AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
Exhibit
4.2
AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT
This
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
(this
“Agreement”),
dated
as of August 29, 2008, is by and among Workstream Inc., a corporation existing
pursuant to the Canada Business Corporations Act with headquarters located
at
000 Xxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxxxx X0X 0X0, Xxxxxx
(the “Company”),
and
the undersigned buyers (each, a “Buyer”,
and
collectively, the “Buyers”).
RECITALS
A. The
Company and the Buyers entered into that certain Transaction Agreement, dated
as
of July 25, 2007 (the “Existing Transaction
Agreement”).
B. Simultaneously
with the consummation of the transactions contemplated by the Existing
Transaction Agreement, the Company issued and sold to each Buyer (i) a Special
Warrant (as defined in the Existing Transaction Agreement) which is convertible
into Conversion Shares (as defined in the Existing Transaction Agreement) in
accordance with the terms thereof and (ii) a Warrant (as defined in the Existing
Transaction Agreement) which is exercisable to purchase Warrant Shares (as
defined in the Existing Transaction Agreement) in accordance with the terms
thereof.
C. Simultaneously
with the consummation of the transactions contemplated by the Existing
Transaction Agreement, the Company and the Buyers executed and delivered the
Registration Rights Agreement, dated as of August 3, 2007 (the “Existing
Registration Rights Agreement”),
pursuant to which the Company agreed to provide certain registration rights
under the Securities Act of 1933, as amended (the “1933
Act”),
and
the rules and regulations promulgated thereunder, and applicable state
securities laws.
D. To
induce
each of the Buyers to consummate the transactions contemplated by the separate
Exchange Agreements (as defined below), the Company agreed to provide amended
registration rights under the 1933 Act and applicable state securities laws
with
respect to the Registrable Securities (as defined below).
AGREEMENT
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and each of the Buyers hereby agree to amend
and restate the Existing Registration Rights Agreement in its entirety as
follows:
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1.
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Definitions
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Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Transaction Agreement (as defined below). As used
in
this Agreement, the following terms shall have the following
meanings:
(a) “Business
Day”
means
any day other than Saturday, Sunday or any other day on which commercial banks
in Chicago, Illinois are authorized or required by law to remain
closed.
(b) “Effective
Date”
means
the date that the applicable Registration Statement has been declared effective
by the SEC.
(c) “Effectiveness
Deadline”
means
(i) with respect to the initial Registration Statement required to be filed
to
cover the resale by the Investors of the Registrable Securities the
100th
calendar
day after the Trigger Date (or the 130th
calendar
day after the Trigger Date in the event that such Registration Statement is
subject to review by the SEC) and (b) with respect to any additional
Registration Statements that may be required to be filed by the Company pursuant
to this Agreement, the 100th
calendar
day following the date on which the Company was required to file such additional
Registration Statement (or the 130th
calendar
day after such date in the event that such Registration Statement is subject
to
review by the SEC).
(d) “Exchange
Agreements”
means,
collectively, the separate Exchange Agreements, each dated as of August 29,
2008, entered into between the Company and each of the Buyers.
(e) “Filing
Deadline”
means
(i) with respect to the initial Registration Statement required to be filed
to
cover the resale by the Investors of the Registrable Securities, the
40th
calendar
day after the Trigger Date and (ii) with respect to any additional Registration
Statements that may be required to be filed by the Company pursuant to this
Agreement, the date on which the Company was required to file such additional
Registration Statement pursuant to the terms of this Agreement.
(f) “Investor”
means
a
Buyer or any transferee or assignee
of
any Registrable Securities or 2008 Warrants (as defined in the Transaction
Agreement), as applicable, to whom a Buyer assigns its rights under this
Agreement and who agrees to become bound by the provisions of this Agreement
in
accordance with Section 9
and any
transferee or assignee thereof to whom a transferee or assignee of any
Registrable Securities or 2008 Warrants, as applicable, assigns its rights
under
this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9.
(g) “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.
(h) “register,”
“registered,”
and
“registration”
refer
to a registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant
to
Rule 415 and the declaration of effectiveness of such Registration Statement(s)
by the SEC.
(i) “Registrable
Securities”
means
(i) the 2008 Warrant Shares (as defined in the Transaction Agreement)
issued or issuable upon exercise of the 2008 Warrants and (ii) any capital
stock
of the Company issued or issuable with respect to the 0000 Xxxxxxx Shares or
the
2008 Warrants, including, without limitation, (1) as a result of any share
split, share dividend, recapitalization, exchange or similar event or otherwise
and (2) shares of capital stock of the Company into which the Common Shares
(as
defined in the Transaction Agreement) are converted or exchanged and shares
of
capital stock of a Successor Entity (as defined in the 2008 Warrants) into
which
the Common Shares are converted or exchanged, in each case, without regard
to
any limitations on exercise of the 2008 Warrants.
2
(j) “Registration
Statement”
means
a
registration statement or registration statements of the Company filed under
the
1933 Act covering the Registrable Securities.
(k) “Required
Holders”
means
the holders of at least a majority of the Registrable Securities.
(l) “Required
Registration Amount”
means
the number of 2008 Warrant Shares issued and issuable pursuant to the 2008
Warrants as of the Trading Day (as defined in the 2008 Warrants) immediately
preceding the applicable date of determination (without taking into account
any
limitations on the exercise of the 2008 Warrants set forth therein), all subject
to adjustment as provided in Section 2(d).
(m) “Rule
415”
means
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis.
(n) “SEC”
means
the United States Securities and Exchange Commission.
(o) “Transaction
Agreement”
means
the Existing Transaction Agreement, as amended and modified by the Exchange
Agreements.
(p) “Trigger Date”
means
the first date on which any of the Investors are unable to sell any Registrable
Securities without restriction under Rule 144 (as defined below) (including,
without limitation, volume restrictions).
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2.
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Registration.
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(a) Mandatory
Registration.
Commencing on the Trigger Date, the Company shall prepare, and, as soon as
practicable, but in no event later than the Filing Deadline, file with the
SEC a
Registration Statement on Form S-3 covering the resale of all of the Registrable
Securities. In the event that Form S-3 is unavailable for such a registration,
the Company shall use such other form as is available for such a registration
on
another appropriate form reasonably acceptable to the Required Holders, subject
to the provisions of Section 2(c).
The
Registration Statement prepared pursuant hereto shall register for resale at
least the number of Common Shares equal to the Required Registration Amount
as
of the date such Registration Statement is initially filed with the SEC. The
Registration Statement shall contain (except if otherwise directed by the
Required Holders) the “Selling
Shareholders”
and
“Plan
of Distribution”
sections in substantially the form attached hereto as Exhibit
B;
provided that the Company may make any changes to such sections as requested
by
the SEC so long as none of such changes are materially inconsistent with the
form attached hereto as Exhibit
B or
adversely affect any Investor (including, without limitation, any restrictions
on the manner of disposition). The Company shall use its commercially reasonable
efforts to have such Registration Statement declared effective by the SEC as
soon as practicable, but in no event later than the applicable Effectiveness
Deadline. By 9:30 a.m. on the Business Day immediately following the Effective
Date of the applicable Registration Statement, the Company shall file with
the
SEC in accordance with Rule 424 under the 1933 Act the final prospectus to
be
used in connection with sales pursuant to such Registration
Statement.
Notwithstanding anything to the contrary contained in this Agreement, other
than
during an Allowable Grace Period, the Company shall ensure that, when filed
and
at all times while effective, each Registration Statement and the prospectus
used in connection with such Registration Statement will disclose (whether
directly or through incorporation by reference to other SEC filings to the
extent permitted) all material information regarding the Company and its
securities. In no event shall the Company include any securities other than
Registrable Securities on any Registration Statement without the prior written
consent of the Required Holders. The Company shall not after the date hereof
until the Effective Date of the Registration Statement required to be filed
pursuant to this Section 2(a)
enter
into any agreement providing any such right to any of its security
holders.
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(b) Legal
Counsel.
Subject
to Section 5
hereof,
Magnetar Capital Master Fund, Ltd shall have the right to select one (1) legal
counsel to review and oversee, solely on its behalf, any registration pursuant
to this Section 2
(“Legal
Counsel”),
which
shall be Xxxxxxxxx Xxxxxxx, LLP or such other counsel as thereafter designated
by Magnetar Capital Master Fund, Ltd.
(c) Ineligibility
for Form S-3.
In the
event that Form S-3 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall (i) register the resale
of
the Registrable Securities on another appropriate form reasonably acceptable
to
the Required Holders and (ii) undertake to register the Registrable Securities
on Form S-3 as soon as such form is available, provided
that the
Company shall maintain the effectiveness of the Registration Statement then
in
effect until such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the SEC.
