EXHIBIT 10.2
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION, UNLESS THE COMPANY IS REASONABLY SATISFIED
THAT THE PROPOSED SALE OR TRANSFER IS EXEMPT FROM SUCH REGISTRATION
REQUIREMENTS.
WARRANT TO PURCHASE SHARES
OF
CLASS A COMMON STOCK
Void after March 5, 2012
THIS IS TO CERTIFY that, as of this 5th day of March, 2007, for value
received and subject to the provisions hereinafter set forth,
[___________________] "PURCHASER"), is entitled to purchase from ATC Healthcare,
Inc., a Delaware corporation (the "COMPANY"), at any time from the date hereof
to and including March 5, 2012 (the "EXPIRATION DATE"), at a price initially
equal to Forty-five Cents ($0.45) per share (the "WARRANT CALCULATION PRICE"),
[_______________]) (the "WARRANT SHARES") shares of the Class A Common Stock of
the Company (the "COMMON STOCK").
The aggregate price for the shares of Common Stock purchasable
hereunder shall be equal to the Warrant Calculation Price multiplied by the
number of shares purchasable hereunder. Such aggregate price is herein sometimes
referred to as the "AGGREGATE WARRANT PRICE". The Warrant Calculation Price per
share is, however, subject to adjustment as hereinafter provided (such price, or
such price as last adjusted, as the case may be, being herein referred to as the
"PER SHARE WARRANT PRICE"). The number of Warrant Shares is likewise subject to
adjustment as hereinafter provided. Defined terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Common Stock and Warrant
Purchase Agreement dated March 5, 2007 among the Company, the Purchaser and the
other purchasers signatory thereto (the "PURCHASE AGREEMENT").
1. EXERCISE OF WARRANT.
(a) Subject to the conditions hereinafter set forth, this Warrant may
be exercised in whole or in part from time to time, by the holder hereof, by
delivery of a written notice in the form at the end hereof (the "EXERCISE
NOTICE") via facsimile to the principal office of the Company in Lake Success,
New York or at such other office as the Company may designate by written notice
to the holder hereof within the above-mentioned period and, at the election of
the holder, either by paying to the Company the Aggregate Warrant Price (or the
proportionate part thereof if exercised in part) for the shares so purchased in
current funds, in which case payment shall be made in cash, by wire transfer, or
by certified or official bank check as hereinafter set forth. The holder shall
not be required to deliver the original Warrant in order to effect an exercise
of the Warrant.
(b) CASHLESS EXERCISE. If at any time after one year from the Closing
there is no effective Registration Statement registering, or no current
prospectus available for, the resale of the Common Stock underlying this Warrant
by the Purchaser, then this Warrant may also be exercised at such time by means
of a "cashless exercise" in which the Purchaser shall be entitled to receive a
certificate for the number of shares of Common Stock equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
(A) = the VWAP on the Trading Day immediately preceding the
date of such election;
(B) = the Warrant Calculation Price of this Warrant, as
adjusted; and
(X) = the number of shares of Common Stock issuable upon
exercise of this Warrant in accordance with the terms
of this Warrant by means of a cash exercise rather
than a cashless exercise.
(c) EXERCISE LIMITATIONS.
i. HOLDER'S RESTRICTIONS. The Company shall not effect any
exercise of this Warrant, and a Purchaser shall not have the
right to exercise any portion of this Warrant, pursuant to
Section 1 or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the
applicable Exercise Notice, such Purchaser (together with
such Purchaser's Affiliates, and any other person or entity
acting as a group together with such Purchaser or any of
such Purchaser's Affiliates), would beneficially own in
excess of the Beneficial Ownership Limitation (as defined
below). For purposes of the foregoing sentence, the number
of shares of Common Stock beneficially owned by such
Purchaser and its Affiliates shall include the number of
shares of Common Stock issuable upon exercise of this
Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock
which would be issuable upon (A) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by
such Purchaser or any of its Affiliates and (B) exercise or
conversion of the unexercised or nonconverted portion of any
other securities of the Company (including, without
limitation, any other securities of the Company exercisable,
convertible or exchangeable for shares of Common Stock)
subject to a limitation on conversion or exercise analogous
to the limitation contained herein beneficially owned by
such Purchaser or any of its Affiliates. Except as set forth
in the preceding sentence, for purposes of this Section
1(c)(i), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the
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rules and regulations promulgated thereunder, it being
acknowledged by the Purchaser that the Company is not
representing to such Purchaser that such calculation is in
compliance with Section 13(d) of the Exchange Act and such
Purchaser is solely responsible for any schedules required
to be filed in accordance therewith. To the extent that the
limitation contained in this Section 1(c)(i) applies, the
determination of whether this Warrant is exercisable (in
relation to other securities owned by such Purchaser
together with any Affiliates) and of which portion of this
Warrant is exercisable shall be in the sole discretion of
the Purchaser, and the submission of an Exercise Notice
shall be deemed to be the Purchaser's determination of
whether this Warrant is exercisable (in relation to other
securities owned by such Purchaser together with any
Affiliates) and of which portion of this Warrant is
exercisable, in each case subject the Beneficial Ownership
Limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination. In
addition, a determination as to any group status as
contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this
Section 1(c)(i), in determining the number of outstanding
shares of Common Stock, a Purchaser may rely on the number
of outstanding shares of Common Stock as reflected in (x)
the Company's most recent Form 10- or Form 10-K, as the case
may be, (y) a more recent public announcement by the Company
or (z) any other notice by the Company or the Company's
Transfer Agent setting forth the number of shares of Common
Stock outstanding. Upon the written or oral request of a
Purchaser, the Company shall within two Trading Days confirm
orally and in writing to such Purchaser the number of shares
of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of
the Company, including this Warrant, by such Purchaser or
its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The
"BENEFICIAL OWNERSHIP LIMITATION" shall be 9.99% of the
number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The Beneficial
Ownership Limitation may not be waived by the Purchaser. The
provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity
with the terms of this Section 1(c)(i) to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of this Warrant.
