Exhibit 4.7
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
September 14, 2005 by and among (i) ATC Healthcare, Inc., a Delaware corporation
(the "Company"), (ii) each person who has executed a Subscription Agreement and
Letter of Investment Intent with the Company with respect to the purchase of
Convertible Notes (the "Notes") and accompanying Warrants to purchase shares of
Class A Common Stock (the "Warrants"), thereby accepting and joining in this
Agreement, whose subscription has been accepted by the Company (collectively,
the "Initial Investors" and each individually, an "Initial Investor") (the
acceptance of the subscription proceeds from one or more Initial Investors shall
be referred to as a "Closing"), and (iii) each person or entity that
subsequently becomes a party to this Agreement pursuant to, and in accordance
with, the provisions of Section 11 hereof (collectively, the "Investor Permitted
Transferees" and each individually an "Investor Permitted Transferee").
WHEREAS, the Company has agreed to issue and sell to the Initial Investors,
and the Initial Investors have agreed to purchase from the Company, Notes in the
aggregate principal amount of up to $1,250,000, together with accompanying
Warrants, all upon the terms and conditions set forth in those certain
Subscription Agreements and Letters of Investment Intent between the Company and
the Initial Investors (each, "Subscription Agreement" and collectively, the
"Subscription Agreements"); and
WHEREAS, in connection with the offering and purchase of the Notes and
Warrants pursuant to the Subscription Agreements, the Company has entered into a
Finder's Agreement with Bathgate Capital Partners LLC ("Finder") pursuant to
which, among other things, the Company has agreed to make certain commission
payments to Finder and to sell Finder certain warrants to purchase the Company's
Class A Common Stock (the "Finder's Warrants"), as more fully described in the
Finder's Agreement (for purposes of this Agreement, the terms "Warrant" and
"Warrants" as used herein shall be deemed to include the Warrants issued to the
Investors and the Finder's Warrants), and
WHEREAS, in connection with the execution and delivery of the Subscription
Agreements, the Company has agreed with the Initial Investors to provide them
with the rights set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
16. DEFINITIONS. The following terms shall have the meanings provided
therefor below:
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and all of the rules and regulations promulgated thereunder.
"Investors" shall mean, collectively, the Initial Investors and the
Investor Permitted Transferees; provided, however, that the term "Investors"
shall not include any of the Initial Investors or any Investor Permitted
Transferee that ceases to own or hold any Registrable Shares.
"Last Sale Price" shall mean the last sale price on the American Stock
Exchange, or if the Company's Common Stock is not traded on the American Stock
Exchange, the reported last sale price for the Company's Common Stock, as
furnished by the National Association of Securities Dealers, Inc., for the
applicable period.
"Majority Holders" shall mean, at the relevant time of reference
thereto, those Investors holding and/or having the right to acquire, as the case
may be, more than fifty percent (50%) of the Registrable Shares held by all of
the Investors.
"Penalty Warrant" shall mean those warrants described in paragraph
3(c) of this Agreement.
"Qualifying Holder" shall have the meaning ascribed thereto in Section
11 hereof.
"Registrable Shares" shall mean the shares of Class A Common Stock
purchased under the Notes and the shares of Class A Common Stock purchasable
upon the exercise of Warrants, and the shares of Class A Common Stock
purchasable upon the exercise of the Penalty Warrants; provided, however, that
such term shall not, after the Mandatory Registration Termination Date, include
any of such shares of Common Stock that become or have become eligible for
resale pursuant to Rule 144.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act
and any successor or substitute rule, law or provision.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and all of the rules and regulations promulgated thereunder.
17. EFFECTIVENESS; TERMINATION; DEFAULT.
(a) This Agreement shall become effective and legally binding with
respect to an Initial Investor only if a Closing with respect to a purchase of a
Note and Warrant by such Initial Investor occurs and only with respect to
Registrable Shares which have been purchased at a Closing by such Initial
Investor.