(d) Sufficient
Number of Shares Registered.
In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2(a)
is
insufficient to cover the resale of all of the Registrable Securities required
to be covered by such Registration Statement, the Company shall amend the
applicable Registration Statement, or file a new Registration Statement (on
the
short form available therefor, if applicable), or both, so as to cover at least
the Required Registration Amount as of the Trading Day immediately preceding
the
date of the filing of such amendment or new Registration Statement, in each
case, as soon as practicable, but in any event not later than fifteen (15)
days
after the necessity therefor arises. The Company shall use its commercially
reasonable efforts to cause such amendment and/or new Registration Statement
to
become effective as soon as practicable following the filing thereof. For
purposes of the foregoing provision, the number of shares available under a
Registration Statement shall be deemed “insufficient to cover all of the
Registrable Securities” if at any time the number of Common Shares available for
resale under the Registration Statement is less than the product determined
by
multiplying (i) the Required Registration Amount as of such time by (ii) 0.90.
The calculation set forth in the foregoing sentence shall be made without regard
to any limitations on the exercise of the 2008 Warrants (and such calculation
shall assume that the 2008 Warrants are then fully exercisable for Common Shares
at the then prevailing applicable Exercise Price (as defined
therein).
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(e) Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement.
If (i)
a Registration Statement covering the resale of all of the Registrable
Securities required to be covered thereby and required to be filed by the
Company pursuant to this Agreement is (A) not filed with the SEC on or before
the Filing Deadline (a “Filing
Failure”)
(it
being understood that if the Company files a Registration Statement without
affording each Investor the opportunity to review and comment on the same as
required by Section 3(c)
hereof,
the
Company shall not be deemed to have satisfied this clause (i)(A) and such event
shall be deemed to be a Filing Failure);
or (B)
not declared effective by the SEC on or before the applicable Effectiveness
Deadline (an “Effectiveness
Failure”)
(it
being understood that if on the Business Day immediately following the Effective
Date the Company shall not have filed a “final” prospectus for such Registration
Statement with the SEC under Rule 424(b) in accordance with Section 2(a)
above
(whether or not such a prospectus is technically required by such rule), the
Company shall not be deemed to have satisfied this clause (i)(B) and such event
shall be deemed to be an Effectiveness Failure); (ii) on any day after the
Effective Date of such Registration Statement sales of all of the Registrable
Securities required to be included on such Registration Statement cannot be
made
(other than during an Allowable Grace Period (as defined in Section 3(r))
pursuant to such Registration Statement (including, without limitation, because
of a failure to keep such Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to such Registration
Statement, a suspension or delisting of (or a failure to timely list) the Common
Shares on its principal trading market or exchange, or to register a sufficient
number of Common Shares) (a “Maintenance
Failure”)
(provided that if an Investor transfers its rights hereunder pursuant to Section
9
and the
transferee requests inclusion in such Registration Statement which requires
the
Company under applicable law to file a post-effective amendment to such
Registration Statement, then a Maintenance Failure shall not be deemed to have
occurred solely with respect to the filing of such post-effective amendment
only
if the Company is using its commercially reasonable efforts to file such
amendment and have such amendment declared effective as soon as practicable);
or
(iii) the Company fails to file with the SEC any required reports under Section
13 or 15(d) of the 1934 Act such that it is not in compliance with Rule
144(c)(1) (a “Current
Public Information Default”)
as a
result of which any of the Investors are unable to sell any Registrable
Securities without restriction under Rule 144 (including, without limitation,
volume restrictions), then, as partial relief for the damages to any holder
by
reason of any such delay in or reduction of its ability to sell the underlying
Common Shares (which remedy shall not be exclusive of any other remedies
available at law or in equity), the Company shall pay to each holder of
Registrable Securities relating to such Registration Statement an amount in
cash
equal to one percent (1%) of such Investor’s original principal amount of its
Note (as defined in the applicable Exchange Agreement) (1) on the date of such
Filing Failure, Effectiveness Failure, Maintenance Failure or Current Public
Information Default, as applicable, and (2) on every thirty (30) day anniversary
of (I) a Filing Failure until such Filing Failure is cured; (II) an
Effectiveness Failure until such Effectiveness Failure is cured; (III) a
Maintenance Failure until such Maintenance Failure is cured; and (IV) a Current
Public Information Default until the earlier of (i) the date such Current Public
Information Default is cured and (ii) such time that such public information
is
no longer required pursuant to Rule 144 (in each case, pro rated for periods
totaling less than thirty (30) days). The payments to which a holder shall
be
entitled pursuant to this Section 2(e)
are
referred to herein as “Registration
Delay Payments.”
Following
the initial Registration Delay Payment for any particular event or failure
(which shall be paid on the date of such event or failure, as set forth above),
without limiting the foregoing, if an event or failure giving rise to the
Registration Delay Payments is cured prior to any thirtieth (30th)
day
anniversary of such event or failure, then such Registration Delay Payment
shall
be made on the third (3rd)
Business Day after such cure. Notwithstanding anything contained in this Section
2(e)
to the
contrary, in no event shall the Registration Delay Payments exceed $5,000,000
in
the aggregate.
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(f) Offering.
Notwithstanding anything to the contrary contained in this Agreement, but
subject to the payment of the Registration Delay Payments pursuant to Section
2(e),
in the
event the staff of the SEC (the “Staff”)
or the
SEC seeks to characterize any offering pursuant to a Registration Statement
filed pursuant to this Agreement as constituting an offering of securities
by or on behalf of the Company, or in any other manner, such that the Staff
or the SEC do not permit such Registration Statement to become
effective and used for resales in a manner that does not constitute such an
offering and that permits the continuous resale at the market by the Investors
participating therein (or as otherwise may be acceptable to each
Investor) without being named therein as an “underwriter,” then the Company
shall reduce the number of shares to be included in such Registration Statement
by all Investors until such time as the Staff and the SEC shall so permit
such Registration Statement to become effective as aforesaid. In making
such reduction, the Company shall reduce the number of shares to be included
by
all Investors on a pro rata basis (based upon the number of Registrable
Securities otherwise required to be included for each Investor) unless the
inclusion of shares by a particular Investor or a particular set of Investors
are resulting in the Staff or the SEC’s “by or on behalf of the Company”
offering position, in which event the shares held by such Investor or set of
Investors shall be the only shares subject to reduction (and if by a set of
Investors on a pro rata basis by such Investors or on such other basis as would
result in the exclusion of the least number of shares by all such
Investors). In addition, in the event that the Staff or the SEC requires
any Investor seeking to sell securities under a Registration Statement
filed pursuant to this Agreement to be specifically identified as
an “underwriter” in order to permit such Registration Statement to
become effective, and such Investor does not consent to being so named as an
underwriter in such Registration Statement, then, in each such case, the
Company shall reduce the total number of Registrable Securities to be
registered on behalf of such Investor, until such time as the
Staff or the SEC does not require such identification or until such Investor
accepts such identification and the manner thereof. Any reduction pursuant
to this paragraph will first reduce all Registrable Securities other than
those issued pursuant to the Exchange Agreements. In the event of
any reduction in Registrable Securities pursuant to this paragraph, an
affected Investor shall have the right to require, upon delivery of a written
request to the Company signed by such Investor, the Company to file a
registration statement within 30 days of such request (subject to any
restrictions imposed by Rule 415 or required by the Staff or the SEC)
for resale by such Investor in a manner reasonably acceptable to such Investor,
and the Company shall following such request cause to be and keep effective
such registration statement in the same manner as otherwise contemplated in
this Agreement for registration statements hereunder, in each case until
such time as: (i) all Registrable Securities held by such Investor have
been registered and sold pursuant to an effective Registration Statement in
a
manner acceptable to such Investor or (ii) all Registrable Securities may
be resold by such Investor without restriction (including volume
limitations) pursuant to Rule 144 (taking account of any Staff position with
respect to “affiliate” status) or (iii) such Investor agrees to be named as an
underwriter in any such Registration Statement in a manner acceptable to such
Investor as to all Registrable Securities held by such Investor and that have
not theretofore been included in a Registration Statement under this Agreement
(it being understood that the special demand right under this sentence may
be
exercised by an Investor multiple times and with respect to limited amounts
of
Registrable Securities in order to permit the resale thereof by such Investor
as
contemplated above).
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(g) Piggyback
Registrations.
