EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
COMMON STOCK
OF
ATC HEALTHCARE, INC.
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made as of
March 5, 2007 by and among (i) ATC Healthcare, Inc., a Delaware corporation (the
"COMPANY") and (ii) the signatories hereto (each, an "INVESTOR" and,
collectively, the "INVESTORS") which Investors have entered into as of the date
hereof a Common Stock and Warrant Purchase Agreement (the "PURCHASE AGREEMENT")
with respect to the purchase of the Company's Class A Common Stock (the "STOCK")
and accompanying Warrants to purchase shares of Stock (the "WARRANTS"), and
(iii) each person or entity that subsequently becomes a party to this Agreement
pursuant to, and in accordance with, the provisions of Section 11 hereof
(collectively, the "INVESTOR PERMITTED TRANSFEREES" and each individually an
"INVESTOR PERMITTED TRANSFEREE"). Capitalized terms used herein but not defined
herein shall have the meanings given to such capitalized terms in the Purchase
Agreement.
WHEREAS, the Company has agreed to issue and sell to the Investors, and
the Investors have agreed to purchase, Stock and Warrants from the Company, all
upon the terms and conditions set forth in the Purchase Agreement; and
WHEREAS, in connection with the execution and delivery of the Purchase
Agreement, the Company has agreed with the Investors to provide it with the
rights set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, the parties hereto hereby agree as follows:
1. DEFINITIONS. The following terms shall have the meanings provided
therefor below:
"EFFECTIVE DATE" means the date that the Mandatory
Registration Statement is declared effective by the SEC.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, and all of the rules and regulations promulgated thereunder.
"INVESTORS" shall mean, collectively, the Investors and the
Investor Permitted Transferees; PROVIDED, HOWEVER, that the term Investors shall
not include signatories hereto or any Investor Permitted Transferee that ceases
to own or hold any Registrable Shares.
"MAJORITY HOLDERS" shall mean, at the relevant time of
reference thereto, those Investors holding and/or having the right to acquire,
as the case may be, more than fifty percent (50%) of the Registrable Shares held
by all of the Investors.
"QUALIFYING HOLDER" shall have the meaning ascribed thereto
in Section 11 hereof.
"REGISTRABLE SHARES" shall mean (i) the shares of Stock
purchased pursuant to the Purchase Agreement and (ii) the shares of Stock
purchasable upon the exercise of Warrants; PROVIDED, HOWEVER, that such term
shall not include any of such shares of Stock that become or have become
eligible for resale pursuant to Rule 144(k).
"RULE 144" shall mean Rule 144 promulgated under the
Securities Act and any successor or substitute rule, law or provision.
"RULE 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same purpose and effect as such Rule.
"RULE 424" means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended or interpreted from
time to time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same purpose and effect as such Rule.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and all of the rules and regulations promulgated thereunder.
2. EFFECTIVENESS. The Company shall be required to use commercially
reasonable efforts to keep the Mandatory Registration Statement (as defined in
Section 3(a)) continuously effective until such date that is the earlier of (i)
the date when all of the Registrable Shares registered thereunder shall have
been sold, (ii) the date when the Registrable Shares become Rule 144(k) eligible
or (iii) the third (3rd) anniversary of the date that the Mandatory Registration
Statement is first declared effective.