(b) The Company shall be required to use reasonable efforts to keep
the Registration Statement effective until such date that is the earlier of (i)
the date when all of the Registrable Shares registered thereunder shall have
been sold or (ii) the second (2nd) anniversary of the date the Registration
Statement is first declared effective.
(c) The Company shall be deemed to have committed a default under this
Agreement (a "Default") if the Company either (i) defaults in payment of the
Notes, or (ii) fails to file a registration statement, as provided in Section
3(a) of this Agreement, within thirty (30) days following the final closing of
the Investors' purchase of the Notes and Warrants under the Subscription
Agreements (the "Final Closing"), which Final Closing shall be deemed to have
occurred on September 19, 2005.
MANDATORY REGISTRATION.
(a) Within ten (10) business days of the Final Closing, the Company
will prepare and file with the SEC a registration statement on Form S-3 for the
purpose of registering under the Securities Act all of the Registrable Shares
for resale by, and for the account of, the Investors as selling stockholders
thereunder (the "Registration Statement"). The Registration Statement shall
permit the Investors to offer and sell, on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act, any or all of the Registrable
Shares. The Company agrees to use reasonable efforts to cause the Registration
Statement to become effective as soon as practicable.
(b) The offer and sale of the Registrable Shares pursuant to the
Registration Statement shall not be underwritten.
(c) In the event that a Default occurs as defined in Section 2(c)
above, the Company shall issue to each of the Investors one warrant to purchase
the Company's Class A Common Stock for each $0.35 of the principal face amount
of the Notes issued to the Investor by the Company (collectively, the "Penalty
Warrants"). The exercise price for the Penalty Warrants shall be equal to the
lower of (i) the thirty (30) day average last closing price immediately prior to
the day of default or (ii) Sixty Cents ($0.60) per share. Each Penalty Warrant
shall be in substantially the form as attached as Exhibit B hereto.
(d) In the event that the Registration Statement is not declared
effective by the SEC by January 31, 2006, then the Company shall be required to
pay to each Investor a penalty payment equal to Five percent (5%) of the total
principal face amount of the Notes issued to such Investor. If the Registration
Statement is not declared effective by the SEC by March 2, 2006, then the
Company shall be required to pay to each Investor an additional penalty payment
equal to Five percent (5%) of the total principal face amount of the Notes
issued to such Investor.
18. OBLIGATIONS OF THE COMPANY. In connection with the Company's
obligation under Section 3 hereof to file the Registration Statement with the
SEC and to use its best efforts to cause the Registration Statement to become
effective as soon as practicable, the Company shall, as expeditiously as
reasonably possible:
(a) Prepare and file with the SEC such amendments and supplements to
the Registration Statement and the prospectus used in connection therewith as
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Shares covered by the Registration
Statement;
(b) Furnish or otherwise make available to the Investors such number
of copies of a prospectus, including a preliminary prospectus, in conformity
with the requirements of the Securities Act, and such other documents
(including, without limitation, prospectus amendments and supplements as are
prepared by the Company in accordance with Section 4(a) above) as the Investors
may reasonably request in order to facilitate the disposition of such Investors'
Registrable Shares;
(c) Notify the Investors, at any time when a prospectus relating to
the Registration Statement is required to be delivered under the Securities Act,
of the happening of any event as a result of which the prospectus included in or
relating to the Registration Statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements therein not
misleading; and, thereafter, the Company will promptly prepare (and, when
completed, give notice to each Investor) a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Shares, such prospectus will not contain an untrue statement of a
material fact or omit to state any fact necessary to make the statements therein
not misleading; provided that upon such notification by the Company, the
Investors will not offer or sell Registrable Shares until the Company has
notified the Investors that it has prepared a supplement or amendment to such
prospectus and delivered copies of such supplement or amendment to the selling
Investors (it being understood and agreed by the Company that the foregoing
proviso shall in no way diminish or otherwise impair the Company's obligation to
promptly prepare a prospectus amendment or supplement as above provided in this
Section 4(c) and deliver copies of same as above provided in Section 4(b)
hereof); and
(d) Use commercially reasonable efforts to register and qualify the
Registrable Shares covered by the Registration Statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
appropriate in the opinion of the Company, provided that the Company shall not
be required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions, and provided further that (notwithstanding anything in this
Agreement to the contrary with respect to the bearing of expenses) if any
jurisdiction in which any of such Registrable Shares shall be qualified shall
require that expenses incurred in connection with the qualification therein of
any such Registrable Shares be borne by the selling Investors, then the selling
Investors shall, to the extent required by such jurisdiction, pay their pro rata
share of such qualification expenses.
19. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the Investors shall furnish to the Company such information regarding them and
the securities held by them as the Company shall reasonably request and as shall
be required in order to effect any registration by the Company pursuant to this
Agreement.
20. EXPENSES OF REGISTRATION. All expenses incurred in connection with
the registration of the Registrable Shares pursuant to this Agreement (excluding
underwriting, brokerage and other selling commissions and discounts), including
without limitation all registration and qualification and filing fees, printing,
and fees and disbursements of counsel for the Company, shall be borne by the
Company.
21. DELAY OF REGISTRATION. The Investors shall not take any action to
restrain, enjoin or otherwise delay any registration as the result of any
controversy which might arise with respect to the interpretation or
implementation of this Agreement.
22. INDEMNIFICATION.
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each selling Investor, any investment banking firm acting as an
underwriter for the selling Investors, any broker/dealer acting on behalf of any
selling Investors and each officer and director of such selling Investor, such
underwriter, such broker/dealer and each person, if any, who controls such
selling Investor, such underwriter or broker/dealer within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which they may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained in the Registration Statement, in any preliminary
prospectus or final prospectus relating thereto or in any amendments or
supplements to the Registration Statement or any such preliminary prospectus or
final prospectus, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading; and will reimburse such
selling Investor, such underwriter, broker/dealer or such officer, director or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 8(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, damage,
liability or action to the extent that it arises out of or is based upon an
untrue statement or alleged untrue statement or omission made in connection with
the Registration Statement, any preliminary prospectus or final prospectus
relating thereto or any amendments or supplements to the Registration Statement
or any such preliminary prospectus or final prospectus, in reliance upon and in
conformity with written information furnished expressly for use in connection
with the Registration Statement or any such preliminary prospectus or final
prospectus by the selling Investors, any underwriter for them or controlling
person with respect to them.
(b) To the extent permitted by law, each selling Investor will
severally and not jointly indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the Registration Statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, any investment banking firm acting as underwriter for the Company or the
selling Investors, or any broker/dealer acting on behalf of the Company or any
selling Investors, and all other selling Investors against any losses, claims,
damages or liabilities to which the Company or any such director, officer,
controlling person, underwriter, or broker/dealer or such other selling Investor
may become subject to, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement or any preliminary prospectus or final
prospectus, relating thereto or in any amendments or supplements to the
Registration Statement or any such preliminary prospectus or final prospectus,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent and only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, in any preliminary
prospectus or final prospectus relating thereto or in any amendments or
supplements to the Registration Statement or any such preliminary prospectus or
final prospectus, in reliance upon and in conformity with written information
furnished by the selling Investor expressly for use in connection with the
Registration Statement, or any preliminary prospectus or final prospectus; and
such selling Investor will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter, broker/dealer or other selling Investor in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided, however, that the liability of each selling Investor hereunder shall
be limited to the proceeds (net of underwriting discounts and commissions, if
any) received by such selling Investor from the sale of Registrable Shares
covered by the Registration Statement, and provided, further, however, that the
indemnity agreement contained in this Section 8(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of those selling Investor(s) against
which the request for indemnity is being made (which consent shall not be
unreasonably withheld).