If, at
any time during the period in which a Registration Statement is required to
be
kept effective, there is not an effective Registration Statement covering all
of
the Registrable Securities and the Company shall determine to prepare and file
with the SEC a registration statement relating to an offering for its own
account or the account of others under the 1933 Act of any of its equity
securities (other than on Form S-4 or Form S-8 (each as promulgated under the
0000 Xxx) or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with the Company’s stock option or other
employee benefit plans), then the Company shall deliver to each Investor a
written notice of such determination and, if within fifteen (15) days after
the
date of the delivery of such notice, any such Investor shall so request in
writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such Investor requests to be registered;
provided, however, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 2(g) that are eligible for
resale pursuant to Rule 144 (without volume restrictions) or that are the
subject of a then effective Registration Statement. Any Registrable Securities
of an Investor that are to be included in a registered public offering pursuant
to this Section 2(g) shall be offered and sold upon such terms as the managing
underwriters thereof determine. The managing underwriters may condition an
Investor’s participation in such a registered public offering upon such
Investor’s execution of an underwriting agreement containing customary terms and
conditions which would customarily be applicable to selling shareholders. If
the
managing underwriters for a registered public offering determine that the number
of Common Shares proposed to be sold in such offering would adversely affect
the
marketing of the Common Shares to be sold by the Company therein or by the
Person or Persons who exercised their right to require the Company to register
such offering under the 1933 Act, then the number of Common Shares to be
included in such offering shall be reduced until the number of such shares
does
not exceed the number that the managing underwriters believe can be sold without
any such adverse effects; provided that any shares to be excluded shall be
so
excluded in the following order of priority: (i) securities held by any Person
or Persons other than (A) the Investors or (B) any Person or Persons who
exercised their demand right to require the Company to register such offering
under the 1933 Act; (ii) securities to be registered on behalf of the Company,
if any, if such registered offering was initiated by any Person or Persons
exercising their demand right to require the Company to register such offering
under the 1933 Act and (iii) the Registrable Securities sought to be included
by
the Investors as determined on a pro-rata basis (based upon the aggregate number
of Registrable Securities sought to be included in such registered
offering).
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3.
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Related
Obligations.
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The
Company will use its commercially reasonable efforts to effect the registration
of the Registrable Securities in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall have the following
obligations:
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(a) Commencing
on the Trigger Date, the Company shall promptly prepare and file with the SEC
a
Registration Statement with respect to the Registrable Securities (but in no
event later than the Filing Deadline) and use its commercially reasonable
efforts to cause such Registration Statement relating to the Registrable
Securities to become effective as soon as practicable after such filing (but
in
no event later than the Effectiveness Deadline). Subject to allowable Grace
Periods (as defined below), the Company shall keep each Registration Statement
effective pursuant to Rule 415 for sale on a continuous basis in an
at-the-market offering at all times until the earlier of (i) the date as of
which all of the Investors may sell all of the Registrable Securities required
to be covered by such Registration Statement without restriction pursuant to
Rule 144 or (ii) the date on which the Investors shall have sold all of the
Registrable Securities covered by such Registration Statement (the “Registration
Period”).
The
Company shall ensure that each Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain
any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein, or necessary to make the statements therein (in the case
of
prospectuses, in the light of the circumstances in which they were made) not
misleading. The Company shall submit to the SEC, within two (2) Business Days
after the later of the date that (i) the Company learns that no review of a
particular Registration Statement will be made by the Staff or that the Staff
has no further comments on a particular Registration Statement (as the case
may
be) and (ii) the approval of Legal Counsel is obtained pursuant to Section
3(c)
(which
approval shall be immediately sought), a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than
48 hours after the submission of such request.
(b) Subject
to Section 3(r)
of this
Agreement, the Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition
of
all Registrable Securities of the Company required to be covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b))
by
reason of the Company filing a report on Form 10-Q or Form 10-K or any analogous
report under the Securities Exchange Act of 1934, as amended (the “1934
Act”),
the
Company shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with
the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement such Registration
Statement.
(c) The
Company shall (A) permit Legal Counsel and legal counsel for each other Investor
to review and comment upon (i) each Registration Statement at least five (5)
Business Days prior to its filing with the SEC and (ii) all amendments and
supplements to all Registration Statements (except for Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any
similar or successor reports) within a reasonable number of days prior to their
filing with the SEC, and (B) not file any Registration Statement or amendment
or
supplement thereto in a form to which Legal Counsel or any legal counsel for
any
other Investor reasonably objects. The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment
or supplement thereto without the prior approval of Legal Counsel, which consent
shall not be unreasonably withheld. The Company shall furnish to Legal Counsel
and legal counsel for each other Investor, without charge, (i) copies of any
correspondence from the SEC or the Staff to the Company or its representatives
relating to any Registration Statement, provided
that
such correspondence shall not contain any material, non-public information
regarding the Company or any of its Subsidiaries (as defined in the Transaction
Agreement), (ii) promptly after the same is prepared and filed with the
SEC, one (1) copy of any Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein
by reference, if requested by an Investor, and all exhibits and (iii) upon
the effectiveness of any Registration Statement, one (1) copy of the prospectus
included in such Registration Statement and all amendments and supplements
thereto. The Company shall reasonably cooperate with Legal Counsel and legal
counsel for each other Investor in performing the Company’s obligations pursuant
to this Section 3.
8
(d) The
Company shall furnish to each Investor whose Registrable Securities are included
in any Registration Statement, without charge, (i) promptly after the same
is
prepared and filed with the SEC, at least one (1) copy of any Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by
an
Investor, all exhibits and each preliminary prospectus, (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus
included in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably request
from time to time) and (iii) such other documents, including copies of any
preliminary or final prospectus, as such Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
(e) The
Company shall use its commercially reasonable efforts to (i) register and
qualify, unless an exemption from registration and qualification applies, the
resale by Investors of the Registrable Securities covered by a Registration
Statement under such other securities or “blue sky” laws of all applicable
jurisdictions in the United States, (ii) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided,
however,
that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e),
(y)
subject itself to general taxation in any such jurisdiction, or (z) file a
general consent to service of process in any such jurisdiction. The Company
shall promptly notify Legal Counsel, legal counsel for each other Investor
and
each Investor who holds Registrable Securities of the receipt by the Company
of
any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities
or “blue sky” laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such
purpose.
(f) The
Company shall notify Legal Counsel, legal counsel for each other Investor and
each Investor in writing of the happening of any event, as promptly as
practicable after becoming aware of such event, as a result of which the
prospectus included in a Registration Statement, as then in effect, includes
an
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein,
in
the light of the circumstances under which they were made, not misleading
(provided
that in
no event shall such notice contain any material, non-public information
regarding the Company or any of its Subsidiaries), and, subject to Section
3(r),
promptly prepare a supplement or amendment to such Registration Statement to
correct such untrue statement or omission and deliver ten (10) copies of such
supplement or amendment to Legal Counsel, legal counsel for each other Investor
and each Investor (or such other number of copies as Legal Counsel, legal
counsel for each other Investor or such Investor may reasonably request). The
Company shall also promptly notify Legal Counsel, legal counsel for each other
Investor and each Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, when a Registration
Statement or any post-effective amendment has become effective (notification
of
such effectiveness shall be delivered to Legal Counsel, legal counsel for each
other Investor and each Investor by facsimile or e-mail on the same day of
such
effectiveness and by overnight mail), and when the Company receives written
notice from the SEC that a Registration Statement or any post-effective
amendment will be reviewed by the SEC, (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus
or
related information, and (iii) of the Company’s reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate.
9
(g) The
Company shall use its commercially reasonable efforts to prevent the issuance
of
any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registrable Securities
for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify Legal Counsel, legal counsel for each other Investor and
each Investor who holds Registrable Securities being sold of the issuance of
such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.
(h) If
any
Investor may be required under applicable securities law to be described in
a
Registration Statement as an underwriter and such Investor consents to so being
named an underwriter, at the request of any Investor, the Company shall furnish
to such Investor, on the date of the effectiveness of such Registration
Statement and thereafter from time to time on such dates as an Investor may
reasonably request (i) a letter, dated such date, from the Company’s independent
certified public accountants in form and substance as is customarily given
by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the Investors, and (ii) an opinion, dated as
of
such date, of counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to the Investors.
