HEALTH SYSTEMS SOLUTIONS, INC. a Nevada corporation PREFERRED STOCK PURCHASE AGREEMENT
EXHIBIT
10.1
HEALTH
SYSTEMS SOLUTIONS, INC.
a
Nevada corporation
THIS
PREFERRED STOCK PURCHASE AGREEMENT,
dated
as of 11th
day of
September, 2008 (the “Agreement”),
is
entered into by and between HEALTH SYSTEMS SOLUTIONS, INC., a Nevada corporation
(the “Company”),
and
STANFORD INTERNATIONAL BANK LTD., an Antiguan banking corporation (the
“Purchaser”).
W
I T N E S S E T H:
WHEREAS,
the
Company and the Purchaser are executing and delivering this Agreement in
reliance upon the exemptions from registration provided by Regulation D
(“Regulation
D”)
promulgated by the Securities and Exchange Commission (the “Commission”)
under
the Securities Act of 1933, as amended (the “Securities
Act”),
and/or Section 4(2) of the Securities Act; and
WHEREAS,
upon
the terms and conditions of this Agreement, the Purchaser has agreed to
purchase, and the Company wishes to issue and sell, for an aggregate purchase
price of up to $5,000,000 (i) up to 833,334 shares of the Company’s Series E
Convertible Preferred Stock, $0.001 par value per share (the “Series
E Preferred Stock”),
the
terms of which are as set forth in the Certificate of Designation of Series
E
Convertible Preferred Stock attached hereto as Exhibit A (the “Series
E Certificate of Designation”)
and
(ii) warrants (the “Warrants”)
to
purchase an aggregate of up to 833,334 shares of the Company’s common stock,
$.001 par value per share (the “Common
Stock”);
and
WHEREAS,
the
Series E Preferred Stock shall be convertible into shares of Common Stock
pursuant to the terms set forth in the Series E Certificate of Designation,
and
the Warrants may be exercised for the purchase of Common Stock, pursuant to
the
terms set forth therein; and
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties agree as follows:
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1.
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AGREEMENT
TO PURCHASE; PURCHASE
PRICE
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(a) Purchase
of Preferred Stock and the Warrants.
Subject
to the terms and conditions in this Agreement, the Purchaser hereby agrees
to
purchase from the Company, and the Company hereby agrees to issue and sell
to
the Purchaser up to 833,334 shares of Series E Preferred Stock and Warrants
to
purchase up to 833,334 shares of Common Stock based on a ratio of one (1)
Warrant share for each Series E Preferred Stock share issued. The aggregate
maximum purchase price for the Series E Preferred Stock shall be $5,000,000
($6.00 per share of Series E Preferred Stock), which shall be payable in
immediately available funds on the applicable closing dates as determined
pursuant to Section 1(b) below. With respect to the Warrants (i) 416,667 shall
have an exercise price of $.001 per share of Common Stock, and (ii) 416,667
shall have an exercise price of $4.00 per share of Common Stock. The Warrants
shall be in the form of Exhibit B attached hereto.
(b) Closings.
Delivery of the shares of Series E Preferred Stock to be purchased by the
Purchaser hereunder shall be made in the form of one or more stock certificates,
registered in such names as the Purchaser may specify and in each case dated
as
of each Closing Date (as defined below). Delivery of all Warrants to be
purchased by the Purchaser hereunder shall be made in the form of one or more
Warrants, registered in such names as specified in Schedule A hereto (based
on
the allocation set forth therein) at the time of the initial Closing Date.
Payment of the aggregate purchase price for such shares of Series E Preferred
Stock shall be made by the Purchaser in the form specifically agreed by the
parties or by wire transfer to an account of the Company, by 5:00 PM, Eastern
Standard Time, on the applicable closing date, and any such closing date being
referred to herein as a “Closing
Date.”
Closings shall occur as and when agreed by the parties in order to finance
the
Company’s needs for working capital. The Company shall submit each sale request
(a “Request”)
to
Purchaser at least two weeks before the desired Closing Date. In connection
with
each Request, the Company shall state the number of shares of Series E Preferred
Stock to be sold, in increments of 50,000 shares, and shall provide to Purchaser
the proposed use of proceeds, together with such information regarding the
Company’s business and financial condition as Purchaser shall request. Purchaser
shall have the right to accept or reject any Request in its sole discretion;
provided, however, that the Purchaser shall not be permitted to reject Requests
to sell up to an aggregate of 500,000 shares of Series E Preferred Stock after
the initial Closing Date provided that the Company is in compliance with this
Agreement in all material respects as of each relevant Request Date and Closing
Date.
(c) Initial
Closing.
The
initial Closing Date shall occur promptly following the execution of this
Agreement. At such time, the Company shall deliver all of the Warrants purchased
hereunder registered in such names as specified in Schedule A attached hereto.
(d) Purchaser’s
Option. Notwithstanding
any provision of this Agreement to the contrary, Purchaser may, at any time
with
two years from the date of this Agreement, require the Company to sell to
Purchaser, consistent with Sections 1(a) and (b) above, shares of Series E
Preferred Stock remaining available hereunder in increments of 50,000 shares
on
two weeks prior written notice to the Company.
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2.
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REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION
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The
Purchaser represents and warrants to, and covenants and agrees with, the Company
as follows:
(a) Qualified
Investor.
The
Purchaser is (i) experienced in making investments of the kind described in
this
Agreement and the related documents, (ii) able to afford the entire loss of
its
investment in the Series E Preferred Stock and the Warrants, and (iv) an
“Accredited
Investor”
as
defined in Rule 501(a) of Regulation D and knows of no reason to anticipate
any
material change in its financial condition for the foreseeable
future.
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(b) Speculative
Nature of Investment.
