Exhibit 10.3
HEALTH SYSTEMS SOLUTIONS,
INC.
a Nevada
corporation
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS
AGREEMENT, dated as of
October 31, 2005 (the “ Agreement
” ), is entered into by and among Health Systems
Solutions, Inc., a Nevada corporation (the “
Company ” ), and the holders (the
“ Investors ” ) of the
Company’s capital stock and Warrants set forth on the
signature page hereof. Capitalized terms not defined herein shall
have the meanings ascribed to them in the Preferred Stock Purchase
Agreement (as hereinafter defined).
WHEREAS, simultaneously with the execution and delivery
of this Agreement, the Investors are agreeing to purchase from the
Company, pursuant to the Preferred Stock Purchase Agreement dated
as of October 31, 2005 among the Company, certain of its
stockholders and Stanford International Bank Ltd., an Antiguan
banking corporation (the “ Preferred Stock Purchase
Agreement ”) up to 4,625,000 shares of the Series
C Preferred Stock and Warrants to purchase up to 2,775,000 shares
of the Company’s common stock, par value $.001 (the
“Common Stock”); and
WHEREAS, the Company desires to grant to the Investors
the registration rights set forth herein with respect to the shares
of Common Stock issuable upon conversion of the Series C Preferred
Stock (the “ Conversion Shares ”
), the shares of Common Stock issuable upon exercise of the
Warrants (the “ Warrant Shares ”
), the shares of Common Stock issuable upon the exercise of the
warrants issuable in the event of a registration default pursuant
to Section 4(e) (the “ Default Warrant
Shares ” ) and the shares of Common Stock issued
as a dividend or other distribution with respect to the Conversion
Shares, Warrant Shares or Default Warrant Shares (the “
Distribution Shares ” ) (all the shares of the
Series C Preferred Stock, the Conversion Shares, the Merger Shares,
the Warrant Shares, the Default Warrant Shares and the Distribution
Shares, collectively and interchangeably, are referred to herein as
the “ Securities ” ).
NOW, THEREFORE,
the parties hereto mutually agree as
follows:
1. CERTAIN
DEFINITIONS
As used herein the term
“ Registrable Security ” means the
Conversion Shares, Warrant Shares, Default Warrant Shares and the
Distribution Shares, until (i) the Registration Statement (as
defined below) has been declared effective by the Securities and
Exchange Commission (the “ Commission
” ), and all Securities have been disposed of
pursuant to the Registration Statement, (ii) all Securities
have been sold under circumstances under which all of the
applicable conditions of Rule 144 ( “ Rule 144
” ) (or any similar provision then in force) under
the Securities Act of 1933, as amended (the “
Securities Act ” ) are met, or (iii) such
time as, in the opinion of counsel to the Company reasonably
satisfactory to the Investors and upon delivery to the Investors of
such executed opinion, all Securities may be sold without any time,
volume or manner limitations pursuant to Rule 144 (or any similar
provision then in effect). In the event of any merger,
reorganization, consolidation, recapitalization or other change in
corporate structure
affecting the Common Stock, such adjustment
shall be deemed to be made in the definition of “Registrable
Security” as is appropriate in order to prevent any dilution
or enlargement of the rights granted pursuant to this Agreement. As
used herein the term “ Holder ”
means any Person owning or having the right to acquire Registrable
Securities or any assignee thereof in accordance with
Section 10 hereof. As used herein “ Trading
Day ” shall mean any business day on which the
market on which the Common Stock trades is open for
business.
2. RESTRICTIONS ON
TRANSFER
Each of the Investors acknowledges
and understands that prior to the registration of the Securities as
provided herein, the Securities are “restricted
securities” as defined in Rule 144. Each of the Investors
understands that no disposition or transfer of the Securities may
be made by any of the Investors in the absence of (i) an
opinion of counsel to such Investor, in form and substance
reasonably satisfactory to the Company, that such transfer may be
made without registration under the Securities Act or
(ii) such registration.
