Exhibit 10.1
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COMMON STOCK AND WARRANT
PURCHASE AGREEMENT
ATC Healthcare, Inc.
January 12, 2007
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COMMON STOCK AND WARRANT
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PURCHASE AGREEMENT
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THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT (this "Agreement"),
dated as of January 12, 2007, is by and among ATC Healthcare, Inc., a Delaware
corporation (the "Company"), and Roaring Fork Capital SBIC, L.P., a Delaware
limited partnership ("Roaring Fork" or the "Purchaser").
Recitals
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A. The Company and Roaring Fork are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act and Rule 506 of Regulation D as
promulgated by the SEC under the Securities Act.
B. Roaring Fork wishes to purchase, and the Company wishes to sell,
upon the terms and conditions stated in this Agreement, (i) 2,000,000 shares of
Common Stock (the "Shares") and (ii) warrants, in substantially the form
attached hereto as Exhibit A (the "Warrants") to acquire up to 1,000,000 shares
of Common Stock (the "Warrant Shares").
C. The Shares, the Warrants and the Warrant Shares collectively are
referred to herein as the "Securities".
The parties hereto, in consideration of the premises and their mutual
covenants and agreements herein set forth and intending to be legally bound
hereby, covenant and agree as follows:
DEFINITIONS
Certain Definitions. In addition to other words and terms defined elsewhere in
this Agreement, the following words and terms have the meanings set forth below
(and such meanings shall be equally applicable to both the singular and plural
form of the terms defined, as the context may require):
"Affiliate" shall mean with respect to any Person, any other Person
that is directly or indirectly controlling, controlled by or under common
control with such Person or entity or any of its Subsidiaries, and the term
"control" (including the terms "controlled by" and "under common control with")
shall mean having, directly or indirectly, the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities or by contract or otherwise. Without limiting the
foregoing, (i) the ownership of ten percent (10%) or more of the voting
securities of a Person shall be deemed to constitute control and notwithstanding
anything to the contrary herein, and (ii) neither Roaring Fork nor any of its
Affiliates shall be deemed to be Affiliates of the Company by virtue of the
transactions contemplated in this Agreement.
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"Agreement" shall mean this Common Stock and Warrant Purchase
Agreement, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Board" shall mean the Board of Directors of ATC Healthcare, Inc.
"Business" shall mean the principal business of the Company as set
forth in Section 4.1(b) hereof and as such shall continue to be conducted
following the purchase and sale of the Common Stock and the Warrants hereby.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banking institutions in Denver, Colorado are authorized or
required by law to close.
"Bylaws" shall mean the Bylaws or analogous instrument governing
operations, including all amendments and supplements thereto.
"Charter Documents" shall mean the certificate of incorporation filed
with the appropriate Governmental Authorities, including all amendments and
supplements thereto.
"Closing" shall mean the closing of the purchase and sale of the Common
Stock and the Warrants pursuant to this Agreement.
"Closing Date" shall mean January 12, 2007.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the Class A Common Stock of the Company.
"Company" shall have the meaning assigned to such term in the
introductory paragraph hereto, except as provided otherwise in this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may from time to time be amended, and the rules and regulations of
any governmental agency or authority, as from time to time in effect,
promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fiscal Year" or "fiscal year" shall mean each 12-month period ending
on December 31 of each year.
"Governmental Authorities" shall mean any federal, state or municipal
court or other governmental department, commission, board, bureau, agency or
instrumentality, governmental or quasi-governmental, domestic or foreign.
"IRS" shall mean the Internal Revenue Service and any governmental body
or agency succeeding to the functions thereof.
"Laws" shall mean all U.S. and foreign federal, state or local
statutes, laws, rules, regulations, ordinances, codes, policies, rules of common
law, and the like, now or hereafter in effect, including any judicial or
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administrative interpretations thereof, and any judicial or administrative
orders, consents, decrees or judgments.
"Lien" shall mean any security interest, pledge, bailment, mortgage,
hypothecation, deed of trust, conditional sales and title retention agreement
(including any lease in the nature thereof), charge, encumbrance or other
similar arrangement or interest in real or personal property, whether such
interest is based on common law, statute or contract.
"Material Adverse Effect" shall mean a material adverse effect on the
business, properties, assets, liabilities or condition (financial or otherwise)
of the Company, individually and/or taken as a whole.
"Person" shall mean any individual, partnership, limited partnership,
corporation, limited liability Company, association, joint stock company, trust,
joint venture, unincorporated organization or governmental entity or department,
agency or political subdivision thereof.
"Plan" shall mean any employee benefit plan (within the meaning of
Section 3(3) of ERISA), established or maintained by the Company or any member
of the Controlled Group.
"Principal Market" shall mean the American Stock Exchange.
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"Properties and Facilities" shall have the meaning assigned to such
term in Section 4.1(r) hereof.
"Property" shall mean, as to any Person, all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent balance sheet of such Person and its subsidiaries
under GAAP.
"Proprietary Rights" shall mean all patents, trademarks, trade names,
service marks, copyrights, inventions, production methods, licenses, formulas,
know-how, trade secrets and good will related to any of the foregoing,
regardless of whether such are registered with any Governmental Authorities,
including applications therefor.
"Purchase Documents" shall mean this Agreement (including all schedules
attached to the Agreement), the Registration Rights Agreement, the Common Stock
and the Warrants as any or all of the foregoing may be supplemented or amended
from time to time.
"Purchaser" shall have the meaning assigned to such term in the
introductory paragraph hereto.
