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EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of April
5, 2001 (the "CLOSING DATE"), is made by and among TEAMSTAFF INC., a New Jersey
corporation (the "COMPANY") and XXXXXXXXXX.XXX, INC., a Georgia corporation (the
"PURCHASER").
RECITALS
A. The Purchaser, the Company and TeamSub, Inc., a Georgia
corporation that is a wholly-owned subsidiary of the Company ("TEAMSUB"), are
parties to that certain Agreement and Plan of Merger dated as of March 6, 2001,
as amended (the "MERGER AGREEMENT"), wherein the Purchaser will merge with and
into TeamSub and become a wholly-owned subsidiary of the Company.
B. In connection with the Series A Preferred Stock Purchase
Agreement by and among the parties hereto of even date herewith (the "PURCHASE
AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions of the Purchase Agreement, to issue and sell to the Purchasers and
the Purchasers have agreed to purchase from the Company an aggregate of
3,500,000 shares of the Company's Series A Convertible Preferred Stock, par
value $0.01 per share (the "SERIES A PREFERRED STOCK"), which are convertible
into shares of the Company's common stock, par value $0.01 per share (the
"COMMON STOCK"), in accordance with the terms of the Certificate of
Designations, Preferences, Rights and Number of Shares of Series A Convertible
Preferred Stock authorizing, creating and designating the Series A Preferred
Stock (the "CERTIFICATE OF DESIGNATION").
C. To induce the Purchaser to execute and deliver the Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), and applicable state securities laws.
NOW, THEREFOR, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchaser
hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
a. "INVESTOR" means the Purchaser and any transferee or
assignee thereof about whom the Purchaser provides notice to the Company in
accordance with Section 9 herein and to whom a Purchaser assigns its rights
under this Agreement and who agrees in writing to become bound by the provisions
of this Agreement in accordance with Section 9 herein and any transferee or
assignee thereof to whom a transferee or assignee assigns its rights under this
Agreement and who agrees in writing to become bound by the provisions of this
Agreement in accordance with Section 9 herein. Any Person shall no longer be an
Investor if such Person no longer holds Registrable Securities or Series A
Preferred Stock.
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b. "PERSON" means a corporation, a limited liability
company, an association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a governmental
agency.
c. "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 Securities Act and pursuant
to Rule 415 under the Securities Act or any successor rule providing for
offering securities on a continuous or delayed basis ("RULE 415"), and the
declaration or ordering of effectiveness of such Registration Statement(s) by
the United States Securities and Exchange Commission (the "SEC").
d. "REGISTRABLE SECURITIES" means (i) the shares of Common
Stock issued or issuable upon conversion of the Series A Preferred Stock (such
Common Stock is referred to collectively as the "CONVERSION SHARES") and (ii)
any shares of capital stock issued or issuable with respect to the Conversion
Shares, as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitations on
conversions of the Series A Preferred Stock. For the purposes of this Agreement,
Registrable Securities will cease to be Registrable Securities, when (i) the
Registration Period (as defined below) is over, (ii) when they are sold pursuant
to a Registration Statement, or (iii) the Registrable Securities are proposed to
be sold or distributed by a Person not entitled to the registration rights
granted by this Agreement.
e. "REGISTRATION STATEMENT" means a registration statement
or registration statements of the Company filed under the Securities Act
covering the Registrable Securities.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Purchase Agreement and its
exhibits, schedules and attachments.
2. Registration.
a. Mandatory Registration. Provided the Series A Preferred
Stock is outstanding, upon the earlier of: (i) the termination of the Merger
Agreement (as defined therein); or (ii) September 30, 2001 (the "FILING
DEADLINE"), the Company shall immediately prepare and file with the SEC a
Registration Statement or Registration Statements (as necessary) on Form S-1,
Form S-2 or Form S-3 covering the resale of the Registrable Securities as
provided for in this Section 2a. The initial Registration Statement filed
hereunder shall cover not less than that number of shares of the Company's
Common Stock representing 19.9% of the total. In the event that the Company
files a Registration Statement hereunder on Form S-3 and Form S-3 thereafter
becomes unavailable for such registration, the Company shall immediately file
another registration statement (or if permissible convert such existing
registration statement on Form S-3) on such other form as is available for such
a registration, subject to the provisions of Section 2d. The Company shall use
its best efforts to cause any Registration Statement filed hereunder to be
declared effective by the SEC as soon as practicable after the filing thereof
but in no event later than the date which is seventy-five (75) days after the
Filing Date (the "EFFECTIVENESS DEADLINE"). Notwithstanding any other provision
herein, the Company shall have no liability
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hereunder for its failure to file with the SEC a Registration Statement by the
Filing Deadline, or to cause such Registration Statement to be declared
effective by the SEC by the Effectiveness Deadline, in the event the failure to
file a Registration Statement or to cause the effectiveness of such Registration
Statement, on or before such respective dates arises from the action or inaction
of any Investor, including any Investor's failure to comply with its obligation
pursuant to Section 5 herein (an "INVESTOR DELAY").