(i) If
any
Investor may be required under applicable securities law to be described in
a
Registration Statement as an underwriter and such Investor consents to so being
named an underwriter, upon the written request of such Investor, the Company
shall make available for inspection by (i) such Investor, (ii) legal counsel
for
such Investor and (iii) one (1) firm of accountants or other agents retained
by
such Investor (collectively, the “Inspectors”),
all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”),
as
shall be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree
in
writing to hold in strict confidence and not to make any disclosure (except
to
such Investor) or use of any Record or other information which the Company’s
Board of Directors determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of
such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c)
the
information in such Records has been made generally available to the public
other than by disclosure in violation of this Agreement or any other Transaction
Document (as defined in the 2008 Warrants). Such Investor agrees that it shall,
upon learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential. Nothing herein (or in any other
confidentiality agreement between the Company and such Investor, if any) shall
be deemed to limit any Investor’s ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and
regulations.
10
(j) The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise required
to be disclosed in the Registration Statement pursuant to the 1933 Act, (iii)
the release of such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to
the
public other than by disclosure in violation of this Agreement or any other
Transaction Document. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a
court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Investor and allow such Investor, at the
Investor’s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.
(k) Without
limiting any obligation of the Company under each of the Exchange Agreements,
the Company shall use its commercially reasonable efforts either to (i) cause
all of the Registrable Securities covered by a Registration Statement to be
listed on 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,
or
(ii) secure designation and quotation of all of the Registrable Securities
covered by a Registration Statement on The
Nasdaq Capital Market
and the
Boston Stock Exchange, or (iii) if, despite the Company’s best efforts to
satisfy the preceding clauses (i) or (ii) the Company is unsuccessful in
satisfying the preceding clauses (i) or (ii), without limiting the generality
of
the foregoing, to use its commercially reasonable efforts to arrange for at
least two market makers to register with the Financial Industry Regulatory
Authority (f/k/a the National Association of Securities Dealers, Inc.) as such
with respect to such Registrable Securities. The Company shall pay all fees
and
expenses in connection with satisfying its obligation under this Section
3(k).
(l) The
Company shall cooperate with the Investors who hold Registrable Securities
being
offered and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing
the
Registrable Securities 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 from time to time and registered
in
such names as the Investors may request.
11
(m) If
requested by an Investor, the Company shall as soon as practicable after receipt
of notice from such Investor and subject to Section 3(r)
hereof,
(i) incorporate in a prospectus supplement or post-effective amendment such
information as an Investor reasonably requests to be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) supplement or
make
amendments to any Registration Statement if reasonably requested by an Investor
holding any Registrable Securities.
(n) The
Company shall use its commercially reasonable efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.
(o) The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the 0000 Xxx) covering
a
twelve-month period beginning not later than the first day of the Company’s
fiscal quarter next following the effective date of the Registration
Statement.
(p) The
Company shall otherwise use its best efforts to comply with all applicable
rules
and regulations of the SEC in connection with any registration
hereunder.
(q) Within
one (1) Business Day after a Registration Statement which covers Registrable
Securities is declared effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the transfer agent
for
such Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
A.
(r) Notwithstanding
anything to the contrary herein (but subject to the last sentence of this
Section 3(r)),
at any
time after the Effective Date of the applicable Registration Statement, the
Company may delay the disclosure of material, non-public information concerning
the Company or any of its Subsidiaries the disclosure of which at the time
is
not, in the good faith opinion of the Board of Directors of the Company, in
the
best interest of the Company and, in the opinion of counsel to the Company,
otherwise required (a “Grace
Period”);
provided,
that
the Company shall promptly (i) notify the Investors in writing of the existence
of material, non-public information giving rise to a Grace Period (provided
that in
each notice the Company will not disclose the content of such material,
non-public information to the Investors) and the date on which the Grace Period
will begin, and (ii) notify the Investors in writing of the date on which
the Grace Period ends; and, provided
further,
that no
Grace Period shall exceed ten (10) consecutive days and during any three hundred
sixty five (365) day period such Grace Periods shall not exceed an aggregate
of
thirty (30) days and the first day of any Grace Period must be at least five
(5)
Trading Days after the last day of any prior Grace Period (each, an
“Allowable
Grace Period”);
provided,
that no
Allowable Grace Period may exist during the first sixty (60) Business Days
after
the Effective Date of the applicable Registration Statement. For purposes of
determining the length of a Grace Period above, the Grace Period shall begin
on
and include the date the Investors receive the notice referred to in clause
(i)
and shall end on and include the later of the date the Investors receive the
notice referred to in clause (ii) and the date referred to in such notice.
The
provisions of Section 3(g)
hereof
shall not be applicable during the period of any Allowable Grace Period. Upon
expiration of each Grace Period, the Company shall again be bound by the first
sentence of Section 3(f)
with
respect to the information giving rise thereto unless such material, nonpublic
information is no longer applicable.
12
(s) The
Company shall use its commercially reasonable efforts to maintain eligibility
for use of Form S-3 (or any successor form thereto) for the registration of
the
resale of the Registrable Securities.
|
4.
|
Obligations
of the Investors.
|
(a) At
least
five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify each Investor in writing of
the
information the Company requires from each such Investor. It shall be a
condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held
by it
and the intended method of disposition of the Registrable Securities held by
it,
as shall be reasonably required to effect and maintain the effectiveness of
the
registration of such Registrable Securities and shall execute such documents
in
connection with such registration as the Company may reasonably request.
(b) Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor’s election to
exclude all of such Investor’s Registrable Securities from such Registration
Statement.
(c) Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(g)
or the
first sentence of 3(f),
such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable Securities
until such Investor’s receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(g)
or the
first sentence of Section 3(f)
or
receipt of notice that no supplement or amendment is required.
(d) Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it in connection with sales of
Registrable
Securities pursuant to the Registration Statement.
13
(e) Each
Investor covenants and agrees to deliver a Registration Statement Questionnaire,
in the form attached hereto as Exhibit
C,
no
later than 15 calendar days after the Trigger Date (such later date, the
“Outside
Delivery Date”);
provided that if such Investor fails to deliver such questionnaire by the close
of business on the Outside Delivery Date, then such Investor’s Registrable
Securities may be excluded from the Registration Statement by the
Company.
|
5.
|
Expenses
of Registration.
|
All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2
and
3,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, and fees and disbursements of counsel for
the Company shall be paid by the Company. Each Buyer shall be responsible for
the fees and disbursements of its own legal counsel in connection with
registration, filing or qualification pursuant to Sections 2
and
3
of this
Agreement.
|
6.
|
Indemnification.
|
In
the
event any Registrable Securities are included in a Registration Statement under
this Agreement:
(a) To
the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Investor, the directors, officers, members,
partners, employees, agents, representatives of, and each Person, if any, who
controls any Investor within the meaning of the 1933 Act or the 1934 Act (each,
an “Indemnified
Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several, (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified
Damages”),
to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of
or are based upon: (i) any untrue statement or alleged untrue statement of
a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue
Sky Filing”),
or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in
any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,
if
the Company files any amendment thereof or supplement thereto with the SEC)
or
the omission or alleged omission to state therein any material fact necessary
to
make the statements made therein, in light of the circumstances under which
the
statements therein were made, not misleading or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”).
Subject to Section 6(b),
the
Company shall reimburse the Indemnified Persons, promptly as such expenses
are
incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any
such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a):
(i)
shall not apply to a Claim by an Indemnified Person arising out of or based
upon
a Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the preparation of
such
Registration Statement or any such amendment thereof or supplement thereto
and
(ii) shall not be available to the extent such Claim is based on a failure
of
the Investor to deliver or to cause to be delivered the prospectus made
available by the Company (to the extent applicable), including a corrected
prospectus, if such prospectus or corrected prospectus was timely made available
by the Company pursuant to Section 3(d)
and then
only if, and to the extent that, following the receipt of the corrected
prospectus no grounds for such Claim would have existed; and (iii) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Such indemnity shall remain in full force
and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of any of the Registrable Securities
by
any of the Investors pursuant to Section 9.
14
(b) In
connection with any Registration Statement in which an Investor is
participating, such Investor agrees to severally and not jointly indemnify,
hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a),
the
Company, each of its directors, each of its officers who signs the Registration
Statement and each Person, if any, who controls the Company within the meaning
of the 1933 Act or the 1934 Act (each, an “Indemnified
Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
or
Indemnified Damages arise out of or are based upon any Violation, in each case,
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by
such
Investor expressly for use in connection with such Registration Statement;
and,
subject to Section 6(b),
such
Investor will reimburse any legal or other expenses reasonably incurred by
an
Indemnified Party in connection with investigating or defending any such Claim;
provided,
however,
that
the indemnity agreement contained in this Section 6(b)
and the
agreement with respect to contribution contained in Section 7
shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which consent
shall
not be unreasonably withheld or delayed; provided,
further,
however,
that
such Investor shall be liable under this Section 6(b)
for only
that amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of any of the Registrable
Securities by any of the Investors pursuant to Section 9.
