Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
-----------------------------
COMMON STOCK
AND RELATED WARRANTS
of
ATC HEALTHCARE, INC.
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
January 12, 2007 by and among (i) ATC Healthcare, Inc., a Delaware corporation
(the "Company") and (ii) Roaring Fork Capital SBIC LP ("Roaring Fork" or the
"Investor") which parties have entered into this date 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 Class A Common 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").
WHEREAS, the Company has agreed to issue and sell to Roaring Fork, and
Roaring Fork has agreed to purchase Stock from the Company, together with
accompanying Warrants, 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 Roaring Fork 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 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, Roaring Fork and the
Investor Permitted Transferees; provided, however, that the term Investors shall
not include Roaring Fork or any Investor Permitted Transferee that ceases to own
or hold any Registrable Shares.
"Issuance Price" shall mean $0.30 per share of Stock, as
adjusted to reflect the occurrence of any stock split, stock dividend, stock
combination, stock subdivision or similar recapitalization affecting such share.
"Last Sale Price" shall mean the last sale price on the
American Stock Exchange, or if the Company's Common Stock is not traded on the
American Stock Exchange, the reported last sale price for the Company's Common
Stock, as furnished by the National Association of Securities Dealers, Inc., for
the applicable period.
"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.
"Penalty Warrants" shall mean those warrants described in
paragraph 3(c) of this Agreement.
"Qualifying Holder" shall have the meaning ascribed thereto in
Section 11 hereof.
"Registrable Shares" shall mean the shares of Class A Common
Stock purchased pursuant to the Purchase Agreement, the shares of Class A Common
Stock purchasable upon the exercise of Warrants, and the shares of Class A
Common Stock purchasable upon the exercise of the Penalty Warrants; provided,
however, that such term shall not include any of such shares of Common 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.
"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.
"Trading Days" shall mean any day on which the Class A Common
Stock is traded on the American Stock Exchange, or if the American Stock
Exchange is not the principal trading market for the Class A Common Stock, then
on the principal securities exchange or securities market on which the Class A
Common Stock is then traded; provided that "Trading Day" shall not include any
day on which the Class A Common Stock is scheduled to trade on such exchange or
market for less than 4.5 hours or any day that the Class A Common Stock is
suspended from trading during the final hour of trading on such exchange or
market (or if such exchange or market does not designate in advance the closing
time of trading on such exchange or market, then during the hour ending at
4:00:00 p.m., New York time)
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 Roaring Fork becomes Rule 144(k) eligible or
(iiii) the third (3rd) anniversary of the date the Mandatory Registration
Statement is first declared effective.
23
3. MANDATORY REGISTRATION; PIGGYBACK REGISTRATION.
-----------------------------------------------
(a) Within One Hundred Twenty (120) days of the Final Closing, 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"). 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. The Company agrees to use reasonable
efforts to cause the Mandatory Registration Statement to become effective as
soon as practicable.
(b) The offer and sale of the Registrable Shares pursuant to the
Mandatory Registration Statement shall not be underwritten.
(c) In the event the Company does not file the Mandatory Registration
Statement with the SEC by the Filing Deadline (as defined below), the Company
shall issue to Roaring Fork Penalty Warrants to purchase 500,000 shares of the
Stock. The exercise price for the Penalty Warrants shall be equal to the lower
of (i) the thirty (30) day average Last Sale Price immediately prior to the
Filing Deadline or (ii) Forty-five Cents ($0.45) per share. The Penalty Warrants
shall be exercisable for a period of five (5) years. Each Penalty Warrant shall
be in substantially the form as attached as Exhibit B hereto. For purposes of
this Agreement, the "Filing Deadline" shall be one hundred twenty (120) days
following the closing of Roaring Fork's purchase of the Stock and Warrants under
the Purchase Agreement (the "Final Closing").
(d) In the event that the Mandatory Registration Statement is not
declared effective by the SEC by the earlier to occur of (i) 180 days after its
filing or (ii) 180 days after the Filing Deadline (the "Effectiveness
Deadline"), then the Company shall issue to Roaring Fork Penalty Warrants to
purchase 500,000 shares of the Stock. The exercise price for the Penalty
Warrants shall be equal to the lower of (i) the thirty (30) day average Last
Sale Price immediately prior to the Effectiveness Deadline or (ii) Forty-five
Cents ($0.45) per share. If on any day after the Effective Date sales of all the
Registrable Securities cannot be made (other than during an Allowable Suspension
Period (as defined in Section 10) pursuant to the Mandatory Registration
Statement or otherwise (including, without limitation, because of a failure to
keep the Mandatory Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to the Mandatory
Registration Statement, to register a sufficient number of shares of Common
Stock) (a "Maintenance Failure") then, after expiration of a single period of
time not to exceed seventy-five (75) days from any such date for the Company to
cure such Maintenance Failure, as liquidated damages and not as a penalty to any
Investor by reason of any such delay in or reduction of its ability to sell the
Stock, then the Company shall be required to pay to each Investor a payment
equal to Five Percent (5%) of the Issuance Price of the Stock, on each of the
following dates: (i) the initial day of a Maintenance Failure and (ii) on every
thirtieth day (prorated for periods taking less than thirty days) thereafter
until such Maintenance Failure is covered. Provided, that, in no event shall the
aggregate amount of payments for Maintenance Failure exceed, in the aggregate,
25% of the aggregate Issuance Price. Such payments, if any, arising under this
Section 3(d) shall be payable by the Company within ten (10) business days of
the expiration of the single seventy-five (75) day cure period. If such payments
24
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.
