WAIVER, AMENDMENT AND EXCHANGE
AGREEMENT
THIS WAIVER, AMENDMENT AND EXCHANGE
AGREEMENT (the “ Agreement ”), dated as of June
19, 2009, is entered into by and among Wizzard Software
Corporation, a Colorado corporation (the “ Company
”), and the persons identified as “Holders” on
the signature pages hereto (the “ Holders ”).
Defined terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement (as defined
below).
WHEREAS, pursuant to that certain
Securities Purchase Agreement, dated June 29, 2007 (the “
Purchase Agreement ”), among the Company, the Holders
and the other investors signatory thereto, the Company issued
the investors thereunder shares of Series A 7% Convertible
Preferred Stock (the “ Preferred Stock ”) and
warrants exercisable for shares of Common Stock (the “
Warrants ”); and
WHEREAS, the Company has requested that
the Holders of the Preferred Stock waive their right to an
anti-dilution adjustment in connection with a proposed financing
transaction;
WHEREAS, in consideration of the
Holders’ waiver of such anti-dilution adjustment, the Company
and the Holders have agreed to exchange the Warrants for shares of
Common Stock, and amend certain provisions of the Transaction
Documents pursuant to the terms hereunder.
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, each Holder hereby agrees as follows:
1.
Amendments and other
Agreements .
(a)
Reduction of Exercise Price and
Immediate Cashless Exercise of Warrants . In consideration of the Holders’ waiver
of the anti-dilution adjustment of their Preferred Stock as
discussed in Section 1(b) below, the parties hereby agree:
(i) pursuant to Section 5(l) of the Warrant, to amend Section
2(c) of the Warrant to add the following sentence at the end
thereof: “In addition, the Holder may exercise this Warrant
on a cashless basis pursuant to the terms of that certain Waiver,
Amendment and Exchange Agreement, dated June 19, 2009, between the
Holder and the Company”; and (ii) to allow an immediate
cashless exercise of the Warrants pursuant to the amended Section
2(c) such that the Company shall issue to each Holder, for no cash
or other consideration, shares of Common Stock, in the individual
amounts set forth on Annex A hereto (the “ Exchange
Shares ”). Such Exchange Shares shall be issued
without any legends or restrictions, electronically, pursuant to
the DTC instructions included on the Holder’s signature page
hereto, within 3 Trading Days from the date hereof. For
clarity, the Purchase Agreement and all Transaction Documents
thereunder are hereby amended so that the term
“Securities” includes the Exchange Shares. Each
Holder acknowledges and agrees that upon the issuance and
acceptance of the Exchange Shares pursuant to this Section, the
original certificate evidencing its Warrants will be deemed
cancelled.
(b)
Amendments to the Purchase
Agreement . The
following new clause is added as clause (d) to the definition of
“Exempt Issuance” in the Purchase Agreement and the
Certificate of Designation: “(d) shares of Common Stock
issued in exchange for certain Warrants issued hereunder in
accordance with the terms of that certain waiver,
amendment and exchange agreement dated
June 19, 2009, among the Company and the investors signatory
thereto and (e) up to $5,000,000 of Common Stock in a registered
direct offering off of the Company’s registration statement
number 333-158996, provided such issuance occurs on or before
October 17, 2009.”
2.
Representations and
Warranties . The Company
hereby makes to the Holders the following representations and
warranties:
(a)
Authorization; Enforcement
. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry
out its obligations hereunder and thereunder. The execution
and delivery of this Agreement by the Company and the consummation
by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company and
no further action is required by the Company, its board of
directors or its stockholders in connection therewith. This
Agreement has been duly executed by the Company and, when delivered
in accordance with the terms hereof will constitute the valid and
binding obligation of the Company enforceable against the Company
in accordance with its terms except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(b)
No Conflicts . The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby do not and will not: (i)
conflict with or violate any provision of the Company’s or
any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under,
result in the creation of any Lien upon any of the properties or
assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any material
agreement, credit facility, debt or other material instrument
(evidencing a Company or Subsidiary debt or otherwise) or other
material understanding to which the Company or any Subsidiary is a
party or by wh
