UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported): March 31, 2008
(Exact
name of registrant as specified in its charter)
(State
or
Other Jurisdiction of Incorporation)
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333-118155
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33-1095411
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(Commission
File Number)
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(IRS
Employer Identification Number)
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Windolph
Center, Suite I
1020
N.W.
6th
Street
Deerfield
Beach, FL 33442
(Address
of Principal Executive Offices)
(Registrant’s
Telephone Number, Including Area Code)
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13-e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
The
use of the terms “we,” “us” or “the Company” in this report shall be deemed to
mean MDwerks, Inc., unless the context requires otherwise. References in this
report to “our subsidiaries” shall be deemed to mean each of MDwerks Global
Holdings, Inc., Xeni Medical Systems, Inc., Xeni Financial Services Corp.,
Xeni
Medical Billing, Corp. and Patient Payment Solutions, Inc.
Item
1.01 Entry
into a Material Definitive Agreement
On
March
31, 2008, we received net proceeds of $6,809,794.44 in connection with a
financing provided by Vicis Capital Master Fund (“Vicis”), an unaffiliated
accredited institutional investor. In connection with the financing, we and
Vicis entered into a Securities Purchase Agreement, dated March 31, 2008 (the
“March Securities Purchase Agreement”), pursuant to which we issued 750 shares
of Series B Convertible Preferred Stock, par value $0.001 ( “Series B Preferred
Stock”), a ten year Series H Warrant to purchase 53,333,334 shares of our common
stock at a price of $0.75 per share (the “Series H Warrant”), and pursuant to
which Vicis surrendered for cancellation all Series F Warrants and all Series
G
Warrants held by Vicis, which warrants were exercisable in the aggregate for
3,125,000 shares of our common stock.
In
connection with the sale of the Series B Preferred Stock, we amended and
restated the Registration Rights Agreement, dated September 28, 2007, by and
between Vicis and us (as amended and restated, the “Amended and Restated
Registration Rights Agreement”), pursuant to which, among other things, we
agreed, to register for resale all of the shares of our common stock into which
the outstanding Series B Preferred Stock is convertible and all of the shares
of
our common stock for which the Series H Warrant is exercisable.
In
connection with obtaining the consent and waiver of Gottbetter Capital Master
Ltd. (in Liquidation) (“Gottbetter”) to the financing provided by Vicis, we
entered into an Amendment, Consent and Waiver Agreement (the “Gottbetter Consent
Agreement”), pursuant to which (i) we issued to Gottbetter a five year Series I
warrant to purchase one million shares of our common stock at an exercise price
of $0.75 per share; (ii) Gottbetter agreed to waive its anti-dilution rights
under the Series D Warrants, Series E Warrants and promissory notes that we
previously issued to Gottbetter and (iii) Gottbetter consented to the financing
provided by Vicis.
The
following summary description of the material agreements entered into in
connection with the transaction described above and the terms of the Series
B
Preferred Stock is qualified in its entirety by reference to the copies of
such
material agreements and the Certificate of Designations for the Series B
Preferred Stock filed as exhibits to this Current Report on Form 8-K.
March
Securities Purchase Agreement
The
March
Securities Purchase Agreement provided for the sale by us to Vicis of (i) 750
shares of Series B Preferred Stock (ii) and the Series H Warrant to
purchase an aggregate of 53,333,334 shares of common stock. Pursuant to the
March Securities Purchase Agreement, the aggregate gross purchase price for
the
Series B Preferred Stock and the Series H Warrant was $7,500,000, which was
paid
by wire transfer of immediately available funds and the surrender for
cancellation of a promissory note that we issued to Vicis in the principal
amount of $575,000. Principal and accrued interest under the promissory note,
and $100,000 of Vicis’ expenses were applied against the purchase price.
The
March
Securities Purchase Agreement provides to Vicis, for a period of eighteen months
after the closing date, a right of first refusal with respect to subsequent
placements of equity or equity equivalent securities by us. The right of first
refusal is on a pro
rata
basis
(based upon the amount invested) with Gottbetter.