The
Purchaser understands and acknowledges that an investment in the Company is
highly speculative and involves substantial risks. The Purchaser can bear the
economic risk of the Purchaser’s investment and is able, without impairing the
Purchaser’s financial condition, to hold the Series E Preferred Stock and the
Warrants for an indefinite period of time and to suffer a complete loss of
such
Purchaser’s investment.
(c) Restricted
Securities.
The
securities are “restricted securities” as defined in Rule 144 promulgated under
the Securities Act. All subsequent offers and sales by the Purchaser of the
Note, the Series E Preferred Stock and the Warrants and the Common Stock
issuable upon conversion of the Series E Preferred Stock or exercise of the
Warrants shall be made pursuant to an effective registration statement under
the
Securities Act or pursuant to an applicable exemption from such registration.
(d) Reliance
on Representations.
The
Purchaser understands that the Series E Preferred Stock and the Warrants are
being offered and sold to it in reliance upon exemptions from the registration
requirements of the United States federal securities laws, and that the Company
is relying upon the truthfulness and accuracy of the Purchaser’s representations
and warranties, and the Purchaser’s compliance with its covenants and
agreements, each as set forth herein, in order to determine the availability
of
such exemptions and the eligibility of the Purchaser to acquire the Series
E
Preferred Stock and the Warrants.
(e) Access
to Information.
The
Purchaser (i) has been provided with sufficient information with respect to
the
business of the Company for the Purchaser to determine the suitability of making
an investment in the Company and such documents relating to the Company as
the
Purchaser has requested and the Purchaser has carefully reviewed the same,
(ii)
has been provided with such additional information with respect to the Company
and its business and financial condition as the Purchaser, or the Purchaser’s
agent or attorney, has requested, and (iii) has had access to management of
the
Company and the opportunity to discuss the information provided by management
of
the Company and any questions that the Purchaser had with respect thereto have
been answered to the full satisfaction of the Purchaser.
(f) Legality.
The
Purchaser has the requisite corporate power and authority to enter into this
Agreement.
(g) Authorization.
This
Agreement and any related agreements, and the transactions contemplated hereby
and thereby, have been duly and validly authorized by the Purchaser, and such
agreements, when executed and delivered by each of the Purchaser and the Company
will each be a valid and binding agreement of the Purchaser, enforceable in
accordance with their respective terms, except to the extent that enforcement
of
each such agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditors rights generally and to general principles of
equity.
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(h) Adequate
Resources.
The
Purchaser, or an affiliate of the Purchaser, has sufficient liquid assets to
deliver the aggregate purchase price during the term of the
Agreement.
(i) Investment.
The
Purchaser is acquiring the Series E Preferred Stock and the Warrants for
investment for the Purchaser’s own account, not as a nominee or agent, and not
with the view to, or for resale in connection with, any distribution thereof,
nor with any present intention of distributing or selling such Series E
Preferred Stock or Warrants. The Purchaser is aware of the limits on resale
imposed by virtue of the transaction contemplated by this Agreement and is
aware
that the Series E Preferred Stock and the Warrants will bear restrictive
legends.
(j) Litigation.
There
is no action, suit, proceeding or investigation pending or, to the Knowledge
of
the Purchaser (as defined herein), currently threatened against the Purchaser
that questions the validity of the Primary Documents (as defined below) or
the
right of Purchaser to enter into any such agreements or to consummate the
transactions contemplated hereby and thereby, nor, to the Knowledge of
Purchaser, is there any basis for the foregoing. All references to the
“Knowledge”
means
the actual knowledge of the person in question or the knowledge such person
could reasonably be expected to have each after reasonable investigation and
due
diligence.
(k) Tax
Advisors.
The
Purchaser has reviewed with its own tax advisors the U.S. federal, state, local
and foreign tax consequences of this investment and the transactions
contemplated by the Primary Documents. With respect to such matters, the
Purchaser relies solely on such advisors and not on any statements or
representations of the Company or any of its agents, written or oral. The
Purchaser understands that it (and not the Company) shall be responsible for
its
own tax liability that may arise as a result of this investment or the
transactions contemplated by the Primary Documents.
(l) Broker’s
Fees and Commissions.
Neither
the Purchaser nor any of its officers, partners, employees or agents has
employed any investment banker, broker, or finder in connection with the
transactions contemplated by the Primary Documents.
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3.
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REPRESENTATIONS
OF THE COMPANY
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The
Company represents and warrants to, and covenants and agrees with, the Purchaser
that:
(a) Organization.
The
Company is a corporation duly organized and validly existing and in good
standing under the laws of the State of Nevada and has all requisite corporate
power and authority to carry on its business as now conducted. The Company
is
duly qualified as a foreign corporation and in good standing in all
jurisdictions in which either the ownership or use of the properties owned
or
used by it, or the nature of the activities conducted by it, requires such
qualification. The minute books and stock record books and other similar records
of the Company have been made available to the Purchaser or its counsel prior
to
the execution of this Agreement, are complete and correct in all material
respects and have been maintained in accordance with sound business practices.
Such minute books contain true and complete records of all actions taken at
all
meetings and by all written consents in lieu of meetings of the directors,
stockholders and committees of the board of directors of the Company from the
date of organization through the date hereof. The Company has, prior to the
execution of this Agreement, delivered to the Purchaser true and complete copies
of the Company’s Articles of Incorporation, and Bylaws, each as amended through
the date hereof. The Company is not in violation of any provisions of its
Articles of Incorporation or Bylaws.
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(b) Capitalization.
Capitalization.