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ii. ISSUANCE RESTRICTIONS. If the Company has not obtained
Shareholder Approval, then the Company may not issue upon
exercise of this Warrant a number of shares of Common Stock,
which, when aggregated with any shares of Common Stock
issued (A) pursuant to the Purchase Agreement, (B) upon
prior exercise of this or any other Warrant issued pursuant
to the Purchase Agreement and (C) pursuant to any warrants
issued to any registered broker-dealer as a fee in
connection with the issuance of Securities pursuant to the
Purchase Agreement, would exceed ______________(1), subject
to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of the
Purchase Agreement (such number of shares, the "ISSUABLE
MAXIMUM"). The Purchaser and the holders of the other
Warrants issued pursuant to the Purchase Agreement shall be
entitled to a portion of the Issuable Maximum equal to the
quotient obtained by dividing (x) such Purchaser's original
Subscription Amount by (y) the aggregate original
Subscription Amount of all holders pursuant to the Purchase
Agreement. In addition, the Purchaser may allocate its
pro-rata portion of the Issuable Maximum among Warrants held
by it in its sole discretion. Such portion shall be adjusted
upward ratably in the event any purchaser (or its successors
or assigns) that was issued warrants pursuant to the
Purchase Agreement no longer holds any Warrants and the
amount of shares issued to such purchaser pursuant to its
Warrants was less than such purchaser's pro-rata share of
the Issuable Maximum. For avoidance of doubt, unless and
until any required Shareholder Approval is obtained and
effective, warrants issued to any registered broker-dealer
as a fee in connection with the Securities issued pursuant
to the Purchase Agreement as described in (C) above shall
provide that such warrants shall not be allocated any
portion of the Issuable Maximum and shall be unexercisable
unless and until such Shareholder Approval is obtained and
effective.
(d) MECHANICS OF EXERCISE.
i. DELIVERY OF CERTIFICATES UPON EXERCISE. Certificates for
shares purchased hereunder shall be transmitted by the
transfer agent of the Company to the Purchaser by crediting
the account of the Purchaser's prime broker with the DTC
through its Deposit Withdrawal Agent Commission ("DWAC")
system if the Company is a participant in such system and
there is an effective Registration Statement permitting the
resale of the Warrant Shares by the Purchaser, and otherwise
by physical delivery to the address specified by the
Purchaser in the Exercise Notice within 3 Trading Days from
the delivery to the Company of the Exercise Notice,
surrender of this Warrant (if required) and payment of the
aggregate Warrant Calculation Price as set forth above
("WARRANT SHARE DELIVERY DATE"). This Warrant shall be
deemed to have been exercised on the date the Warrant
Calculation Price is received by the Company (or the date
the Exercise Notice is received by the Company in the case
of a "cashless exercise" of this Warrant). The Warrant
Shares shall be deemed to have been issued, and the
Purchaser or any other person so designated to be named
therein shall be deemed to have become a holder of record of
such shares for all purposes, as of the date the Warrant has
been exercised by payment to the Company of the Exercise
Price (or by cashless exercise, if permitted) and all taxes
required to be paid by the Purchaser, if any, pursuant to
Section 8 prior to the issuance of such shares, have been
paid.
-------------------------
(1) 19.999% of the number of shares of Common Stock outstanding
on the Trading Day immediately preceding the Closing Date
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ii. DELIVERY OF NEW WARRANTS UPON EXERCISE. If this Warrant is
exercised in respect of fewer than all of the shares of
Common Stock at the time purchasable hereunder, the holder
hereof shall be entitled to receive a new Warrant covering
the number of shares in respect of which this Warrant shall
not have been exercised and setting forth the Aggregate
Warrant Price applicable to such shares, which new Warrant
shall in all other respects be identical with this Warrant.