"Registrable Securities" shall mean the Shares, the Warrant Shares and
any shares issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event, or any exercise or other price
adjustment with respect to the Common Stock.
"Roaring Fork" shall mean Roaring Fork Capital SBIC, L.P., the
Purchaser, which is managed by Roaring Fork Capital Management, LLC.
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"SBA Compliance Agreement" means the SBA Compliance Agreement between
the Company and Roaring Fork dated as of January 12, 2007.
"SEC" means the U.S. Securities and Exchange Commission.
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"Securities" means the Shares, Warrants and the Warrant Shares.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" of any corporation shall mean any other corporation or
limited liability company of which the outstanding capital stock possessing a
majority of voting power in the election of directors (otherwise than as the
result of a default) is owned or controlled by such corporation directly or
indirectly through Subsidiaries.
"Trading Day" means (i) a day on which the Common Stock is traded on a
Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock
is not listed on a Trading Market (other than the OTC Bulletin Board), a day on
which the Common Stock is traded in the over-the-counter market, as reported by
the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any
Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
shall mean a Business Day.
"Trading Market" means whichever of the New York Stock Exchange, the
American Stock Exchange, the NASDAQ Global Market, the NASDAQ Global Select
Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common
Stock is listed or quoted for trading on the date in question.
"Transaction Documents" shall have the meaning assigned to such term in
Section 4.1(f) hereof.
"Transactions" shall mean the purchase of the Shares and the Warrants
as contemplated by this Agreement, and all other agreements contemplated hereby
and thereby.
Accounting Principles. The character or amount of any asset, liability, capital
account or reserve and of any item of income or expense to be determined, and
any consolidation or other accounting computation to be made, and the
construction of any definition containing a financial term, pursuant to this
Agreement shall be determined or made in accordance with generally accepted
accounting principles in the United States of America consistently applied
("GAAP").
Other Definitional Provisions; Construction. Whenever the context so requires,
neuter gender includes the masculine and feminine, the singular number includes
the plural and vice versa. The words "hereof" "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not in any particular provision of this agreement, and references to
section, article, annex, schedule, exhibit and like references are references to
this Agreement unless otherwise specified. References in this Agreement to any
Persons shall include such Persons' successors and permitted assigns.
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ISSUE AND SALE OF COMMON STOCK AND WARRANTS
Authorization and Issuance of the Shares and Warrants. The Company has duly
authorized the offering of the Shares and Warrants to Roaring Fork.
Purchase Price. Subject to the terms and conditions and in reliance upon the
representations, warranties and agreements set forth herein, the Company shall
sell to Roaring Fork for $600,000 invested in the Company (the "Purchase
Price"), and Roaring Fork shall purchase from the Company, the Shares and the
Warrants. Roaring Fork and the Company agree that the Shares and the Warrants
constitute an "investment unit" for purposes of Section 1273(c)(2) of the Code.
On or before the Closing Date, Roaring Fork shall notify the Company of its
determination of the allocation of the issue price of such investment unit
between the Shares and the Warrants in accordance with Section 1273(c)(2) of the
Code and Treasury Regulation Section 1.1273-2(h), and neither Roaring Fork nor
the Company shall take any position inconsistent with such allocation in any tax
return or in any judicial or administrative proceeding in respect of taxes.
The Closing. Delivery of and payment for the Shares and the Warrants to be sold
to Roaring Fork will be made on the Closing Date at such place and date as may
be mutually agreeable to the Company and Roaring Fork. Delivery of the Shares
and Warrants shall be made to Roaring Fork against payment of the $600,000, by
check or by wire transfer of immediately available funds in the manner agreed to
by the Company and Roaring Fork. The Shares and the Warrants shall be issued in
the name of Roaring Fork.
CONDITIONS
Conditions to Purchase of Securities. The obligation of Roaring Fork to purchase
and pay for the Shares and Warrants is subject to the satisfaction, prior to or
at the Closing, of the following conditions at the time of its purchase:
(i) Representations and Warranties True. The representations and
warranties contained in Article 4 hereof shall be true and correct in
all material respects at and as of the Closing Date as though then
made, except to the extent of changes caused by the transactions
expressly contemplated herein.
(j) Material Adverse Change. Except as described in the SEC Reports,
there will have been no material adverse change in the business of the
Company since September 30, 2006.
(k) Closing Documents. The Company shall have delivered or ordered to
be delivered to the Purchaser all of the following documents in form
and substance satisfactory to the Purchaser:
the certificate for the Shares, duly completed and executed by the Company;
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the Warrants, duly completed and executed by the Company;
the Registration Rights Agreement, duly completed and executed by the Company;
the Amendments to the Certificate of Designation of the Series C Preferred Stock
and the warrants issued to Roaring Fork in connection with the purchase and sale
of the Series C Preferred Stock changing the conversion price of the Series C
Preferred Stock to $.40 and the exercise price of the warrants to $.45,
respectively.
a copy of the Charter Documents and Bylaws of the Company certified by the
Secretary or Assistant Secretary of the Company as of the Closing Date;
copies of the resolutions duly adopted by the Board authorizing the execution,
delivery and performance by the Company of this Agreement and each of the other
agreements, instruments and documents contemplated hereby to which the Company
is a party, and the consummation of all of the other Transactions, certified as
of each Closing Date by the president or secretary of the Company;
a certificate dated as of the Closing Date from the President and Secretary, as
officers of the Company, stating that the conditions specified in this Section
3.1 have been fully satisfied or waived by Roaring Fork with respect to its
purchase;
the SBA Compliance Agreement, duly completed and executed by the Company; and
such other documents relating to the Transactions contemplated by this Agreement
that Roaring Fork may reasonably request.