3. MANDATORY REGISTRATION; PIGGYBACK REGISTRATION.
(a) Within forty-five (45) days of the Closing Date, the
Company will prepare and file with the SEC a registration statement on Form S-3
or its equivalent for the purpose of registering under the Securities Act all of
the Registrable Shares for resale by, and for the account of, the Investors as
selling stockholders thereunder (the "MANDATORY REGISTRATION STATEMENT") and
shall use its best efforts to cause the Registration Statement to be declared
effective within 90 calendar days after the Closing Date, or within 120 calendar
days after the Closing Date in the event that the Registration Statement is
reviewed by the SEC (such dates, as applicable, the "EFFECTIVENESS DATE"). The
Mandatory Registration Statement shall permit the Investors to offer and sell,
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
any or all of the Registrable Shares and shall contain (unless otherwise
directed by at least an 85% majority in interest of the Investors) substantially
the "PLAN OF DISTRIBUTION" attached hereto as EXHIBIT B. The Company agrees to
use best efforts to cause the Mandatory Registration Statement to become
effective as soon as practicable. The Mandatory Registration Statement shall
only relate to resales of (1) Stock purchased by the Investors pursuant to the
Purchase Agreement or pursuant to Warrants issued under the Purchase Agreement
(2) 2,000,000 shares of Stock purchased by Roaring Fork Capital SBIC, L.P. in
January 2007 and a related Warrant to purchase up to 1,000,000 shares of Common
Stock and (2) Bathgate Capital with respect to the Warrant to purchase Stock of
the Company it has received or receives as placement agent for the offering to
the Investors amd the offering to Roaring Fork Capital SBIC, L.P.. The Company
shall telephonically request effectiveness of the Mandatory Registration
Statement as of 5:00 p.m. New York City time on a Trading Day. The Company shall
immediately notify the Holders via facsimile or by e-mail delivery of a ".pdf"
format data file of the effectiveness of the Mandatory Registration Statement on
the same Trading Day that the Company telephonically confirms effectiveness with
the Commission, which shall be the date requested for effectiveness of the
Mandatory Registration Statement. The Company shall, by 9:30 a.m. New York City
time on the second Business Day immediately following the Effectiveness Date,
file a final prospectus with the SEC as required by Rule 424.
2
(b) The offer and sale of the Registrable Shares pursuant to
the Mandatory Registration Statement shall not be underwritten.
(c) In the event that a Registration Default (as defined
herein) occurs, the Company shall pay, as partial liquidated damages and not as
a penalty, an amount in cash to each Investor equal to one percent (1%) of the
Purchase Price under the Purchase Agreement (the "MONTHLY DELAY DAMAGES AMOUNT")
paid by such Investor for each month (or part thereof, prorated daily) that the
Registration Default continues and until it is cured. The Monthly Delay Damages
Amount shall be paid by the Company within ten (10) business days after the end
of each month that the Registration Default continues.
(d) Each of the following shall be deemed to be a breach of
the Company's obligations hereunder (each, a "REGISTRATION DEFAULT"):
(i) The failure of the Company to file the Mandatory
Registration Statement with the SEC within forty-five (45) days following the
Closing Date;
(ii) the failure of the Company to file with the SEC
a request for acceleration within five business days of the date that the
Company is notified by the SEC that the Registration Statement will not be
"reviewed" or will not be subject to further review;
(iii) the Mandatory Registration Statement is not
declared effective by the SEC within ninety (90 days) (or, in the event of a
review by the SEC, one hundred twenty (120) days) after the Closing Date; or
(iv) the failure of the Company to file the final
prospectus pursuant to Rule 424 or to notify each Investor, each within 3
Business Days of effectiveness of the Mandatory Registration Statement.
(v) If on any day after the Effectiveness Date, sales
of all of the Registrable Shares cannot be made (A) other than during a
Suspension Period (as defined in Section 10) or (B) for more than sixty (60)
days in any period of 365 consecutive days for any reason.
3
(e) If any payments under Section 3(c) are not made in a
timely manner, the amounts due shall bear interest at the rate of one and
one-half percent (1.5%) per month (prorated for partial months) until paid in
full.
