EXHIBIT 10.22
AMENDMENT AND WAIVER
AGREEMENT
THIS
AMENDMENT AND WAIVER AGREEMENT (this “ Agreement
”) dated as of August ___, 2009, is entered into among Visual
Management Systems, Inc, a Nevada corporation (the “
Company ”) and the holders of the Company’s
Original Issue Discount 5% Senior Secured Convertible Debentures
(individually, a “ Holder ” and collectively,
the “ Holders ”). Capitalized terms used but
not otherwise defined herein shall have the meanings ascribed to
such terms in the Purchase Agreement or the Debentures (each as
defined below).
WHEREAS, pursuant to a Securities Purchase Agreement, as
amended, (the “ Purchase Agreement ”) dated
November 29, 2007, between the Company and the Holders, the Company
sold Original Issue Discount 5% Senior Secured Convertible
Debentures (the “ Debentures ”) to the Holders,
in the aggregate sum of $3.75 million in Principal Amount;
and
WHEREAS, the Company has requested that the Holders agree to
certain waivers and amendments under the Transaction Documents, and
the Holders have agreed to such request, subject to the terms and
conditions of this Agreement;
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each
Holder hereby agrees as follows:
1.
Waiver of Defaults on the Debentures . The Holders hereby
waive the Company’s compliance with Section 8(a)(i)(B) of the
Debentures in connection with the Company’s failure to pay
interest since August 2008, and failure to make payments pursuant
to the Monthly Redemption beginning in November 2008 and continuing
through the date of this Agreement (the “ Limited Default
Waiver ”). This Limited Default Waiver shall not affect
the rights set forth in Section 8 of the Debentures with respect to
any other present or future Events of Default.
2.
Adjusted Principal Amount . The Company hereby agrees to
issue to each Holder in exchange for such Holder’s
Debentures, an amended and restated debenture (the “
Amended and Restated Debentures ”) with a principal
amount equal to the Principal Amount of such Holder’s current
Debenture plus all outstanding and unpaid interest due and payable
on such Debenture as of the date hereof. The individual principal
amounts of the Amended and Restated Debentures are as set forth on
Schedule A attached hereto. Other than as amended hereunder,
the rights and obligations of the Holders and the Company with
respect to the Amended and Restated Debentures shall be identical
in all respects to the rights and obligations of the Holders and
the Company with respect to the Debentures and the Underlying
Shares issued and issuable pursuant to each Purchase Agreement. For
clarity, the Purchase Agreement and all Transaction Documents
thereunder are hereby amended so that the term “
Debentures ” includes the Amended and Restated
Debentures and the term “ Underlying Shares ”
includes the shares of Common Stock issuable upon conversion and
redemption thereof, and the term “ Transaction
Documents ” shall be amended to include this Agreement.
The Amended and Restated Debentures are being issued in
substitution for and not in satisfaction of the outstanding
Debentures of each Holder. Upon the written request of either any
of the Holders or the Company, each party shall use commercially
reasonable efforts to deliver the instruments representing the
original Debentures to the Company in exchange for such
Holder’s Amended and Restated Debenture that reflect the
revised terms of such securities as set forth in this
Agreement.
3.
Adjustment to the Conversion Price . The Company hereby
agrees to amend the terms of the Amended and Restated Debenture as
follows:
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(a) The
Conversion Price of the Amended and Restated Debentures shall be
reduced to be equal to (a) from the date hereof until January 1,
2010, $0.10 per share, subject to adjustment therein and (b) from
January 1, 2010 until the Maturity Date, 80% of the lowest
daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on
which the Common Stock is then listed or quoted as reported by
Bloomberg L.P. during the 20 Trading Days immediately prior to the
applicable Conversion Date, but in no case less than $0.00625. As
such, Section 4(b) of the Amended and Restated Debentures is hereby
deleted in its entirety and replaced with the following:
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“ Conversion
Price . From August __, 2009 until January 1, 2010, the
conversion price in effect on any Conversion Date shall be equal to
$0.10, subject to adjustment herein (the “
Conversion Price ”) and, from January 1, 2010 until
the Maturity Date, the conversion price in effect on any Conversion
Date shall be equal to the lesser of (a) $0.10 , subject to
adjustment herein (the “ Set Price ”) and (b)
80% of the lowest daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. during the 20 Trading Days
immediately prior to the applicable Conversion Date, but in no case
less than $0.00625 (subject to adjustment herein) (the “
Conversion Price ”).”