On the
date hereof, the authorized capital of the Company consists of:
(i) 150,000,000 shares of Common Stock, par value $0.001 per share, of
which 7,408,846 shares are issued and outstanding and (ii) 15,000,000
shares of preferred stock, par value $0.001 per share, of which 4,625,000 shares
of Series C Preferred Stock are issued and outstanding, 1,425,000 shares of
Series D Preferred Stock are issued and outstanding and - 0 - shares of Series
E
Preferred Stock are outstanding. The Company’s filings with the Commission (the
“Commission
Filings”)
accurately disclose the outstanding capital stock of the Company and all
outstanding options, warrants, notes, or any other rights or instruments which
would entitle the holder thereof to acquire shares of the Common Stock or other
equity interests in the Company upon conversion or exercise, setting forth
for
each such holder the type of security, number of equity shares covered
thereunder, the exercise or conversion price thereof, the vesting schedule
thereof (if any), and the issuance date and expiration date thereof. Other
than
as disclosed in the Commission Filings, there are no outstanding rights,
agreements, arrangements or understandings to which the Company is a party
(written or oral) which would obligate the Company to issue any equity interest,
option, warrant, convertible note, or other types of securities or to register
any shares in a registration statement filed with the Commission. Other than
as
disclosed in the Commission Filings, there is no agreement, arrangement or
understanding between or among any entities or individuals which affects,
restricts or relates to voting, giving of written consents, dividend rights
or
transferability of shares with respect to any voting shares of the Company,
including without limitation any voting trust agreement or proxy. The Commission
Filings accurately disclose all the shares subject to “lock-up” or similar
agreements or arrangements by which any equity shares are subject to resale
restrictions and the Company has provided the Purchaser complete and accurate
copies of all such agreements, which agreements are in full force and effect.
Except as set forth in the Commission Filings, there are no outstanding
obligations of the Company to repurchase, redeem or otherwise acquire for value
any outstanding shares of capital stock or other ownership interests of the
Company or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any other entity. There are no
anti-dilution or price adjustment provisions regarding any security issued
by
the Company (or in any agreement providing rights to security holders) that
will
be triggered by the issuance of the Securities (as defined below).
(c) Concerning
the Common Stock, the Preferred Stock and the Warrants.
The
Series E Preferred Stock, the Warrants and the Common Stock issuable upon
conversion of the Series E Preferred Stock and upon exercise of the Warrants
when issued, shall be duly and validly issued, fully paid and non-assessable
and
will not subject the holder thereof to personal liability by reason of being
such a holder.
(d) Authorized
Shares.
The
Company shall have available a sufficient number of authorized and unissued
shares of Common Stock as may be necessary to effect conversion of the Series
E
Preferred Stock and the exercise of the Warrants. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock of the issuance
of shares of Common Stock upon the conversion of the Series E Preferred Stock
and the exercise of the Warrants. The Company further acknowledges that its
obligation to issue shares of Common Stock upon conversion of the Series E
Preferred Stock and upon exercise of the Warrants is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.
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(e) Authorization;
Enforcement.
This
Agreement, the Warrants, the Registration Rights Agreement Amendment (as defined
below) and the Series E Certificate of Designation (collectively, the
“Primary
Documents”),
and
the transactions contemplated hereby and thereby, have been duly and validly
authorized by the Company; this Agreement has been duly executed and delivered
by the Company and this Agreement is, and the other Primary Documents, when
executed and delivered by the Company, will each be, a valid and binding
agreement of the Company, enforceable in accordance with their respective terms,
except to the extent that enforcement of each of the Primary Documents may
be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors’ rights generally and to general principles of equity.
(f) Financial
Statements.
The
financial statements and related notes thereto contained in the Company’s
filings with the Commission (the “Company
Financials”)
are
correct and complete in all material respects, comply in all material respects
with the Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
and
the rules and regulations of the Commission promulgated thereunder and have
been
prepared in accordance with United States generally accepted accounting
principles applied on a basis consistent throughout the periods indicated and
consistent with each other. The Company Financials present fairly and accurately
the financial condition and operating results of the Company in all material
respects as of the dates and during the periods indicated therein and are
consistent with the books and records of the Company. Except as set forth in
the
Company Financials, the Company has no material liabilities, contingent or
otherwise, other than liabilities disclosed on the balance sheet as of
June 30, 2008. Since
January 1, 2008, there has been no change in any accounting policies,
principles, methods or practices, including any change with respect to reserves
(whether for bad debts, contingent liabilities or otherwise), of the Company.
(g) Commission
Filings.
The
Company has made all filings with the Commission that it has been required
to
make under the Securities Act and the Exchange Act and has furnished or made
available to the Purchaser true and complete copies of all the documents it
has
filed with the Commission since its inception, all in the forms so filed. As
of
their respective filing dates, such filings already filed by the Company or
to
be filed by the Company after the date hereof but before the initial Closing
Date complied or, if filed after the date hereof, will comply in all material
respects with the requirements of the Securities Act and the Exchange Act,
and
the rules and regulations of the Commission promulgated thereunder, as the
case
may be, and none of the filings with the Commission contained or will contain
any untrue statement of a material fact or omitted or will omit any material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading,
except to the extent such filings have been all prior to the date of this
Agreement corrected, updated or superseded by a document subsequently filed
with
Commission.
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(h) Non-Contravention.
The
execution and delivery of this Agreement and each of the other Primary
Documents, and the consummation by the Company of the transactions contemplated
by this Agreement and each of the other Primary Documents, do not and will
not
conflict with, or result in a breach by the Company of, or give any third party
any right of termination, cancellation, acceleration or modification in or
with
respect to, any of the terms or provisions of, or constitute a default under,
(A) its Articles of Incorporation or Bylaws, as amended through the date hereof,
(B) any material indenture, mortgage, deed of trust, lease or other agreement
or
instrument to which the Company is a party or by which it or any of its
properties or assets are bound, or (C) any existing applicable law, rule, or
regulation or any applicable decree, judgment or order of any court or federal,
state, securities industry or foreign regulatory body, administrative agency,
or
any other governmental body having jurisdiction over the Company or any of
their
properties or assets (collectively, “Legal
Requirements”),
other
than those which have been waived or satisfied on or prior to the initial
Closing Date.
(i) Approvals
and Filings.