b. Allocation of Registrable Securities. In the event that
the Purchaser sells or otherwise transfers any Registrable Securities to another
party who becomes an Investor, each transferee Investor shall be allocated a pro
rata portion of the then remaining number of Registrable Securities included in
such Registration Statement for such transferor Investor. Any shares of Common
Stock included in a Registration Statement and which remain allocated to any
Person which ceases to hold any Registrable Securities covered by such
Registration Statement shall be allocated to the remaining Investors, pro rata
based on the number of Registrable Securities then held by such Investors that
are covered by such Registration Statement.
c. Legal Counsel. Subject to Section 6 hereof, the
Purchaser shall have the right to select one legal counsel ("LEGAL COUNSEL") to
review and, if applicable, comment on, the Registration Statement and any
amendments thereto pursuant to this Section 2. The Company shall reasonably
cooperate with Legal Counsel in connection with its review of the Registration
Statement.
d. Ineligibility for Form S-3. In the event that Form S-3
is not available for any registration of Registrable Securities hereunder, the
Company shall (i) register the sale of the Registrable Securities on another
appropriate form that is reasonably acceptable to the Purchaser 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.
e. Sufficient Number of Shares Registered. In the event the
number of shares available under a Registration Statement filed pursuant to
Section 2a is insufficient to cover all of the Registrable Securities required
to be covered by such Registration Statement, the Company shall amend the
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover 100% of the number
of such Registrable Securities 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 forty-five (45)
days after the necessity therefor arises. The Company shall use its best efforts
to cause such amendment and/or new Registration Statement to become effective as
soon as reasonably 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 Registrable Securities covered by such
Registration Statement is greater than the number of shares of Common Stock
available for resale under such Registration Statement. The calculation set
forth in the foregoing sentence shall be made without regard to any limitations
on the conversion of the Series A Preferred Stock and such calculation shall
assume that the Series A Preferred Stock
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are then convertible into shares of Common Stock at the then prevailing
Conversion Price (as defined in the Certificate of Designation).
f. Incidental or "Piggyback" Registration. If prior to the
Filing Deadline the Company proposes to file a Registration Statement under the
Securities Act with respect to an offering of Common Stock by the Company for
its own account (other than a Registration Statement on Form S-4 or S-8 or any
successor thereto) or for the account of any stockholder of the Company (an
"INCIDENTAL REGISTRATION"), then the Company shall give written notice of such
proposed filing to the Purchaser at least twenty (20) days before the
anticipated filing date, and such notice shall describe the proposed
registration and distribution and offer the Purchaser the opportunity to
register the number of Registrable Securities that it may request. The Company
shall use its reasonable best efforts (within twenty (20) days of the notice
provided for in the preceding sentence) to cause the managing underwriter or
underwriters in the case of a proposed firm commitment underwritten offering
(the "UNDERWRITER") to permit the Purchaser to participate in the Incidental
Registration to include its Registrable Securities in such offering on the same
terms and conditions as the securities of the Company or the account of such
other stockholder, as the case may be, included therein. In connection with any
Incidental Registration under this Section 2f involving an underwritten
offering, the Company shall not be required to include any Registrable
Securities in such underwritten offering unless the Purchaser accepts the terms
of the underwritten offering as agreed upon between the Company, such other
stockholders, if any, and the Underwriter, and then only in such quantity as the
Underwriter believes will not jeopardize the success of the offering by the
Company. If the Underwriter determines that the registration of all or part of
the Registrable Securities which the Investors have requested to be included
would materially adversely affect the success of such offering, then the Company
shall be required to include in such Incidental Registration, to the extent of
the amount that the Underwriter believes may be sold without causing such
adverse effect: first, all of the securities to be offered for the account of
the Company; second, to the Registrable Securities to be offered for the account
of the Purchaser pursuant to this Section 2f; and third, any other securities
requested to be included in such offering. Notwithstanding anything herein to
the contrary, no holder of Registrable Securities may participate in any
underwritten registration hereunder unless such holder (i) agrees to enter into
an underwriting agreement in customary form with the Underwriter or Underwriters
and (ii) accurately completes and executes in a timely manner all
questionnaires, powers of attorney, indemnities, custody agreements,
underwriting agreements, lock-up agreements and other documents reasonably
required under the terms of such underwriting agreements.