15
(c) Promptly
after receipt by an Indemnified Person or Indemnified Party (as the case may
be)
under this Section 6
of
notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or
Indemnified Party (as the case may be) shall, if a Claim in respect thereof
is
to be made against any indemnifying party under this Section 6,
deliver
to the indemnifying party a written notice of the commencement thereof, and
the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person
or
the Indemnified Party (as the case may be); provided,
however,
that an
Indemnified Person or Indemnified Party (as the case may be) shall have the
right to retain its own counsel with the fees and expenses of such counsel
to be
paid by the indemnifying party if: (i) the indemnifying party has agreed in
writing to pay such fees and expenses; (ii) the indemnifying party shall have
failed promptly to assume the defense of such Claim and to employ counsel
reasonably satisfactory to such Indemnified Person or Indemnified Party (as
the
case may be) in any such Claim; or (iii) the named parties to any such Claim
(including any impleaded parties) include both such Indemnified Person or
Indemnified Party (as the case may be) and the indemnifying party, and such
Indemnified Person or such Indemnified Party (as the case may be) shall have
been advised by counsel that a conflict of interest is likely to exist if the
same counsel were to represent such Indemnified Person or such Indemnified
Party
and the indemnifying party (in which case, if such Indemnified Person or such
Indemnified Party (as the case may be) notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, then the indemnifying party shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party, provided
further,
that in
the case of clause (iii) above the indemnifying party shall not be responsible
for the reasonable fees and expenses of more than one (1) separate legal counsel
for such Indemnified Person or Indemnified Party (as the case may be). The
Indemnified Party or Indemnified Person (as the case may be) shall reasonably
cooperate with the indemnifying party in connection with any negotiation or
defense of any such action or Claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person (as the case may be) which relates
to
such action or Claim. The indemnifying party shall keep the Indemnified Party
or
Indemnified Person (as the case may be) reasonably apprised at all times as
to
the status of the defense or any settlement negotiations with respect thereto.
No indemnifying party shall be liable for any settlement of any action, claim
or
proceeding effected without its prior written consent, provided,
however,
that
the indemnifying party shall not unreasonably withhold, delay or condition
its
consent. No indemnifying party shall, without the prior written consent of
the
Indemnified Party or Indemnified Person (as the case may be), consent to entry
of any judgment or enter into any settlement or other compromise which does
not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person (as the case may be) of a
release from all liability in respect to such Claim or litigation, and such
settlement shall not include any admission as to fault on the part of the
Indemnified Party. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party
or
Indemnified Person (as the case may be) with respect to all third parties,
firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party (as the case may be) under this Section 6,
except
to the extent that the indemnifying party is materially and adversely prejudiced
in its ability to defend such action.
16
(d) No
Person
involved in the sale of Registrable Securities who is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) in
connection with such sale shall be entitled to indemnification from any Person
involved in such sale of Registrable Securities who is not guilty of fraudulent
misrepresentation.
(e) The
indemnification required by this Section 6
shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.
(f) The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
|
7.
|
Contribution.
|
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6
to the
fullest extent permitted by law; provided,
however,
that:
(i) no contribution shall be made under circumstances where the maker would
not
have been liable for indemnification under the fault standards set forth in
Section 6
of this
Agreement, (ii) no Person involved in the sale of Registrable Securities which
Person is guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) in connection with such sale shall be entitled to
contribution from any Person involved in such sale of Registrable Securities
who
was not guilty of fraudulent misrepresentation; and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount
of
proceeds received by such seller from the sale of such Registrable Securities
pursuant to such Registration Statement. Notwithstanding the provisions of
this
Section 7, no Investor shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the net proceeds actually received
by
such Investor from the sale of the Registrable Securities subject to the Claim
exceeds the amount of any damages that such Investor has otherwise been required
to pay, or would otherwise be required to pay under Section 6(b),
by
reason of such untrue or alleged untrue statement or omission or alleged
omission.
|
8.
|
Reports
Under the 1934 Act
|
With
a
view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that
may
at any time permit the Investors to sell securities of the Company to the public
without registration (“Rule
144”),
the
Company agrees to:
(a) make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
(b) file
with
the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements (it being understood that nothing herein shall
limit the Company’s obligations under Section 4(c) of the Transaction Agreement)
and the filing of such reports and other documents is required for the
applicable provisions of Rule 144; and
17
(c) furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company, if true, that it has
complied with the reporting requirements of Rule 144 and the 1934 Act, (ii)
a
copy of the most recent annual or quarterly report of the Company and such
other
reports and documents so filed by the Company with the SEC if such reports
are
not publicly available via XXXXX, and (iii) such other information as may be
reasonably requested to permit the Investors to sell such securities pursuant
to
Rule 144 without registration.
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9.
|
Assignment
of Registration Rights
|
The
rights under this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of such Investor’s Registrable
Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to
the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee,
and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act or applicable state securities laws if so
required; (iv) at or before the time the Company receives the written notice
contemplated by clause (ii) of this sentence the transferee or assignee agrees
in writing with the Company to be bound by all of the provisions contained
herein; (v) such transfer shall have been made in accordance with the applicable
requirements of the applicable Exchange Agreement; and (vi) such transfer shall
have been conducted in accordance with all applicable federal and state
securities laws.
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10.
|
Amendment
of Registration Rights.
|
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Holders, provided
that any
Investor may give a waiver in writing as to itself. Any amendment or waiver
effected in accordance with this Section 10
shall be
binding upon each Investor and the Company. No such amendment or waiver (unless
given pursuant to the foregoing proviso) shall be effective to the extent that
it applies to less than all of the holders of the Registrable Securities. No
consideration shall be offered or paid to any Person to amend or consent to
a
waiver or modification of any provision of this Agreement unless the same
consideration also is offered to all of the parties to this
Agreement.
|
11.
|
Miscellaneous.
|
(a) Solely
for purposes of this Agreement, a Person is deemed to be a holder of Registrable
Securities whenever such Person owns or is deemed to own of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from such record owner of such Registrable
Securities.
18
(b) Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
(iii) with respect to Section 3(c),
by
electronic mail (provided confirmation of transmission is electronically
generated and kept on file by the sending party); or (iv) one (1) Business
Day
after deposit with a nationally recognized overnight delivery service with
next
day delivery specified, in each case, properly addressed to the party to receive
the same. The addresses and facsimile numbers for such communications shall
be:
If
to the
Company:
000
Xxxxx
Xxxx, Xxxxx 000
Xxxxxx,
Xxxxxxx, Xxxxxx X0X - 0X0
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
CEO
With
a
copy (for informational purposes only) to:
Cozen
X’Xxxxxx
0000
Xxxxxx Xxxxxx
Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
If
to the
Transfer Agent:
American
Stock Transfer and Trust Company
00
Xxxxxx
Xxxx
Xxx
Xxxx,
XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxxxxx Xxxxxx
If
to
Legal Counsel:
Xxxxxxxxx
Traurig, LLP
00
X.
Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxxxx X. Xxxxxxxxx, Esq.
Xxxx
X. Xxxxx, Esq.
19
If
to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers
attached to the Transaction Agreement, with copies to such Buyer’s
representatives as set forth on the Schedule of Buyers, or to such other address
and/or facsimile number and/or to the attention of such other Person as the
recipient party has specified by written notice given to each other party five
(5) days prior to the effectiveness of such change; provided
that
Xxxxxxxxx Traurig, LLP shall only be provided notices sent to Magnetar Capital
Master Fund, Ltd. Written confirmation of receipt (A) given by the recipient
of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine or electronic mail
transmission containing the time, date, recipient facsimile number or electronic
mail address and an image of the first page of such transmission or (C) provided
by a courier or overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from a nationally recognized
overnight delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.
(c) Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as
a
waiver thereof.
(d) The
parties hereby agree that pursuant to 735 Illinois Compiled Statutes 105/5-5
they have chosen that all questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of Illinois, without giving effect to any choice
of
law or conflict of law provision or rule (whether of the State of Illinois
or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Illinois. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
in
The City of Chicago, Xxxx County, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in
any
suit, action or proceeding, any claim that it is not personally subject to
the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding
is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. 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.
(e) This
Agreement and the schedules and exhibits attached hereto and the instruments
referenced herein and therein constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement and the schedules and exhibits
attached hereto and the instruments referenced herein and therein supersede
all
prior agreements and understandings among the parties hereto with respect to
the
subject matter hereof and thereof.