(e) 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 X-0, Xxxx X-0 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 Securities 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 Securities that the 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 Securities, then the Registrable Securities which shall be
registered in such offering on behalf of holders of Registrable Securities 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 Securities 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 Securities, 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 Securities in connection with such registration.
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 reasonable efforts to cause the Registration
Statement to become effective as soon as practicable, the Company shall, as
expeditiously as reasonably possible:
(a) 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;
(b) 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) above) as the Investors may reasonably request in order to
facilitate the disposition of such Investors' Registrable Shares;
25
(c) 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 above provided in this
Section 4(c) and deliver copies of same as above provided in Section 4(b)
hereof); and
(d) 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.
(e) The Company shall file additional registration statements or
amendments to register any additional shares of Class A Common Stock that may be
issuable upon exercise of Warrants or Penalty Warrants as a result of any change
in the per share price of any Warrant or Penalty Warrant.
(f) The Company shall use its best efforts either to (i) 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 Securities 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).
(g) 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.
26
5. FURNISH INFORMATION. Each Investor shall furnish to the Company such
information regarding the Investor and the securities held by it as the Company
shall reasonably request and as shall be required in order to effect any
registration by the Company pursuant to this Agreement, unless such Investor
desires to exclude its Registrable Securities from the Registration Statement.
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.
7. DELAY OF REGISTRATION. The Investors shall not take any action to
restrain, enjoin or otherwise delay any registration as the result of any
controversy which might arise with respect to the interpretation or
implementation of this Agreement.
8. INDEMNIFICATION.
(a) 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
27
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.
(b) Notwithstanding any termination of this Agreement, each
Investor will severally and not jointly 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).
(c) 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
28
any liability which he may have to any indemnified party otherwise other than
under this Section 8.
(d) 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 the General Instructions to Form S-3, or any
successor or substitute form, and in 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.
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 (i) that 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) that
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) that 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 further that
no Suspension Period shall exceed forty-five (45) days and during any 365 day
period shall not exceed an aggregate of ninety (90) days and the first day of
any Suspension Period must be at least five (5) trading days after the last day
of any prior suspension period (each, an "Allowable Suspension Period"). During
the Suspension Period, none of the Investors shall offer or sell any Registrable
29
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.
(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. MISCELLANEOUS.
(a) 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.
30
(b) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Colorado, 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.
(c) (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.
(d) Any entity may change the address to which Correspondence to it is
to be addressed by notification as provided for herein.
(e) 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.
(f) 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
31
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/ Xxxxxx Xxxx
---------------------------------------------------------
Xxxxxx Xxxx
Senior Vice President/Chief Financial Officer
ROARING FORK CAPITAL SBIC L.P.
BY: Roaring Fork Capital Management, LLC, its General Partner
By: /s/ G. Xxxxxxx Xxxxxxx
-------------------------------------------------
Name: G. Xxxxxxx Xxxxxxx
Title: Manager
32
EXHIBIT A
---------
INSTRUMENT OF ADHERENCE
Reference is hereby made to that certain Registration Rights
Agreement, dated as of January 12, 2007, among ATC Healthcare, Inc., a Delaware
corporation (the "Company"), Roaring Fork Capital SBIC, L.P. 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 Class A Common Stock or (ii) Warrant(s) to purchase ___ shares of
Class A Common 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:_________________________
EXHIBIT B
---------
FORM OF PENALTY WARRANT
See Attached
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAW 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.
WARRANT TO PURCHASE SHARES
OF
CLASS A COMMON STOCK
--------------------
Void after _______, 20__
THIS IS TO CERTIFY that, as of this ___ day of __________, 20__, for
value received and subject to the provisions hereinafter set forth, Roaring Fork
Capital SBIC, L. P. (the "Purchaser"), is entitled to purchase from ATC
Healthcare, Inc., a Delaware corporation (the "Company"), at any time from the
date hereof to and including ________, 20__ [five years from issuance] (the
"Expiration Date"), at a price initially equal to _______ ($___) per share (the
"Warrant Calculation Price"), Five Hundred Thousand (500,000) (the "Warrant
Number") shares of the Class A Common Stock of the Company (the "Stock").
The aggregate price for the shares of Stock purchasable hereunder shall
be equal to the initial Warrant Calculation Price multiplied by the number of
shares initially purchasable hereunder. Such aggregate price is herein sometimes
referred to as the "Aggregate Warrant Price". The Warrant Calculation Price per
share is, however, subject to adjustment as hereinafter provided (such price, or
such price as last adjusted, as the case may be, being herein referred to as the
"Per Share Warrant Price"). The Warrant Number is likewise subject to adjustment
as hereinafter provided.
1. EXERCISE OF WARRANT. Subject to the conditions hereinafter set forth, this
Warrant may be exercised in whole at any time, or in part from time to time, by
the holder hereof, by delivery of a written notice in the form at the end hereof
(the "Exercise Notice") duly executed at the principal office of the Company in
Lake Success, New York or at such other office as the Company may designate by
written notice to the holder hereof within the above-mentioned period and, at
the election of the holder, either by paying to the Company the Aggregate
Warrant Price (or the proportionate part thereof if exercised in part) for the
shares so purchased in current funds, in which case payment shall be made in
cash, by wire transfer, or by certified or official bank check, or by cashless
exercise as hereinafter set forth. The holder shall not be required to deliver
the original Warrant in order to effect an exercise of the Warrant. At its
option, the holder may request, pursuant to Section 1, that the Company exchange
this Warrant for a particular number of shares subject to the Warrant (the
"Converted Warrant Shares") by delivering to the holder, without payment by the
holder of the Warrant Price or any cash or other consideration, that number of
shares of Stock as is equal to the quotient obtained by dividing the Net Value
(as hereinafter defined) of the Converted Warrant Shares by the Fair Market
Value (as determined (i) by reference to the current market price based upon the
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
average last sale price for the three business days prior to exercise, if the
Stock is publicly traded or (ii) by the Board of Directors acting in good faith
if the Stock is not publicly traded) of a single share of Stock, determined in
each case as of the close of business on the date of exercise of this Warrant.