(l) Proceedings. All proceedings taken or required to be taken in
connection with the transactions contemplated hereby to be consummated
at or prior to the Closing and all documents incident thereto will be
satisfactory in form and substance to Roaring Fork.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Representations and Warranties of the Company. Unless the context requires
otherwise, all references to the "Company" shall include each of the Company's
Subsidiaries, unless the context requires otherwise. As a material inducement to
Roaring Fork to enter into this Agreement and purchase the Shares and the
Warrants, the Company hereby represents and warrants to Roaring Fork as follows:
(m) Organization and Power. The Company is duly organized, validly
existing and in good standing under the laws of its state of
organization. The Company has all requisite corporate or other
organizational power and authority and all material licenses, permits,
approvals and authorizations necessary to own and operate its
properties, to carry on its businesses as now conducted and presently
proposed to be conducted and to carry out the Transactions, and is
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qualified to do business in every jurisdiction where the failure to so
qualify might reasonably be expected to have a Material Adverse
Effect. The Company has its principal place of business in Lake
Success, New York. The copies of the Charter Documents and Bylaws of
the Company that have been furnished to Roaring Fork reflect all
amendments made thereto at any time prior to the date of this
Agreement and are correct and complete.
(n) Principal Business. The Company is primarily engaged in providing
medical supplemental staffing services (the "Business").
(o) SEC Reports; Financial Statements. Except as set forth on Schedule
4.1(c), the Company has filed all reports required to be filed by it
under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof reports filed on Form 10-K, Form 10-Q,
and Form 8-K, for the two years preceding the date hereof (or such
shorter period as the Company was required by law to file such
reports) (the foregoing materials being collectively referred to
herein as the "SEC Reports" and, together with the Schedules to this
Agreement (if any), the "Disclosure Materials") on a timely basis or
has timely filed a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such
extension. Attached as Schedule 4.1(c) is a list of any SEC Reports
not available on the XXXXX system. As of their respective dates, the
SEC Reports complied in all material respects with the requirements of
the Securities Act and the Exchange Act and the rules and regulations
of the SEC promulgated thereunder, and none of the SEC Reports, when
filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements
of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance
with GAAP applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the
financial position of the Company and its consolidated Subsidiaries as
of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments. The
Company's Common Stock is registered pursuant to Section 12(g) of the
Exchange Act, and the Company has taken no action designed to, or
which to its knowledge is likely to have the effect of, terminating
the registration of the Common Stock under the Exchange Act nor has
the Company received any notification that the SEC is contemplating
terminating such registration. No other information provided by or on
behalf of the Company to Roaring Fork which is not included in the SEC
Reports, including in any disclosure schedules, contains any untrue
statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made not misleading.
(p) Capitalization and Related Matters. As of the Closing Date and
immediately thereafter, the authorized capital stock of the Company
and the shares of stock that are issued, outstanding and reserved for
issuance upon conversion of notes, exercise of warrants and Options
and exercise of the Warrants hereunder (after giving effect to
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anti-dilution adjustments) are as set forth on Schedule 4.1(d)
hereto. As of the Closing Date, the Company will not have
outstanding any capital stock or securities convertible or
exchangeable for any shares of its capital stock except as set
forth in Schedule 4.1(d), and will not have outstanding any
rights or options to subscribe for or to purchase its capital
stock or any stock or securities convertible into or exchangeable
for its capital stock, except as set forth in Schedule 4.1(d). As
of the Closing Date, the Company will not be subject to any
obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital stock, except as set
forth herein and the Charter Documents, respectively, as in
effect on the date hereof. As of the Closing, all of the
outstanding shares of the Company's capital stock will be validly
issued, fully paid and nonassessable. Except as set forth on the
Schedule 4.1(d), there are no statutory or contractual
stockholders' preemptive rights or notices with respect to the
issuance of the Shares and Warrants hereunder. Subject to and
based on the accuracy of all representations made by Roaring Fork
in this Offering, the Company has not violated any applicable
federal or state securities laws in connection with the offer,
sale or issuance of any of its capital stock, and the offer, sale
and issuance of the Shares and Warrants hereunder do not require
registration under the Securities Act or any applicable state
securities laws.
(q) Subsidiaries. Except as set forth on Schedule 4.1(e), the
Company does not own, or hold any rights to acquire, any shares
of stock or any other security or interest in any other Person.
The Company has no Subsidiaries except as set forth on Schedule
4.1(e).
(r) Authorization; No Breach. The execution, delivery and
performance of the Purchase Documents, and the SBA Compliance
Agreement (collectively, the "Transaction Documents"), and the
consummation of the Transactions have been duly authorized by the
Company. The Company has the requisite corporate power and
authority to enter into and perform its obligations under the
Transaction Documents and to issue the Shares, Warrants and
Warrant Shares in accordance with the terms hereof and thereof.
Except as set forth in Section 4.1(f), no further filing,
consent, or authorization is required by the Company, its Board
of Directors, or its stockholders. Except as set forth on
Schedule 4.1(f), the execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Shares and
Warrants and reservation for issuance and issuance of the Warrant
Shares) will not (i) result in a violation of any certificates or
articles of incorporation, articles of formation, certificates or
articles of designations or other constituent documents of the
Company or any of its Subsidiaries, any capital stock of the
Company or any of its Subsidiaries or bylaws of the Company or
any of its Subsidiaries or (ii) conflict with, or constitute a
default (or an event which would with notice or lapse of time or
both would become a default) in any respect under, or give to
others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, or (iii)
result in a violation of any law, rule, regulation, order,
judgment or decree, including foreign, federal and state
securities laws and regulations and the rules and regulations of
the Principal Market, applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or
any of its Subsidiaries is bound or effective.