g. Liquidated Damages. The Company acknowledges that it is
of paramount importance to the Purchaser that any Investor is able to sell
Registrable Securities immediately following the time period specified herein
for effectiveness of a Registration Statement. Therefore, the Company agrees
that if, other than as a result of an Investor Delay, a Registration Statement
covering all of the Registrable Securities has not been declared effective by
the SEC on or prior to the Effectiveness Deadline, then the Company shall pay
the Purchaser, as liquidated damages and not as a penalty, an amount
("LIQUIDATED DAMAGES") equal to: (i) $100,000 if the Registration Statement is
declared effective within thirty (30) days after the Effectiveness Deadline;
(ii) an additional $150,000 if the Registration Statement is declared effective
between thirty (30) and sixty (60) days after the Effectiveness Deadline; and
(iii) an
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additional $400,000 if the Registration Statement is declared effective more
than sixty (60) days after the Effectiveness Deadline. All Liquidated Damages
that accrue hereunder shall be paid in cash to the Purchaser on the date that is
the earlier of fifteen (15) days after the date the Registration is Declared
effective or sixty (60) days after the Effectiveness Deadline. The foregoing
shall not be the exclusive remedy of the Purchaser in the event of a breach by
the Company of this Section 2g and the Purchaser and any other Investor shall
have all other remedies available to them in equity or at law.
h. Underwritten Offering.
(i) Timing of Demand Registrations. At any time
after the effective date of Registration Statement filed pursuant to Section 2a
hereof, the Purchaser, may request that the Company amend or convert the
Registration for the purpose of selling all or any portion of the Registrable
Securities through a firm commitment underwritten offering (a "DEMAND
REGISTRATION").
Upon receipt of a valid Demand Registration, the Company
shall (i) if required by the Securities Act and all relevant securities laws,
rules and regulations, file a post-effective amendment to the relevant
Registration Statement regarding the Registrable Securities, or such other
registration statements or filings as necessary to effect a Demand Registration,
(ii) within ten (10) Business Days give written notice to all holders of
Registrable Securities (other than the Purchaser) that they may exercise their
piggyback rights pursuant to Section 2f hereof, with respect to such
registration, and (iii) within ten (10) Business Days give written notice to all
holders of Common Stock (other than the Purchaser) or other securities
convertible or exercisable into Common Stock who hold piggyback rights. Subject
to this Section 2h, the Company shall thereafter use its reasonable best efforts
to effect the registration under the Securities Act of all Registrable
Securities requested to be included in such registration pursuant to the request
for Demand Registration and pursuant to notices that the Company receives,
within twenty (20) days after the date of its written notice, from Investors and
other holders of Common Stock or other securities convertible or exercisable
into Common Stock, that desire to exercise their piggyback rights.
(ii) Underwriter's Cutback. The Company may, and may
allow other holders of securities of the Company to, include securities in a
Demand Registration if, but only if, the managing underwriter concludes that
such inclusion will not interfere with the successful marketing of all the
Registrable Securities requested to be included in such Demand Registration. If,
in the good faith judgment of the managing underwriter, marketing factors
require a limitation of the number of Registrable Securities to be underwritten,
the number of shares of Registrable Securities to be included in such Demand
Registration shall be reduced in the following order until such inclusion, in
the good faith judgment of the managing underwriter, will not interfere with the
successful marketing of the remaining Registrable Securities: first, all
securities that are not contractually entitled to be included in such Demand
Registration shall be excluded; second, all securities that are entitled to be
included in such Demand Registration pursuant to contractual commitments made by
the Company other than pursuant to this Agreement shall be excluded; and third,
securities that are entitled to be included in such Demand Registration pursuant
to the exercise of piggyback rights shall be excluded, with such number of
excluded securities to be
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allocated on a pro rata basis among the holders of such piggyback rights in
accordance with the number of Registrable Securities then outstanding and held
by each such Investor.