(f) If (but without any obligation to do so) at any time prior
to the earlier to occur of (i) the expiration or termination of the Warrants or
(ii) the date that sales of the Stock issued in connection with the Purchase
Agreement can be made under Rule 144(k), the Company proposes to register any of
its securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration on Form ▇-▇, ▇▇▇▇ ▇-▇ or
any form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Shares and a registration statement relating to a PIPE (private
investment public equity) or similar transaction), the Company shall, each such
time, promptly give each Investor written notice of such registration. Upon the
written request of an Investor given within twenty (20) days after receipt of
such written notice from the Company, the Company shall cause to be included in
the registration statement all of the Registrable Shares that such Investor has
requested to be registered (a "PIGGYBACK REGISTRATION STATEMENT"); PROVIDED,
HOWEVER, that if the managing underwriter of any underwritten offering by the
Company expresses reasonable written objection to the registration of all of the
Registrable Shares, then the Registrable Shares which shall be registered in
such offering on behalf of holders of Registrable Shares shall be reduced in the
proportion equal to the average proportion of reduction as that of all such
holders seeking registration in connection with such offering, subject to any
rights granted to other holders of securities of the Company that are expressly
by the terms of their agreements with the Company entitled to have priority
registration rights. If, at any time after giving written notice of its
intention to register any such Registrable Shares and prior to the effective
date of the Piggyback Registration Statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such Registrable Shares, the Company may, at its election,
give written notice of such determination to each Investor and, thereupon, in
the case of a determination not to register, the Company need not register any
Registrable Shares in connection with such registration.
(g) Neither the Company nor any of its security holders (other
than the Investors in such capacity pursuant hereto and Bathgate) may include
securities of the Company in the Mandatory Registration Statement other than the
Registrable Securities. The Company shall not file any other registration
statements until all Registrable Securities are registered pursuant to the
Mandatory Registration Statement that is declared effective by the SEC, provided
that this Section 3(g) shall not prohibit the Company from filing amendments to
registration statements filed prior to the date of this Agreement.
4. OBLIGATIONS OF THE COMPANY. In connection with the Company's
obligation under Section 3 hereof to file a Mandatory Registration Statement or
Piggyback Registration Statement with the SEC (collectively, a "REGISTRATION
STATEMENT") and to use its best efforts to cause the Registration Statement to
become effective as soon as practicable, the Company shall, as expeditiously as
reasonably possible:
(a) Not less than 5 Trading Days prior to the filing of the
Mandatory Registration Statement and not less than one Trading Day prior to the
filing of any related prospectus or any amendment or supplement thereto
(including any document that would be incorporated or deemed to be incorporated
therein by reference), the Company shall (i) furnish to each Investor copies of
all such documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to the
review of such Investors and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to each Investor,
to conduct a reasonable investigation within the meaning of the Securities Act.
The Company shall not file a Mandatory Registration Statement or any such
prospectus or any amendments or supplements thereto to which the Investors
owning a majority of the Registrable Shares shall reasonably object in good
faith, provided that the Company is notified of such objection in writing no
later than 5 Business Days after the Investors have been so furnished copies of
a Registration Statement or 1 Business Day after the Investors have been so
furnished copies of any related prospectus or amendments or supplements thereto.
4
(b) Prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Shares covered by the
Registration Statement;
(c) Furnish or otherwise make available to the Investors such
number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
(including, without limitation, prospectus amendments and supplements as are
prepared by the Company in accordance with Section 4(a)) as the Investors may
reasonably request in order to facilitate the disposition of such Investors'
Registrable Shares;
(d) Notify the Investors, at any time when a prospectus
relating to the Registration Statement is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in or relating to the Registration Statement contains an
untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading; and, thereafter, the Company will promptly
prepare (and, when completed, give notice to each Investor) a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Shares, such prospectus will not contain an untrue statement
of a material fact or omit to state any fact necessary to make the statements
therein not misleading, provided that upon such notification by the Company, the
Investors will not offer or sell Registrable Shares until the Company has
notified the Investors that it has prepared a supplement or amendment to such
prospectus and delivered copies of such supplement or amendment to the selling
Investors (it being understood and agreed by the Company that the foregoing
proviso shall in no way diminish or otherwise impair the Company's obligation to
promptly prepare a prospectus amendment or supplement as provided in this
Section 4(c) and deliver copies of same as above provided in Section 4(b)
hereof); and
(e) Use commercially reasonable efforts to register and
qualify the Registrable Shares covered by the Registration Statement under such
other securities or Blue Sky laws of such jurisdictions as shall be reasonably
appropriate in the opinion of the Company, provided that the Company shall not
be required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions, and provided further that (notwithstanding anything in this
Agreement to the contrary with respect to the bearing of expenses) if any
jurisdiction in which any of such Registrable Shares shall be qualified shall
require that expenses incurred in connection with the qualification therein of
any such Registrable Shares be borne by the selling Investors, then the selling
Investors shall, to the extent required by such jurisdiction, pay their pro rata
share of such qualification expenses.