Notwithstanding anything to the contrary set forth herein,
this Warrant or any new Warrant issued as the result of a
partial exercise hereof and all rights and options hereunder
or thereunder shall expire and shall be wholly null and void
to the extent this Warrant or such new warrant is not
exercised before it expires at the close of business on the
Expiration Date.
iii RESCISSION RIGHTS. If the Company fails to cause its
transfer agent to transmit to the Purchaser a certificate or
certificates representing the Warrant Shares pursuant to
Section 1(d)(i) by the Warrant Share Delivery Date, then the
Purchaser will have the right to rescind such exercise.
iv. BUY-IN. If within 3 Trading Days after the Company's receipt
of the facsimile copy of an Exercise Notice the Company
shall fail to issue and deliver a certificate to the holder
and register such shares of Common Stock on the Company's
share register or credit the holder's balance account with
DTC for the number of shares of Common Stock to which the
holder is entitled upon the holder's exercise hereunder, and
if after such Warrant Share Delivery date the Purchaser is
required by its broker to purchase (in an open market
transaction or otherwise) or the Purchaser's brokerage firm
otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Purchaser of the Warrant
Shares which the Purchaser anticipated receiving upon such
exercise (a "BUY-IN"), then the Company shall (1) pay in
cash to the Purchaser the amount by which (x) the
Purchaser's total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A)
the number of Warrant Shares that the Company was required
to deliver to the Purchaser in connection with the exercise
at issue times (B) the price at which the sell order giving
rise to such purchase obligation was executed, and (2) at
the option of the Purchaser, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for
which such exercise was not honored or deliver to the
Purchaser the number of shares of Common Stock that would
have been issued had the Company timely complied with its
exercise and delivery obligations hereunder. For example, if
the Purchaser purchases Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to an
attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation
of $10,000, under clause (1) of the immediately preceding
sentence the Company shall be required to pay the Purchaser
$1,000. The Purchaser shall provide the Company written
notice indicating the amounts payable to the Purchaser in
respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss. Nothing herein shall
limit a Purchaser's right to pursue any other remedies
available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to
timely deliver certificates representing shares of Common
Stock upon exercise of the Warrant as required pursuant to
the terms hereof.
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2. RESERVATION OF STOCK. The Company covenants and agrees that during
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized, and in reserve, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant; provided, however, in the event of an adjustment in
the number of Warrant Shares issuable hereunder pursuant to Section 3.1 that
results in the Company having an insufficient number of authorized, but unissued
shares of Common Stock available following such adjustment to reserve hereunder,
the Company shall as soon as practicable take such action as is required to
increase the Company's authorized shares of Common Stock in order to provide a
sufficient number of such shares.
3. PROTECTION AGAINST DILUTION.
3.1 CERTAIN SALES OF STOCK. In case the Company or any
Subsidiary thereof shall issue sell or grant any option to purchase,
or sell or grant any right to reprice, or otherwise dispose of or
issue (or announce any offer, sale, grant or any option to purchase or
other disposition) any Common Stock or securities exercisable,
exchangeable or convertible into shares of Common Stock ("Common Stock
Equivalents") entitling any person to acquire shares of Common Stock,
at an effective price per share less than the then Warrant Calculation
Price (such lower price, the "BASE SHARE PRICE" and such issuances
collectively, a "DILUTIVE ISSUANCE") (if the holder of the Common
Stock or Common Stock Equivalents so issued shall at any time, whether
by operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to
warrants, options or rights per share which are issued in connection
with such issuance, be entitled to receive shares of Common Stock at
an effective price per share which is less than the Warrant
Calculation Price, such issuance shall be deemed to have occurred for
less than the Warrant Calculation Price on such date of the Dilutive
Issuance), then the Warrant Calculation Price shall be reduced and
only reduced to equal the Base Share Price. Such adjustment shall be
made successively whenever any such event shall occur. For the
purposes of this paragraph, the aggregate of the offering price
received or to be received by the Company shall include the minimum
aggregate amount (if any) payable upon exercise or conversion of any
such Common Stock Equivalents. The value of any consideration received
or to be received by the Company, if other than cash, is to be
determined by the Board of Directors in good faith. The Company shall
notify the Purchaser in writing, no later than the Trading Day
following the issuance of any Common Stock or Common Stock Equivalents
subject to this Section 3.1, indicating therein the applicable
issuance price, or applicable reset price, exchange price, conversion
price and other pricing terms (such notice the "DILUTIVE ISSUANCE
NOTICE"). For purposes of clarification, whether or not the Company
provides a Dilutive Issuance Notice pursuant to this Section 3.1, upon
the occurrence of any Dilutive Issuance, after the date of such
Dilutive Issuance the Purchaser is entitled to receive a number of
Warrant Shares based upon the Base Share Price regardless of whether
the Purchaser accurately refers to the Base Share Price in the
Exercise Notice.