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(s) Enforceability. This Agreement constitutes, and each of the
other Transaction Documents when duly executed and delivered by
the Company will constitute, legal, valid and binding obligations
of the Company enforceable in accordance with their respective
terms.
(t) No Material Adverse Change. Except as disclosed in Schedule
4.1(h), since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed
in the SEC Reports, (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A)
trade payables, accrued expenses and other liabilities incurred
in the ordinary course of business consistent with past practice
and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed
in filings made with the Commission, (iii) the Company has not
altered its method of accounting or the identity of its auditors,
(iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock, and (v) except as set forth on
Schedule 4.1(t), the Company has not issued any equity securities
to any officer, director or Affiliate. The Company does not have
pending before the SEC any request for confidential treatment of
information.
(u) Litigation. Except as described in the SEC Reports, the
Company has not received notice of the filing of any material
actions, suits or proceedings at law or in equity or by or before
any arbitrator or any Governmental Authority (collectively,
"Lawsuits") now pending nor, to the best knowledge of the
Company's management after due inquiry, have any material
Lawsuits been threatened against or filed by or materially
affecting the Company or against any of its directors or officers
or Affiliates relating to the assets or rights of the Company or
the Business.
(v) Compliance with Laws. The Company is not in violation of any
applicable Law in any material respect. The Company is not in
default with respect to any judgment, order, writ, injunction,
decree, rule or regulation of any Governmental Authority. There
is no investigation, enforcement action or regulatory action
pending or threatened against or affecting the Company by any
Governmental Authority. There is no remedial or other corrective
action that the Company is required to take to remain in
compliance with any judgment, order, writ, injunction or decree
of any Governmental Authority or to maintain any material
permits, approvals or licenses granted by any Governmental
Authority in full force and effect. During the past five (5)
years, none of the officers, directors or management of the
Company have been arrested or convicted of any material crime nor
have any of them been bankrupt or an officer or director of a
bankrupt company.
(w) Transactions With Affiliates and Employees. Except as set
forth in the SEC Reports referenced in Schedule 4.1(k), none of
the officers or directors of the Company or the Principal
Shareholders and, to the knowledge of the Company, none of the
employees of the Company is presently a party to any transaction
with the Company (other than for services as employees, officers
and directors), including any contract, agreement or other
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arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or
partner.
(x) Xxxxxxxx-Xxxxx Act. The Company is in material compliance
with any and all applicable material requirements of the
Xxxxxxxx-Xxxxx Act of 2002 that are effective as of the date
hereof, and any and all applicable material rules and regulations
promulgated by the SEC thereunder that are effective as of the
date hereof.
(y) Certain Fees. Neither the Company, nor any of its
Subsidiaries or Affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in
connection with the offer or sale of the Shares and Warrants.
Except for any payments that may be due to Bathgate Capital
Partners LLC, no brokerage or finder's fees or commissions are or
will be payable by the Company to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank
or other Person with respect to the transactions contemplated by
this Agreement. Roaring Fork shall have no obligation with
respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this
Section that may be due in connection with the transactions
contemplated by this Agreement.
(z) Application of Takeover Protections. The Company has taken
all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company's Charter
Documents, or the laws of its state of incorporation that is or
could become applicable to the Purchaser as a result of the
Purchaser and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents,
including without limitation the Company's issuance of the
Shares, the Warrants and the Warrant Shares and Roaring Fork's
ownership of the Shares, the Warrants, and the Warrant Shares.
(aa) Taxes. Except as set forth on Schedule 4.1(o), the Company
has filed or caused to be filed all Federal, state and local tax
returns that are required to be filed by it, and has paid or
caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, including payroll
taxes.
(bb) Labor and Employment. The Company is and each of its Plans
are in compliance in all material respects with those provisions
of ERISA, the Code, the Age Discrimination in Employment Act, and
the regulations and published interpretations thereunder which
are applicable to the Company or any such Plan. The Company is in
compliance in all material respects with all labor and employment
laws, rules, regulations and requirements of all applicable
domestic and foreign jurisdictions. There are no pending or
threatened labor disputes, work stoppages or strikes.
(cc) Properties; Security Interests. Except as set forth in
Schedule 4.1(q), the Company has good and marketable title to, or
valid leasehold interests in, all of the material assets and
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properties used or useful by the Company in the Business
(collectively, the "Properties and Facilities"). All of the
Properties and Facilities are in good repair, working order and
condition and all such assets and properties are, except as set
forth in the SEC Reports. The Properties and Facilities
constitute all of the material assets, properties and rights of
any type used in or necessary for the conduct of the Business.
(dd) Intellectual Property. The Company has good title and
ownership of, or has sufficient rights to, all trademarks,
service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes and patents,
including without limitation the Proprietary Rights
(collectively, the "Intellectual Property") used in or necessary
for its business as now conducted or as proposed to be conducted.
