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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.
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| MSMI: |
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| MEDICAL SOLUTIONS MANAGEMENT INC., |
| a Nevada Corporation |
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| By: |
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/s/ Brian
Lesperance
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Brian
Lesperance, Chief Executive Officer |
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| GUARANTOR: |
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| ORTHOSUPPLY MANAGEMENT, INC., |
| a Delaware corporation |
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| By: |
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/s/ Brian
Lesperance
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Brian
Lesperance, Chief Executive Officer |
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| FUND: |
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| VICIS CAPITAL MASTER FUND, a sub-trust of Vicis Capital Series
Master Trust |
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| By: |
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Caledonian Bank & Trust Limited, |
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Trustee
of Vicis Capital Series Master Trust |
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| By: |
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/s/ Keith W.
Hughes
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| Name: |
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Keith W.
Hughes |
| Title: |
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Chief
Financial Officer |
EXHIBIT A
IRREVOCABLE STANDBY LETTER OF
CREDIT NO. 00034
AMENDMENT NO. 2
AMENDMENT DATE: NOVEMBER 16,
2007
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| BENEFICIARY : |
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APPLICANT : |
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SOVEREIGN BANK
3 FRIENDS LANE, 3 RD FLOOR
NEWTOWN, PA 18940
ATTENTION: STANDBY LETTER OF CREDIT
DEPARTMENT
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MEDICAL SOLUTIONS MANAGEMENT
INC.
237 CEDAR HILL STREET
MARLBOROUGH, MA 01752
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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:
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(A) |
BY AMENDING AND RESTATING THE “EXPIRATION DATE”
SECTION THEREOF IN ITS ENTIRETY TO READ AS FOLLOWS: |
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| “EXPIRATION DATE: |
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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
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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 |
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(B)
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BY DELETING THE PHRASE
“THIS LETTER OF CREDIT EXPIRES ON MARCH 15, 2008”
CONSTITUTING THE 2 ND PARAGRAPH THEREOF.
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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
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| 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
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Warrant Number
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CS- |
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Date of Grant
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, 200 (the
“ Grant Date ”) |
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Exercise Term
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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. |
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Name of Holder
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Vicis
Capital Master Fund |
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Right to Purchase the following
number of shares of Common Stock of Medical Solutions Management
Inc. (subject to adjustment as provided herein)
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3,060,000 |
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Warrant Price
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$0.50 |
Page 1
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.
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1. |
Term . The term of the purchase right represented by
this Warrant as set forth in the table above. |
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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.
Page 2
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:
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X = |
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the
number of Warrant Shares to be delivered to the holder; |
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Y = |
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the
number of Exchanged Warrant Shares; |
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A = |
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the Fair
Market Value of the Warrant Shares as determined in accordance with
Section 4. |
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B = |
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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
Page 3
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.
Page 4
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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