20
(f) Subject
to the requirements of Section 9,
this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.
(g) The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof. Unless the context clearly
indicates otherwise, each pronoun herein shall be deemed to include the
masculine, feminine, neuter, singular and plural forms thereof. The terms
“including,”
“includes,”
“include”
and
words of like import shall be construed broadly as if followed by the words
“without limitation.” The terms “herein,”
“hereunder,”
“hereof”
and
words of like import refer to this entire Agreement instead of just the
provision in which they are found.
(h) This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.
In
the event that any signature is delivered by facsimile transmission or by an
e-mail which contains an electronic file of an executed signature page, such
signature page shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such facsimile or electronic file signature page (as the case
may be) were an original thereof.
(i) Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(j) All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders.
(k) The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent and no rules of strict construction
will
be applied against any party. Terms used in this Agreement but defined in the
other Transaction Documents shall have the meanings ascribed to such terms
on
the Closing Date (as defined in the Exchange Agreements) in such other
Transaction Documents unless otherwise consented to in writing by each
Buyer.
(l) This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, other than the Persons
referred to in Section 6
and
7
hereof.
21
(m) The
obligations of each Investor under this Agreement and the other Transaction
Documents are several and not joint with the obligations of any other Investor,
and no Investor shall be responsible in any way for the performance of the
obligations of any other Investor under this Agreement or any other Transaction
Document. Nothing contained herein or in any other Transaction Document, and
no
action taken by any Investor pursuant hereto or thereto, shall be deemed to
constitute the Investors as, and the Company acknowledges that the Investors
do
not so constitute, a partnership, an association, a joint venture or any other
kind of group or entity, or create a presumption that the Investors are in
any
way acting in concert or as a group or entity with respect to such obligations
or the transactions contemplated by the Transaction Documents or any matters,
and the Company acknowledges that the Investors are not acting in concert or
as
a group, and the Company shall not assert any such claim, with respect to such
obligations or the transactions contemplated by this Agreement or any of the
other the Transaction Documents. Each Investor shall be entitled to
independently protect and enforce its rights, including, without limitation,
the
rights arising out of this Agreement or out of any other Transaction Documents,
and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose. The use of a single
agreement with respect to the obligations of the Company contained was solely
in
the control of the Company, not the action or decision of any Investor, and
was
done solely for the convenience of the Company and not because it was required
or requested to do so by any Investor. It is expressly understood and agreed
that each provision contained in this Agreement and in each other Transaction
Document is between the Company and an Investor, solely, and not between the
Company and the Investors collectively and not between and among
Investors.
[signature
pages follow]
22
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Amended and Restated Registration Rights Agreement to be duly executed as of
the
date first written above.
|
COMPANY:
|
|
|
By:
_________________________________
Name:
__________________
Title:
__________________
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Amended and Restated Registration Rights Agreement to be duly executed as of
the
date first written above.
|
BUYERS:
|
|
|
MAGNETAR
CAPITAL MASTER FUND, LTD
By: Magnetar
Financial LLC
Its: Investment
Manager
|
|
|
______________________________
By:
Its:
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Amended and Restated Registration Rights Agreement to be duly executed as of
the
date first written above.
|
BUYERS:
SRB
GREENWAY CAPITAL, L.P.
By:
SRB Management, L.P., General Partner
By:
BC Advisors, L.L.C., General Partner
By:
____________________________________
Name:
Title:
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Amended and Restated Registration Rights Agreement to be duly executed as of
the
date first written above.
|
BUYERS:
SRB
GREENWAY OFFSHORE OPERATING FUND, L.P.
By:
SRB Management, L.P., General Partner
By:
BC Advisors, L.L.C., General Partner
By:
_________________________________
Name:
Title:
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Amended and Restated Registration Rights Agreement to be duly executed as of
the
date first written above.
|
BUYERS:
SRB
GREENWAY CAPITAL (QP), L.P.
By:
SRB Management, L.P., General Partner
By:
BC Advisors, L.L.C., General Partner
By:
__________________________________
Name:
Title:
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Amended and Restated Registration Rights Agreement to be duly executed as of
the
date first written above.
|
BUYERS:
XXX
XXXX XXX INDIVIDUAL ACCOUNT
By:
________________________________
Name:
Title:
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Amended and Restated Registration Rights Agreement to be duly executed as of
the
date first written above.
|
BUYERS:
|
|
|
TALKOT
FUND, L.P.
By:
_______________________
By:
_______________________
By:
______________________________
Name:
Title:
|
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Amended and Restated Registration Rights Agreement to be duly executed as of
the
date first written above.
|
BUYERS:
|
|
|
CRESTVIEW
CAPITAL MASTER, LLC
By:
Crestview Capital Partners, LLC, its sole
manager
By:
______________________________
Name:
Title:
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Amended and Restated Registration Rights Agreement to be duly executed as of
the
date first written above.
|
BUYERS:
|
|
|
FORT
XXXXX PARTNERS, LP
By:
Fort Xxxxx Capital, LLC
By:
________________________________
Name:
Title:
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Amended and Restated Registration Rights Agreement to be duly executed as of
the
date first written above.
|
BUYERS:
|
|
|
FORT
XXXXX MASTER, LP
By:
Fort Xxxxx Capital, LLC
By:
__________________________________
Name:
Title:
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Amended and Restated Registration Rights Agreement to be duly executed as of
the
date first written above.
|
BUYERS:
|
|
|
CCM
MASTER QUALIFIED FUND, LTD
By:
__________________________________
Name:
Title:
|
SCHEDULE
OF BUYERS
|
Buyer
|
Buyer
Address
and
Facsimile Number
|
Buyer’s
Representative’s Address
and
Facsimile Number
|
||
|
Magnetar
Capital Master Fund, Ltd
|
0000
Xxxxxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attn:
Xxxxx Xxxxxxxx
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
Xxxxxxxxx
Xxxxxxx, LLP
00
X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxx X. Xxxxxxxxx
Xxxx
X. Xxxxx
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
||
|
SRB
Greenway Capital (QP), L.P.
|
000
Xxxxxxxx Xxxxx
Xxxxx
0000
Xxxxxx,
XX 00000
Attention:
Xxxxxx Xxx
Facsimile:
Telephone:
(000) 000-0000
|
|||
|
SRB
Greenway Capital, L.P.
|
000
Xxxxxxxx Xxxxx
Xxxxx
0000
Xxxxxx,
XX 00000
Attention:
Xxxxxx Xxx
Facsimile:
Telephone:
(000) 000-0000
|
|||
|
SRB
Greenway Offshore Operating Fund, L.P.
|
000
Xxxxxxxx Xxxxx
Xxxxx
0000
Xxxxxx,
XX 00000
Attention:
Xxxxxx Xxx
Facsimile:
Telephone:
(000) 000-0000
|
|||
|
Xxx
Xxxx XXX Individual Account
|
c/o
Talkot Fund, L.P.
0000
Xxxxxxxxx
Xxxxx
000
Xxxxxxxxx,
XX 00000
Attention:
Xxxxxx Xxxx
Facsimile:
Telephone:
|
|||
|
Talkot
Fund, L.P.
|
0000
Xxxxxxxxx
Xxxxx
000
Xxxxxxxxx,
XX 00000
Attention:
Xxxxxx Xxxx
Facsimile:
Telephone:
|
|||
|
Crestview
Capital Master, LLC
|
00
Xxxxxx Xxxxx
Xxxxx
X
Xxxxxxxxxx,
XX 00000
Attention:
Xxxxxx X Xxxxx
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|||
|
Fort
Xxxxx Partners, LP
|
000
Xxxxxxxxxx Xxxxxx
Xxxxx
0000
Xxx
Xxxxxxxxx, XX 00000
Attention:
Xxxxx Xxxxxx and Xxxxxxxx Xxxxxx
Facsimile:
Telephone:
|
|
Fort
Xxxxx Master, LP
|
000
Xxxxxxxxxx Xxxxxx
Xxxxx
0000
Xxx
Xxxxxxxxx, XX 00000
Attention:
Xxxxx Xxxxxx and Xxxxxxxx Xxxxxx
Facsimile:
Telephone:
|
|||
|
CCM
Master Qualified Fund, Ltd
|
0
Xxxxx Xxxxxx Xxxxx
Xxxxx
0000
Xxxxxxx,
XX 00000
Attention:
Xxxxxx Xxxxx
Facsimile:
Telephone:
|
EXHIBIT
A
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
______________________
______________________
______________________
Attention:
_____________
Re: Workstream
Inc.