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3.2 STOCK SPLITS AND DIVIDENDS. If outstanding shares of the
Company's Common Stock shall be subdivided into a greater number of
shares or a dividend in Common Stock shall be paid in respect of
Stock, the Per Share Warrant Price in effect immediately prior to such
subdivision or at the record date of such dividend shall
simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately
reduced. If outstanding shares of Common Stock shall be combined into
a smaller number of shares, the Per Share Warrant Price in effect
immediately prior to such combination shall, simultaneously with the
effectiveness of such combination, be proportionately increased. When
any adjustment is required to be made in the Per Share Warrant Price
under this Section, the number of shares of Common Stock purchasable
upon the exercise of this Warrant shall be changed to the number
determined by dividing (i) an amount equal to the number of shares
issuable upon the exercise of this Warrant immediately prior to such
adjustment, multiplied by the Per Share Warrant Price in effect
immediately prior to such adjustment, by (ii) the Per Share Warrant
Price in effect immediately after such adjustment.
3.3 RECLASSIFICATION, ETC. In case of any reclassification
or change of the outstanding securities of the Company or of any
reorganization of the Company (or any other corporation the stock or
securities of which are at the time receivable upon the exercise of
this Warrant) or any similar corporate reorganization on or after the
date hereof that is not a Fundamental Transaction (as defined herein),
then and in each such case the holder of this Warrant, upon the
exercise hereof at any time after the consummation of such
reclassification, change, reorganization, merger or conveyance, shall
be entitled to receive, in lieu of the stock or other securities and
property receivable upon the exercise hereof prior to such
consummation, the stock or other securities or property to which such
holder would have been entitled upon such consummation if such holder
had exercised this Warrant immediately prior thereto, all subject to
further adjustment as provided in Section 3.2; and in each such case,
the terms of this Section 3 shall be applicable to the shares of stock
or other securities properly receivable upon the exercise of this
Warrant after such consummation.
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3.4 EXEMPTED ISSUANCES. Notwithstanding any other provision
herein, the foregoing provisions of Section 3.1 shall not apply to,
and no adjustment shall be made to the Per Share Warrant Price for:
(a) shares of Common Stock or options to employees, officers
or directors of the Company pursuant to any stock or option
plan duly adopted for such purpose by a majority of the
non-employee members of the Board of Directors of the Company
or a majority of the members of a committee of non-employee
directors established,
(b) securities upon the exercise or exchange of or conversion
of any securities issued hereunder and/or other securities
exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of
such securities or to decrease the exercise, exchange or
conversion price of such securities, and
(c) securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested
directors of the Company, provided that any such issuance
shall only be to a person which is, itself or through its
subsidiaries, an operating company in a business synergistic
with the business of the Company and in which the Company
receives benefits in addition to the investment of funds, but
shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in
securities.
3.5 SUBSEQUENT RIGHTS OFFERINGS. If the Company, at any time
while the Warrant is outstanding, shall issue rights, options or
warrants to all holders of Common Stock (and not to Purchaser)
entitling them to subscribe for or purchase shares of Common Stock at
a price per share less than the VWAP at the record date mentioned
below, then the Warrant Calculation Price shall be multiplied by a
fraction, of which the denominator shall be the number of shares of
the Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock offered
for subscription or purchase, and of which the numerator shall be the
number of shares of the Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of shares which
the aggregate offering price of the total number of shares so offered
(assuming receipt by the Company in full of all consideration payable
upon exercise of such rights, options or warrants) would purchase at
such VWAP. Such adjustment shall be made whenever such rights or
warrants are issued, and shall become effective immediately after the
record date for the determination of stockholders entitled to receive
such rights, options or warrants.
3.6 PRO RATA DISTRIBUTIONS. If the Company, at any time
while this Warrant is outstanding, shall distribute to all holders of
Common Stock (and not to the holder of this Warrant) evidences of its
indebtedness or assets (including cash and cash dividends) or rights
or warrants to subscribe for or purchase any security other than the
Common Stock (which shall be subject to Section 3.1), then in each
such case the Warrant Calculation Price shall be adjusted by
multiplying the Warrant Calculation Price in effect immediately prior
to the record date fixed for determination of stockholders entitled to
receive such distribution by a fraction of which the denominator shall
be the VWAP determined as of the record date mentioned above, and of
which the numerator shall be such VWAP on such record date less the
then per share fair market value at such record date of the portion of
such assets or evidence of indebtedness so distributed applicable to
one outstanding share of the Common Stock as determined by the Board
of Directors in good faith. In either case the adjustments shall be
described in a statement provided to the Purchaser of the portion of
assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date mentioned
above.