(iii) Managing Underwriter. The managing underwriter
or other underwriters of any underwritten public offering covered by a Demand
Registration shall be selected by the Purchaser, and shall be reasonably
acceptable to the Board of Directors of the Company.
(iv) Underwriter's Agreement. Upon receipt of a valid
Demand Registration, the Company shall enter into and perform customary
agreements (including an underwriting agreement in customary form with the
managing underwriter) and take such other actions as are prudent and reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities, including, without limitation, causing its officer's to be
reasonably available for and to participate in "road shows," due diligence
inquiries and other information meetings as reasonably requested by the managing
underwriter.
3. [DELETED].
4. Company Obligations. At such time as the Company is obligated to
file a Registration Statement with the SEC pursuant to Section 2, the Company
will use its best 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:
a. The Company shall prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities on or before
the Filing Deadline and use its best efforts to cause such Registration
Statement relating to the Registrable Securities to become effective as soon as
possible after such filing and keep such Registration Statement effective
pursuant to Rule 415 at all times until the earlier of (i) the tenth anniversary
of the date hereof, or (ii) the date on which (A) the Investors shall have sold
or otherwise disposed of all the Registrable Securities and (B) none of the
outstanding Series A Preferred Stock are held by Persons entitled to the
registration rights granted by this Agreement (the "REGISTRATION PERIOD"). The
term "BEST EFFORTS" as used in the first sentence of this Section 4a shall mean,
among other things, that the Company shall submit to the SEC, within three (3)
business days after the Company learns that no review of a particular
Registration Statement will be made by the staff of the SEC or that the staff
has no further comments on the Registration Statement, as the case may be, a
request for acceleration of effectiveness of such Registration Statement to a
time and date not later than forty-eight (48) hours after the submission of such
request. Notwithstanding the foregoing, Investors which, individually or in the
aggregate with its affiliates, holds Registrable Securities representing more
than three percent (3%) of the total outstanding equity securities of the
Company shall, pursuant to, and limited by Section 3 above, continue to have the
right to require the Company to prepare an underwritten offering and shall
continue to have rights under Section 2f, and the term "Registrable Securities"
shall include the shares held by such 3% holder, despite the termination of the
Registration Period above, for all Registrable Securities it then holds.
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b. Subject to Section 4l, 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 Securities 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 Securities Act with
respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof as set forth in such
Registration Statement.
c. The Company shall (a) permit Legal Counsel to review and
comment upon a Registration Statement and all amendments and supplements thereto
at least five (5) days prior to their filing with the SEC and (b) not file any
document in a form to which Legal Counsel reasonably objects and has advised the
Company in writing of its objection and the basis for such objection, provided
that notwithstanding anything to the contrary in this Agreement, the Company
shall suffer no adverse consequence from any delay in the filing of a
Registration Statement if such delay is caused by any delay in review of or
comment on such Registration Statement by Legal Counsel. The Company shall
furnish to Legal Counsel, without charge, (i) copies of any correspondence with
the SEC or the Staff of the SEC to the Company or its representatives relating
to the effectiveness of the Registration Statement, (ii) promptly after the same
is prepared and filed with the SEC, one copy of any Registration Statement and
any amendment(s) thereto, including financial statements and schedules, and all
exhibits and (iii) upon the effectiveness of any Registration Statement, one
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto.