Ladies
and Gentlemen:
[We
are][I am] counsel to Workstream Inc., a corporation existing pursuant to the
Canada Business Corporations Act (the “Company”),
and
have represented the Company and its subsidiaries in connection with those
certain separate Exchange Agreements (the “Exchange
Agreements”)
entered into by and among the Company and the parties named therein
(collectively, the “Holders”)
pursuant to each of which the Company issued to the Holders warrants (the
“2008 Warrants”)
exercisable for the Company’s common shares, no par value per share
(the “Common
Shares”).
Pursuant to the Exchange Agreements, the Company also has entered into an
Amended and Restated Registration Rights Agreement with the Holders (the
“Amended Registration
Rights Agreement”)
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Amended Registration Rights
Agreement), including the Common Shares issuable upon exercise of the 2008
Warrants, under the Securities Act of 1933, as amended (the “1933
Act”).
In
connection with the Company’s obligations under the Amended Registration Rights
Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
on Form S-3 (File No. 333-_____________) (the “Registration
Statement”)
with
the Securities and Exchange Commission (the “SEC”)
relating to the Registrable Securities which names each of the Holders as a
selling shareholder thereunder.
In
connection with the foregoing, [we][I] advise you that a member of the SEC’s
staff has advised [us][me] by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at
[ENTER
TIME OF EFFECTIVENESS]
on
[ENTER
DATE OF EFFECTIVENESS]
and
[we][I] have no knowledge, after telephonic inquiry of a member of the SEC’s
staff, that any stop order suspending its effectiveness has been issued or
that
any proceedings for that purpose are pending before, or threatened by, the
SEC
and the Registrable Securities are available for resale under the 1933 Act
pursuant to the Registration Statement.
This
letter shall serve as our standing opinion to you that the Common Shares
underlying the 2008 Warrants are freely transferable by the Holders pursuant
to
the Registration Statement, subject to the prospectus delivery requirements
of
the 1933 Act, which the selling shareholders have agreed to comply with to
the
extent applicable and which we have assumed compliance with in issuing this
letter. You need not require further letters from us to effect any future
legend-free issuance or reissuance of such Common Shares to the Holders as
contemplated by the Company’s Irrevocable Transfer Agent Instructions dated
_________ __, 200_.
|
Very
truly yours,
|
|
[ISSUER’S
COUNSEL]
|
|
By:___________________________
|
CC: [LIST
NAMES OF HOLDERS]
EXHIBIT
B
SELLING
SHAREHOLDERS
The
common shares being offered by the selling shareholders are those issuable
to
the selling shareholders upon exercise of the 2008 warrants. For additional
information regarding the issuance of the 2008 warrants, see “Exchange of 2008
Warrants” above. We are registering the common shares in order to permit the
selling shareholders to offer the shares for resale from time to time. Except
for the ownership of the 2008 warrants issued pursuant to the separate Exchange
Agreements, the selling shareholders have not had any material relationship
with
us within the past three years.
The
table
below lists the selling shareholders and other information regarding the
beneficial ownership of the common shares by each of the selling shareholders.
The second column lists the number of common shares beneficially owned by each
selling shareholder, based on its ownership of common shares and the 2008
warrants, as of ________, 2008, assuming exercise of the 2008 warrants held
by
the selling shareholders on that date, taking account of any limitations on
exercise.
The
third
column lists the common shares being offered by this prospectus by the selling
shareholders.
In
accordance with the terms of a registration rights agreement with the holders
of
the 2008 warrants, this prospectus generally covers the resale of the number
of
common shares issuable upon exercise of the 2008 warrants, determined as if
the
outstanding 2008 warrants were exercised in full (without regard to any
limitations on exercise contained therein) as of the trading day immediately
preceding the date this registration statement was initially filed with the
SEC.
Because the exercise price of the 2008 warrants may be adjusted, the number
of
shares that will actually be issued may be more or less than the number of
shares being offered by this prospectus. The fourth column assumes the sale
of
all of the common shares offered by the selling shareholders pursuant to this
prospectus.
Under
the
terms of the 2008 warrants, a selling shareholder may not exercise the 2008
warrants, to the extent such exercise would cause such selling shareholder,
together with its affiliates, to beneficially own a number of common shares
which would exceed 4.99% or 9.99% (as applicable) of our then outstanding common
shares following such exercise, excluding for purposes of such determination
common shares issuable upon exercise of the 2008 warrants which have not been
exercised. The number of shares in the second column reflects these limitations.
The selling shareholders may sell all, some or none of their shares in this
offering. See “Plan of Distribution.”
|
Name
of Selling Shareholder
|
Number of Common Shares
of Owned Prior to Offering
|
Maximum Number of
Common Shares to be Sold
Pursuant to this Prospectus
|
Number
of Common
Shares
of Owned After
Offering
|
|||
|
Magnetar
Capital Master Fund, Ltd (1)
|
0
|
|||||
|
[Other
Buyers]
|
(1)
Magnetar Financial LLC is the investment advisor of Magnetar Capital Master
Fund, Ltd. (“Magnetar Master Fund”) and consequently has voting control and
investment discretion over securities held by Magnetar Master Fund. Xxxx
Xxxxxxxx has voting control over Supernova Management LLC, the general partner
of Magnetar Capital Partners LP, the sole managing member of Magnetar Financial
LLC. As a result, Xx. Xxxxxxxx may be deemed to have beneficial ownership (as
determined under Section 13(d) of the Securities Exchange Act of 1934, as
amended) of any shares deemed to be beneficially owned by Magnetar Financial
LLC.
PLAN
OF DISTRIBUTION
We
are
registering the common shares issuable upon exercise of the 2008 warrants to
permit the resale of these common shares by the holders of the 2008 warrants
from time to time after the date of this prospectus. We will not receive any
of
the proceeds from the sale by the selling shareholders of the common shares.
We
will bear all fees and expenses incident to our obligation to register the
common shares.
The
selling shareholders may sell all or a portion of the common shares beneficially
owned by them and offered hereby from time to time directly or through one
or
more underwriters, broker-dealers or agents. If the common shares are sold
through underwriters or broker-dealers, the selling shareholders will be
responsible for underwriting discounts or commissions or agent’s commissions.
The common shares may be sold in one or more transactions at fixed prices,
at
prevailing market prices at the time of the sale, at varying prices determined
at the time of sale, or at negotiated prices. These sales may be effected in
transactions, which may involve crosses or block transactions,
| · |
on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
|
| · |
in
the over-the-counter market;
|
| · |
in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
|
| · |
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
| · |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
| · |
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
| · |
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
| · |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
| · |
privately
negotiated transactions;
|
| · |
short
sales made after the date the Registration Statement is declared
effective
by the SEC, subject to any applicable limitations on short sales
contained
in any agreement between a selling shareholder and the
Company;
|
| · |
sales
pursuant to Rule 144;
|
| · |
broker-dealers
may agree with the selling securityholders to sell a specified number
of
such shares at a stipulated price per
share;
|
| · |
a
combination of any such methods of sale;
and
|
| · |
any
other method permitted pursuant to applicable
law.
|
If
the
selling shareholders effect such transactions by selling common shares to or
through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling shareholders or commissions from
purchasers of the common shares for whom they may act as agent or to whom they
may sell as principal (which discounts, concessions or commissions as to
particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with sales
of
the common shares or otherwise, the selling shareholders may enter into hedging
transactions with broker-dealers, which may in turn engage in short sales of
the
common shares in the course of hedging in positions they assume. The selling
shareholders may also sell common shares short and deliver common shares covered
by this prospectus to close out short positions and to return borrowed shares
in
connection with such short sales. The selling shareholders may also loan or
pledge common shares to broker-dealers that in turn may sell such
shares.
The
selling shareholders may pledge or grant a security interest in some or all
of
the 2008 warrants or common shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the common shares from time to time pursuant to this prospectus
or any amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act of 1933, as amended, amending, if necessary,
the
list of selling shareholders to include the pledgee, transferee or other
successors in interest as selling shareholders under this prospectus. The
selling shareholders also may transfer and donate the common shares in other
circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The
selling shareholders and any broker-dealer participating in the distribution
of
the common shares may be deemed to be “underwriters” within the meaning of the
Securities Act, and any commission paid, or any discounts or concessions allowed
to, any such broker-dealer may be deemed to be underwriting commissions or
discounts under the Securities Act. At the time a particular offering of the
common shares is made, a prospectus supplement, if required, will be distributed
which will set forth the aggregate amount of common shares being offered and
the
terms of the offering, including the name or names of any broker-dealers or
agents, any discounts, commissions and other terms constituting compensation
from the selling shareholders and any discounts, commissions or concessions
allowed or re-allowed or paid to broker-dealers.
