such exercise, the sum of the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unexercised portion of the Warrant Shares or any unexercised right held by the Holder subject to a similar limitation), would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock (after taking into account the shares to be issued to the Holder upon such exercise). For purposes of this Section 2(c) , beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. Nothing herein shall preclude the Holder from disposing of a sufficient number of other shares of Common Stock beneficially owned by the Holder so as to thereafter permit the continued exercise of this Warrant.

d. Cashless Exercise . Subject to the provisions hereof, at any time or from time to time prior to the Expiration Date, the Holder shall also have the right to exercise this Warrant or any portion thereof, without payment by the Holder of the Warrant Price in cash or any other consideration (other than the surrender of rights to receive Warrant Shares hereunder), as provided herein (a “ Cashless Exercise ”). Upon a Cashless Exercise with respect to a particular number of Warrant Shares (the “ Exchanged Warrant Shares ”), the Company shall deliver to the Holder (without payment by the Holder of the Warrant Price in cash or any other consideration (other than the surrender of rights to receive Common Stock hereunder) that number of Warrant Shares computed using the following formula:

 

X =   

Y (A - B)

   A

 

Where:    X =    the number of Warrant Shares to be delivered to the holder;
   Y =    the number of Exchanged Warrant Shares;
   A =    the Fair Market Value of the Warrant Shares as determined in accordance with Section 4.
   B =    the Warrant Price (as adjusted through the Cashless Exercise Date)

A Cashless Exercise may be effected by the Holder by the surrender of this Warrant as provided herein, together with a written statement specifying that the Holder thereby intends to effect a Cashless Exercise and indicating the number of Exchanged Warrant Shares which are covered by the Cashless Exercise. Such Cashless Exercise shall be effective

 

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upon receipt by the Company of this Warrant, together with the aforesaid written statement, or on such later date as is specified therein (the “ Cashless Exercise Date ”). The Company shall issue to the Holder as of the Cashless Exercise Date a certificate for the Warrant Shares issuable upon the Cashless Exercise and, if applicable, a new warrant of like tenor evidencing the balance of the Warrant Shares remaining subject to this Warrant.

3. Stock Fully Paid; Reservation of Shares . All Warrant Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance pursuant to the terms and conditions herein, be fully paid and nonassessable, and free from all taxes (other than any taxes determined with respect to, or based upon, the income of the person to whom such shares are issued), liens and charges (other than liens or charges created by actions of the Holder or the person to whom such shares are issued), and pre-emptive rights with respect to the issue thereof. During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant.

4. Adjustment of Warrant Price and Number of Shares . The number and kind of securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows:

a. Reclassification or Merger . In case of any reclassification, change or conversion of securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in case of any merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is the acquiring and the surviving corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or substantially all of the assets of the Company, the Company, or such successor or purchasing corporation, as the case may be, shall duly execute and deliver to the Holder a new Warrant (in form and substance satisfactory to the Holder), so that the Holder shall have the right to receive, at a total purchase price not to exceed that payable upon the exercise of the unexercised portion of this Warrant, and in lieu of the shares of Common Stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change or merger by a holder of the number of shares of Common Stock then purchasable under this Warrant. Such new Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 4 . The provisions of this Section 4(a) shall similarly apply to successive reclassifications, changes, mergers and transfers.

 

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b. Subdivision or Combination of Shares . If at any time while this Warrant remains outstanding and unexpired the Company shall subdivide or combine its outstanding shares of Common Stock, the Warrant Price shall be proportionately decreased in the case of a subdivision or increased in the case of a combination, effective at the close of business on the date the subdivision or combination becomes effective.

c. Stock Dividends . If at any time while this Warrant is outstanding and unexpired the Com


 
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