5
(f) The Company shall file additional registration statements
or amendments to register any additional shares of Stock that may be issuable
upon exercise of Warrants as a result of any change in the exercise price of any
Warrant.
(g) The Company shall use its best efforts to cause all of the
Registrable Shares covered by a Registration Statement to be listed on the
American Stock Exchange or each securities exchange on which securities of the
same class or series issued by the Company are then listed, if any, if the
listing of such Registrable Shares is then permitted under the rules of such
exchange. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section 3(k).
(h) The Company shall cooperate with the Investors who hold
Registrable Shares being offered and, to the extent applicable, facilitate the
timely preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Shares to be offered pursuant to a
Registration Statement and enable such certificates to be in such denominations
or amounts, as the case may be, as the Investors may reasonably request and
registered in such names as the Investors may request.
(i) The Company shall effect a filing with respect to the
public offering contemplated by each Registration Statement (an "ISSUER FILING")
with the National Association of Securities Dealers, Inc. ("NASD") Corporate
Financing Department pursuant to NASD Rule 2710(b) within one Trading Day of the
date that the Registration Statement is first filed with the Commission and pay
the filing fee required by such Issuer Filing. The Company shall use
commercially reasonable efforts to pursue the Issuer Filing until the NASD
issues a letter confirming that it does not object to the terms of the offering
contemplated by the Registration Statement as described in the Plan of
Distribution attached hereto as ANNEX B. A copy of the Issuer Filing and all
related correspondence to or from the NASD with respect thereto shall be
provided to FWS.
5. FURNISH INFORMATION. Each Investor agrees to furnish to the Company
a completed questionnaire in the form attached to this Agreement as EXHIBIT C (a
"SELLING SHAREHOLDER QUESTIONNAIRE") not less than two Business Days prior to
the filing date of the Mandatory Registration Statement as set forth in Section
3(a) or by the end of the fourth Business Day following the date on which such
Investor receives draft materials in accordance with this Section 4(a).
6. EXPENSES OF REGISTRATION. All expenses incurred in connection with
the registration of the Registrable Shares pursuant to this Agreement (excluding
underwriting, brokerage and other selling commissions and discounts), including,
without limitation, all registration and qualification and filing fees,
printing, and fees and disbursements of counsel and auditors for the Company,
shall be borne by the Company.
6
7. [RESERVED].
8. INDEMNIFICATION.
(j) Notwithstanding any termination of this Agreement, the
Company will indemnify and hold harmless each Investor, any investment banking
firm acting as an underwriter for the Investors, any broker/dealer acting on
behalf of any Investors and each officer and director of such Investor, such
underwriter, such broker/dealer and each person, if any, who controls such
Investor, such underwriter or broker/dealer within the meaning of the Securities
Act, to the fullest extent permitted by law, against any losses, claims,
damages, judgments, fines, penalties, charges, or liabilities, joint or several,
costs, reasonable attorneys' fees, amounts paid in settlement or expenses, joint
or several (collectively, "CLAIMS") to which they may become subject under the
Securities Act or otherwise, insofar as such Claims arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, in any preliminary prospectus or final prospectus
relating thereto or in any amendments or supplements to the Registration
Statement or any such preliminary prospectus or final prospectus, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; and will reimburse such Investor, such underwriter,
broker/dealer or such officer, director or controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 8(a) shall not apply to
amounts paid in settlement of any such Claim, if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such Claim
to the extent that it arises out of or is based upon an untrue statement or
alleged untrue statement or omission made in connection with the Registration
Statement, any preliminary prospectus or final prospectus relating thereto or
any amendments or supplements to the Registration Statement or any such
preliminary prospectus or final prospectus, in reliance upon and in conformity
with written information furnished specifically for inclusion in the
Registration Statement or any such preliminary prospectus or final prospectus by
the Investors, any underwriter for them or controlling person with respect to
them. The Company shall reimburse the indemnified persons promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim.