Other
than the completion of the filing of the Series E Certificate of Designation,
no
authorization, approval or consent of any court, governmental body, regulatory
agency, self-regulatory organization, stock exchange or market or the
stockholders of the Company is required to be obtained by the Company for the
entry into or the performance of this Agreement and the other Primary Documents.
(j) Compliance
With Legal Requirements.
Except
as disclosed in the Commission Filings, the Company has not violated in any
material respect, and is not currently in material default under, any Legal
Requirement applicable to the Company, or any of the assets or properties of
the
Company, where such violation could reasonably be expected to have material
adverse effect on the business or financial condition of the
Company.
(k) Absence
of Certain Changes.
Since
January 1, 2008, except as previously disclosed in the Commission Filings,
there
has been no material adverse change nor any material adverse development in
the
business, properties, operations, financial condition, prospects, outstanding
securities or results of operations of the Company, and no event has occurred
or
circumstance exists that may result in such a material adverse
change.
(l) Indebtedness
to Officers, Directors and Stockholders.
The
Company is not indebted to any of the Company’s stockholders, officers or
directors or their Affiliates in any amount whatsoever (including, without
limitation, any deferred compensation, salaries or rent payable).
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(m) Relationships
with Related Persons.
Except
as disclosed in the Commission Filings, no officer, director, or principal
stockholder of the Company nor any Related Person (as defined below) of any
of
the foregoing has, or since December 31, 2007, has had, any interest in any
property (whether real, personal, or mixed and whether tangible or intangible)
used in or pertaining to the business of the Company. Except disclosed in the
Commission Filings, no officer, director, or principal stockholder of the
Company nor any Related Person of the any of the foregoing is, or since December
31, 2007, has owned an equity interest or any other financial or profit interest
in, a Person (as defined below) that has (i) had business dealings or a material
financial interest in any transaction with the Company, or (ii) engaged in
competition with the Company with respect to any line of the merchandise or
services of such company (a “Competing
Business”)
in any
market presently served by such company except for ownership of less than one
percent of the outstanding capital stock of any Competing Business that is
publicly traded on any recognized exchange or in the over-the-counter market.
Except as disclosed in the Commission Filings, no director, officer, or
principal stockholder of the Company nor any Related Person of any of the
foregoing is a party to any Contract with, or has claim or right against, the
Company. As used in this Agreement, “Person”
means
any individual, corporation (including any non-profit corporation), general
or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or any governmental
body; “Related
Person”
means,
(X) with respect to a particular individual, (a) each other member of such
individual’s Family (as defined below); (b) any Person that is directly or
indirectly controlled by such individual or one or more members of such
individual’s Family; (c) any Person in which such individual or members of such
individual’s Family hold (individually or in the aggregate) a Material Interest
(as defined below); and (d) any Person with respect to which such individual
or
one or more members of such individual’s Family serves as a director, officer,
partner, executor, or trustee (or in a similar capacity); (Y) with respect
to a
specified Person other than an individual, (a) any Person that directly or
indirectly controls, is directly or indirectly controlled by, or is directly
or
indirectly under common control with such specified Person; (b) any Person
that
holds a Material Interest in such specified Person; (c) each Person that serves
as a director, officer, partner, executor, or trustee of such specified Person
(or in a similar capacity); (d) any Person in which such specified Person holds
a Material Interest; (e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity); and (f)
any
Related Person of any individual described in clause (b) or (c). For purposes
of
the foregoing definition, (a) the “Family”
of
an
individual includes (i) the individual, (ii) the individual’s spouse and former
spouses, (iii) any other natural person who is related to the individual or
the
individual’s spouse within the second degree, and (iv) any other natural person
who resides with such individual, and (b) “Material
Interest”
means
direct or indirect beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) of voting securities or other voting interests representing at
least 1% of the outstanding voting power of a Person or equity securities or
other equity interests representing at least 1% of the outstanding equity
securities or equity securities in a Person.
(n) Title
to Properties; Liens and Encumbrances.
The
Company has good and marketable title to all of its material properties and
assets, both real and personal, and has good title to all its leasehold
interests. Except as disclosed in the Commission Filings, all material
properties and assets reflected in the Company Financials are free and clear
of
all Encumbrances (as defined below) except liens for current Taxes not yet
due.
As used in this Agreement, “Encumbrance”
means
any charge, claim, community property interest, condition, equitable interest,
lien, pledge, security interest, right of first refusal, or restriction of
any
kind, including any restriction on use, voting, transfer, receipt of income,
or
exercise of any other attribute of ownership.
(o) Permits.
The
Company has all permits, licenses and any similar authority necessary for the
conduct of its business as now conducted, the lack of which would materially
and
adversely affect the business or financial condition of such company. The
Company is not in default in any respect under any of such permits, licenses
or
similar authority.
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(p) Absence
of Litigation.
There
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board or body, or arbitration tribunal pending or, to the Knowledge
of
the Company, threatened, against or affecting the Company, in which an
unfavorable decision, ruling or finding would have a material adverse effect
on
the properties, business, condition (financial or other) or results of
operations of the Company, taken as a whole, or the transactions contemplated
by
the Primary Documents, or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, the Primary Documents.
All
references to the “Knowledge
of the Company”
in
this
Agreement shall mean the actual knowledge of the Company or the knowledge that
the Company could reasonably be expected to have, after reasonable investigation
and due diligence.
(q) No
Default.
The
Company is not in default in the performance or observance of any obligation,
covenant or condition contained in any indenture, mortgage, deed of trust or
other instrument or agreement to which it is a party or by which it or its
property may be bound.
(r) Taxes.
(i) All
Tax
Returns (as defined below) required to have been filed by or with respect to
the
Company (including any extensions) have been filed. All such Tax Returns are
true, complete and correct in all material respects. All Taxes (as defined
below) due and payable by the Company, whether or not shown on any Tax Return,
or claimed to be due by any Taxing Authority (as defined below), have been
paid
or accrued on the balance sheet included in the Company’s latest filing with the
Commission.