None of the Intellectual Property used in or necessary for the
Company's business as now conducted conflicts with or infringes,
nor has the Company received any written or oral communications
alleging that the Company has violated or, by conducting its
business, would violate, any Intellectual Property of any other
Person. The transactions contemplated under this Agreement will
not alter, impair or otherwise affect any rights of the Company
in the Intellectual Property. The Company has taken commercially
reasonable measures to protect the proprietary nature of the
Intellectual Property and to maintain in confidence all trade
secrets and confidential information owned or used by the
Company.
There are no legal or governmental proceedings, including interference,
re-examination, reissue, opposition, nullity, or cancellation proceedings
pending that relate to any of the Intellectual Property, other than review of
pending patent applications, and the Company is not aware of any information
indicating that such proceedings are threatened or contemplated by any
governmental entity or any other Person.
(ee) Employment Agreements; Intellectual Property Agreements. The
Company is not aware that any of its employees or independent
contractors is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or
subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such
employee's or independent contractor's best efforts to promote
the interest of the Company or that would conflict with the
Company's business as now conducted or as proposed to be
conducted. Neither the execution or delivery of this Agreement,
nor the carrying on of the Company's business by the employees
and independent contractors of the Company, nor the conduct of
the Company's business as now conducted, or as currently proposed
to be conducted, will, to the Company's knowledge, conflict with
or result in a breach of the terms, conditions, or provisions of,
or constitute a default under, any contract, covenant or
instrument under which any such employee or independent
contractor is now obligated. It is not and will not be necessary
to use any inventions of any of the Company's employees (or
persons the Company currently intends to hire) made prior to
their employment by the Company. Schedule 4.1(s) and the specific
SEC Reports referenced therein list all material employment
agreements, including non-competition agreements, confidentiality
and intellectual property agreements, between the Company and its
directors, officers, key employees and agents. To the knowledge
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of the Company, no key employee of the Company is in violation of
any term of any employment contract, patent disclosure agreement,
proprietary information agreement, noncompetition agreement, or
any other contract or agreement or any restrictive covenant
relating to the right of any such key employee to be employed by
the Company because of the nature of the business conducted or to
be conducted by the Company or relating to the use of trade
secrets or proprietary information of others, and the continued
employment of the key employees does not subject the Company or
Roaring Fork to any material liability to third parties.
To the knowledge of the Company, no key employee of the Company whose
termination, either individually or in the aggregate, would have a Material
Adverse Effect, has expressed any present intention of terminating his
employment with the Company
(ff) Complete Disclosure. All factual information furnished by or
on behalf of the Company to Roaring Fork for purposes of or in
connection with this Agreement or the Transactions is, and all
other such factual information hereafter furnished by or on
behalf of the Company will be, true and accurate in all material
respects on the date as of which such information is furnished
and not incomplete by omitting to state any fact necessary to
make such information not misleading at such time in light of the
circumstances under which such information was provided.
(gg) Side Agreements. Neither the Company nor any Affiliate of
the Company nor any director, officer or employee of the Company
or any of its Affiliates has entered into, as of the date hereof,
any side agreement, either oral or written, with any individual
or business, pursuant to which the director, officer, employee,
Company or Affiliate agreed to do anything beyond the
requirements of the formal, written contracts executed by the
Company and disclosed in the SEC reports.
(hh) Product Liabilities. There are no product recalls, trade
disputes, product liabilities or product tampering claims now
pending, threatened against or made by or affecting the Company
or any of its directors, officers or employees or the businesses,
assets or rights of the Company.
(ii) Business Plan. The business plan which the Company delivered
to Roaring Fork on or about December 14, 2006, has been prepared
honestly and in good faith, with reasonable basis, by management
of the Company. All potential material changes that have become
known to Management since December 14, 2006, with respect to the
Company's business plan are listed on Schedule 4.1(h).
(jj) Environmental Laws. Except as set forth in Schedule 4.1(x),
the Company and its Subsidiaries, to their knowledge, (i) are in
material compliance with any and all Environmental Laws (as
hereinafter defined), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit,
license or approval where, in each of the foregoing clauses (i),
(ii) and (iii), the failure to so comply could be reasonably
expected to have, individually or in the aggregate, a Material
Adverse Effect. The term "Environmental Laws" means all federal,
state, local or foreign laws relating to pollution or protection
12
of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface
or subsurface strata), including, without limitation, laws
relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "Hazardous
Materials") into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well
as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered,
promulgated or approved thereunder.
(kk) Subsidiary Rights. The Company or one of its Subsidiaries
has the unrestricted right to vote, and (subject to limitations
imposed by applicable law) to receive dividends and distributions
on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.
(ll) Internal Accounting and Disclosure Controls. The Company and
each of its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general
or specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to
assets or incurrence of liabilities is permitted only in
accordance with management's general or specific authorization
and (iv) the recorded accountability for assets and liabilities
is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect
to any difference. The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the
Exchange Act) that are effective in ensuring that information
required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the
rules and forms of the SEC, including, without limitation,
controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is accumulated and
communicated to the Company's management, including its principal
executive officer or officers and its principal financial officer
or officers, as appropriate, to allow timely decisions regarding
required disclosure. During the twelve months prior to the date
hereof neither the Company nor any of its Subsidiaries have
received any notice or correspondence from any accountant
relating to any potential material weakness in any part of the
system of internal accounting controls of the Company or any of
its Subsidiaries.