The
March
Securities Purchase Agreement contains certain restrictions on our ability
to:
(i) declare dividends; (ii) reclassify, combine or reverse split our common
stock; (iii) incur liens; (iii) incur certain types of indebtedness; (iv) issue
classes of securities senior to, or pari
passu
with,
the Series B Preferred Stock; (v) liquidate or sell a substantial portion of
our
assets; (vi) enter into transactions that would result in a Change of Control
(as defined in the January Securities Purchase Agreement); (vii) amend our
charter documents in a way that adversely affects the rights of Vicis; (viii)
except through Xeni Financial Services, Corp., make loans to, or advances or
guarantee the obligations of, third parties; (ix) make intercompany transfers;
(x) engage in transactions with officers, directors, employees or affiliates;
(xi) divert business to other business entities; (xii) make investments in
securities or evidences of indebtedness (excluding of loans made by Xeni
Financial Services, Corp.) in excess of $250,000 in a calendar year; and (xii)
file registration statements.
Events
of
default under the March Securities Purchase Agreement include: (i) default
in
the payment of dividends on or the failure to redeem the Series B Preferred
Stock when due; (ii) failure to perform the covenants contained in the
Securities Purchase Agreement or the related transaction documents; (iii)
suspension from listing on the OTC Bulletin Board or other exchange for 10
consecutive trading days; (iv) the failure to timely deliver shares of common
stock upon conversion of the Series B Preferred Stock or exercise of the Series
H Warrant ; (v) default in the payment of indebtedness in excess of $250,000;
(vi) a judgment entered against us in excess of $250,000; and (vii) insolvency,
bankruptcy and similar circumstances.
The
March
Securities Purchase Agreement further provides that our obligations to Vicis
under the Series B Preferred Stock, the March Securities Purchase Agreement
and
the various transaction documents entered into in connection with the March
Securities Purchase Agreement (the “March Transaction Documents”) are secured by
a lien on all of our assets pursuant to the Security Agreement, dated September
28, 2007, between us and Vicis (the “Company Security Agreement”). The Company
Security Agreement is more fully described below and is attached as an exhibit
to our Current Report on Form 8-K, which was filed with the Securities and
Exchange Commission (the “SEC”) on October 2, 2007.
The
March
Securities Purchase Agreement further provides that our obligations under the
Series B Preferred Stock, the March Securities Purchase Agreement and the March
Transaction Documents are guaranteed by each of our subsidiaries pursuant to
the
terms of the guaranty agreements, dated September 28, 2007, between Vicis and
each of our subsidiaries (the “Guaranty Agreements”). The Guaranty Agreements
are more fully described below and are attached as exhibits to our Current
Report on Form 8-K, which was filed with the SEC on October 2, 2007.
The
March
Securities Purchase Agreement also provides that the guaranty obligations of
our
subsidiaries in connection with the March Securities Purchase Agreement and
the
March Transaction Documents are secured by the liens on all of the assets of
each of our subsidiaries, except for the accounts receivable and certain
contract rights of Xeni Financial Services, Corp., created pursuant to the
security agreements entered into by and between our subsidiaries and Vicis
on
September 28, 2007 (the “Guarantor Security Agreements”). The Guarantor Security
Agreements are more fully described below and are attached as exhibits to our
Current Report on Form 8-K, which was filed with the SEC on October 2, 2007.
The
March
Securities Purchase Agreement also contains customary representations,
warranties, covenants and indemnification provisions for transactions of the
type entered into between the Company and Vicis.
Series
B Preferred Stock
On
March
31, 2008 we filed an amended and restated Certificate of Designations (as
amended and restated, the “Certificate of Designations”) with the Secretary of
State of the State of Delaware.
The
Certificate of Designations, which designates the rights, preferences,
privileges and terms of the Series B Preferred Stock, provides that the Series
B
Preferred Stock will rank senior to other classes of common stock and preferred
stock that are currently outstanding as to distributions of assets upon
liquidation, dissolution or winding up and as to payment of dividends on shares
of equity securities.
Each
share of Series B Preferred Stock is entitled to cumulative dividends at the
annual rate of 12% of the stated value of the Series B Preferred Stock. The
stated value of each share of Series B Preferred Stock is $10,000. Dividends
are
payable in cash or additional shares of Series B Preferred Stock.
Each
share of Series B Preferred Stock is convertible, at any time, at the option
of
the holder, into the number of shares of common stock determined by dividing
the
stated value of the Series B Preferred Stock by the conversion price. The
initial conversion price of the Series B Preferred Stock is $0.75 per
share.