The "Net Value" of the Converted Warrant Shares shall be determined by
subtracting the Aggregate Warrant Price of the Converted Warrant Shares from the
aggregate Fair Market Value of the Converted Warrant Shares. All other
provisions of the Warrants shall apply to any such exchange of the Warrants
pursuant to the terms of this Section 1.
Company's Failure to Timely Deliver Securities. If within ten (10) Trading Days
after the Company's receipt of the facsimile copy of an Exercise Notice the
Company shall fail to issue and deliver a certificate to the holder and register
such shares of Common Stock on the Company's share register or credit the
holder's balance account with DTC for the number of shares of Common Stock to
which the holder is entitled upon the holder's exercise hereunder, and such
failure to issue and deliver such certificate(s) continues for more than five
(5) Business Days after the Company receives written notice of non-delivery from
the holder (with the total period of time of the 10 Trading Day period and 5
Business Day period referenced herein being referred to as the "Cure Period")
and if on or after the expiration of the Cure Period without the delivery of the
applicable certificate(s), the holder purchases (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
holder of shares of Common Stock issuable upon such exercise that the holder
anticipated receiving from the Company (a "Buy-In"), then the Company shall,
within three (3) Business Days after the holder's request and in the holder's
discretion, either (i) pay cash to the holder in an amount equal to the holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased (the "Buy-In Price"), at which point the Company's
obligation to deliver such certificate (and to issue such shares of Common
Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such shares of Common Stock
and pay cash to the Holder in an amount equal to the excess (if any) of the
Buy-In Price over the product of (A) such number of shares of Common Stock,
times (B) the dollar volume Weighted Average Price on the date of exercise.
If this Warrant is exercised in respect of fewer than all of the shares of Stock
at the time purchasable hereunder, the holder hereof shall be entitled to
receive a new Warrant covering the number of shares in respect of which this
Warrant shall not have been exercised and setting forth the Aggregate Warrant
Price applicable to such shares. Notwithstanding anything to the contrary set
forth herein, this Warrant or any new Warrant issued as the result of a partial
exercise hereof and all rights and options hereunder or thereunder shall expire
and shall be wholly null and void to the extent this Warrant or such new warrant
is not exercised before it expires at the close of business on the Expiration
Date.
2. RESERVATION OF STOCK. The Company covenants and agrees that during the period
within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized, and in reserve, a sufficient number
of shares of its Stock to provide for the exercise of the rights represented by
this Warrant; provided, however, that in the event there is at any time an
insufficient number of shares of Stock reserved and available the Company shall
as soon as practicable take such action as is required to increase the Company's
authorized shares of Stock in order to provide a sufficient number of such
shares.
36
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
3. PROTECTION AGAINST DILUTION.
3.1 Sales of Stock Below Per Share Warrant Price. In case the Company
shall issue or grant to any person (a) rights, warrants, options,
exchangeable securities or convertible securities (each referred to
herein as "Rights") entitling such person to subscribe for or purchase
shares of Stock at a price per share less than the Per Share Warrant
Price or (b) shares of Stock at a price per share less than the Per
Share Warrant Price, on the date fixed for the determination of persons
entitled to receive such Rights or such shares, the Per Share Warrant
Price in effect immediately before the close of business on the date
fixed for such determination shall be reduced by multiplying such Per
Share Warrant Price by a fraction, of which (i) the numerator is the
number of shares of Stock outstanding (including all shares of Stock
issued or issuable upon conversion of any convertible security or upon
the exercise of any rights, warrants or options) on such date plus the
number of shares of Stock which the aggregate of the offering price of
the total number of shares of Stock so offered for subscription or
purchase pursuant to such Rights, or so issued, would purchase at the
Per Share Warrant Price on such date and (ii) the denominator shall be
the number of shares of Stock outstanding (including all shares of
Stock issued or issuable upon conversion of any convertible security or
upon the exercise of any rights, warrants or options) at the close of
business on such date plus the number of shares of Stock so offered for
subscription or purchase pursuant to such Rights, or so issued. If,
after any such date, any such Rights or shares are not in fact issued,
or are not exercised prior to the expiration thereof, the Per Share
Warrant Price shall be immediately readjusted, effective as of the date
such Rights or shares expire, or the date the Board of Directors
determines not to issue such Rights or shares, to the Per Share Warrant
Price that would have been in effect if the unexercised Rights had
never been granted or such record date had not been fixed, as the case
may be. Such adjustment shall be made successively whenever any such
event shall occur. For the purposes of this paragraph, the aggregate of
the offering price received or to be received by the Company shall
include the minimum aggregate amount (if any) payable upon exercise or
conversion of such Rights. The value of any consideration received or
to be received by the Company, if other than cash, is to be determined
by the Board of Directors in good faith.