(mm) Indebtedness and Other Contracts. Except as disclosed in
Schedule 4.1(aa) or in the SEC Reports, neither the Company nor
any of its Subsidiaries (i) has any outstanding Indebtedness (as
defined below), (ii) is a party to any contract, agreement or
instrument, the violation of which, or default under which, by
the other party(ies) to such contract, agreement or instrument
could reasonably be expected to result in a Material Adverse
Effect, (iii) is in violation of any term of or in default under
any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not
result, individually or in the aggregate, in a Material Adverse
13
Effect, or (iv) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of
which, in the judgment of the Company's officers, has or is
expected to have a Material Adverse Effect. Schedule 4.1(aa)
provides a detailed description of the material terms of any such
outstanding Indebtedness. For purposes of this Agreement: (x)
"Indebtedness" of any Person means, without duplication (A) all
indebtedness for borrowed money in excess of $100,000
individually (the "Debt Threshold"), (B) all obligations in
excess of the Debt Threshold issued, undertaken or assumed as the
deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business), (C)
all reimbursement or payment obligations with respect to letters
of credit, surety bonds and other similar instruments in excess
of the Debt Threshold, (D) all obligations in excess of the Debt
Threshold evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or
businesses, (E) all indebtedness in excess of the Debt Threshold
created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case
with respect to any property or assets acquired with the proceeds
of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are
limited to repossession or sale of such property), (F) all
monetary obligations in excess of the Debt Threshold under any
leasing or similar arrangement which, in connection with
generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital
lease, (G) all indebtedness referred to in clauses (A) through
(F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to
be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness,
and (H) all Contingent Obligations in excess of the Debt
Threshold in respect of indebtedness or obligations of others of
the kinds referred to in clauses (A) through (G) above; (y)
"Contingent Obligation" means, as to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with
respect to any Indebtedness of another Person if the primary
purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of
such liability that such liability will be paid or discharged, or
that any agreements relating thereto will be complied with, or
that the holders of such liability will be protected (in whole or
in part) against loss with respect thereto; and (z) "Person"
means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency
thereof.
(nn) Off Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company and an
unconsolidated or other off balance sheet entity that is required
to be disclosed by the Company in its Exchange Act filings and is
not so disclosed or that otherwise would be reasonably likely to
have a Material Adverse Effect.
(oo) Investment Company Status. The Company is not, and upon
consummation of the sale of the Securities will not be, an
"investment company," a company controlled by an "investment
company" or an "affiliated person" of, or "promoter" or
14
"principal underwriter" for, an "investment company" as such
terms are defined in the Investment Company Act of 1940, as
amended.
(pp) Transfer Taxes. On the Closing Date, all stock transfer or
other taxes (other than income or similar taxes) which are
required to be paid in connection with the sale and transfer of
the Securities to be sold to Roaring Fork hereunder will be, or
will have been, fully paid or provided for by the Company, and
all laws imposing such taxes will be or will have been complied
with.
(qq) Foreign Corrupt Practices. Neither the Company nor any of
its Subsidiaries nor any director, officer, agent, employee or
other Person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf
of, the Company or any of its Subsidiaries (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government
official or employee.
(rr) No Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or circumstance
has occurred or exists, or is contemplated to occur with respect
to the Company, its Subsidiaries or their respective business,
properties, prospects, operations or financial condition, that
would be required to be disclosed by the Company under applicable
securities laws on a registration statement on Form S-1 filed
with the SEC relating to an issuance and sale by the Company of
its Common Stock and which has not been publicly announced.
(ss) No Integrated Offering. None of the Company, its
Subsidiaries, any of their affiliates, and any Person acting on
their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of
any of the Securities under the Securities Act or cause this
offering of the Securities to be integrated with prior offerings
by the Company for purposes of the Securities Act or any
applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of any exchange or
automated quotation system on which any of the securities of the
Company are listed or designated. None of the Company, its
Subsidiaries, their affiliates and any Person acting on their
behalf will take any action or steps referred to in the preceding
sentence that would require registration of any of the Securities
under the Securities Act or cause the offering of the Securities
to be integrated with other offerings.
(tt) Dilutive Effect. The Company understands and acknowledges
that the number of Warrant Shares issuable upon exercise of the
Warrants will increase in certain circumstances. The Company
further acknowledges that its obligation to issue the Warrant
Shares upon exercise of the Warrants in accordance with this
Agreement and the Warrants is, in each case, absolute and
unconditional, regardless of the dilutive effect that such
issuance may have on the ownership interests of other
stockholders of the Company.
15
(uu) No Changes to Bylaws or Charter Documents. There have been
no changes in the Bylaws or the charter documents for the Company
and its Subsidiaries since the closing of the Series C Preferred
Stock.
Survival of Company Representations and Warranties. All representations and
warranties contained in this Agreement and any financial statements,
instruments, certificates, schedules or other documents delivered in connection
herewith, shall survive the execution and delivery of this Agreement only for a
period of eighteen (18) months from the date of this Agreement.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Roaring Fork hereby represents and warrants to the Company as follows:
Purchase Entirely for Its Own Account. This Agreement is made with Roaring Fork
in reliance upon its representation to the Company that the Shares and the
Warrants will be acquired for investment for the Purchaser's own account, not as
a nominee or agent, and not with any agreement for the resale or distribution of
any part thereof. Subject to the immediate preceding sentence, nothing contained
herein shall be deemed a representation or warranty by Roaring Fork to hold any
of the Securities for any period of time.
Disclosure of Information. Roaring Fork has had the opportunity to ask questions
of, and receive answers from officers and directors of the Company, to review
the SEC Reports, and to obtain additional information regarding the Company and
this Offering. Neither such inquiries nor any other investigation conducted by
or on behalf of Roaring Fork or its representatives or counsel shall modify,
amend or affect Roaring Fork's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations and
warranties contained in the Purchase Documents.