(k) Notwithstanding any termination of this Agreement, each
Investor, severally and not jointly, will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of the Securities Act, against any Claims to which the Company or
any such director, officer, or controlling person may become subject to, under
the Securities Act or otherwise, insofar as such Claims arise out of or are
based upon any untrue or alleged untrue statement of any material fact contained
in the Registration Statement or any preliminary prospectus or final prospectus,
relating thereto or in any amendments or supplements to the Registration
Statement or any such preliminary prospectus or final prospectus, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent and only to the extent that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, in any preliminary prospectus
or final prospectus relating thereto or in any amendments or supplements to the
Registration Statement or any such preliminary prospectus or final prospectus,
in reliance upon and in conformity with written information furnished by the
Investor specifically for inclusion in the Registration Statement, or any
preliminary prospectus or final prospectus; and such Investor will reimburse any
legal or other expenses reasonably incurred by the Company or any such director,
officer, or controlling person in connection with investigating or defending any
such Claim, provided, however, that the liability of each Investor hereunder
shall be limited to the proceeds (net of underwriting discounts and commissions,
if any) received by such Investor from the sale of Registrable Shares covered by
the Registration Statement, and provided, further, however, that the indemnity
agreement contained in this Section 8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of those Investor(s) against which
the request for indemnity is being made (which consent shall not be unreasonably
withheld).
7
(l) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof and the indemnifying party shall have the right to
participate in and, to the extent the indemnifying party desires, jointly with
any other indemnifying party similarly noticed, to assume at its expense the
defense thereof with counsel mutually satisfactory to the indemnifying parties
with the consent of the indemnified party which consent will not be unreasonably
withheld, conditioned or delayed. In the event that the indemnifying party
assumes any such defense, the indemnified party may participate in such defense
with its own counsel and at its own expense, provided, however, that the counsel
for the indemnifying party shall act as lead counsel in all matters pertaining
to such defense or settlement of such claim and the indemnifying party shall
only pay for such indemnified party's expenses for the period prior to the date
of the indemnifying party's participation in such defense. The failure to notify
an indemnifying party promptly of the commencement of any such action, if
prejudicial to his ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
8, but the omission so to notify the indemnifying party will not relieve him of
any liability which he may have to any indemnified party otherwise other than
under this Section 8.
(m) Notwithstanding anything to the contrary herein, the
indemnifying party shall not be entitled to settle any claim, suit or proceeding
unless in connection with such settlement the indemnified party receives an
unconditional release with respect to the subject matter of such claim, suit or
proceeding and such settlement does not contain any admission of fault by the
indemnified party.
9. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to
the Investors the benefits of Rule 144 and any other rule or regulation of the
SEC that may at any time permit the Investors to sell the Registrable Shares to
the public without registration, the Company agrees to use commercially
reasonable efforts: (i) to make and keep public information available, as those
terms are understood and defined in (a) the General Instructions to Form S-3, or
any successor or substitute form and (b) Rule 144, (ii) to file with the SEC in
a timely manner all reports and other documents required to be filed by an
issuer of securities registered under the Securities Act or the Exchange Act,
(iii) as long as any Investor owns any Stock, Warrants or Registrable Shares, to
furnish in writing upon such Investor's request a written statement by the
Company that it has complied with the reporting requirements of Rule 144 and of
the Securities Act and the Exchange Act, and to furnish to such Investor a copy
of the most recent annual or quarterly report of the Company, and such other
reports and documents so filed by the Company as may be reasonably requested in
availing such Investor of any rule or regulation of the SEC permitting the
selling of any Registrable Shares without registration and (iv) undertake any
additional actions reasonably necessary to maintain the availability of the
Registration Statement or the use of Rule 144.