(ii) The
Company does not have any material liability for Taxes outstanding other than
as
reflected in the balance sheet included in the Company’s latest filing with the
Commission or incurred subsequent to the date of such filing in the ordinary
course of business. The unpaid Taxes of the Company (i) did not, as of the
most
recent fiscal month end, exceed by any material amount the reserve for liability
for income tax (other than the reserve for deferred taxes established to reflect
timing differences between book and tax income) set forth on the face of the
balance sheet included in the Company’s latest filing with the Commission, and
(ii) will not exceed by any material amount that reserve as adjusted for
operations and transactions through the initial Closing Date.
(iii) The
Company is not a party to any agreement extending the time within which to
file
any Tax Return. No claim has ever been made by a Taxing Authority of any
jurisdiction in which the Company does not file Tax Returns that the Company
is
or may be subject to taxation by that jurisdiction.
(iv) The
Company has withheld and paid all Taxes required to have been withheld and
paid
in connection with amounts paid or owing to any employee, creditor or
independent contractor.
(v) There
has
been no action by any Taxing Authority in connection with assessing additional
Taxes against, or in respect of, the Company for any past period. There is
no
dispute or claim concerning any Tax liability of the Company either (i) claimed,
raised or, to the Knowledge of the Company, threatened by any Taxing Authority
or (ii) of which the Company is otherwise aware. There are no liens for Taxes
upon the assets and properties of the Company other than liens for Taxes not
yet
due. None of the Tax Returns of the Company have been audited or examined by
Taxing Authorities, and none of the Tax Returns of the Company currently are
the
subject of audit or examination. The Company has made available to the Purchaser
complete and correct copies of all federal, state, local and foreign income
Tax
Returns filed by, and all Tax examination reports and statements of deficiencies
assessed against or agreed to by, the Company since the fiscal year ended
December 31, 2005.
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(vi) There
are
no outstanding agreements or waivers extending the statutory period of
limitation applicable to any Tax Returns required to be filed by, or which
include or are treated as including, the Company or with respect to any Tax
assessment or deficiency affecting the Company.
(vii) The
Company has not received any written ruling related to Taxes or entered into
any
agreement with a Taxing Authority relating to Taxes.
(viii) Except
as
included in the Company’s latest filing with the Commission, the Company does
not have any liability for the Taxes of any person or entity other than the
Company (i) under Section 1.1502-6 of the Treasury regulations (or any similar
provision of state, local or foreign Legal Requirements), (ii) as a transferee
or successor, (iii) by contract or (iv) otherwise.
(ix) The
Company (i) has not agreed to make nor is required to make any adjustment under
Section 481 of the Internal Revenue Code by reason of a change in accounting
method and (ii) is not a “consenting corporation” within the meaning of Section
341(f)(1) of the Internal Revenue Code.
(x) The
Company is not a party to or bound by any obligations under any tax sharing,
tax
allocation, tax indemnity or similar agreement or arrangement.
(xi) The
Company is not involved in, subject to, or a party to any joint venture,
partnership, contract or other arrangement that is treated as a partnership
for
federal, state, local or foreign Tax purposes.
(xii) The
Company was not included nor is includible, in the Tax Return of any other
entity.
As
used
in this Agreement, a “Tax
Return”
means
any return, report, information return, schedule, certificate, statement or
other document (including any related or supporting information) filed or
required to be filed with, or, where none is required to be filed with a Taxing
Authority, the statement or other document issued by, a Taxing Authority in
connection with any Tax; “Tax”
means
any and all taxes, charges, fees, levies or other assessments, including,
without limitation, income, gross, receipts, excise, real or personal property,
sales, withholding, social security, retirement, unemployment, occupation,
use,
service, service use, license, net worth, payroll, franchise, transfer and
recording taxes, fees and charges, imposed by Taxing Authority, whether computed
on a separate, consolidated, unitary, combined or any other basis; and such
term
includes any interest whether paid or received, fines, penalties or additional
amounts attributable to, or imposed upon, or with respect to, any such taxes,
charges, fees, levies or other assessments; and “Taxing
Authority”
means
any governmental agency, board, bureau, body, department or authority of any
United States federal, state or local jurisdiction or any foreign jurisdiction,
having or purporting to exercise jurisdiction with respect to any
Tax.
10
(s) Certain
Prohibited Activities.
Neither
the Company nor any of its directors, officers or other employees has (i) used
any Company funds for any unlawful contribution, endorsement, gift,
entertainment or other unlawful expense relating to any political activity,
(ii)
made any direct or indirect unlawful payment of Company funds to any foreign
or
domestic government official or employee, (iii) violated or is in violation
of
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or
(iv)
made any bribe, rebate, payoff, influence payment, kickback or other similar
payment to any person.
(u) Agent
Fees.
The
Company has not incurred any liability for any finder’s or brokerage fees or
agent’s commissions in connection with the transactions contemplated by this
Agreement.
(v) Private
Offering.
Subject
to the accuracy of the Purchaser’s representations and warranties set forth in
Section 2
hereof,
(i) the offer, sale and issuance of the Series E Preferred Stock and the
Warrants, (ii) the issuance of Common Stock pursuant to the conversion and/or
exercise of such securities into shares of Common Stock, each as contemplated
by
the Primary Documents, are exempt from the registration requirements of the
Securities Act. The Company agrees that neither the Company nor anyone acting
on
its behalf will offer any of the Series E Preferred Stock, the Warrants or
any
similar securities for issuance or sale, or solicit any offer to acquire any
of
the same from anyone so as to render the issuance and sale of such securities
subject to the registration requirements of the Securities Act. The Company
has
not offered or sold the Series E Preferred Stock or the Warrants by any form
of
general solicitation or general advertising, as such terms are used in Rule
502(c) under the Securities Act.
|
4.
|
CERTAIN
COVENANTS, ACKNOWLEDGMENTS AND
RESTRICTIONS
|
(a) Termination
of Convertible Debenture Purchase Agreement.