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3.7 FUNDAMENTAL TRANSACTION. If, at any time while this
Warrant is outstanding, (A) the Company effects any merger or
consolidation of the Company with or into another Person, (B) the
Company effects any sale of all or substantially all of its assets in
one or a series of related transactions, (C) any tender offer or
exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (D)
the Company effects any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or
property (each "FUNDAMENTAL TRANSACTION"), then, upon any subsequent
exercise of this Warrant, the Purchaser shall have the right to
receive, for each Warrant Share that would have been issuable upon
such exercise immediately prior to the occurrence of such Fundamental
Transaction, the number of shares of Common Stock of the successor or
acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the "ALTERNATE
CONSIDERATION") receivable as a result of such merger, consolidation
or disposition of assets by a holder of the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to such
event. For purposes of any such exercise, the determination of the
Warrant Calculation Price shall be appropriately adjusted to apply to
such Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Company shall apportion the Warrant
Calculation Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a
Fundamental Transaction, then the Purchaser shall be given the same
choice as to the Alternate Consideration it receives upon any exercise
of this Warrant following such Fundamental Transaction. To the extent
necessary to effectuate the foregoing provisions, any successor to the
Company or surviving entity in such Fundamental Transaction shall
issue to the Purchaser a new warrant consistent with the foregoing
provisions and evidencing the Purchaser's right to exercise such
warrant into Alternate Consideration. The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include
terms requiring any such successor or surviving entity to comply with
the provisions of this Section 3.7 and insuring that this Warrant (or
any such replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental Transaction.
Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction that is (1) an all cash transaction, (2) a
"Rule 13e-3 transaction" as defined in Rule 13e-3 under the Securities
Exchange Act of 1934, as amended, or (3) a Fundamental Transaction
involving a person or entity not traded on a national securities
exchange, the Nasdaq Global Select Market, the Nasdaq Global Market,
or the Nasdaq Capital Market, the Company or any successor entity
shall pay at the Purchaser's option, exercisable at any time
concurrently with or within 30 days after the consummation of the
Fundamental Transaction, an amount of cash equal to the value of this
Warrant as determined in accordance with the Black-Scholes option
pricing formula using an expected volatility equal to the 100 day
historical price volatility obtained from the HVT function on
Bloomberg L.P. as of the trading day immediately prior to the public
announcement of the Fundamental Transaction.
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3.8 CALCULATIONS. All calculations under this Section 3
shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 3, the number of
shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock
(excluding treasury shares, if any) issued and outstanding.
3.9 NOTICE TO PURCHASER. If (A) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common
Stock; (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock; (C) the Company shall
authorize the granting to all holders of the Common Stock rights or
warrants to subscribe for or purchase any shares of capital stock of
any class or of any rights; (D) the approval of any stockholders of
the Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the Company
is a party, any sale or transfer of all or substantially all of the
assets of the Company, of any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or property; (E)
the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company; then, in each
case, the Company shall cause to be mailed to the Purchaser at its
last address as it shall appear upon the Warrant Register of the
Company, at least 20 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of the Common Stock of
record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as of
which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice. The
Purchaser is entitled to exercise this Warrant during the period
commencing on the date of such notice to the effective date of the
event triggering such notice.
3.10 NOTICE OF ADJUSTMENT. Whenever the Warrant Shares or
the Per Share Warrant Price is adjusted under this Section 3, the
Company shall provide notice thereof to the holder within one Business
Day of such adjustment.
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4. MERGERS, CONSOLIDATIONS, SALES; NON-IMPAIRMENT OF RIGHTS. The
Company will not, by amendment of its Certificate of Incorporation or through
any reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issuance or sale of securities or any other voluntary action, avoid
or seek to avoid the performance of any of the terms of this Warrant, but will
at all times in good faith take all necessary action to carry out the intent of
all such terms. Without limiting the generality of the foregoing, the Company
(a) will not cause the par value of any securities receivable on exercise of
this Warrant to be in excess of the amount payable therefor on such exercise,
and (b) will take all action as may be necessary or appropriate so that the
Company may validly and legally issue fully paid and nonassessable shares (or
other securities or property deliverable hereunder) upon the exercise of this
Warrant.
5. DISSOLUTION OR LIQUIDATION. In the event of any proposed
distribution of the assets of the Company in dissolution or liquidation (except
under circumstances when the foregoing Section 4 shall be applicable) the
Company shall mail notice thereof to the holder of this Warrant and shall make
no distribution to shareholders until the expiration of 30 days from the date of
mailing of the aforesaid notice and, in any such case, the holder of this
Warrant may exercise this Warrant within 30 days from the date of the mailing of
such notice, and all rights herein granted not so exercised within such 30 day
period shall thereafter become null and void.
6. FRACTIONAL SHARES. Fractional shares shall not be issued upon the
exercise of this Warrant but in any case where the holder hereof would, except
for the provisions of this paragraph, be entitled under the terms hereof to
receive a fractional share upon the exercise of this Warrant, the Company shall,
upon the exercise of this Warrant for the largest number of whole shares then
called for, pay a sum in cash equal to the excess of the VWAP of such fractional
share over the proportional part of the Per Share Warrant Price represented by
such fractional share.
7. FULLY PAID STOCK; TAXES. The Company covenants and agrees that the
shares of stock represented by each and every certificate for its Common Stock
to be delivered on any exercise of this Warrant shall, at the time of such
delivery, be duly authorized, validly issued and outstanding and be fully paid
and nonassessable. The Company further covenants and agrees that it will pay
when due and payable any and all federal and state taxes, other than taxes on
income, which may be payable in respect of this Warrant or any Common Stock or
certificates therefor upon the exercise of the rights herein provided for
pursuant to the provisions hereof. The Company shall not, however, be required
to pay any tax which may be payable in respect of any transfer involved in the
transfer and delivery of stock certificates in the name other than that of the
holder of the Warrant converted, and any such tax shall be paid by such holder
at the time of presentation.