8
10. DEFERRAL AND LOCK-UP. Notwithstanding anything in this Agreement to
the contrary, if the Company shall furnish to the selling Investors a
certificate signed by the President or Chief Executive Officer of the Company
stating that the Board of Directors of the Company has made the good faith,
reasonable determination that (i) continued use by the selling Investors of the
Registration Statement for purposes of effecting offers or sales of Registrable
Shares pursuant thereto would require, under the Securities Act, premature
disclosure in the Registration Statement (or the prospectus relating thereto) of
material, nonpublic information concerning the Company, its business or
prospects or any proposed material transaction involving the Company, (ii) such
premature disclosure would be materially adverse to the Company, its business or
prospects or any such proposed material transaction or would make the successful
consummation by the Company of any such material transaction significantly less
likely and (iii) it is therefore advisable to suspend the use by the Investors
of such Registration Statement (and the prospectus relating thereto) for
purposes of effecting offers or sales of Registrable Shares pursuant thereto,
then the right of the selling Investors to use the Registration Statement (and
the prospectus relating thereto) for purposes of effecting offers or sales of
Registrable Shares pursuant thereto shall be suspended for a period (the
"SUSPENSION PERIOD") after delivery by the Company of the certificate referred
to above in this Section 10, provided that no Suspension Period shall exceed
thirty (30) consecutive or sixty (60) non-consecutive days during any 365 day
period; provided, further, that this Section 10 shall be subject to the
Company's obligation to pay liquidated damages as set forth in Section 3. During
the Suspension Period, none of the Investors shall offer or sell any Registrable
Shares pursuant to or in reliance upon the Registration Statement (or the
prospectus relating thereto). The Company shall use commercially reasonable
efforts to cause the termination of the Suspension Period to occur as promptly
as practicable.
11. TRANSFER OF REGISTRATION RIGHTS.
(a) None of the rights of any Investor under this Agreement
shall be transferred or assigned to any person unless (i) such person is a
Qualifying Holder (as defined below), and (ii) such person agrees to become a
party to, and bound by, all of the terms and conditions of, this Agreement by
duly executing and delivering to the Company an Instrument of Adherence in the
form attached as EXHIBIT A hereto. For purposes of this Section 11, the term
"QUALIFYING HOLDER" shall mean, with respect to any Investor, any direct
transferee from such Investor of those Registrable Shares held or that may be
acquired by such Investor. None of the rights of any Investor under this
Agreement shall be transferred or assigned to any Person (including, without
limitation, a Qualifying Holder) that acquires Registrable Shares in the event
that and to the extent that such Person is eligible to resell such Registrable
Shares pursuant to Rule 144(k) of the Securities Act (or any successor or
substitute rule) or may otherwise resell such Registrable Shares pursuant to an
exemption from the registration provisions of the Securities Act.
9
(b) Notwithstanding anything to the contrary contained in this
Section 11, to the extent the Company previously has registered the Registrable
Shares pursuant to a Registration Statement which has been declared effective by
the SEC and, thereafter, an Investor assigns its Registrable Shares to any other
person, the assignee shall have the right to cause the Registration Statement to
be amended or the prospectus related thereto to be supplemented, in either case
to name such assignee as a selling stockholder, provided that (i) the use of a
post-effective amendment or a supplement to the prospectus is permitted by
applicable law for such purpose, and (ii) all costs and expenses to the Company,
including, without limitation, legal and accounting expenses, incurred to so
amend such Registration Statement or supplement the prospectus shall be paid by
the assignee requesting such amendment (or shared on a PRO RATA basis to the
extent more than one assignee requests such amendment).
12. ENTIRE AGREEMENT. This Agreement constitutes and contains the
entire agreement and understanding of the parties with respect to the subject
matter hereof, and it also supersedes any and all prior negotiations,
correspondence, agreements or understandings with respect to the subject matter
hereof.
13. INDEPENDENT NATURE OF HOLDERS' OBLIGATIONS AND RIGHTS. The
obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor hereunder, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Investor pursuant
hereto or thereto, shall be deemed to constitute the Investors as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each
Investor shall be entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose.