3. COMPLIANCE WITH REPORTING
REQUIREMENTS
With a view to making available to
the Investors the benefits of Rule 144 or any other similar rule or
regulation of the Commission that may at any time permit the
holders of the Securities to sell securities of the Company to the
public pursuant to Rule 144, the Company agrees to:
(a) comply with the provisions of
paragraph (c)(1) of Rule 144;
(b) file with the Commission in a
timely manner all reports and other documents required to be filed
with the Commission pursuant to Section 13 or 15(d) under the
Securities Exchange Act of 1934 (the “ Exchange
Act ” ) by companies subject to either of such
sections, irrespective of whether the Company is then subject to
such reporting requirements; and
(c) Upon request by any Holder or
the Company’s transfer agent, the Company shall provide an
opinion of counsel, which opinion shall be reasonably acceptable to
the Holder and/or the Company’s transfer agent, that the such
Holder has complied with the applicable conditions of Rule 144 (or
any similar provision then in force).
4. REGISTRATION RIGHTS WITH
RESPECT TO THE REGISTRABLE SECURITIES
(a) The Company agrees that it will
prepare and file with the Commission, (i) within 90 calendar
days from the date of demand, a registration statement (on Form S-1
or SB-2, or other appropriate registration statement form) under
the Securities Act (the “ Registration Statement
” ), and (ii) if at least 20% of the Registrable
Securities covered under the Registration Statement filed under
(i) remain unsold during the effective period of such
Registration Statement, then within 20 days following receipt of a
written notice from the holders representing a majority of such
unsold Registrable Securities, another Registration Statement so as
to permit a resale of the Securities under the Securities Act by
the Holders as selling stockholders and not as
underwriters.
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The Company shall use diligent best
efforts to cause the Registration Statement to become effective as
soon as practical following the filing of the Registration
Statement. The Company will notify the Holders and its transfer
agent of the effectiveness of the Registration Statement within one
Trading Day of such event.
(b) The Company will maintain the
Registration Statement or post-effective amendment filed under this
Section 4 effective under the Securities Act until the earlier
of (i) the date that none of the Registrable Securities
covered by such Registration Statement are or may become issued and
outstanding, (ii) the date that all of the Registrable
Securities have been sold pursuant to such Registration Statement,
(iii) the date all the Holders receive an opinion of counsel
to the Company, which counsel shall be reasonably acceptable to the
Holders, that the Registrable Securities may be sold under the
provisions of Rule 144 without limitation as to volume,
(iv) all Registrable Securities have been otherwise
transferred to persons who may trade such shares without
restriction under the Securities Act, and the Company has delivered
a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend, or (v) two years
from the Effective Date.
(c) All fees, disbursements and
out-of-pocket expenses and costs incurred by the Company in
connection with the preparation and filing of the Registration
Statement under this Section 4 and in complying with
applicable securities and blue sky laws (including, without
limitation, all attorneys’ fees of the Company) shall be
borne by the Company. The Company shall also reimburse the fees and
expenses of counsel to the Holders incurred in connection with such
counsel’s review of the Registration Statement and advice
concerning the Registration Statement and its filing subject to a
cap of $15,000. The Holders shall bear the cost of underwriting
and/or brokerage discounts, fees and commissions, if any,
applicable to the Registrable Securities being registered. The
Holders and their counsel shall have a reasonable period, not to
exceed 15 Trading Days, to review the proposed Registration
Statement or any amendment thereto, prior to filing with the
Commission, and the Company shall provide the Holders with copies
of any comment letters received from the Commission with respect
thereto within two Trading Days of receipt thereof. The Company
shall qualify any of the Registrable Securities for sale in such
states as the Holders reasonably designate and shall furnish
indemnification in the manner provided in Section 7 hereof.
However, the Company shall not be required to qualify in any state
which will require an escrow or other restriction relating to the
Company and/or the Holders, or which will require the Company to
qualify to do business in such state or require the Company to file
therein any general consent to service of process. The Company at
its expense will supply each of the Investors with copies of the
applicable Registration Statement and the prospectus included
therein and other related documents in such quantities as may be
reasonably requested by any of the Investors.
(d) The Company shall not be
required by this Section 4 to include the Registrable
Securities in any Registration Statement which is to be filed if,
in the opinion of counsel for both the Holders and the Company (or,
should they not agree, in the opinion of another counsel
experienced in securities law matters acceptable to counsel for the
Holders and the Company) the proposed offering or other transfer as
to which such registration is requested is exempt from applicable
federal and state securities laws and would result in all
purchasers or transferees obtaining securities which are not
“restricted securities,” as defined in Rule
144.