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(b) Section
5(a) of the Amended and Restated Debenture shall be deleted in its
entirety and replaced with the following:
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“ Stock Dividends and
Stock Splits . If the Company, at any time while this Debenture
is outstanding: (A) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on
shares of Common Stock or any Common Stock Equivalents (which, for
avoidance of doubt, shall not include any shares of Common Stock
issued by the Company upon conversion of, or payment of interest
on, the Debentures); (B) subdivides outstanding shares of Common
Stock into a larger number of shares; (C) combines (including by
way of a reverse stock split) outstanding shares of Common Stock
into a smaller number of share; or (D) issues, in the event of a
reclassification of shares of the Common Stock, any shares of
capital stock of the Company, then the Set Price shall be
multiplied by a fraction of which the numerator shall be the number
of shares of Common Stock (excluding any treasury shares of the
Company) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made
pursuant to this Section shall become effective immediately after
the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or re-classification.”
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(c) Section
5(b) of the Amended and Restated Debenture shall be deleted in its
entirety and replaced with the following:
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“ Subsequent Equity
Sales . If, at any time while this Debenture is outstanding,
the Company or any Subsidiary, as applicable, sells or grants any
option to purchase or sells or grants any right to reprice, or
otherwise disposes of or issues (or announces any sale, grant or
any option to purchase or other disposition), any Common Stock or
Common Stock Equivalents entitling any Person to acquire shares of
Common Stock at an effective price per share that is lower than the
then Set Price (such lower price, the “ Base Conversion
Price ” and such issuances, collectively, a “
Dilutive Issuance ”) (if the holder of the Common
Stock or Common Stock Equivalents so issued shall at any time,
whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or
otherwise, or due to warrants, options or rights per share which
are issued in connection with such issuance, be entitled to receive
shares of Common Stock at an effective price per share that is
lower than the Set Price, such issuance shall be deemed to have
occurred for less than the Set Price on such date of the Dilutive
Issuance), then the Set Price shall be reduced to equal the Base
Conversion Price. Such adjustment shall be made whenever such
Common Stock or Common Stock Equivalents are issued.
Notwithstanding the foregoing, no adjustment will be made under
this Section 5(b) in respect of an Exempt Issuance. If the Company
enters into a Variable Rate Transaction, despite the prohibition
set forth in the Purchase Agreement, the Company shall be deemed to
have issued Common Stock or Common Stock Equivalents at the lowest
possible conversion price at which such securities may be converted
or exercised. The Company shall notify the Holder in writing, no
later than 1 Business Day following the issuance of any Common
Stock or Common Stock Equivalents subject to this Section 5(b),
indicating therein the applicable issuance price, or applicable
reset price, exchange price, conversion price and other pricing
terms (such notice, the “ Dilutive Issuance Notice
”). For purposes of clarification, whether or not the Company
provides a Dilutive Issuance Notice pursuant to this Section 5(b),
upon the occurrence of any Dilutive Issuance, the Holder is
entitled to receive a number of Conversion Shares based upon the
Base Conversion Price on or after
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the date of such Dilutive
Issuance, regardless of whether the Holder accurately refers to the
Base Conversion Price in the Notice of
Conversion.”
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(d) Section
5(c) of the Amended and Restated Debenture shall be deleted in its
entirety and replaced with the following:
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“ Subsequent Rights
Offerings . If the Company, at any time while the Debenture is
outstanding, shall issue rights, options or warrants to all holders
of Common Stock (and not to Holders) entitling them to subscribe
for or purchase shares of Common Stock at a price per share that is
lower than the VWAP on the record date referenced below, then the
Set Price shall be multiplied by a fraction of which the
denominator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus
the number of additional shares of Common Stock offered for
subscription or purchase, and of which the numerator shall be the
number of shares of the Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of shares which
the aggregate offering price of the total number of shares so
offered (assuming delivery to the Company in full of all
consideration payable upon exercise of such rights, options or
warrants) would purchase at such VWAP. Such adjustment shall be
made whenever such rights or warrants are issued, and shall become
effective immediately after the record date for the determination
of stockholders entitled to receive such rights, options or
warrants.”
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