14. MISCELLANEOUS.
(n) This Agreement may not be amended, modified or terminated,
and no rights or provisions may be waived, except with the written consent of
the Majority Holders and the Company. The Company may not assign any of its
rights or obligations arising under this Agreement without the written consent
of the Majority Holders, except to the extent that such assignment is the result
of a merger or consolidation of the Company.
(o) This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, and shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors or assigns, provided that the terms
and conditions of Section 11 hereof are satisfied. This Agreement shall also be
binding upon and inure to the benefit of any transferee of any of the Stock,
Warrants or the Registrable Shares provided that the terms and conditions of
Section 11 hereof are satisfied. Notwithstanding anything in this Agreement to
the contrary, if at any time any Investor shall cease to own any Stock, Warrants
or Registrable Shares, all of such Investor's rights under this Agreement shall
immediately terminate. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
10
(p) (i) Any notices, reports or other correspondence
(hereinafter collectively referred to as "CORRESPONDENCE") required or permitted
to be given hereunder shall be sent by courier (overnight or same day) or
telecopy or delivered by hand to the party to whom such Correspondence is
required or permitted to be given hereunder. The date of giving any notice shall
be the date of its actual receipt.
(i) All Correspondence to the Company shall be
addressed in the manner set forth in the Purchase Agreement.
(ii) All Correspondence to any Investor shall be sent
to such Purchaser at the address set forth in the Purchase Agreement.
(q) Any entity may change the address to which Correspondence
to it is to be addressed by notification as provided for herein.
(r) The parties acknowledge and agree that in the event of any
breach of this Agreement, remedies at law may be inadequate, and each of the
parties hereto shall be entitled to seek specific performance of the obligations
of the other parties hereto and such appropriate injunctive relief as may be
granted by a court of competent jurisdiction.
(s) This Agreement may be executed in a number of
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the parties hereto notwithstanding that all such
parties have not signed the same counterpart.
[INTENTIONALLY LEFT BLANK - NEXT PAGE IS SIGNATURE PAGE
11
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date and year first above written.
ATC HEALTHCARE, INC.
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇
----------------------------------------------
By: ▇▇▇▇▇▇ ▇▇▇▇
Title: Senior Vice President/Chief Financial Officer
12
[SIGNATURE PAGE TO AHN REGISTRATION RIGHTS AGREEMENT]
Name of Investor: __________________________
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTOR: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
13
EXHIBIT A
INSTRUMENT OF ADHERENCE
Reference is hereby made to that certain Registration Rights
Agreement, dated as of March 5, 2007, among ATC Healthcare, Inc., a Delaware
corporation (the "COMPANY"), the Investors and the Investor Permitted
Transferees, as amended and in effect from time to time (the "REGISTRATION
RIGHTS AGREEMENT"). Capitalized terms used herein without definition shall have
the respective meanings ascribed thereto in the Registration Rights Agreement.
The undersigned, in order to become the owner or holder of (i)
___ shares of Stock or (ii) Warrant(s) to purchase ___ shares of Stock of the
Company, hereby agrees that, from and after the date hereof, the undersigned has
become a party to the Registration Rights Agreement in the capacity of an
Investor Permitted Transferee, and is entitled to all of the benefits under, and
is subject to all of the obligations, restrictions and limitations set forth in
the Registration Rights Agreement that are applicable to Investor Permitted
Transferees. This Instrument of Adherence shall take effect and shall become a
part of the Registration Rights Agreement immediately upon execution.
Executed as of the date set forth below.
Signature:______________________________
Name of Signatory:______________________
Title: _________________________________
________________________________________
Name of Investor (if not individual)
Accepted:
ATC HEALTHCARE, INC.