3.2 Stock Splits and Dividends. If outstanding shares of the Company's
Stock shall be subdivided into a greater number of shares or a dividend
in Stock shall be paid in respect of Stock, the Per Share Warrant Price
in effect immediately prior to such subdivision or at the record date
of such dividend shall simultaneously with the effectiveness of such
subdivision or immediately after the record date of such dividend be
proportionately reduced. If outstanding shares of Stock shall be
combined into a smaller number of shares, the Per Share Warrant Price
in effect immediately prior to such combination shall, simultaneously
with the effectiveness of such combination, be proportionately
increased. When any adjustment is required to be made in the Per Share
Warrant Price, the number of shares of Stock purchasable upon the
exercise of this Warrant shall be changed to the number determined by
dividing (i) an amount equal to the number of shares issuable upon the
37
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
exercise of this Warrant immediately prior to such adjustment,
multiplied by the Per Share Warrant Price in effect immediately prior
to such adjustment, by (ii) the Per Share Warrant Price in effect
immediately after such adjustment.
3.3 Reclassification, Etc. In case of any reclassification or change of
the outstanding securities of the Company or of any reorganization of
the Company (or any other corporation the stock or securities of which
are at the time receivable upon the exercise of this Warrant) or any
similar corporate reorganization on or after the date hereof that is
not a Change of Control (as defined herein), then and in each such case
the holder of this Warrant, upon the exercise hereof at any time after
the consummation of such reclassification, change, reorganization,
merger or conveyance, shall be entitled to receive, in lieu of the
stock or other securities and property receivable upon the exercise
hereof prior to such consummation, the stock or other securities or
property to which such holder would have been entitled upon such
consummation if such holder had exercised this Warrant immediately
prior thereto, all subject to further adjustment as provided in Section
3.2; and in each such case, the terms of this Section 3 shall be
applicable to the shares of stock or other securities properly
receivable upon the exercise of this Warrant after such consummation.
3.4 Exempted Issuances. Notwithstanding any other provision herein, the
foregoing provisions of this Section 3 shall not apply to, and no
adjustment shall be made to the Per Share Warrant Price for:
(a) shares of Stock issuable upon the exercise of options or
other convertible securities previously issued pursuant to the
Company's stock option, employee stock purchase or other
employee benefit plan;
(b) shares of Stock to be issued pursuant to the Company's
outstanding stock option, employee stock purchase or other
employee benefit plan that total not more than 200,000 shares
of Stock per employee per year and an aggregate maximum of
2,000,000 shares of Stock per year and that do not contain
exercise prices that are below $0.30 per share;
(c) shares of Stock issuable upon conversion of shares of
Series C Preferred Stock or warrants issued in connection
therewith;
(d) shares of Stock issuable upon conversion of shares of 7%
Convertible Series A Preferred Stock or 5% Convertible Series
B Preferred Stock of the Company or any warrants outstanding
on the date of the filing of this Designation;
(e) shares of Stock issuable upon conversion of Class B Common
Stock;
(f) securities that have been approved for issuance or grant
by the holders of at least a majority of the outstanding
shares of Series C Preferred Stock;
38
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
(g) securities that are issued in conjunction with an
acquisition or a non-financing strategic transaction approved
by the Board of Directors; provided, however, that the number
of shares of Stock or securities convertible into Stock issued
by the Company in conjunction with non-financing strategic
transactions that are exempt from the foregoing provisions of
this Section 3 shall be limited to 10% of the shares of Stock
outstanding (including all shares of Stock issued or issuable
upon conversion of any convertible security or upon the
exercise of any rights, warrants or options) immediately prior
to the date of such transaction; or
(h) Shares of Stock that are issued pursuant to that certain
Common Stock and Warrant Purchase Agreement dated as of an
even date herewith between the Company and Purchaser, pursuant
to which the Purchaser is purchasing this Warrant, and the
related Registration Rights Agreement referenced therein,
including, without limitation, any shares of Stock to be
issued in connection with any penalty or anti-dilution
provision contained in such documents, any shares of Common
Stock issued under the Warrants issued as part of that
offering or under the terms of the Common Stock and Warrant
Purchase Agreement relating thereto, and shares of Common
Stock issued in private offerings completed prior to May 31,
2007 as provided in Section 7.10 of the Common Stock and
Warrant Purchase Agreement, or under Warrants issued as part
of those other offerings, or under the terms of the purchase
agreements relating to those other offerings.
3.5 Deferral of Small Adjustments. Any adjustment in the Per Share
Warrant Price otherwise required by this Section 3 may be postponed
until the date of the next adjustment otherwise required by this
Section 3 to be made if such adjustment (together with any other
adjustments postponed pursuant to this paragraph (ix) and not
theretofore made) would not require an increase or decrease of more
than 1 % in such Per Share Warrant Price. All calculations under this
Section 3 shall be made to the nearest cent or to the nearest I/100th
of a share, as the case may be.
3.6 Authority of Board of Directors. The Board of Directors shall have
the power to resolve any ambiguity or correct any error in this Section
3, and its action in good faith in so doing shall be final and
conclusive.
3.7 Notice of Adjustment. Whenever the Warrant Number or the Per Share
Warrant Price is adjusted under this Section 3, the Company shall
provide notice thereof to the holder within thirty (30) days of such
adjustment.