Accredited and Sophisticated Investor; Investment Experience. Roaring Fork
represents that it is a sophisticated investor and an "accredited investor" as
defined in Rule 501 under the Securities Act. Roaring Fork also represents that
it is an investor in restricted securities and acknowledges that it is able to
fend for itself, can bear the economic risk of its investment, and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Shares and Warrants and
can bear the economic risk of loss of the investment in the Securities being
purchased.
Restricted Securities. Roaring Fork acknowledges that the Shares, the Warrants
and the Warrant Shares have not been registered under the Securities Act and may
be resold only if registered pursuant to the provisions of the Securities Act or
if an exemption from registration is available.
Legends. Unless the Shares and the Warrants have been registered under the
Securities Act, the Company shall instruct its transfer agent to enter stop
transfer orders with respect to such Shares and Warrants (including any Common
Stock issued pursuant to exercise of the Warrants), and all certificates or
instruments representing such Shares and Warrants shall bear on the face thereof
substantially the following legend:
16
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED, IN THE ABSENCE OF
SUCH REGISTRATION, UNLESS THE COMPANY IS REASONABLY SATISFIED THAT THE PROPOSED
SALE OR TRANSFER IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS.
Assignment. Upon the assignment or transfer by Roaring Fork or any of its
successors or assignees of all or any part of the Warrants, the term "Purchaser"
as used herein shall thereafter mean, to the extent thereof, the then holder or
holders of such Warrants, or portion thereof.
Survival of Purchaser Representations. All representations and warranties
contained in this Agreement by Purchaser and any financial statements,
instruments, certificates, schedules or other documents delivered in connection
herewith, shall survive the execution and delivery of this Agreement, regardless
of any investigation made by the Company or on the Company's behalf.
COVENANTS
Affirmative Covenants. The Company covenants that, so long as Roaring Fork owns
any Shares, Warrants or Warrant Shares the Company shall:
(vv) Existence. Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal
existence.
(ww) Furnishing of Information. Timely file (or obtain extensions
in respect thereof and file within the applicable grace period)
all reports required to be filed by the Company pursuant to the
Exchange Act, and if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the
Purchaser and make publicly available in accordance with Rule
144(c) such information as is required for the Purchaser to sell
the Conversion Shares and Warrant Shares under Rule 144. The
Company further covenants that it will take such further action
as any holder of Shares, Warrants and or the Warrant Shares may
reasonably request, all to the extent required from time to time
to enable such Person to sell the Shares or Warrant Shares
without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.
(xx) Indemnification of Investors. In addition to the indemnity
provided in Article 7, indemnify and hold each Purchaser and its
respective directors, officers, partners, representatives,
employees and agents (each, an "Investor Party") harmless from
any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation
(collectively, "Losses") that any such Investor Party may suffer
or incur as a result of or relating to any misrepresentation,
breach or inaccuracy of any representation, warranty, covenant or
agreement made by the Company in any Transaction Document. In
addition to the indemnity contained herein, the Company will
17
reimburse each Investor Party for its reasonable legal and other
expenses (including the cost of any investigation, preparation
and travel in connection therewith) incurred in connection
therewith, as such expenses are incurred.
(yy) Common Stock Reserve. Maintain in reserve, at all times that
the Warrants are unexercised, authorized, but unissued and
unreserved, shares of Common Stock for issuance upon exercise of
the Warrants.
(zz) Use of Proceeds. Use the funds received from Roaring Fork in
connection with the Transactions substantially in accordance with
the "Use of Proceeds Schedule" attached hereto as Schedule
6.1(e).
(aaa) Further Assurances. With reasonable promptness, execute and
deliver to the Purchaser, from time to time, upon the reasonable
request of the Purchaser, such supplemental agreements,
statements, assignments and transfers, or instructions on
documents as the Purchaser may request in order that the full
intent of this Agreement and the other Purchase Documents may be
carried into effect.
6.2. Amendment of Note. The Company will deliver to the Purchaser
within ten (10) days of the Closing, an amendment to that certain 15% Secured
Convertible Subordinated Note Dated December 15, 2004 from the Company to Xxxxxx
Xxxxxxxx (the "Note") that will (i) extend the maturity date of the Note to
January 15, 2009, (ii) have the payee forebear on the Company's obligations to
make principal payments on the Note until the maturity date, (iii) acknowledge
that the conversion price is fixed at $0.38 per share, the current price under
the formula in the Note, and (iv) provide for the Company's issuance to Xxxxxx
Xxxxxxxx in connection with such amendment of a Warrant to Purchase 350,000
shares of Class A Common Stock at an exercise price of $0.50 per share, and
which will not include any provision for anti-dilution price adjustment.
MISCELLANEOUS
Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that (a) the Company may not assign or transfer its rights hereunder or
any interest herein or delegate its duties hereunder.
Modifications and Amendments. The provisions of this Agreement may be modified,
waived or amended, but only by a written instrument signed by the Company and
the Purchaser.
No Implied Waivers; Cumulative Remedies; Writing Required. No delay or failure
in exercising any right, power or remedy hereunder shall affect or operate as a
waiver thereof; nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power or remedy
preclude any further exercise thereof or of any other right, power or remedy.
The rights and remedies hereunder are cumulative and not exclusive of any rights
or remedies that the Purchaser or any holder of Warrants or Warrant Shares would
otherwise have. Any waiver, permit, consent or approval of any kind or character
18
of any breach or default under this Agreement or any such waiver of any
provision or condition of this Agreement must be in writing, and shall be
effective only to the extent in such writing specifically set forth.