The
parties acknowledge and agree that the Convertible Debenture Purchase Agreement,
dated as of August 17, 2007, as amended on March 27, 2008, by and between the
parties is hereby terminated and cancelled with no further force or effect.
Without limiting the generality of the foregoing, the Company shall not be
required to sell or issue any Debentures to the Purchaser thereunder.
Notwithstanding the foregoing, all warrants previously issued to the Purchaser
and its assigns in connection with the Convertible Debenture Purchase Agreement
shall remain outstanding and shall not be cancelled as a result of the
termination of the Convertible Debenture Purchase Agreement.
(b) Transfer
Restrictions.
The
Purchaser acknowledges that (i) neither the Series E Preferred Stock, the
Warrants nor the Common Stock issuable upon conversion of the Series E Preferred
Stock or upon exercise of the Warrants have been registered under the Securities
Act, and such securities may not be transferred unless (A) subsequently
registered thereunder or (B) they are transferred pursuant to an exemption
from
such registration, and (ii) any sale of the Series E Preferred Stock, the
Warrants or the Common Stock issuable upon conversion, exercise or exchange
thereof (collectively, the “Securities”)
made
in reliance upon Rule 144 under the Securities Act (“Rule
144”)
may be
made only in accordance with the terms of said Rule 144. The provisions of
Section 4(b) and 4(d) hereof, together with the rights of the Purchaser under
this Agreement and the other Primary Documents, shall be binding upon any
subsequent transferee of the Series E Preferred Stock and the
Warrants.
11
(c) Restrictive
Legend.
The
Purchaser acknowledges and agrees that, until such time as the Securities shall
have been registered under the Securities Act or the Purchaser demonstrates
to
the reasonable satisfaction of the Company and its counsel that such
registration shall no longer be required, such Securities may be subject to
a
stop-transfer order placed against the transfer of such Securities, and such
Securities shall bear a restrictive legend in substantially the following
form:
THESE
SECURITIES (INCLUDING ANY UNDERLYING SECURITIES) HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF
COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION SHALL NO LONGER BE REQUIRED.
(d) Filings.
The
Company undertakes and agrees that it will make all required filings in
connection with the sale of the Securities to the Purchaser as required by
federal and state laws and regulations, or by any domestic securities exchange
or trading market, and if applicable, the filing of a notice on Form D (at
such
time and in such manner as required by the rules and regulations of the
Commission), and to provide copies thereof to the Purchaser promptly after
such
filing or filings. With a view to making available to the holders of the
Securities the benefits of Rule 144 and any other rule or regulation of the
Commission that may at any time permit such holder to sell securities of the
Company to the public without registration or pursuant to a registration on
Form
S-3, the Company shall (a) at all times make and keep public information
available, as those terms are understood and defined in Rule 144, (b) file
on a
timely basis with the Commission all information that the Commission may require
under either of Section 13 or Section 15(d) of the Exchange Act and, so long
as
it is required to file such information, take all actions that may be required
as a condition to the availability of Rule 144 (or any successor exemptive
rule
hereafter in effect) with respect to the Common Stock; and (d) furnish to any
holder of the Securities forthwith upon request (i) a written statement by
the
Company as to its compliance with the reporting requirements of Rule 144, (ii)
a
copy of the most recent annual or quarterly report of the Company as filed
with
the Commission, and (iii) any other reports and documents that a holder of
the
Securities may reasonably request in order to avail itself of any rule or
regulation of the Commission allowing such holder to sell any such Securities
without registration.
(e) Reservation
of Common Stock.
The
Company will at all times have authorized and reserved for the purpose of
issuance a sufficient number of shares of Common Stock to provide for the
conversion of the Series E Preferred Stock and the exercise of the
Warrants.
12
(f) Registration
Requirement.
Upon
the execution of this Agreement, the holders of the Securities and the Company
shall execute an amendment, in the form attached hereto as Exhibit C (the
“Registration
Rights Agreement Amendment”),
to
that certain Amended and Restated Registration Rights Agreement, dated July
25,
2008, by and between the parties hereto.
(g) Return
of Certificates on Conversion and Warrants on Exercise.
(i) Upon
any
conversion by the Purchaser of less than all of the Series E Preferred Stock
pursuant to the terms of the Series E Certificate of Designation, the Company
shall issue and deliver to the Purchaser, within seven business days of the
date
of conversion, a new certificate or certificates for, as applicable, the total
number of shares of the Series E Preferred Stock, which the Purchaser has not
yet elected to convert (with the number of and denomination of such new
certificate(s) designated by the Purchaser).
(ii) Upon
any
partial exercise by the Purchaser of the Warrants, the Company shall issue
and
deliver to the Purchaser, within seven business days of the date on which the
Warrants is exercised, new Warrants representing the number of adjusted shares
of Common Stock covered thereby, in accordance with the terms
thereof.
(h) Replacement
Certificates and Warrants.
(i) The
certificate(s) representing the shares of the Series E Preferred Stock held
by
the Purchaser shall be exchangeable, at the option of the Purchaser at any
time
and from time to time at the office of Company, for certificates with different
denominations representing, as applicable, an equal aggregate number of shares
of the Series E Preferred Stock as requested by the Purchaser upon surrendering
the same. No service charge will be made for such registration or transfer
or
exchange.