By:_______________________________________
Name: ____________________________________
Title: ___________________________________
Date:_____________________________________
14
EXHIBIT B
PLAN OF DISTRIBUTION
Each Selling Stockholder (the "SELLING STOCKHOLDERS") of the common
stock and any of their pledgees, assignees and successors-in-interest may, from
time to time, sell any or all of their shares of common stock on the American
Stock Exchange or any other stock exchange, market or trading facility on which
the shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. A Selling Stockholder may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o settlement of short sales entered into after the effective
date of the registration statement of which this prospectus is
a part;
o broker-dealers may agree with the Selling Stockholders to sell
a specified number of such shares at a stipulated price per
share;
o through the writing or settlement of options or other hedging
transactions, whether through an options exchange or
otherwise;
o a combination of any such methods of sale; or
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), if available, rather
than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.
15
In connection with the sale of the common stock or interests therein,
the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each Selling Stockholder has
informed the Company that it does not have any written or oral agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock. In no event shall any broker-dealer receive fees, commissions and markups
which, in the aggregate, would exceed eight percent (8%).
The Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the shares. The Company has agreed
to indemnify the Selling Stockholders against certain losses, claims, damages
and liabilities, including liabilities under the Securities Act.
Because Selling Stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act including Rule 172 thereunder. In
addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather
than under this prospectus. There is no underwriter or coordinating broker
acting in connection with the proposed sale of the resale shares by the Selling
Stockholders.
We agreed to keep this prospectus effective until the earlier of (i)
the date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(k) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to the common stock for the applicable
restricted period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).
16
EXHIBIT C
ATC HEALTHCARE, INC.
SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE
The undersigned beneficial owner of common stock (the "REGISTRABLE
SECURITIES") of ATC Healthcare, Inc., a Delaware corporation (the "COMPANY"),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the "COMMISSION") a registration statement (the
"REGISTRATION STATEMENT") for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), of the Registrable
Securities, in accordance with the terms of the Registration Rights Agreement
(the "REGISTRATION RIGHTS AGREEMENT") to which this document is annexed. A copy
of the Registration Rights Agreement is available from the Company upon request
at the address set forth below. All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Registration Rights
Agreement.
Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the "SELLING SECURITYHOLDER") of
Registrable Securities hereby elects to include the Registrable Securities owned
by it in the Registration Statement.
17
The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
QUESTIONNAIRE
1. NAME.
(a) Full Legal Name of Selling Securityholder
-------------------------------------------------------------
-------------------------------------------------------------
(b) Full Legal Name of Registered Holder (if not the same as (a)
above) through which Registrable Securities are held:
-------------------------------------------------------------
-------------------------------------------------------------
(c) Full Legal Name of Natural Control Person (which means a
natural person who directly or indirectly alone or with others
has power to vote or dispose of the securities covered by the
questionnaire):
-------------------------------------------------------------
-------------------------------------------------------------
2. ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Telephone:
---------------------------------------------------------------------
Fax:
Contact Person:
3. BROKER-DEALER STATUS:
(a) Are you a broker-dealer?
Yes [_] No [_]
(b) If "yes" to Section 3(a), did you receive your Registrable
Securities as compensation for investment banking services to
the Company.
Yes [_] No [_]
Note: If no, the Commission's staff has indicated that you
should be identified as an underwriter in the Registration
Statement.
19
(c) Are you an affiliate of a broker-dealer?
Yes [_] No [_]
(d) If you are an affiliate of a broker-dealer, do you certify
that you bought the Registrable Securities in the ordinary
course of business, and at the time of the purchase of the
Registrable Securities to be resold, you had no agreements or
understandings, directly or indirectly, with any person to
distribute the Registrable Securities?
Yes [_] No [_]
Note: If no, the Commission's staff has indicated that you should
be identified as an underwriter in the Registration Statement.
4. BENEFICIAL OWNERSHIP OF SECURITIES OF THE COMPANY OWNED BY THE SELLING
SECURITYHOLDER.
EXCEPT AS SET FORTH BELOW IN THIS ITEM 4, THE UNDERSIGNED IS NOT THE
BENEFICIAL OR REGISTERED OWNER OF ANY SECURITIES OF THE COMPANY OTHER
THAN THE SECURITIES ISSUABLE PURSUANT TO THE PURCHASE AGREEMENT.
(a) Type and Amount of other securities beneficially owned by the
Selling Securityholder:
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
20