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 copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, and all exhibits, (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)
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 reasonable efforts to (i) register
and qualify the Registrable Securities covered by a Registration Statement under
such securities or "blue sky" laws of such jurisdictions in the United States as
Legal Counsel or any Investor reasonably requests, (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
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do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 4e, (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 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 threat of any proceeding for such purpose.
f. As promptly as practicable after becoming aware of such
event or development, the Company shall notify Legal Counsel and each Investor
in writing of the happening of any 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 light of the
circumstances under which they were made, not misleading (provided that such
notice shall not contain any material, non- public information), and 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 and each Investor (or such other number of copies as
Legal Counsel or such Investor may reasonably request). The Company shall also
promptly notify Legal Counsel and each Investor in writing (i) when a prospectus
or any prospectus supplement or post-effective amendment has been filed, and
when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to Legal
Counsel by overnight mail as promptly as possible), (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.
g. The Company shall use its reasonable best 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 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. At the reasonable request of the Purchaser and at the
Company's expense, the Company shall use its reasonable best efforts to furnish
to the Purchaser, on the date of the effectiveness of the Registration Statement
and thereafter from time to time upon any change or addition (including by way
of incorporation by reference) to the financial statements or financial
information included in the Registration Statement (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 Purchaser and
the Company and any underwriter 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 Purchaser and any underwriter.
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i. The Company shall use its best efforts either to cause
all the Registrable Securities covered by a Registration Statement to be listed
on each securities exchange or The Nasdaq National Market 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 The Nasdaq National Market. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this Section 4i.
j. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, to
facilitate the timely preparation and delivery of certificates 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 and registered in such names as the
Investors may request.
k. Within two (2) business days after a Registration
Statement which includes the 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) written confirmation that such Registration Statement has been
declared effective by the SEC.
l. Notwithstanding anything to the contrary herein, at any
time after 90 days after the applicable Registration Statement has been declared
effective by the SEC, the Company may delay the disclosure of material
non-public information concerning the Company 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 (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 15
consecutive days and during any consecutive 365 day period, such Grace Periods
shall not exceed an aggregate of 45 days (an "ALLOWABLE GRACE PERIOD"). 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 4f hereof shall not be applicable during the
period of any Allowable Grace Period. Upon expiration of the Grace Period, the
Company shall again be bound by the first sentence of Section 4f with respect to
the information giving rise thereto.
m. If requested by an Investor, the Company shall (i) as
soon as practicable 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
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terms of the offering of the Registrable Securities to be sold in such other
offering provided that such information is required to be included in the
Registration Statement by the Securities Act; (ii) as soon as practicable 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) as soon as practicable,
supplement or make amendments to any Registration Statement if reasonably
requested by an Investor of such Registrable Securities.
n. The Company shall use its reasonable best efforts to
cause the Registrable Securities covered by the 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 90 days after the
close of the period covered thereby, an earnings statement as contemplated by
Section 11(a) of the Securities Act (in form and in a manner complying with the
provisions of Rule 158 promulgated under the Securities Act). 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.
p. The Company shall make available for inspection by (i)
any Investor, (ii) Legal Counsel, (iii) one firm of accountants or other agents
retained by the Investors and (iv) any underwriter (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 requested 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 to
hold in strict confidence and shall not make any disclosure (except to an
Investor) or use of any Record or other information which the Company 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 Securities 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 or any other agreement of which the Inspector has knowledge. Each 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.
5. Obligations of the Investors.
a. At least seven (7) 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 if
such Investor elects to have any of such Investor's Registrable Securities
included in such Registration Statement. It shall be a condition precedent
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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 required to
effect 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. [DELETED]
d. To the extent requested by the Underwriter in the case
of an underwritten public offering, and if all of the Company's executive
officers, directors and holders in excess of five percent (5%) of its
outstanding capital stock execute agreements identical to those referred to in
this Section 5d, each Investor agrees not to effect any public sale or
distribution of any Registrable Securities or of any securities convertible into
or exchangeable or exercisable for such Registrable Securities, including a sale
pursuant to Rule 144 promulgated under the Securities Act, during the ninety
(90) day period or such shorter period, if any, mutually agreed upon by such
Investor and the Underwriter beginning on the effective date of such
Registration Statement (except as part of such registration).
e. If, however, an Investor has entered into a contract for
sale of its Registrable Securities prior to the Investor's receipt of a notice
from the Company of the happening of any event of the kind described in Section
4g, the first sentence of Section 4f, or Section 4l and for which the Investor
has not yet settled, the Company agrees to (i) cause its transfer agent to
deliver unlegended shares of Common Stock to a transferee of the Investor in
accordance with the terms of the purchase agreement in connection with any sale,
or (ii) be fully liable for any damages resulting from any breach by the
Investor in complying with this Section 5e.