(ii) The
Warrants will be exchangeable, at the option of the Purchaser, at any time
and
from time to time at the office of the Company, for other Warrants of different
denominations entitling the holder thereof to purchase in the aggregate the
same
number of shares of Common Stock as are purchasable under such Warrants. No
service charge will be made for such transfer or exchange.
|
5.
|
CONDITIONS
TO THE COMPANY’S OBLIGATION TO ISSUE THE SHARES AND THE
WARRANTS
|
The
Purchaser understands that the Company’s obligation to issue the Series E
Preferred Stock on each Closing Date and the Warrants on the initial Closing
Date to the Purchaser pursuant to this Agreement is conditioned upon the
following, unless waived in writing by the Company:
(a) The
accuracy on each Closing Date of the representations and warranties of the
Purchaser contained in this Agreement as if made on each Closing Date and the
performance by the Purchaser on or before each Closing Date of all covenants
and
agreements of the Purchaser required to be performed on or before each Closing
Date.
13
(b) The
absence or inapplicability on each Closing Date of any and all laws, rules
or
regulations prohibiting or restricting the transactions contemplated hereby,
or
requiring any consent or approval, except for any stockholder or Board of
Director approval or consent contemplated herein, which shall not have been
obtained.
(c) All
regulatory approvals or filings, if any, on each Closing Date necessary to
consummate the transactions contemplated by this Agreement shall have been
made
as of each Closing Date.
(d) The
receipt of good funds as of each Closing Date.
|
6.
|
CONDITIONS
TO THE PURCHASER’S OBLIGATION TO PURCHASE THE SHARES AND THE
WARRANTS
|
The
Company understands that the Purchaser’s obligation to purchase the Series E
Preferred Stock on each Closing Date and the Warrants on the initial Closing
Date pursuant to Sections 1(a) and 1(b) above is conditioned upon each of the
following, unless waived in writing by the Purchaser:
(a) The
Purchaser shall have completed to its satisfaction its due diligence review
of
the Company, the Company’s business, assets and liabilities, the Company shall
have furnished to the Purchaser and its representatives, such information as
may
be reasonably requested by them, and the Purchaser shall have approved the
use
of proceeds of the sale in its sole discretion.
(b) The
accuracy on each Closing Date of the representations and warranties of the
Company contained in this Agreement as if made on such Closing Date, and the
performance by the Company on or before such Closing Date of all covenants
and
agreements of the Company required to be performed on or before such Closing
Date.
(c) The
Company shall have executed and delivered to the Purchaser (i) the shares of
Series E Preferred Stock with respect to each Closing Date and (ii) all of
the
Warrants as of the initial Closing Date.
(d) On
each
Closing Date, the Purchaser shall have received from the Company such other
certificates and documents as it or its representatives, if applicable, shall
reasonably request, and all proceedings taken by the Company or the Board of
Directors of the Company, as applicable, in connection with the Primary
Documents contemplated by this Agreement and the other Primary Documents and
all
documents and papers relating to such Primary Documents shall be satisfactory
to
the Purchaser.
(e) All
regulatory approvals or filings, if any, necessary to consummate the
transactions contemplated by this Agreement shall have been made as of each
Closing Date.
14
(f) The
Company shall have received a Closing Certificate substantially in the form
attached hereto as Exhibit D.
(g) With
respect to the initial Closing Date only, the Company shall have reimbursed
the
Purchaser the expenses incurred in connection with the negotiation or
performance of this Agreement pursuant to Section 7
hereof.
|
7.
|
FEES
AND EXPENSES
|
The
Company shall bear its own costs, including attorney’s fees, incurred in the
negotiation of this Agreement and consummating of the transactions contemplated
herein and the corporate proceedings of the Company in contemplation hereof
and
thereof. At the initial Closing Date, the Company shall reimburse the Purchaser
for all of the Purchaser’s reasonable out-of-pocket expenses incurred in
connection with the negotiation or performance of this Agreement, including
without limitation reasonable fees and disbursements of counsel to the
Purchaser.
|
8.
|
SURVIVAL
|
The
agreements, covenants, representations and warranties of the Company and the
Purchaser shall survive the execution and delivery of this Agreement and the
delivery of the Securities hereunder for a period of two years from the date
of
the Final Closing Date, except that:
(a) the
Company’s representations and warranties regarding Taxes contained in Section
3(r) of this Agreement shall survive as long as the Company remains statutorily
liable for any obligation referenced in Section 3(r), and
(b) the
Company’s representations and warranties contained in Section 3(b)
shall
survive until the Purchaser and any of its affiliates are no longer holders
of
any of the Securities purchased hereunder.
|
9.
|
INDEMNIFICATION
|
(a) Each
of
the Company and the Purchaser (each in such capacity under this section, the
“Indemnifying
Party”)
agrees
to indemnify the other party and each officer, director, employee, agent,
partner, stockholder, member and affiliate of such other party (collectively,
the “Indemnified
Parties”)
for,
and hold each Indemnified Party harmless from and against: (i) any and all
damages, losses, claims, diminution in value and other liabilities of any and
every kind, including, without limitation, judgments and costs of settlement,
and (ii) any and all reasonable out-of-pocket costs and expenses of any and
every kind, including, without limitation, reasonable fees and disbursements
of
counsel for such Indemnified Parties (all of which expenses periodically shall
be reimbursed as incurred), in each case, arising out of or suffered or incurred
in connection with any of the following, whether or not involving a third party
claim: (a) any misrepresentation or any breach of any warranty made by the
Indemnifying Party herein or in any of the other Primary Documents, (b) any
breach or non-fulfillment of any covenant or agreement made by the Indemnifying
Party herein or in any of the other Primary Documents, or (c) any claim relating
to or arising out of a violation of applicable federal or state securities
laws
by the Indemnifying Party in connection with the sale or issuance of the Series
E Preferred Stock or the Warrants by the Indemnifying Party to the Indemnified
Party (collectively, the “Indemnified
Liabilities”).