4. MERGERS, CONSOLIDATIONS, SALES; NON-IMPAIRMENT OF RIGHTS. The Company will
not, by amendment of its Certificate of Incorporation or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issuance or sale of securities or any other voluntary action, avoid
or seek to avoid the performance of any of the terms of this Warrant, but will
at all times in good faith take all necessary action to carry out the intent of
all such terms. Without limiting the generality of the foregoing, the Company
(a) will not cause the par value of any securities receivable on exercise of
this Warrant to be in excess of the amount payable therefor on such exercise,
and (b) will take all action as may be necessary or appropriate so that the
39
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
Company may validly and legally issue fully paid and nonassessable shares (or
other securities or property deliverable hereunder) upon the exercise of this
Warrant. In the event the Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other entity and,
following the sale or transfer, a majority of the combined voting power of the
then-outstanding securities of the other corporation or entity immediately after
the sale or transfer is held in the aggregate by the holders of Voting Stock (as
defined below) immediately prior to the sale or transfer, then, as a condition
of such sale or transfer, lawful and adequate provision shall be made whereby
the holder of this Warrant shall thereafter have the right to receive upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Stock immediately theretofore purchasable hereunder, such shares of
stock, securities or assets as may (by virtue of such consolidation, merger,
sale, reorganization or reclassification) be issued or payable with respect to
or in exchange for a number of outstanding shares of Stock equal to the number
of shares of Stock immediately theretofore so purchasable hereunder had such
sale or transfer not taken place, and in any such case appropriate provision
shall be made with respect to the rights and interests of the holder of this
Warrant to the end that the provisions hereof (including, without limitation,
provisions for adjustment of the Warrant Number and the Per Share Warrant Price)
shall thereafter be applicable as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon exercise of this
Warrant. The Company shall not effect any such sale or transfer unless prior to
or simultaneously with the consummation thereof, the entity purchasing such
assets shall assume by written instrument, reasonably satisfactory to the holder
of this Warrant, executed and mailed or delivered to the holder of this Warrant,
the obligation to deliver to such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to receive.
5. DISSOLUTION OR LIQUIDATION. In the event of any proposed distribution of the
assets of the Company in dissolution or liquidation (except under circumstances
when the foregoing Section 4 shall be applicable) the Company shall mail notice
thereof to the holder of this Warrant and shall make no distribution to
shareholders until the expiration of 30 days from the date of mailing of the
aforesaid notice and, in any such case, the holder of this Warrant may exercise
this Warrant within 30 days from the date of the mailing of such notice, and all
rights herein granted not so exercised within such 30 day period shall
thereafter become null and void.
6. CHANGE OF CONTROL; FUNDAMENTAL TRANSACTIONS.
(a) Change of Control. In the event of a Change of Control, as defined
below, the Company shall provide notice thereof to the holder of this Warrant at
least ten (10) days prior to the contemplated closing date or occurrence of such
Change of Control (the "Contemplated Closing Date"). Upon the Purchaser's
receipt of the Company's notice of a Change of Control, the Purchaser may, at
its option, elect to exercise this Warrant pursuant to Section 1 hereof. Should
the Purchaser decline or fail to exercise this Warrant before 5:00 p.m. New
York, New York time on the Contemplated Closing Date, then this Warrant shall
immediately prior to the closing of the Change of Control be deemed to have been
exercised by cashless exercise, as provided for in Section 1 hereof, without any
further action on the part of the Purchaser, and all rights and options
hereunder shall expire and shall be wholly null and void. In the case of a
cashless exercise pursuant to this Section, from and after the Contemplated
40
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
Closing Date, the Purchaser shall be deemed the holder of record of the
securities issuable upon exercise of this Warrant, and this Warrant shall
represent only the right to receive, upon return of the Warrant to the Company
for cancellation, a certificate representing the securities issuable to the
Purchaser upon exercise of this Warrant.
For purposes of this Warrant, a "Change of Control" shall be deemed to occur if
(A) any of the following occur:
(i) The Company is merged, consolidated or reorganized into or with
another corporation or other entity, and as a result of the merger,
consolidation or reorganization less than a majority of the combined
voting power of the then-outstanding securities of the corporation or
entity immediately after the transaction is held in the aggregate by
the holders of Voting Stock immediately prior to the transaction;
(ii) The Company sells or otherwise transfers all or substantially all
of its assets to another corporation or other entity and, as a result
of the sale or transfer, less than a majority of the combined voting
power of the then-outstanding securities of the other corporation or
entity immediately after the sale or transfer is held in the aggregate
by the holders of Voting Stock immediately prior to the sale or
transfer; or
(iii) Any person or group of persons (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934) that holds less than
5% of the Voting Stock of the Company outstanding on the date of the
first issuance of any of the Warrants becomes the beneficial owner of a
majority of the Voting Stock.;
and (B) the per share price for any such transaction mentioned in (A)
above is at least $1.35 per share of Stock.
For purposes of this Warrant, the term "Voting Stock" means the capital stock of
the Company of any class or series entitled to vote generally in the election of
directors.