The
conversion price is subject to adjustment for stock splits, dividends,
subdivisions, distributions, reorganizations and similar transactions.
Furthermore, the conversion price is also subject to adjustment in the event
of
the issuance of securities for a price below the conversion price then in effect
or the issuance of convertible securities with an exercise or conversion price
that is less than the then current conversion price for the shares of Series
B
Preferred Stock.
To
the
extent that any shares of Series B Preferred Stock remain outstanding on March
31, 2010, each holder thereof shall have the option to either require us to
redeem such holder’s shares of Series B Preferred Stock or convert such holder’s
shares of Series B Preferred Stock into shares of common stock at the conversion
price then in effect.
Holders
of Series B Preferred Stock have the option to require us to redeem shares
of
Series B Preferred Stock in the event of a Change of Control (as defined in
the
Certificate of Designations).
Holders
of Series B Preferred Stock are entitled to vote on matters submitted to our
stockholders as if the Series B Preferred Stock had been converted into shares
of common stock pursuant to the terms of the Certificate of Designations. To
the
extent the holders of Series B Preferred Stock are required to vote separately,
as a class, the affirmative vote of the holders of a majority of the outstanding
shares of Series B Preferred Stock will be required to approve the matter to
be
voted upon.
As
of the
date of this report, there are 1,000 shares of Series B Preferred Stock issued
and outstanding.
Series
H Warrant
The
Series H Warrant is exercisable at a price of $0.75 per share for a period
of
ten years from the date of issuance. The Series H Warrant may be exercised
on a
cashless basis to the extent that the resale of shares of common stock
underlying the Series H Warrant is not covered by an effective registration
statement. The exercise price will be subject to adjustment in the event of
subdivision or combination of shares of our common stock and similar
transactions, distributions of assets, issuances of shares of common stock
with
a purchase price below the exercise price of the Series H Warrant, issuances
of
any rights, warrants or options to purchase shares of our common stock with
an
exercise price below the exercise price of the Series H Warrant, issuances
of
convertible securities with a conversion price below the exercise price of
the
Series H Warrant.
As
of the
date of this report, the outstanding Series H Warrant is exercisable for an
aggregate of 53,333,334 shares or our common stock.
Company
Security Agreement
Pursuant
to the terms of the March Securities Purchase Agreement, we agreed that the
lien
granted pursuant to the Company Security Agreement would, in addition to
securing the obligations previously secured thereby, secure our obligations
in
connection with the March Securities Purchase Agreement, the March Transaction
Documents and the Series B Preferred Stock issued in connection with the March
Securities Purchase Agreement. The Company Security Agreement provides for
a
lien on all of our assets in favor of Vicis.
Guaranty
Agreements
Pursuant
to the terms of the March Securities Purchase Agreement, we agreed that the
Guaranty Agreements would, in addition to applying to the obligations previously
guaranteed thereby, apply to our obligations in connection with the March
Securities Purchase Agreement, the March Transaction Documents and the Series
B
Preferred Stock issued pursuant to the January Securities Purchase Agreement.
The Guaranty Agreements provide for unconditional guaranties of the obligations
guaranteed thereunder.
Guarantor
Security Agreements
Pursuant
to the terms of the March Securities Purchase Agreement, we agreed that the
security interests granted by our subsidiaries pursuant to the Guarantor
Security Agreements would, in addition to securing the obligations previously
secured thereunder, secure the obligations of our subsidiaries under the
Guaranty Agreements insofar as those obligations related to the January
Securities Purchase Agreement, the March Transaction Documents and the Series
B
Preferred Stock issued pursuant to March Securities Purchase Agreement. The
Guarantor Security Agreements provide for liens in favor of Vicis on all of
the
assets of each of our subsidiaries, except for the accounts receivable and
certain contract rights of Xeni Financial Services, Corp.
Amended
and Restated Registration Rights Agreement
Pursuant
to the Amended and Restated Registration Rights Agreement, we agreed to register
for resale, the shares of our common stock into which the Series B Preferred
Stock is convertible and the shares of our common stock for which the Series
H
Warrant is exercisable.