Fees and Expenses. The Company agrees to pay Roaring Fork $15,000] at Closing as
reimbursement of Roaring Fork's legal fees in connection with the preparation of
the Purchase Documents and other expenses. It is understood that counsel for
Roaring Fork has only rendered legal advice to Roaring Fork, and not to the
Company or any other Person in connection with the transactions contemplated
hereby, and that each of the Company and Roaring Fork has relied for such
matters on the advice of its own respective counsel. Except as specified in the
immediately preceding sentence, each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of the Purchase Documents.
Reimbursement of Expenses-Enforcement and Collection. The Company upon demand
shall pay or reimburse the Purchaser for all fees and expenses incurred or
payable by the Purchaser (including, without limitation, reasonable fees and
expenses of counsel for the Purchaser), from time to time arising in connection
with the enforcement of this Agreement.
Notices. All notices and other communications given to or made upon any party
hereto in connection with this Agreement shall, except as otherwise expressly
herein provided, be in writing (including telecopy, but in such case, a
confirming copy will be sent by another permitted means) and mailed via
certified mail, telecopied or delivered by guaranteed overnight parcel express
service or courier to the respective parties, as follows:
to the Company:
---------------
ATC Healthcare, Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attn: Chief Financial Officer
Fax: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Keevican Xxxxx Xxxxxxx & Xxxxxx LLC
11th Floor, Federated Investors Tower
0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
and
To Roaring Fork and its counsel at the addresses set forth
----------------------------------------------------------
below the signature of Roaring Fork;
------------------------------------
19
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective upon delivery if delivered by
courier or overnight parcel express service; in the case of certified mail,
three (3) Business Days after the date sent; or in the case of telecopy, when
received.
Survival. All representations, warranties, covenants and agreements of the
Company contained herein or made in writing in connection herewith shall survive
the execution and delivery of this Agreement, the Closing and the purchase and
delivery of the Common Stock and Warrants.
Governing Law; Consent to Jurisdiction. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Colorado, without regard
to conflict of laws principles. Each of the parties hereto irrevocably submits
to the exclusive jurisdiction of the courts of the State of Colorado, County of
Arapahoe, and the United States District Court for the District of Colorado for
the purpose of any suit, action, proceeding or judgment relating or arising out
of this Agreement and the transactions contemplated hereby. Service of process
in connection with any such suit, action or proceeding may be served on each
party hereto by the same methods as are specified for the giving of notices
under this Agreement. Each of the parties hereto irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and the
laying of venue in such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, the Purchaser will be entitled
to specific performance under the Purchase Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
Adjustment Provisions. The Company has represented to Roaring Fork that it plans
to raise between $900,000 and $1,900,000 in additional funds in a private
offering to be completed no later than May 31, 2007 on terms no more favorable
than those made to Roaring Fork pursuant to the Purchase Documents. If the
Company does not raise at least $900,000 by May 31, 2007 either through such a
private offering or through a mezzanine debt arrangement involving a note with a
minimum term of two years or more that includes a warrant, then the Company
shall, for no additional consideration, issue an additional 1,000,000 shares of
Common Stock to Roaring Fork and the exercise price of the Warrants shall be
reduced to $.30 and the Warrant Shares shall be increased by 500,000 shares. If
the Company enters into a subsequent placement involving an equity issuance from
and after the date hereof until September 30, 2007 and any of the terms of such
subsequent placement are more beneficial to the investors than those provided in
this Agreement or in any of the other Transaction Documents, the relevant
Transaction Document(s) shall be, without any further action by Roaring Fork or
the Company, deemed amended and modified in an economically and legally
equivalent manner such that Roaring Fork shall receive the benefit of the more
favorable terms of such subsequent placement. The Company hereby agrees, at its
expense, to take such other actions (such as entering into amendments to this
20
Agreement or any other Transaction Document) as Roaring Fork may reasonably
request to further effectuate the foregoing.
Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law in any jurisdiction, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating any
other provision of this Agreement.
Headings. Article, section and subsection headings in this Agreement are
included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
Counterparts. This Agreement may be executed in any number of counterparts and
by any party hereto on separate counterparts, each of which, when so executed
and delivered, shall be an original, but all such counterparts shall together
constitute one and the same instrument.
Integration. This Agreement and the other Purchase Documents set forth the
entire understanding of the parties hereto with respect to all matters
contemplated hereby and supersede all previous agreements and understandings
among them concerning such matters. No statements or agreements, oral or
written, made prior to or at the signing hereof, shall vary, waive or modify the
written terms hereof.
[remainder of page intentionally left blank; signature page follows]
21
SIGNATURE PAGE TO
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COMPANY:
ATC Healthcare, Inc., a Delaware corporation
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chief Executive Officer
PURCHASER:
ROARING FORK CAPITAL SBIC, L.P.,
a Delaware limited partnership
By: Roaring Fork Capital Management, LLC,
its general partner
By: /s/ G. Xxxxxxx Xxxxxxx
-------------------------------
Name: G. Xxxxxxx Xxxxxxx
Title: Manager
Purchase Price: $600,000
-------------------------
Address for Notices to:
Roaring Fork Capital SBIC, L.P.
0000 X. Xxxxxx Xx., Xxx. 000
Xxxxxxxxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
With a copy to its counsel:
Xxxxxx Xxxxx, LLP
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