(b) Fundamental Transactions. The Company shall not enter into or be
party to a Fundamental Transaction that is not a Change of Control unless (i)
the Successor Entity assumes in writing all of the obligations of the Company
under this Warrant and the other Transaction Documents in accordance with the
provisions of this Section 6 pursuant to written agreements in form and
substance satisfactory to the Required Holders and approved by the Required
Holders prior to such Fundamental Transaction, including agreements to deliver
to each holder of Warrants in exchange for such Warrants a security of the
Successor Entity evidenced by a written instrument substantially similar in form
and substance to this Warrant, including, without limitation, an adjusted
exercise price equal to the value for the shares of Common Stock reflected by
the terms of such Fundamental Transaction, and exercisable for a corresponding
number of shares of capital stock equivalent to the shares of Common Stock
acquirable and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such Fundamental
Transaction, and satisfactory to the Required Holders. Upon the occurrence of
any Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the "Company" shall
41
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this
Warrant with the same effect as if such Successor Entity had been named as the
Company herein. Upon consummation of the Fundamental Transaction, the Successor
Entity shall deliver to the Holder confirmation that there shall be issued upon
exercise of this Warrant at any time after the consummation of the Fundamental
Transaction, in lieu of the shares of the Common Stock (or other securities,
cash, assets or other property) issuable upon the exercise of the Warrant prior
to such Fundamental Transaction, such shares of stock, securities, cash, assets
or any other property whatsoever (including warrants or other purchase or
subscription rights) which the Holder would have been entitled to receive upon
the happening of such Fundamental Transaction had this Warrant been converted
immediately prior to such Fundamental Transaction, as adjusted in accordance
with the provisions of this Warrant. In addition to and not in substitution for
any other rights hereunder, prior to the consummation of any Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to
receive securities or other assets with respect to or in exchange for shares of
Common Stock (a "Corporate Event"), the Company shall make appropriate provision
to insure that the Holder will thereafter have the right to receive upon an
exercise of this Warrant at any time after the consummation of the Fundamental
Transaction but prior to the Expiration Date, in lieu of the shares of the
Common Stock (or other securities, cash, assets or other property) issuable upon
the exercise of this Warrant prior to such Fundamental Transaction, such shares
of stock, securities, cash, assets or any other property whatsoever (including
warrants or other purchase or subscription rights) which the Holder would have
been entitled to receive upon the happening of such Fundamental Transaction had
this Warrant been exercised immediately prior to such Fundamental Transaction.
Provision made pursuant to the preceding sentence shall be in a form and
substance reasonably satisfactory to the Required Holders. The provisions of
this Section shall apply similarly and equally to successive Fundamental
Transactions and Corporate Events and shall be applied without regard to any
limitations on the exercise of this Warrant.
7. FRACTIONAL SHARES. Fractional shares shall not be issued upon the exercise of
this Warrant but in any case where the holder hereof would, except for the
provisions of this paragraph, be entitled under the terms hereof to receive a
fractional share upon the complete exercise of this Warrant, the Company shall,
upon the exercise of this Warrant for the largest number of whole shares then
called for, pay a sum in cash equal to the excess of the Fair Market Value of
such fractional share over the proportional part of the Per Share Warrant Price
represented by such fractional share.
8. FULLY PAID STOCK; TAXES. The Company covenants and agrees that the shares of
stock represented by each and every certificate for its Stock to be delivered on
any exercise of this Warrant shall, at the time of such delivery, be duly
authorized, validly issued and outstanding and be fully paid and nonassessable.
The Company further covenants and agrees that it will pay when due and payable
any and all federal and state taxes, other than taxes on income, which may be
payable in respect of this Warrant or any Stock or certificates therefor upon
the exercise of the rights herein provided for pursuant to the provisions
hereof. The Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the transfer and delivery of
42
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
stock certificates in the name other than that of the holder of the Warrant
converted, and any such tax shall be paid by such holder at the time of
presentation.
9. CLOSING OF TRANSFER BOOKS. The holder of this Warrant shall continue to have
the right to exercise this Warrant even during a period when the stock transfer
books of the Company for its Stock are closed. The Company shall not be
required, however, to deliver certificates of its Stock upon such exercise while
such books are duly closed for any purpose, but the Company may postpone the
delivery of the certificates for such Stock until the opening of such books, and
they shall, in such case, be delivered forthwith upon the opening thereof, or as
soon as practicable thereafter.
10. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES; COMPLIANCE WITH
SECURITIES ACT; EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT. This Warrant and the
Stock issued upon the exercise hereof, and any security into which such Stock
may be convertible ("Underlying Stock") shall not be transferable except upon
the conditions hereinafter specified, which conditions are intended to insure
compliance with the provisions of the Securities Act of 1933, as amended, or any
similar Federal statute at the time in effect (the "Securities Act") in respect
of the transfer of any Warrant or any such Stock or any security into which such
Stock may be convertible.
10.1 Assignments Generally. Except as may otherwise be expressly
provided herein, this Warrant is exchangeable, without expense, at the
option of the holder, upon presentation and surrender of the Warrant to
the Company, for other Warrants of different denominations entitling
the holder thereof to purchase in the aggregate the same number of
shares of Stock purchasable hereunder. Any assignment shall be made by
surrender of this Warrant to the Company with the Form of Assignment
annexed hereto duly executed and funds sufficient to pay any transfer
tax, provided the Company has received an opinion or other evidence
satisfactory to the Company that the transfer will be in compliance
with the provisions of the Securities Act of 1933, as amended, or any
similar Federal statute at the time in effect (the "Securities Act") in
respect of the transfer of this Warrant. Upon compliance with the
express provisions of this Section 10, the Company shall, without
charge, cause to be executed and delivered a new Warrant in the name of
the assignee named in such instrument of assignment and this Warrant
shall promptly be canceled. This Warrant may be divided or combined
with other warrants that carry the same rights upon presentation hereof
to the Company together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the
holder hereof.
10.2 Certain Assignments Following Registration. Notwithstanding
anything to the contrary contained herein, if the Company has
registered the Underlying Stock pursuant to a Registration Statement
which has been declared effective by the Securities and Exchange
Commission (SEC) and, thereafter, the holder purports to assigns all or
a portion of the Underlying Stock 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 (at the expense of
the Company), in either case to name such assignee as a selling
43
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
stockholder, provided that the use of a post-effective amendment or a
supplement to the prospectus is permitted by applicable law for such
purpose.
10.3 Restrictive Legends. Each Warrant shall bear on the face thereof a
legend substantially in the form of the notice endorsed on the first
page of this Warrant.