Under
the
securities laws of some states, the common shares may be sold in such states
only through registered or licensed brokers or dealers. In addition, in some
states the common shares may not be sold unless such shares have been registered
or qualified for sale in such state or an exemption from registration or
qualification is available and is complied with.
There
can
be no assurance that any selling shareholder will sell any or all of the common
shares registered pursuant to the shelf registration statement, of which this
prospectus forms a part.
The
selling shareholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of
1934,
as amended, and the rules and regulations thereunder, including, without
limitation, to the extent applicable, Regulation M of the Exchange Act, which
may limit the timing of purchases and sales of any of the common shares by
the
selling shareholders and any other participating person. To the extent
applicable, Regulation M may also restrict the ability of any person engaged
in
the distribution of the common shares to engage in market-making activities
with
respect to the common shares. All of the foregoing may affect the marketability
of the common shares and the ability of any person or entity to engage in
market-making activities with respect to the common shares.
We
will
pay all expenses of the registration of the common shares pursuant to the
registration rights agreement, estimated to be $[ ]
in total, including, without limitation, Securities and Exchange Commission
filing fees and expenses of compliance with state securities or “blue sky” laws;
provided,
however,
that a
selling shareholder will pay all underwriting discounts and selling commissions,
if any. We will indemnify the selling shareholders against liabilities,
including some liabilities under the Securities Act, in accordance with the
registration rights agreements, or the selling shareholders will be entitled
to
contribution. We may be indemnified by the selling shareholders against civil
liabilities, including liabilities under the Securities Act, that may arise
from
any written information furnished to us by the selling shareholder specifically
for use in this prospectus, in accordance with the related registration rights
agreements, or we may be entitled to contribution.
Once
sold
under the registration statement, of which this prospectus forms a part, the
common shares will be freely tradable in the hands of persons other than our
affiliates.
EXHIBIT
C
(the
“Company”)
QUESTIONNAIRE
TO THE SELLING SHAREHOLDERS
This
Questionnaire is to be completed, signed and faxed to Xxxxx Xxxxxxx, Esquire
at
(000) 000-0000 by no later than fifteen (15) calendar days after the Trigger
Date, by the person or entity indicated on the cover of this Questionnaire
(the
“Selling Shareholder”) whose common shares of the Company are being registered
pursuant to a Registration Statement on Form S-3. Retain a duplicate copy for
your files. If you do not return the Questionnaire by the foregoing deadline,
your shares may not be included in the Registration Statement.
If
you
are uncertain about any of the following questions as they apply to your
situation, please supply all relevant facts. Include separate sheets with
details if necessary. If you have any questions, please call Workstream’s
counsel, Xxxxx Xxxxxxx, Esquire, at (000) 000-0000.
Please
notify me immediately if any of the information disclosed in your answers
changes. Please answer all questions. Indicate “none” or “not applicable” when
appropriate. Information should be given as of the date of this Questionnaire,
even if previously reported to the Company.
IN
ANSWERING THESE QUESTIONS, PLEASE REFER TO THE INSTRUCTIONS AT THE BEGINNING
OF
THIS QUESTIONNAIRE.
Name
of
Selling Shareholder: _________________________________
Instructions
and Definitions
The
following instructions and definitions are furnished to aid you in preparing
your answers to this Questionnaire.
|
1.
|
For
purposes of this Questionnaire the term “Company” means Workstream
Inc.
|
|
2.
|
“Beneficial”
ownership.
Beneficial ownership shall have the meaning ascribed to it in Section
13(d) of the Securities Exchange Act of 1934, as amended. The SEC
has
taken the position that if you have sole or shared voting power or
dispositive power or the ability to acquire either sole or shared
voting
or dispositive power of a security within 60 days, you are the beneficial
owner of that security, even though that security is not registered
in
your name. Thus, for example, you could be the beneficial owner of
securities in a trust or estate of which you are a trustee or executor,
or
of which you are one of the trustees or executors, or you could be
the
beneficial owner of securities which you have a right to
purchase.
|
|
3.
|
The
term “affiliate” for purposes of this Questionnaire means any person
directly or indirectly controlling, controlled by, or under common
control
with the Selling Shareholder.
|
|
4.
|
An
example response has been provided to assist you in preparing your
response.
|
1. Broker-Dealer
Status.
(a) Are
you,
or are you an affiliate of, a broker-dealer registered under the Securities
Exchange Act of 1934?
Yes
____ No
____
If
“yes,”
please give details below.
(b) Please
confirm the following statement: The Company’s equity securities that are being
issued to you were acquired in the ordinary course of your business, and at
the
time the securities were issued to you, you did not have any agreement or
understanding, directly or indirectly, with any person to distribute the
securities.
Confirmed
____ Cannot
Confirm ____
If
“cannot confirm,” please give details below.
2.
Relationships
with the Company.
(a) Have
you
held any position or office with the Company, its predecessors or affiliates
within the last three years?
Yes
____ No
____
If
“yes,”
please give details below.
(b)
Have
you
had any other material relationship with the Company, its predecessors or
affiliates within the last three years?
Yes
____ No
____
If
“yes,”
please give details below.
3. Equity
Securities Owned By You.
(a) Please
state the number and type of equity securities of the Company owned (please
see
instructions and definitions on page 2) by you as of the date of this
Questionnaire, including securities which are exercisable or convertible into
equity securities within 60 days of the date of this Questionnaire.
|
Class
of
Security
|
Number
of Shares
Owned
|
(b) If
any
natural person or entity other than you holds or shares voting power or
dispositive power with respect to the Company’s equity securities listed in
response to Question 3(a), please provide the names of the natural persons
(including titles) or entities that hold or share such voting power or
dispositive power and indicate the number of the Company’s equity securities
covered thereby.
(c) With
respect to the Company’s equity securities listed in response to
Questions 3(a) and 3(b) for which an entity holds or shares voting power or
dispositive power, please provide the names of the natural persons (including
titles) or entities that control the entity or entities listed in response
to
Questions 3(a) and 3(b).
(d) Please
continue to list the natural persons or entities that control the entities
listed in response to Question 3(c) and the entities listed in response to
this Question 3(d) until you have listed only natural persons (including
titles) that control the applicable entity or entities.
(e) If
any
person or entity disclaims beneficial ownership of any of the equity securities
you have listed in response to Question 3, please so indicate:
EXAMPLE
RESPONSE
The
following is an example of a response to items 1 through 3. Please assume ABC
Corporation is the Selling Shareholder for purposes of this
example.
1.
Broker-Dealer
Status.
ABC
Corporation is an affiliate of a broker-dealer because its sole shareholder,
DEF
Corporation, is a broker-dealer.
2. Relationships
with the Company.
(a) ABC
Corporation has not held any position or office with the Company, its
predecessors or affiliates within the last three years.
(b)
ABC
Corporation provided consulting services to the Company in March 2002.
3. Equity
Securities Owned By You.
Question
3(a).
|
Class
of
Security
|
Number
of Shares
Owned
|
|
|
Common
Shares
|
100,000
|
|
|
Warrants
to purchase Common Shares
|
200,000
|
Question
3(b).
Not
applicable
Question
3(c).
ABC
Corporation is controlled by DEF Corporation, ABC Corporation’s sole
shareholder.
Question
3(d).
DEF
Corporation is controlled by XYZ Corporation, DEF Corporation’s sole
shareholder. XYZ Corporation is controlled by Xxxx Xxx, XYZ Corporation’s sole
shareholder and its President and Chief Executive Officer.
Question
3(e).
Xxxx
Xxx
disclaims beneficial ownership of the 100,000 Common Shares and the Warrants
to
purchase 200,000 Common Shares.
The
undersigned hereby acknowledges that the information contained herein is true
to
the best of his knowledge and will notify the Company immediately of any changes
in such information.
|
FOR
INDIVIDUALS:
|
||
|
__________________________________
|
||
|
Name
of Selling Shareholder [please print]
|
||
|
__________________________________
|
||
|
Signature
|
||
|
FOR
CORPORATIONS, PARTNERSHIPS OR TRUSTS:
|
||
|
__________________________________
|
||
|
Name
of Selling Shareholder [please print]
|
||
|
By:
|
_________________________________
|
|
|
Signature
|
||
|
Name:___________________________
|
||
|
[please
print]
|
||
|
Title:____________________________
|
||
|
[please
print]
|
||