8. CLOSING OF TRANSFER BOOKS. The Company will not close its
stockholder books or records in any manner which prevents the timely exercise of
this Warrant, pursuant to the terms hereof.
9. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES; COMPLIANCE
WITH SECURITIES ACT; EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT. This Warrant and
the Common Stock issued upon the exercise hereof, and any security into which
such Common Stock may be convertible ("UNDERLYING STOCK") shall not be
transferable except upon the conditions hereinafter specified, which conditions
are intended to insure compliance with the provisions of the Securities Act of
1933, as amended, or any similar Federal statute at the time in effect (the
"SECURITIES ACT") in respect of the transfer of any Warrant or any such Common
Stock or any security into which such Common Stock may be convertible.
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9.1 ASSIGNMENTS GENERALLY. Except as may otherwise be
expressly provided herein, this Warrant is exchangeable, without
expense, at the option of the holder, upon presentation and surrender
of the Warrant to the Company, for other Warrants of different
denominations entitling the holder thereof to purchase in the
aggregate the same number of shares of Common Stock purchasable
hereunder. Any assignment shall be made by surrender of this Warrant
to the Company with the Form of Assignment annexed hereto duly
executed and funds sufficient to pay any transfer tax, provided the
Company has received an opinion or other evidence reasonably
satisfactory to the Company that the transfer will be in compliance
with the provisions of the Securities Act of 1933, as amended, or any
similar Federal statute at the time in effect (the "Securities Act")
in respect of the transfer of this Warrant. Upon compliance with the
express provisions of this Section 9, the Company shall, without
charge, cause to be executed and delivered a new Warrant in the name
of the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. This Warrant may be divided or
combined with other warrants that carry the same rights upon
presentation hereof to the Company together with a written notice
specifying the names and denominations in which new Warrants are to be
issued and signed by the holder hereof.
9.2 CERTAIN ASSIGNMENTS FOLLOWING REGISTRATION.
Notwithstanding anything to the contrary contained herein, if the
Company has registered the Underlying Stock pursuant to a Registration
Statement which has been declared effective by the Securities and
Exchange Commission (SEC) and, thereafter, the holder purports to
assigns all or a portion of the Underlying Stock to any other person,
the assignee shall have the right to cause the Registration Statement
to be amended or the prospectus related thereto to be supplemented (at
the expense of the Company), in either case to name such assignee as a
selling stockholder, provided that the use of a post-effective
amendment or a supplement to the prospectus is permitted by applicable
law for such purpose.
9.3 RESTRICTIVE LEGENDS. Each Warrant shall bear on the face
thereof a legend substantially in the form of the notice endorsed on
the first page of this Warrant.
Each certificate for shares of Underlying Stock initially issued upon
the exercise of any Warrant and each certificate for shares of
Underlying Stock issued to a subsequent transferee of such certificate
shall, if not registered for resale, bear on the face thereof a legend
reading substantially as follows:
THE SHARES OF CLASS A COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE
COMPANY IS REASONABLY SATISFIED THAT THE PROPOSED SALE OR TRANSFER IS
EXEMPT FROM SUCH REGISTRATION REQUIREMENTS.
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9.4 REMOVAL OF LEGEND. In the event that the Company shall
receive an opinion of its counsel or counsel of the holder, which
opinion is reasonably acceptable to it, that, in the opinion of such
counsel, such legend is not, or is no longer, necessary or required
(including, without limitation, because of the availability of the
exemption afforded by Rule 144 of the General Rules and Regulations of
the Securities and Exchange Commission), the Company shall, or shall
instruct its transfer agents and registrars to, remove such legend
from the certificates evidencing the Restricted Stock or issue new
certificates without such legend in lieu thereof. The Company shall
also remove the legend if the Underlying Stock has been registered for
resale with the SEC.
10. PARTIAL EXERCISE AND PARTIAL ASSIGNMENT. If this Warrant be
exercised in part only, the holder hereof shall be entitled to receive a new
Warrant covering the number of shares in respect of which this Warrant shall not
have been exercised as provided in paragraph 1 hereof. If this Warrant is
partially assigned, this Warrant shall be surrendered at the principal office of
the Company (with the partial assignment form at the end hereof duly executed),
and thereupon a new Warrant shall be issued to the holder hereof covering the
number of shares not assigned and setting forth the proportionate Aggregate
Warrant Price applicable to such shares not assigned. The assignee of such
partial assignment of this Warrant shall also be entitled to receive a new
Warrant covering the number of shares so assigned and setting forth the
proportionate Aggregate Warrant Price applicable to such assigned shares.