6. Expenses of Registration. Except as otherwise set forth herein,
all reasonable expenses, other than underwriting discounts and brokerage
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 4, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees
shall be paid by the Company. In addition, the Company shall reimburse the
Investors for the reasonable fees and disbursements of Legal Counsel in
connection with registrations, filings or qualifications pursuant to Sections 2
and 4 of this Agreement.
7. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
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a. Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement and without limitation as to
time, indemnify and hold harmless each Investor, the officers, directors, agents
(including any underwriters retained by such Investor in connection with the
offer and sale of Registrable Securities), each Person who controls any such
Investor (within the meaning of Section 15 of the Securities Act or Section 20
of the Securities Exchange Act of 1934, as amended, (the "EXCHANGE ACT")) and
the officers, directors, agents and employees of each such controlling Person,
to the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable costs of preparation and attorneys' fees) and expenses (collectively,
"LOSSES"), that arise out of or are based upon (x) any untrue statement of a
material fact or alleged untrue statement of material fact contained in the
Registration Statement, any prospectus, or any form of prospectus or amendment
or supplement thereto, or (y) any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (z) any violation or alleged violation by the Investor (or
its underwriter) of the prospectus delivery requirements of the Securities Act.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 7(a): (w) shall not apply to the extent, but
only to the extent, that such untrue statements or omissions are based solely
upon information regarding such Investor furnished in writing to the Company by
or on behalf of such Investor expressly for use in any Registration Statement,
prospectus or any amendment or supplement thereto, which information was
reasonably relied on by the Company for use therein or to the extent that such
information relates to such Investor or such Investor's or Underwriter's
proposed method of distribution of Registrable Securities and was reviewed and
approved by such Investor or Underwriter for use in the Registration Statement,
such prospectus or such form of prospectus or in any amendment or supplement
thereto; (x) with respect to any preliminary prospectus, shall not inure to the
benefit of any such Investor, Underwriter or any related Indemnified Persons
from whom the Person asserting any such Losses purchased the Registrable
Securities that are the subject thereof (or to the benefit of any Person
controlling such Person) if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected in the prospectus, as then
amended or supplemented, if such prospectus was timely made available by the
Company pursuant to Section 4d hereof; (y) shall not be available to the extent
such Losses are based on a failure of an Investor to deliver or to cause to be
delivered the prospectus made available by the Company; and (z) shall not apply
to amounts paid in settlement of any losses, claims, damages, liabilities, costs
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld.
b. Indemnification by Investors. Each Investor shall,
severally and not jointly, indemnify and hold harmless the Company, the
directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses to the extent they arise out of or are based upon (x) any
untrue statement of a material fact or alleged untrue statement of material fact
contained in the Registration Statement, any prospectus, or any form of
prospectus or amendment or supplement thereto, or (y) any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (z) any violation or alleged violation
by the Investor (or its
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underwriter) of the prospectus delivery requirements of the Securities Act,
including, without limitation, Losses arising out of the failure to deliver, or
to cause to be delivered, or alleged failure to deliver or cause to be delivered
any amendments or supplements to the prospectus or supplement, if such amendment
or supplement was timely made available to such Investor; provided, however,
that the Investor shall be liable under this Section 7b to the extent, but only
to the extent, that such untrue statement or omission is made in reliance upon
or results in conformity with any information furnished in writing by such
Investor to the Company specifically for use in connection with the Registration
Statement or such prospectus or any amendment or supplement thereto, or to the
extent that such information relates to such Investor or such Investor's
proposed method of distribution of Registrable Securities and was reviewed and
approved by such Investor expressly for use in the Registration Statement, such
prospectus or such form of prospectus or any amendment or supplement thereto;
provided, further that the Investor shall be liable under this Section 7(b) for
only that amount of a claim or Losses as does not exceed the net proceeds to
such Investor as result of the sale of Registrable Securities pursuant to such
Registration Statement.
c. Conduct of Indemnification Proceedings.
