EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
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AGREEMENT dated as of July 19, 2005, between MERCATOR MOMENTUM FUND, L.P.,
MERCATOR MOMENTUM FUND III, L.P, MONARCH POINTE FUND, LTD. (collectively, the
"Funds") and M.A.G. Capital, LLC ("MAG") (the Funds and MAG are referred to
individually as a "Holder" and collectively as the "Holders"), and Vasomedical,
Inc. a Delaware corporation (the "Company").
WHEREAS, the Funds have purchased, for an aggregate of $2,500,000, an
aggregate of 25,000 shares of Series D Convertible Preferred Stock (the "Series
D Stock") from the Company, and have the right to cause their Series D Stock to
be converted into shares of Common Stock, $.001 par value (the "Common Stock"),
of the Company, pursuant to the conversion formula set forth in the Certificate
of Designation ;
WHEREAS, each Fund and MAG have acquired Warrants (together, the
"Warrants") from the Company, pursuant to which the Holders have the right to
purchase in the aggregate up to 1,892,219 shares of the Common Stock through the
exercise of the Warrants;
WHEREAS, the Company desires to grant to the Holders the registration
rights set forth herein with respect to the shares of Common Stock issuable upon
the conversion of the Series D Stock and the exercise of the Warrants.
NOW, THEREFORE, the parties hereto mutually agree as follows:
1. Registrable Securities. As used herein the terms "Registrable Security"
means each of the shares of Common Stock (i) issued upon the conversion of the
Series D Stock (the "Conversion Shares") or (ii) upon exercise of the Warrants
(the "Warrant Shares"), provided, however, that with respect to any particular
Registrable Security, such security shall cease to be a Registrable Security
when, as of the date of determination that (a) it has been effectively
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and disposed of pursuant thereto, or (b) registration under the Securities Act
is no longer required for the immediate public distribution of such security.
The term "Registrable Securities" means any and/or all of the securities falling
within the foregoing definition of a "Registrable Security." In the event of any
merger, reorganization, consolidation, recapitalization or other change in
corporate structure affecting the Common Stock, such adjustment shall 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 Section 1.
2. Registration.
(a) The Company shall file a registration statement (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC") within
forty-five (45) days after the date of this Agreement in order to register the
resale of the Registrable Securities under the Securities Act. Once effective,
the Company shall maintain the effectiveness of the Registration Statement until
the earlier of (i) the date that all of the Registrable Securities have been
sold, or (ii) the date that the Company receives an opinion of counsel to the
Company that all of the Registrable Securities may be freely traded without
registration under the Securities Act, under Rule 144 promulgated under the
Securities Act or otherwise.
(b) The Company will initially include in the Registration Statement as
Registrable Securities Eight Million One Hundred Forty-Two Thousand Two Hundred
Nineteen (8,142,219) shares of Common Stock.
3. Covenants of the Company with Respect to Registration. The Company
covenants and agrees as follows:
(a) The Company shall use commercially reasonable efforts to cause the
Registration Statement to become effective with the SEC as promptly as possible
and in no event more than 90 days after filing the Registration Statement with
the SEC. If any stop order shall be issued by the SEC in connection therewith,
the Company shall use commercially reasonable efforts to obtain promptly the
removal of such order. Following the effective date of the Registration
Statement, the Company shall, upon the request of any Holder, forthwith supply
such reasonable number of copies of the Registration Statement, preliminary
prospectus and prospectus meeting the requirements of the Securities Act, and
any other documents necessary or incidental to the public offering of the
Registrable Securities, as shall be reasonably requested by the Holder to permit
the Holder to make a public distribution of the Holder's Registrable Securities.
The obligations of the Company hereunder with respect to the Holder's
Registrable Securities are subject to the Holder's furnishing to the Company
such appropriate information concerning the Holder, the Holder's Registrable
Securities and the terms of the Holder's offering of such Registrable Securities
as the Company may reasonably request in writing.
(b) The Company shall pay all costs, fees and expenses in connection with
the Registration Statement filed pursuant to Section 2 hereof including, without
limitation, the Company's legal and accounting fees, printing expenses, and blue
sky fees and expenses; provided, however, that each Holder shall be solely
responsible for the fees of any counsel retained by the Holder in connection
with such registration and any transfer taxes or underwriting discounts,
commissions or fees applicable to the Registrable Securities sold by the Holder
pursuant thereto.
(c) The Company will take all actions which may be reasonably required to
qualify or register the Registrable Securities included in the Registration
Statement for the offer and sale under the securities or blue sky laws of such
states as are reasonably requested by each Holder of such securities, provided
that the Company shall not be obligated to execute or file any general consent
to service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
4. Additional Terms.
(a) The Company shall indemnify and hold harmless the Holders and each
underwriter, within the meaning of the Securities Act, who may purchase from or
sell for any Holder, any Registrable Securities, from and against any and all
losses, claims, damages and liabilities caused by any untrue statement of a
material fact contained in the Registration Statement, any other registration
statement filed by the Company under the Securities Act with respect to the
registration of the Registrable Securities, any post-effective amendment to such
registration statements, or any prospectus included therein or caused by any
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omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission based upon information furnished or required to be furnished in
writing to the Company by the Holders or underwriter expressly for use therein,
which indemnification shall include each person, if any, who controls any Holder
or underwriter within the meaning of the Securities Act and each officer,
director, employee and agent of each Holder and underwriter; provided, however,
that the indemnification in this Section 4(a) with respect to any prospectus
shall not inure to the benefit of any Holder or underwriter (or to the benefit
of any person controlling any Holder or underwriter) on account of any such
loss, claim, damage or liability arising from the sale of Registrable Securities
by the Holder or underwriter, if a copy of a subsequent prospectus correcting
the untrue statement or omission in such earlier prospectus was provided to such
Holder or underwriter by the Company prior to the subject sale and the
subsequent prospectus was not delivered or sent by the Holder or underwriter to
the purchaser prior to such sale and provided further, that the Company shall
not be obligated to so indemnify any Holder or any such underwriter or other
person referred to above unless the Holder or underwriter or other person, as
the case may be, shall at the same time indemnify the Company, its directors,
each officer signing the Registration Statement and each person, if any, who
controls the Company within the meaning of the Securities Act, from and against
any and all losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in the Registration Statement, any
registration statement or any prospectus required to be filed or furnished by
reason of this Agreement or caused by any omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission based upon information furnished in
writing to the Company by the Holder or underwriter expressly for use therein.