Each certificate for shares of Underlying Stock initially issued upon
the exercise of any Warrant and each certificate for shares of
Underlying Stock issued to a subsequent transferee of such certificate
shall, if not registered for resale, bear on the face thereof a legend
reading substantially as follows:
THE SHARES OF CLASS A COMMON STOCK REPRESENTED 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 LAW 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.
10.4 Removal of Legend. In the event that the Company shall receive an
opinion of its counsel or counsel of the holder, which opinion is
reasonably acceptable to it, that, in the opinion of such counsel, such
legend is not, or is no longer, necessary or required (including,
without limitation, because of the availability of the exemption
afforded by Rule 144 of the General Rules and Regulations of the
Securities and Exchange Commission), the Company shall, or shall
instruct its transfer agents and registrars to, remove such legend from
the certificates evidencing the Restricted Stock or issue new
certificates without such legend in lieu thereof. The Company shall
also remove the legend if the Underlying Stock has been registered for
resale with the SEC.
11. PARTIAL EXERCISE AND PARTIAL ASSIGNMENT. If this Warrant be exercised in
part only, the holder hereof shall be entitled to receive a new Warrant covering
the number of shares in respect of which this Warrant shall not have been
exercised as provided in paragraph 1 hereof. If this Warrant is partially
assigned, this Warrant shall be surrendered at the principal office of the
Company (with the partial assignment form at the end hereof duly executed), and
thereupon a new Warrant shall be issued to the holder hereof covering the number
of shares not assigned and setting forth the proportionate Aggregate Warrant
Price applicable to such shares not assigned. The assignee of such partial
assignment of this Warrant shall also be entitled to receive a new Warrant
covering the number of shares so assigned and setting forth the proportionate
Aggregate Warrant Price applicable to such assigned shares.
12. REGISTRATION RIGHTS. A holder of a Warrant is entitled to any and all
applicable registration rights as set forth in that certain Registration Rights
Agreement, dated January 12, 2007, relating to the Common Stock of the Company
and this and other Warrants.
44
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
13. LOST, STOLEN WARRANTS, ETC. In case any Warrant shall be mutilated, stolen
or destroyed, the Company may issue a new Warrant of like date, tenor and
denomination and deliver the same in exchange and substitution for and upon
surrender and cancellation of any mutilated Warrant, or in lieu of any Warrant
lost, stolen or destroyed, upon receipt of evidence satisfactory to the Company
of the loss, theft or destruction of such Warrant, and upon receipt of indemnity
satisfactory to the Company.
14. WARRANT HOLDER NOT SHAREHOLDER. This Warrant does not confer upon the holder
hereof any right to vote or to consent or to receive notice as a shareholder of
the Company, as such, in respect of any matters whatsoever, or any other rights
or liabilities as a shareholder, prior to the exercise hereof as hereinbefore
provided.
15. SEVERABILITY. Should any part of this Warrant for any reason be declared
invalid, such decision shall not affect the validity of any remaining portion,
which remaining portion shall remain in force and effect as if this Warrant had
been executed with the invalid portion thereof eliminated, and it is hereby
declared the intention of the parties hereto that they would have executed and
accepted the remaining portion of this Warrant without including therein any
such part, parts or portion which may, for any reason, be hereafter declared
invalid.
16. NOTICE. All notices and other communications required or permitted to be
given under any Agreement shall be deemed given when personally delivered or
sent by certified mail, return receipt requested, postage prepaid, overnight
delivery or confirmed facsimile transmission to the parties at the following
address or fax number:
To the Company at:
ATC Healthcare, Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxx, Esquire
Keevican Xxxxx Xxxxxxx & Xxxxxx LLC
11th Floor, Federated Investors Tower
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
45
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
To the Purchaser at:
The address set forth in the Purchase Agreement under
which the Purchaser acquired, among other things,
this Warrant.
or, as to either party or any subsequent holder of this Warrant, to such other
address and/or facsimile number as such party designates by written notice to
the other party or parties.
17. CERTAIN DEFINITIONS.
(a) "Business Day" means any day other than Saturday, Sunday or other
day on which commercial banks in The City of New York are authorized or required
by law to remain closed.
(b) "DTC" means The Depository Trust Company and its Fast Automated
Securities Transfer Program.
(c) "Fundamental Transaction" means that the Company shall, directly or
indirectly, in one or more related transactions, (i) consolidate or merge with
or into (whether or not the Company is the surviving corporation) another
Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company to another Person,
or (iii) allow another Person to make a purchase, tender or exchange offer that
is accepted by the holders of more than the 50% of the outstanding shares of
Common Stock (not including any shares of Common Stock held by the Person or
Persons making or party to, or associated or affiliated with the Persons making
or party to, such purchase, tender or exchange offer), or (iv) consummate a
stock purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of
arrangement) with another Person whereby such other Person acquires more than
the 50% of the outstanding shares of Common Stock (not including any shares of
Common Stock held by the other Person or other Persons making or party to, or
associated or affiliated with the other Persons making or party to, such stock
purchase agreement or other business combination), (v) reorganize, recapitalize
or reclassify its Common Stock, or (vi) any "person" or "group" (as these terms
are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or
shall become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 50% of the aggregate ordinary voting power
represented by issued and outstanding Common Stock.
(d) "Person" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
association, any other entity and a government or any department or agency
thereof.
(e) "Required Holders" means the holders of the Warrants representing
at least a majority of shares of the Underlying Stock.
(f) "Successor Entity" means the Person (or, if so elected by the
Required Holders, the Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or the Person (or, if so elected by the Required
Holders, the Parent Entity) with which such Fundamental Transaction shall have
been entered into.