The
Amended and Restated Registration Rights Agreement requires us to file a
registration statement covering the resale of the shares underlying the Series
B
Preferred Stock and the Series H warrant within 60 days after the closing date.
We are only required to register up to thirty percent of the number of
outstanding shares of common stock in such registration statement and then
file
subsequent registration statements after the later of (i) sixty days following
the sale of the securities covered by the initial registration statement or
any
subsequent registration statement and (ii) six months following the effective
date of the initial registration statement or any subsequent registration
statement. We are required to cause the initial registration statement to become
effective on or before the date which is 150 calendar days after the closing
date if the Securities and Exchange Commission (the “SEC”) does not review the
registration statement or 180 calendar days after the closing if the
registration statement receives a full review by the SEC. If we fail to file
a
registration statement in the time frame required, fail to file a request for
acceleration in the time frame required, or fail to maintain the effectiveness
of a registration statement as required by the Registration Rights Agreement,
we
will be required to pay a cash penalty in the amount of 1.5% of the aggregate
stated value of the Series B Preferred Stock for each month, or part thereof,
that such registration statement is not filed or effective, as the case may
be.
The cash penalty is limited to 9% of the aggregate stated value of the
Series B Preferred Stock. The cash penalty will not apply to the
registration of shares of common stock underlying the Series H Warrant. The
Registration Rights Agreement also provides for piggyback registration
rights.
Gottbetter
Consent Agreement
In
connection with obtaining the consent and waiver of Gottbetter to the financing
provided by Vicis, we entered into the Gottbetter Consent Agreement, pursuant
to
which Gottbetter agreed to waive its anti-dilution rights under the Series
D
Warrants, Series E Warrants and promissory notes that we previously issued
to
Gottbetter and Gottbetter consented to the financing provided by
Vicis.
Series
I Warrant
As
consideration for Gottbetter entering into the Gottbetter Consent Agreement,
we
issued to Gottbetter a Series I warrant to purchase 1,000,000 shares of our
common stock at an exercise price of $0.75 per share. The Series I Warrant
is
exercisable for a period of five years from the date of issuance. The Series
I
Warrant may be exercised on a cashless basis to the extent that the resale
of
shares of common stock underlying the Series I Warrant is not covered by an
effective registration statement. The exercise price will be subject to
adjustment in the event of subdivision or combination of shares of our common
stock and similar transactions, distributions of assets, issuances of shares
of
common stock with a purchase price below the exercise price of the Series I
Warrant, issuances of any rights, warrants or options to purchase shares of
our
common stock with an exercise price below the exercise price of the Series
I
Warrant and issuances of convertible securities with a conversion price below
the exercise price of the Series I Warrant.
As
of the
date of this report, the outstanding Series I Warrant is exercisable for an
aggregate of 1,000,000 shares or our common stock.
Item
3.02 Unregistered
sales of Equity Securities.
Item
1.01
above is incorporated into this Item 3.02 by reference.
Vicis
is
an “accredited investor,” as defined in Regulation D under the Securities Act of
1933, as amended, or the Securities Act. None of the Series
B
Preferred Stock, the Series F Warrant, the Series G Warrant
or the
shares of our common stock underlying such securities were registered under
the
Securities Act, or the securities laws of any state and were offered and sold
in
reliance on the exemption from registration afforded by Section 4(2) and
Regulation D (Rule 506) under the Securities Act and corresponding provisions
of
state securities laws, which exempts transactions by an issuer not involving
any
public offering.
We
made
this determination with respect to the sale of the Series B Preferred Stock
and
the Series H Warrant based on the representations of Vicis, which included,
in
pertinent part, that Vicis is an “accredited investor” within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act, and that Vicis
was acquiring the securities it was acquiring for investment purposes for its
own account and not as nominee or agent, and not with a view to the resale
or
distribution, and that Vicis understood such securities may not be sold or
otherwise disposed of without registration under the Securities Act or an
applicable exemption therefrom.
Thus,
the
Series B Preferred Stock, the Series H Warrant, and shares of common stock
underlying such securities may not be offered or sold in the United States
absent registration or an applicable exemption from the registration
requirements and certificates evidencing such shares contain a legend stating
the same.
Item
9.01 Financial
Statements and Exhibits.
The
following exhibits are filed as part of this report:
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Exhibit
No.