To
the extent that the foregoing undertaking by the Indemnifying Party may be
unenforceable for any reason, the Indemnifying Party shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
15
No
indemnification shall be payable in respect of any Indemnified Liability (i)
where the claiming Indemnified Party had actual knowledge of or notice from
information set forth in the schedules hereto of the facts giving rise to such
Indemnified Liability prior to the initial Closing Date or (ii) where such
Indemnified Party entered into a settlement of an Indemnified Liability without
the prior written consent of the applicable Indemnifying Party.
|
10.
|
NOTICES
|
Any
notice required or permitted hereunder shall be given in writing (unless
otherwise specified herein) and shall be effective upon personal delivery,
via
facsimile (upon receipt of confirmation of error-free transmission and mailing
a
copy of such confirmation, postage prepaid by certified mail, return receipt
requested) or two business days following deposit of such notice with an
internationally recognized courier service, with postage prepaid and addressed
to each of the other parties thereunto entitled at the following addresses,
or
at such other addresses as a party may designate by five days advance written
notice to each of the other parties hereto.
|
Company:
|
Health
Systems Solutions, Inc.
|
|
|
000
Xxxxx Xxxxxx, Xxxxx Xxxxx
|
||
|
Xxx
Xxxx, XX 00000
|
||
|
Attention:
Xxxxxxx X. Xxxxxx, Chief Financial Officer
|
||
|
Telephone:
|
000-000-0000
|
|
|
Facsimile:
|
000-000-0000
|
|
|
with
a copy to:
|
Health
Systems Solutions, Inc.
|
|
|
000
Xxxxx Xxxxxx, Xxxxx Xxxxx
|
||
|
Xxx
Xxxx, XX 00000
|
||
|
Attention:
Xxxxxx Xxxxxx, Senior Vice President, Secretary & General
Counsel
|
||
|
Telephone:
|
000-000-0000
|
|
|
Facsimile:
|
000-000-0000
|
|
|
-
and -
|
||
|
Xxxxxxx
Xxxxxx P.A.
|
||
|
0000
Xxxxxxxxxxxxx Xxxxx
|
||
|
000
XX 0xx Xxxxxx
|
||
|
Xxxxx,
XX 00000
|
||
|
Attention:
Xxxx X. Xxxxxx
|
||
|
Telephone:
|
000-000-0000
|
|
|
Facsimile:
|
000-000-0000
|
|
16
After
November 1, 2008, all notices to the Company shall be delivered to the persons
stated above at the following address: 00 Xxxx 00xx
Xxxxxx,
Xxx Xxxx, XX 00000.
|
Purchaser:
|
Stanford
International Bank Ltd.
|
|
|
0000
Xxxxxx Xxxxxx
|
||
|
Xxxxxxx,
Xxxxxxxxx 00000
|
||
|
Attention:
Xxxxx X. Xxxxx, Chief Financial Officer
|
||
|
Telephone:
|
000-000-0000
|
|
|
Facsimile:
|
000-000-0000
|
|
|
with
a copy to:
|
Stanford
Financial Group
|
|
|
0000
Xxxxxxxxxx Xxxx
|
||
|
Xxxxxxx,
Xxxxx 00000
|
||
|
Attention:
Xxxxxxxx Xxxxxxxx, Esq.
|
||
|
Telephone
|
000-000-0000
|
|
|
Facsimile:
|
000-000-0000
|
|
|
11.
|
GOVERNING
LAW; JURISDICTION
|
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of Florida, without regard to its principles of conflict of laws.
Any
action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any party in the federal
courts of Florida or the state courts of the State of Florida, Miami-Dade County
and each of the parties consents to the jurisdiction of such courts and hereby
waives, to the maximum extent permitted by law, any objection, including any
objections based on forum non conveniens, to the bringing of any such proceeding
in such jurisdictions.
|
12.
|
MISCELLANEOUS
|
(a) Entire
Agreement. This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof. This Agreement, together
with
the other Primary Documents, including any certificate, schedule, exhibit or
other document delivered pursuant to their terms, constitutes the entire
agreement among the parties hereto with respect to the subject matters hereof
and thereof, and supersedes all prior agreements and understandings, whether
written or oral, among the parties with respect to such subject
matters.
(b) Amendments.
This
Agreement may not be amended except by an instrument in writing signed by the
party to be charged with enforcement.
(c) Waiver.
No
waiver
of any provision of this Agreement shall be deemed a waiver of any other
provisions or shall a waiver of the performance of a provision in one or more
instances be deemed a waiver of future performance thereof.
17
(d) Construction.
This
Agreement and each of the Primary Documents have been entered into freely by
each of the parties, following consultation with their respective counsel,
and
shall be interpreted fairly in accordance with its respective terms, without
any
construction in favor of or against either party.
(e) Binding
Effect of Agreement. This
Agreement shall inure to the benefit of, and be binding upon the successors
and
assigns of each of the parties hereto, including any transferees of the Series
E
Preferred Stock and the Warrants.
(f) Severability.
If
any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
unenforceability of this Agreement in any other jurisdiction.
(g) Attorneys’
Fees. If
any
action should arise between the parties hereto to enforce or interpret the
provisions of this Agreement, the prevailing party in such action shall be
reimbursed for all reasonable expenses incurred in connection with such action,
including reasonable attorneys’ fees.
(h) Headings.
The
headings of this Agreement are for convenience of reference only and shall
not
form part of, or affect the interpretation of this Agreement.
(i) Counterparts.
This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original and all of which, when taken together, will be deemed to
constitute one and the same agreement.
[Signatures
Begin on Following Page]
18
IN
WITNESS WHEREOF,
this
Agreement has been duly executed by each of the undersigned as of the date
first
written above.
|
By:
|
/s/
Xxxx Xxxxxxxxx
|
|
Xxxx
Xxxxxxxxx
|
|
|
Chief
Executive Officer
|
|
|
STANFORD
INTERNATIONAL BANK LTD.
|
|
|
By:
|
/s/
Xxxxx X. Xxxxx
|
|
Xxxxx
X. Xxxxx
|
|
|
Chief
Financial Officer
|
|
19