(b) If for any reason the indemnification provided for in the preceding
section is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, liability or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations.
(c) Neither the filing of a Registration Statement by the Company pursuant
to this Agreement nor the making of any request for prospectuses by the Holder
shall impose upon any Holder any obligation to sell the Holder's Registrable
Securities.
(d) Each Holder, upon receipt of notice from the Company that an event has
occurred which requires a Post-Effective Amendment to the Registration Statement
or a supplement to the prospectus included therein, shall promptly discontinue
the sale of Registrable Securities until the Holder receives a copy of a
supplemented or amended prospectus from the Company, which the Company shall
provide as soon as practicable after such notice.
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(e) If the Company fails to keep the Registration Statement referred to
above continuously effective during the requisite period, then the Company
shall, promptly upon the request of any Holder, use commercially reasonable
efforts to update the Registration Statement or file a new registration
statement covering the Registrable Securities remaining unsold, subject to the
terms and provisions hereof.
(f) Each Holder agrees to provide the Company with any information or
undertakings reasonably requested by the Company in order for the Company to
include any appropriate information concerning the Holder in the Registration
Statement or in order to promote compliance by the Company or the Holder with
the Securities Act.
(g) The Company agrees that it shall cause each of its directors, officers
and shareholders owning ten percent (10%) or more of the Company's outstanding
Common Stock to refrain from selling any shares of the Company's Common Stock
until the Registration Statement has been declared effective.
(h) Each Holder, on behalf of itself and its affiliates, hereby covenants
and agrees not to, directly or indirectly, offer to "short sell", contract to
"short sell" or otherwise "short sell" any securities of the Company, including,
without limitation, shares of Common Stock that will be received as a result of
the conversion of the Series D Stock or the exercise of the Warrants.
5. Governing Law. This Agreement shall be deemed to have been made and
delivered in the State of New York and shall be governed as to validity,
interpretation, construction, effect and in all other respects by the internal
substantive laws of the State of New New York, without giving effect to the
choice of law rules thereof.
6. Amendment. This Agreement may only be amended by a written instrument
executed by the Company and the Holders.
7. Entire Agreement. This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.
8. Execution in Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
9. Notices. All communications hereunder shall be in writing and shall be
hand delivered, mailed by first-class mail, couriered by next-day air courier or
by facsimile at the addresses set forth below.
If to the Holders, M.A.G. Capital, LLC
Mercator Momentum Fund, L.P.
Mercator Momentum Fund III, L.P.
Monarch Pointe Fund, Ltd.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
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Xxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
With a copy to Xxxxxxxx Xxxxxx Xxxxxxx & Hampton LLP
000 Xxxxx Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx
If to the Company,
Vasomedical Inc
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Attention: Xxxxxx X. Xxx
With a copy to: Xxxxxxx, Xxxxxxxxx & Xxxxxxxx, LLP
000 Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
All such notices and communications shall be deemed to have been duly given: (i)
three (3) days after it is received if sent by facsimile at the address and
number set forth above; provided that notices given by facsimile shall not be
effective, unless either (a) a duplicate copy of such facsimile notice is
promptly given by depositing the same in the mail, postage prepaid and addressed
to the party as set forth below or (b) the receiving party delivers a written
confirmation of receipt for such notice by any other method permitted under this
paragraph; and further provided that any notice given by facsimile received
after 5:00 p.m. (recipient's time) or on a non-business day shall be deemed
received on the next business day; (ii) five (5) business days after deposit in
the United States mail, certified, return receipt requested, postage prepaid,
and addressed to the party as set forth below; or (iii) the next business day
after deposit with an international overnight delivery service, postage prepaid,
addressed to the party as set forth below with next business day delivery
guaranteed; provided that the sending party receives confirmation of delivery
from the delivery service provider.
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10. Binding Effect; Benefits. Any Holder may assign its rights hereunder.
This Agreement shall inure to the benefit of, and be binding upon, the parties
hereto and their respective heirs, legal representatives, successors and
assigns. Nothing herein contained, express or implied, is intended to confer
upon any person other than the parties hereto and their respective heirs, legal
representatives and successors, any rights or remedies under or by reason of
this Agreement.
11. Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
12. Severability. Any provision of this Agreement which is held by a court
of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
13. Attorneys' Fees and Disbursements. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party or parties shall be entitled to receive from the other party or parties
reasonable attorneys' fees and disbursements in addition to any other relief to
which the prevailing party or parties may be entitled.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.
VASOMEDICAL, INC.
By:/s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Its: President
HOLDERS:
MERCATOR MOMENTUM FUND, L.P.
By: M.A.G. CAPITAL, LLC
Its: General Partner
By:/s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
Its: Managing Member
MERCATOR MOMENTUM FUND III, L.P.
By: M.A.G. CAPITAL, LLC
Its: General Partner
By:/s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
Its: Managing Member
MONARCH POINTE FUND, LTD.
By:/s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
Its: President
M.A.G. CAPITAL, LLC
By:/s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
Its: Managing Member
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