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(e) In the event that (i) the
Registration Statement is not filed by the Company in a timely
manner as set forth in Section 4(a); or (ii) such
Registration Statement is not maintained as effective by the
Company for the period set forth in Section 4(b) above (each a
“ Registration Default ” ), then
the Company will issue to each of the Holders as of the first day
of such Registration Default and for every consecutive month in
which such Registration Default is occurring, as liquidated
damages, and not as a penalty, warrants to purchase one
(1) share of the Common Stock ( “ Default
Warrants ” ) for each share of Series C Preferred
Stock issued to the Holders pursuant to the Preferred Stock
Purchase Agreement until such corresponding Registration Default no
longer exists ( “ Liquidated Damages
” ); provided, however, that the issuance of such
Default Warrants shall not relieve the Company from its obligations
to register the Registrable Securities pursuant to this
Section.
If the Company does not issue the
Default Warrants to the Holders as set forth above, the Company
will pay any Holder’s reasonable costs of any action in a
court of law to cause compliance with this Section 4(e),
including reasonable attorneys’ fees, in addition to the
Default Warrants. The registration of the Registrable Securities
pursuant to this Section shall not affect or limit a Holder’s
other rights or remedies as set forth in this Agreement.
(f) The Company shall be precluded
from including in any Registration Statement which it is required
to file pursuant to this Section 4 any other securities apart
from the Registrable Securities, without the prior written consent
of the Holders.
(g) If, at any time any Registrable
Securities are not at the time covered by any effective
Registration Statement, the Company shall determine to register
under the Securities Act (including pursuant to a demand of any
stockholder of the Company exercising registration rights) any of
its shares of the Common Stock (other than in connection with a
merger or other business combination transaction that has been
consented to in writing by holders of the Series C Preferred Stock,
or pursuant to Form S-8 when such filing has been consented to in
writing by holders of the Series C Preferred Stock), it shall send
to each Holder written notice of such determination and, if within
20 days after receipt of such notice, such Holder shall so request
in writing, the Company shall its best efforts to include in such
registration statement all or any part of the Registrable
Securities that such Holder requests to be registered.
Notwithstanding the foregoing, if, in connection with any offering
involving an underwriting of the Common Stock to by issued by the
Company, the managing underwriter shall impose a limitation on the
number of shares of the Common Stock included in any such
registration statement because, in such underwriter’s
judgment, such limitation is necessary based on market conditions:
(a) if the registration statement is for a public offering of
common stock on a “firm commitment” basis with gross
proceeds to the Company of at least $15,000,000 (a “
Qualified Public Offering ” ), the Company may
exclude, to the extent so advised by the underwriters, the
Registrable Securities from the underwriting; provided, however,
that if the underwriters do not entirely exclude the Registrable
Securities from such Qualified Public Offering, the Company shall
be obligated to include in such registration statement, with
respect to the requesting Holder, only an amount of Registrable
Securities equal to the product of (i) the number of
Registrable Securities that remain available for registration after
the underwriter’s cutback and (ii) such Holder’s
percentage of ownership of all the Registrable Securities then
outstanding (on an as-converted basis) (the “
Registrable Percentage ” ); and (b) if
the registration statement is not for a Qualified Public Offering,
the Company shall be obligated to include in
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such registration statement, with respect to the
requesting Holder, only an amount of Registrable Securities equal
to the product of (i) the number of Registrable Securities
that remain available for registration after the
underwriter’s cutback and (ii) such Holder’s
Registrable Percentage; provided, however, that the aggregate value
of the Registrable Securities to be included in such registration
may not be so reduced to less than 30% of the total value of all
securities included in such registration. If any Holder disapproves
of the terms of any underwriting referred to in this paragraph, it
may elect to withdraw therefrom by written notice to the Company
and the underwriter. No incidental right under this paragraph shall
be construed to limit any registration required under the other
provisions of this Agreement.
5. COOPERATION WITH
COMPANY
Each Holder will cooperate with the
Company in all respects in connection with this Agreement,
including timely supplying all information reasonably requested by
the Company (which shall include all information regarding such
Holder and proposed manner of sale of the Registrable Securities
required to be disclosed in any Registration Statement) and
executing and returning all documents reasonably requested in
connection with the registration and sale of the Registrable
Securities and entering into and performing its obligations under
any underwriting agreement, if the offering is an underwritten
offering, in usual and customary form, with the managing
underwriter or underwriters of such underwritten offering. Nothing
in this Agreement shall obligate any Holder to consent to be named
as an underwriter in any Registration Statement. The obligation of
the Company to register the Registrable Securities shall be
absolute and unconditional as to those Registrable Securities which
the Commission will permit to be registered without naming any
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