46
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
(g) "Trading Day" means any day on which the Common Stock are traded on
the Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock are then traded; provided that
"Trading Day" shall not include any day on which the Common Stock are scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock are suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York time).
(h) "Weighted Average Price" means, for any security as of any date,
the dollar volume-weighted average closing price for such security on the
Principal Market during the immediately preceeding ten (10) business days, or,
if the foregoing does not apply, the dollar volume-weighted average closing
price of such security in the over-the-counter market on the electronic bulletin
board for such security during the immediately preceeding ten (10) business
days, as reported by Bloomberg, or, if no dollar volume-weighted average closing
price is reported for such security by Bloomberg for such ten (10) day period,
the average of the highest closing bid price and the lowest closing ask price of
any of the market makers for such security as reported in the "pink sheets" by
Pink Sheets LLC (formerly the National Quotation Bureau, Inc.) for such ten (10)
day period. If the Weighted Average Price cannot be calculated for such security
on such date on any of the foregoing bases, the Weighted Average Price of such
security on such date shall be the fair market value as mutually determined by
the Company and the Required Holders. All such determinations shall be
appropriately adjusted for any share dividend, share split or other similar
transaction during such period.
18. CALL OPTION.
18.1 Option to Call Warrants. The Company shall be entitled to call
this Warrant if the Company's Stock trades at or above One and 35/100 Dollars
($1.35) (as adjusted for any stock dividends, splits, combinations,
recapitalizations and the like with respect to the Stock) for twenty (20) out of
thirty (30) consecutive Trading Days with an average daily trading volume of
over 150,000 shares and there is an effective registration statement registering
the shares underlying both the Series C Preferred Stock and Warrants.
18.2 Call Price. The call price for the Warrant shall be One Cent
($0.01) multiplied by the Warrant Number then in effect.
18.3 Notice. Notice of a call of this Warrant under this Section 18
shall be mailed by overnight courier and by fax, addressed to the holder. The
notice shall state, as appropriate, the following and may contain such other
information as the Company deems advisable: (a) the call date, which shall be at
least thirty (30) days after the "notice date" as defined herein (b) the
aggregate call price for the Warrant, and (c) the place where the Warrant is to
be surrendered. The "notice date" shall be the date such notice is mailed. Any
notice mailed as provided in this Section 18.3 shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice.
47
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
18.4 Effectiveness of Call. If notice of the call of the Warrant has
been duly given then, notwithstanding that the Warrant has not been surrendered
for cancellation, on and after the call date this Warrant shall cease to be
outstanding and all rights with respect to this Warrant shall forthwith on such
notice date cease and terminate, except only the right of the holder hereof to
receive the amount payable on such call without interest.
19. MISCELLANEOUS.
(a) This Warrant shall be governed by, construed and enforced in
accordance with the law of the State of Delaware, without regard to its conflict
of laws principles.
(b) The agreements which are contained herein shall survive the
exercise of this Warrant to the extent applicable thereafter.
(c) This Warrant was originally issued to Roaring Fork Capital SBIC,
L.P. on _______, 20__.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as of the day and year first set forth above.
ATC HEALTHCARE, INC.
By: __________________________
Name: ___________________________
Title: __________________________
48
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
ASSIGNMENT
----------
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto _______________________ the within Warrant and all rights
evidenced thereby and does irrevocably constitute and appoint
__________________________, attorney, to transfer the said Warrant on the books
of the within named Company.
___________________________________
By_________________________________
Its________________________________
Dated: ___________________________
FORM OF PENALTY WARRANT UNDER REGISTRATION RIGHTS AGREEMENT
PARTIAL ASSIGNMENT
------------------
FOR VALUE RECEIVED ______________________________ hereby sells, assigns and
transfers unto _______________________________ that portion of the within
Warrant and the rights evidenced thereby which will an the date hereof entitle
the holder to purchase __________ shares of Class A Common Stock of ATC
Healthcare, Inc., and does hereby irrevocably constitute and appoint
__________________________, attorney, to transfer that part of the said Warrant
on the books of the within named Company.
___________________________________
By_________________________________
Its________________________________
Dated: ___________________________
EXERCISE NOTICE
---------------
(To be completed and signed only upon an exercise of the Warrant in whole
or in part)
TO: ATC Healthcare, Inc.:
The undersigned, the holder of the attached Warrant, hereby irrevocably elects
to exercise the purchase right represented by the Warrant for, and to purchase
thereunder, ______ shares of Class A Common Stock (or other securities or
property), and herewith makes payment as follows:
_____ By payment of $____________ therefor in cash, by certified or official
bank check or such other form of payment as may be permitted under the Warrant.
____ By cashless exercise.
The undersigned hereby requests that the Certificate(s) for such securities be
issued in the name(s) and delivered to the address(es) as follows:
Name: _____________________________________________
Address: _____________________________________________
Social Security Number: _____________________________________________
Deliver to: _____________________________________________
Address: _____________________________________________
If the foregoing Exercise Notice evidences an exercise of the Warrant to
purchase fewer than all of the Shares (or other securities or property) to which
the undersigned is entitled under such Warrant, please issue a new Warrant, of
like date and tenor, for the remaining portion of the Warrant (or other
securities or property) in the name(s), and deliver the same to the address(e'
s), as follows:
Name: ______________________________________________
Address: ______________________________________________
DATED: ____________________, 200__
--------------------------------------------------------------------------------
(Social Security or Taxpayer Identification (Name of Holder)
Number of Holder)
-------------------------------------------
(Signature of Holder or
Authorized Signatory)
Signature Guaranteed:
-------------------------------------------