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Description
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3.1
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Amended
and Restated Certificate of Designations designating the rights,
preferences, privileges of, and restrictions on, the Series B Preferred
Stock.
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4.1
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Securities
Purchase Agreement, dated March 31, 2008, by and between Vicis and
MDwerks, Inc.
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4.2
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Series
H Warrant to purchase 53,333,334 shares of common stock at a price
of
$0.75 per share
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4.3
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Series
I Warrant to purchase 1,000,000 shares of common stock at a price
of $0.75
per share
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4.4
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Amended
and Restated Registration Rights Agreement between MDwerks, Inc.
and
Vicis
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10.1
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Guaranty
issued to Vicis by Xeni Financial Services, Corp.*
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10.2
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Guaranty
issued to Vicis by Xeni Medical Billing, Corp.*
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10.3
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Guaranty
issued to Vicis by MDwerks Global Holdings, Inc.*
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10.4
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Guaranty
issued to Vicis by Xeni Medical Systems, Inc.*
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10.5
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Guaranty
issued to Vicis by Patient Payment Solutions, Inc.*
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10.6
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Security
Agreement entered into by and between Vicis and MDwerks,
Inc.*
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10.7
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Security
Agreement entered into by and between Vicis and Xeni Medical Billing,
Corp.*
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10.8
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Security
Agreement entered into by and between Vicis and MDwerks Global Holdings,
Inc.*
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10.9
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Security
Agreement entered into by and between Vicis and Xeni Medical Systems,
Inc.*
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10.10
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Security
Agreement entered into by and between Vicis and Xeni Financial Services,
Corp.*
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10.11
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Security
Agreement entered into by and between Vicis and Patient Payment Solutions,
Inc.*
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10.12
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Amendment,
Consent & Waiver Agreement by and between MDwerks, Inc. and
Gottbetter
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99.1
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Press
Release announcing Vicis financing
transaction
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*
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Incorporated
by reference to our Current Report on Form 8-K, filed with the Securities
and Exchange Commission on October 2,
2007.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
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MDWERKS,
INC.
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Dated:
April 2, 2008
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By:
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/s/ Howard B. Katz
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Howard
B. Katz
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Chief
Executive Officer
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Exhibit
Index
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Description
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3.1
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Amended
and Restated Certificate of Designations designating the rights,
preferences, privileges of, and restrictions on, the Series B
Preferred Stock.
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4.1
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Securities
Purchase Agreement, dated March 31, 2008, by and between Vicis and
MDwerks, Inc.
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4.2
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Series
H Warrant to purchase 53,333,334 shares of common stock at a price
of
$0.75 per share
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4.3
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Series
I Warrant to purchase 1,000,000 shares of common stock at a price
of $0.75
per share
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4.4
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Amended
and Restated Registration Rights Agreement between MDwerks, Inc.
and
Vicis
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10.1
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Guaranty
issued to Vicis by Xeni Financial Services, Corp.*
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10.2
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Guaranty
issued to Vicis by Xeni Medical Billing, Corp.*
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10.3
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Guaranty
issued to Vicis by MDwerks Global Holdings, Inc.*
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10.4
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Guaranty
issued to Vicis by Xeni Medical Systems, Inc.*
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10.5
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Guaranty
issued to Vicis by Patient Payment Solutions, Inc.*
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10.6
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Security
Agreement entered into by and between Vicis and MDwerks,
Inc.*
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10.7
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Security
Agreement entered into by and between Vicis and Xeni Medical Billing,
Corp.*
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10.8
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Security
Agreement entered into by and between Vicis and MDwerks Global Holdings,
Inc.*
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10.9
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Security
Agreement entered into by and between Vicis and Xeni Medical Systems,
Inc.*
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10.10
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Security
Agreement entered into by and between Vicis and Xeni Financial Services,
Corp.*
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10.11
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Security
Agreement entered into by and between Vicis and Patient Payment Solutions,
Inc. *
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Amendment,
Consent & Waiver Agreement by and between MDwerks, Inc. and
Gottbetter
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99.1
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Press
Release announcing Vicis financing transaction
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| |
|
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*
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Incorporated
by reference to our Current Report on Form 8-K, filed with the Securities
and Exchange Commission on October 2,
2007.
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