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof
and the indemnifying party shall have the right to participate in and, to the
extent the indemnifying party desires, jointly with any other indemnifying party
similarly noticed, to assume at its expense the defense thereof with counsel
mutually satisfactory to the indemnifying parties with the consent of the
indemnified party which consent will not be unreasonably withheld, conditioned
or delayed. In the event that the indemnifying party assumes any such defense,
the indemnified party may participate in such defense with its own counsel and
at its own expense, provided, however, that the counsel for the indemnifying
party shall act as lead counsel in all matters pertaining to such defense or
settlement of such claim and the indemnifying party shall only pay for such
indemnified party's expenses for the period prior to the date of the
indemnifying party's participation in such defense. The failure to notify an
indemnifying party promptly of the commencement of any such action, if
prejudicial to his ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
8, but the omission so to notify the indemnifying party will not relieve him of
any liability which he may have to any indemnified party otherwise other than
under this Section 8.
(d) Notwithstanding anything to the contrary herein, the indemnifying
party shall not be entitled to settle any claim, suit or proceeding unless in
connection with such settlement the indemnified party receives an unconditional
release with respect to the subject matter of such claim, suit or proceeding and
such settlement does not contain any admission of fault by the indemnified
party.
23. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to the
Investors the benefits of Rule 144 and any other rule or regulation of the SEC
that may at any time permit the Investors to sell the Registrable Shares to the
public without registration, the Company agrees to use commercially reasonable
efforts: (i) to make and keep public information available, as those terms are
understood and defined in the General Instructions to Form S-3, or any successor
or substitute form, and in Rule 144, (ii) to file with the SEC in a timely
manner all reports and other documents required to be filed by an issuer of
securities registered under the Securities Act or the Exchange Act, (iii) as
long as any Investor owns any Warrants or Registrable Shares, to furnish in
writing upon such Investor's request a written statement by the Company that it
has complied with the reporting requirements of Rule 144 and of the Securities
Act and the Exchange Act, and to furnish to such Investor a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed by the Company as may be reasonably requested in availing
such Investor of any rule or regulation of the SEC permitting the selling of any
Registrable Shares without registration and (iv) undertake any additional
actions reasonably necessary to maintain the availability of the Registration
Statement or the use of Rule 144.
24. DEFERRAL AND LOCK-UP. Notwithstanding anything in this Agreement to
the contrary, if the Company shall furnish to the selling Investors a
certificate signed by the President or Chief Executive Officer of the Company
stating that the Board of Directors of the Company has made the good faith
determination (i) that continued use by the selling Investors of the
Registration Statement for purposes of effecting offers or sales of Registrable
Shares pursuant thereto would require, under the Securities Act, premature
disclosure in the Registration Statement (or the prospectus relating thereto) of
material, nonpublic information concerning the Company, its business or
prospects or any proposed material transaction involving the Company, (ii) that
such premature disclosure would be materially adverse to the Company, its
business or prospects or any such proposed material transaction or would make
the successful consummation by the Company of any such material transaction
significantly less likely and (iii) that it is therefore advisable to suspend
the use by the Investors of such Registration Statement (and the prospectus
relating thereto) for purposes of effecting offers or sales of Registrable
Shares pursuant thereto, then the right of the selling Investors to use the
Registration Statement (and the prospectus relating thereto) for purposes of
effecting offers or sales of Registrable Shares pursuant thereto shall be
suspended for a period (the "Suspension Period") of not more than 90 days after
delivery by the Company of the certificate referred to above in this Section 10.
During the Suspension Period, none of the Investors shall offer or sell any
Registrable Shares pursuant to or in reliance upon the Registration Statement
(or the prospectus relating thereto).