11. REGISTRATION RIGHTS. A holder of a Warrant is entitled to any and
all applicable registration rights as set forth in that certain Registration
Rights Agreement, dated March 5, 2007, relating to the Common Stock of the
Company and this and other Warrants.
12. LOST, STOLEN WARRANTS, ETC. In case any Warrant shall be
mutilated, stolen or destroyed, the Company may issue a new Warrant of like
date, tenor and denomination and deliver the same in exchange and substitution
for and upon surrender and cancellation of any mutilated Warrant, or in lieu of
any Warrant lost, stolen or destroyed, upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft or destruction of such Warrant,
and upon receipt of customary indemnity reasonably satisfactory to the Company.
13. WARRANT HOLDER NOT SHAREHOLDER. This Warrant does not confer upon
the holder hereof any right to vote or to consent or to receive notice as a
shareholder of the Company, as such, in respect of any matters whatsoever, or
any other rights or liabilities as a shareholder, prior to the exercise hereof
as hereinbefore provided.
14. SEVERABILITY. Should any part of this Warrant for any reason be
declared invalid, such decision shall not affect the validity of any remaining
portion, which remaining portion shall remain in force and effect as if this
Warrant had been executed with the invalid portion thereof eliminated, and it is
hereby declared the intention of the parties hereto that they would have
executed and accepted the remaining portion of this Warrant without including
therein any such part, parts or portion which may, for any reason, be hereafter
declared invalid.
13
15. NOTICE. All notices and other communications required or permitted
to be given under any Agreement shall be deemed given when personally delivered
or sent by certified mail, return receipt requested, postage prepaid, overnight
delivery or confirmed facsimile transmission to the parties at the following
address or fax number:
To the Company at:
ATC Healthcare, Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxx, Esquire
Keevican Xxxxx Xxxxxxx & Xxxxxx LLC
11th Floor, Federated Investors Tower
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
To the Purchaser at:
The address set forth in the Purchase Agreement under
which the Purchaser acquired, among other things,
this Warrant.
or, as to either party or any subsequent holder of this Warrant, to such other
address and/or facsimile number as such party designates by written notice to
the other party or parties.
16. CERTAIN DEFINITIONS.
(a) "BUSINESS DAY" means any day other than Saturday, Sunday
or other day on which commercial banks in The City of New York are
authorized or required by law to remain closed.
(b) "DTC" means The Depository Trust Company and its Fast
Automated Securities Transfer Program.
(c) "PERSON" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated association, any other entity and a government or any
department or agency thereof.
14
(d) "REQUIRED HOLDERS" means the holders of the Warrants
representing at least a majority of shares of the Underlying Stock.
(e) "VWAP" means, for any date, the price determined by the
first of the following clauses that applies: (a) if the Common Stock
is then listed or quoted on a Principal Market, the daily volume
weighted average price of the Common Stock for such date (or the
nearest preceding date) on the Principal Market on which the Common
Stock is then listed or quoted as reported by Bloomberg L.P. (based on
a Trading Day from 9:30 a.m. New York City time to 4:02 p.m. New York
City time); (b) if the OTC Bulletin Board is not a Principal Market,
the volume weighted average price of the Common Stock for such date
(or the nearest preceding date) on the OTC Bulletin Board; (c) if the
Common Stock is not then listed or quoted on the OTC Bulletin Board
and if prices for the Common Stock are then reported in the "Pink
Sheets" published by Pink Sheets, LLC (or a similar organization or
agency succeeding to its functions of reporting prices), the most
recent bid price per share of the Common Stock so reported; or (d) in
all other cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by the
Purchaser and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
(f) "WEIGHTED AVERAGE PRICE" means, for any security as of
any date, the dollar volume-weighted average closing price for such
security on the Principal Market during the immediately preceding ten
(10) business days, or, if the foregoing does not apply, the dollar
volume-weighted average closing price of such security in the
over-the-counter market on the electronic bulletin board for such
security during the immediately preceding ten (10) business days, as
reported by Bloomberg, or, if no dollar volume-weighted average
closing price is reported for such security by Bloomberg for such ten
(10) day period, the average of the highest closing bid price and the
lowest closing ask price of any of the market makers for such security
as reported in the "pink sheets" by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.) for such ten (10) day period. If the
Weighted Average Price cannot be calculated for such security on such
date on any of the foregoing bases, the Weighted Average Price of such
security on such date shall be the fair market value as mutually
determined by the Company and the Required Holders. All such
determinations shall be appropriately adjusted for any share dividend,
share split or other similar transaction during such period.
18. CALL OPTION.
18.1 OPTION TO CALL WARRANT. The Company shall be entitled
to call this Warrant if the Company's Stock trades at or above One and
35/100 Dollars ($1.35) (as adjusted for any stock dividends, splits,
combinations, recapitalizations and the like with respect to the
Stock) for twenty (20) out of thirty (30) consecutive Trading Days
with a daily trading volume of over 150,000 shares on at least fifteen
(15) Trading Days of that thirty (30) consecutive Trading Day period,
and there is an effective registration statement registering the
shares of Common Stock purchased by the Purchaser under the Purchase
Agreement (or those shares can be sold by the Purchaser under Rule
144(k) promulgated under the Securities Act of 1933, as amended) and
registering the shares of Common Stock purchasable under this Warrant.