(i) If any proceeding shall be brought or asserted
against any Person entitled to indemnity hereunder (an "INDEMNIFIED PARTY"),
such Indemnified Party promptly shall notify the Person from whom indemnity is
sought (the "INDEMNIFYING PARTY") in writing promptly after receipt by the
Indemnified Party of notice of such proceeding, and the Indemnifying Party shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees and expenses
incurred in connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party
of its obligations or liabilities pursuant to this Agreement, except (and only)
to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have proximately and adversely prejudiced the
Indemnifying Party or the defense of such proceeding or is shown to be the
proximate cause of additional Losses.
(ii) An Indemnified Party shall have the right to
employ separate counsel in any such proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
to pay such fees and expenses; or (2) the Indemnifying Party shall have failed
promptly to assume the defense of such proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such proceeding; or (3)
the named parties to any such proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable expenses of such counsel
shall be at the expense of the Indemnifying Party). Notwithstanding the
foregoing, in no event shall an Indemnifying Party be required to pay the
expenses of more than one (1) separate counsel. The Indemnifying Party shall not
be
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liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such proceeding.
d. Contribution. If a claim for indemnification under
Section 7a or 7b is unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 7c, any reasonable attorneys' or other fees or expenses incurred by
such party in connection with any proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification provided for
in this Section 7 was available to such party in accordance with its terms. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 7d were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 7d, no Investor shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by the Investor from the sale of the Registrable
Securities subject to the proceeding exceeds the amount of any damages that the
Investor has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
e. Fees and Expenses - Indemnification. All fees and
expenses of the Indemnified Party (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such
proceeding in a manner not inconsistent with this Section 7) shall be paid to
the Indemnified Party, as incurred, within ten (10) business days after written
notice thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder); provided, however, this Section 7e shall not apply
if
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there is a bona fide dispute between the Indemnifying Party and the Indemnified
Party as to the Indemnified Party's right to indemnification in the instance in
question.
f. Cumulative. The indemnity and contribution agreements
contained in this Section 7 are in addition to any liability that the
Indemnifying Parties may have to the Indemnified Parties.
8. Reports Under the Securities Act and the Exchange Act. With a
view to making available to the Investors the benefits of Rule 144 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, the
Company agrees to:
a. file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act so long as the Company remains subject to such requirements and the
filing of such reports and other documents is required for the applicable
provisions of Rule 144; and
b. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of the Exchange Act
or, if applicable, that there is publicly available the information concerning
the Company described in Rule 144(C)(2), (ii) unless available on the XXXXX
system, a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the investors to sell such
securities pursuant to Rule 144 without registration.
9. Assignment of Registration Rights. The rights under this
Agreement shall be assignable by the Purchaser or any Investor to any transferee
of all or any portion of 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 Securities Act and
applicable state securities laws; (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; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Purchase Agreement.
Notwithstanding the foregoing, in no event will the Registrable Securities or
the rights hereunder be transferable prior to the Filing Deadline.
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 Purchaser. Any amendment or waiver
effected in accordance with this Section 10 shall be
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binding upon each Investor and the Company. No such amendment 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 any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.
11. Miscellaneous.
a. 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 the registered owner of such Registrable
Securities.
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); or (iii) one (1) business day after deposit
with a nationally recognized overnight delivery service, 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:
TeamStaff, Inc.
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
With copies to:
Xxxxxxxxx & XxXxxxx LLP
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
If to the Purchaser:
XxxxxxXxxx.xxx, Inc.
Xxxxx 000
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
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With copies to:
Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P.
1600 Atlanta Financial Center
0000 Xxxxxxxxx Xxxx X.X.
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxx X. Xxxxxx, Esq.
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 containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a nationally recognized overnight delivery 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. This Agreement shall be governed by the laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. 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 might have, and agrees not to request, a jury trial for the
adjudication of any dispute hereunder of in connection herewith or arising out
of this Agreement or any transaction contemplated hereby.
e. This Agreement and the Purchase Agreement are 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
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
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.
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h. This Agreement may be executed in identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.
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 the 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. 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.
k. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, it being intended that all
of the rights and privileges of the Investors shall be enforceable to the
fullest extent permitted by law.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY:
TEAMSTAFF, INC.
By:
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Name:
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Title:
------------------------------------------
PURCHASER:
XXXXXXXXXX.XXX, INC.
By:
---------------------------------------------
Name:
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Title:
------------------------------------------
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