25. TRANSFER OF REGISTRATION RIGHTS. None of the rights of any Investor
under this Agreement shall be transferred or assigned to any person unless (i)
such person is a Qualifying Holder (as defined below), and (ii) such person
agrees to become a party to, and bound by, all of the terms and conditions of,
this Agreement by duly executing and delivering to the Company an Instrument of
Adherence in the form attached as Exhibit A hereto. For purposes of this Section
11, the term "Qualifying Holder" shall mean, with respect to any Investor, any
direct transferee from such Investor of at least 50% of those Registrable Shares
held or that may be acquired by such Investor. None of the rights of any
Investor under this Agreement shall be transferred or assigned to any Person
(including, without limitation, a Qualifying Holder) that acquires Registrable
Shares in the event that and to the extent that such Person is eligible to
resell such Registrable Shares pursuant to Rule 144(k) of the Securities Act (or
any successor or substitute rule) or may otherwise resell such Registrable
Shares pursuant to an exemption from the registration provisions of the
Securities Act.
26. ENTIRE AGREEMENT. This Agreement constitutes and contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and it also supersedes any and all prior negotiations, correspondence,
agreements or understandings with respect to the subject matter hereof.
27. MISCELLANEOUS.
(a) This Agreement may not be amended, modified or terminated, and no
rights or provisions may be waived, except with the written consent of the
Majority Holders and the Company.
(b) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, and shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors or assigns, provided that the terms and conditions
of Section 11 hereof are satisfied. This Agreement shall also be binding upon
and inure to the benefit of any transferee of any of the Warrants or the
Registrable Shares provided that the terms and conditions of Section 11 hereof
are satisfied. Notwithstanding anything in this Agreement to the contrary, if at
any time any Investor shall cease to own any Warrants or Registrable Shares, all
of such Investor's rights under this Agreement shall immediately terminate.
(c) (i) Any notices, reports or other correspondence (hereinafter
collectively referred to as "correspondence") required or permitted to be given
hereunder shall be sent by courier (overnight or same day) or telecopy or
delivered by hand to the party to whom such correspondence is required or
permitted to be given hereunder. The date of giving any notice shall be the date
of its actual receipt.
(ii) All correspondence to the Company shall be addressed in the
manner set forth in the Subscription Agreement.
(iii) All correspondence to any Investor shall be sent to such
Purchaser at the address set forth in the Subscription Agreement.
(d) Any entity may change the address to which correspondence to it is
to be addressed by notification as provided for herein.
(e) The parties acknowledge and agree that in the event of any breach
of this Agreement, remedies at law may be inadequate, and each of the parties
hereto shall be entitled to seek specific performance of the obligations of the
other parties hereto and such appropriate injunctive relief as may be granted by
a court of competent jurisdiction.
(f) This Agreement may be executed in a number of counterparts, all of
which together shall for all purposes constitute one Agreement, binding on all
the parties hereto notwithstanding that all such parties have not signed the
same counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date and year first above written.
ATC HEALTHCARE, INC.
By:
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Xxxxxx X. Xxxxxx
Senior Vice President/Chief Financial
Officer
EXHIBIT A
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Instrument of Adherence
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Reference is hereby made to that certain Registration Rights Agreement,
dated as of September 12 , 2005, among ATC Healthcare, Inc., a Delaware
corporation (the "Company"), the Initial Investors and the Investor Permitted
Transferees, as amended and in effect from time to time (the "Registration
Rights Agreement"). Capitalized terms used herein without definition shall have
the respective meanings ascribed thereto in the Registration Rights Agreement.
The undersigned, in order to become the owner or holder of ___________
shares of Class A Common Stock, or of warrant(s) to purchase shares of Class A
Common Stock, of the Company, hereby agrees that, from and after the date
hereof, the undersigned has become a party to the Registration Rights Agreement
in the capacity of an Investor Permitted Transferee, and is entitled to all of
the benefits under, and is subject to all of the obligations, restrictions and
limitations set forth in, the Registration Rights Agreement that are applicable
to Investor Permitted Transferees. This Instrument of Adherence shall take
effect and shall become a part of the Registration Rights Agreement immediately
upon execution.
Executed as of the date set forth below.
Signature:
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Name of Signatory:
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Title:
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Name of Investor (if not individual)
Accepted:
ATC HEALTHCARE, INC.
By:
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Name:
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Title:
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Date:
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EXHIBIT B
FORM OF PENALTY WARRANT
See Attached