18.2 CALL PRICE. The call price for this Warrant shall be
One Cent ($0.01) multiplied by the Warrant Number then in effect.
15
18.3 NOTICE. Notice of a call of this Warrant under this
Section 18 shall be mailed by overnight courier and by fax, addressed
to the holder. The notice shall state, as appropriate, the following
and may contain such other information as the Company deems advisable:
(a) the call date, which shall be at least thirty (30) days after the
"notice date" as defined herein (b) the aggregate call price for the
Warrant, and (c) the place where the Warrant is to be surrendered. The
"notice date" shall be the date such notice is mailed. Any notice
mailed as provided in this Section 18.3 shall be conclusively presumed
to have been duly given, whether or not the holder receives such
notice.
18.4 EFFECTIVENESS OF CALL. If notice of the call of the
Warrant has been duly given then, notwithstanding that the Warrant has
not been surrendered for cancellation, on and after the call date this
Warrant shall cease to be outstanding and all rights with respect to
this Warrant shall forthwith on such notice date cease and terminate,
except only the right of the holder hereof to receive the amount
payable on such call without interest.
19. MISCELLANEOUS.
(a) All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in
accordance with the provisions of the Purchase Agreement.
(b) The agreements which are contained herein shall survive
the exercise of this Warrant to the extent applicable thereafter.
(c) If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein shall
not be a Business Day, then such action may be taken or such right may
be exercised on the next succeeding Business Day.
(d) No provision hereof, in the absence of any affirmative
action by Purchaser to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of
Purchaser, shall give rise to any liability of the Purchaser for the
purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of
the Company.
(e) Purchaser, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Warrant. The Company
agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive and not to assert the defense
in any action for specific performance that a remedy at law would be
adequate.
(f) Subject to applicable securities laws, this Warrant and
the rights and obligations evidenced hereby shall inure to the benefit
of and be binding upon the successors of the Company and the
successors and permitted assigns of the Purchaser. The provisions of
this Warrant are intended to be for the benefit of all holders from
time to time of this Warrant and shall be enforceable by any such
holder or holder of Warrant Shares.
(g) This Warrant may be modified or amended or the
provisions hereof
waived with the written consent of the Company and the Purchaser.
(i) The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
*********SIGNATURE PAGE FOLLOWS*************
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as of the day and year first set forth above.
ATC HEALTHCARE, INC.
By: /s/ Xxxxx Xxxxxxxx
------------------------------
Xxxxx Xxxxxxxx
Chief Executive Officer
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ASSIGNMENT
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto _______________________ the within Warrant and all rights
evidenced thereby and does irrevocably constitute and appoint
__________________________, attorney, to transfer the said Warrant on the books
of the within named Company.
__________________________________
By________________________________
Its_______________________________
Dated: __________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED ______________________________ hereby sells, assigns and
transfers unto _______________________________ that portion of the within
Warrant and the rights evidenced thereby which will an the date hereof entitle
the holder to purchase __________ shares of Class A Common Stock of ATC
Healthcare, Inc., and does hereby irrevocably constitute and appoint
__________________________, attorney, to transfer that part of the said Warrant
on the books of the within named Company.
_________________________________
By_______________________________
Its______________________________
Dated: _________________________
EXERCISE NOTICE
(To be completed and signed only upon an exercise of the Warrant in whole or in
part)
TO: ATC Healthcare, Inc.:
The undersigned, the holder of the attached Warrant, hereby irrevocably elects
to exercise the purchase right represented by the Warrant for, and to purchase
thereunder, ______ shares of Class A Common Stock (or other securities or
property), and herewith makes payment of $____________ therefor in cash, by
certified or official bank check or such other form of payment as may be
permitted under the Warrant. OR
[if permitted] the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection 1(b), to
exercise this Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in subsection
1(b).
The undersigned hereby requests that the Certificate(s) for such securities be
issued in the name(s) and delivered to the address(es) as follows:
Name:_________________________________________________
Address:______________________________________________
Social Security Number: ______________________________
Deliver to: __________________________________________
Address:______________________________________________
OR
The Warrant Shares shall be delivered to the following DWAC Account Number:
____________________________
____________________________
____________________________
If the foregoing Exercise Notice evidences an exercise of the Warrant to
purchase fewer than all of the Shares (or other securities or property) to which
the undersigned is entitled under such Warrant, please issue a new Warrant, of
like date and tenor, for the remaining portion of the Warrant (or other
securities or property) in the name(s), and deliver the same to the address(e'
s), as follows:
Name:_______________________________
Address:____________________________
DATED:_______________________, 200__
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(Social Security or Taxpayer Identification (Name of Holder)
Number of Holder)
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(Signature of Holder or Authorized Signatory)
