Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated this 26th day of April,
1999 (this "Agreement"), between STAR MULTI CARE SERVICES, INC., a New York
corporation with principal executive offices located at 00 Xxxxxxxx Xxxxx, Xxxxx
000, Xxxxxxxxxx, Xxx Xxxx 00000 (the "Company"), and the undersigned (the
"Investor").
W I T N E S S E T H :
WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement dated as of April 26th, 1999, between the
Investor and the Company (the "Securities Purchase Agreement"), the Company has
agreed to issue and sell to the Investor on the date hereof, (i) 500 shares of
the Company's Series A 8% Convertible Preferred Stock, par value $1.00 per share
(the "Preferred Shares") which, upon the terms of and subject to the conditions
of the Company's Certificate of Amendment to the Company's Certificate of
Incorporation (the "Certificate of Amendment"), are convertible into shares of
the Company's common stock, par value $0.001 per share (the "Common Stock"), and
(ii) Common Stock Purchase Warrants (the "Warrants") to purchase 50,000 shares
of Common Stock; and
WHEREAS, to induce the Investor to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide with respect to
the Common Stock issued or issuable in lieu of cash dividend payments on the
Preferred Shares, upon conversion of the Preferred Shares and exercise of the
Warrants certain registration rights under the Securities Act;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
(14) DEFINITIONS.
(1) As used in this Agreement, the following terms shall have the
following meanings:
(1) "AFFILIATE", of any specified Person means any other
Person who directly, or indirectly through one or
more intermediaries, is in control of, is controlled
by, or is under common control with, such specified
Person. For purposes of this definition, control of a
Person means the power, directly or indirectly, to
direct or cause the direction of the management and
policies of such Person whether by contract,
securities, ownership or otherwise; and the terms
"controlling" and "controlled" have the respective
meanings correlative to the foregoing.
(iii) "COMMISSION" means the Securities and
Exchange Commission.
(iv) "CURRENT MARKET PRICE" on any date of
determination means the closing bid price of a share of the Common Stock on such
day as reported by the National Association of Securities Dealers ("NASD")
over-the-counter bulletin board system ("OTC/BBS"), or, if such security is not
listed or admitted to trading on the OTC/BBS, on the principal national security
exchange or quotation system on which such security is quoted or listed or
admitted to trading, or, if not quoted or listed or admitted to trading on any
national securities exchange or quotation system, the closing bid price of such
security on the over-the-counter market on the day in question as reported by
the National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or if not so available, in such manner as furnished by any
NASD member firm selected from time to time by the Board of Directors of the
Company for that purpose, or a price determined in good faith by the Board of
Directors of the Company as being equal to the fair market value thereof, as the
case may be.
(v) "EXCHANGE ACT" means the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder, or any similar successor statute.
(2) "FUNDING DATE" means the date and time of
the issuance and sale of the Preferred Shares and the
Warrants.
(vi) "INVESTORS" means the Investor and any
transferee or assignee of Registrable Securities who agrees to become bound by
all of the terms and provisions of this Agreement in accordance with Section 8
hereof.
(vii) "PUBLIC OFFERING" means an offer registered
with the Commission and the appropriate state securities commissions by the
Company of its Common Stock and made pursuant to the Securities Act.
(viii) "PERSON" means any individual, partnership,
corporation, limited liability company, joint stock company, association, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
(ix) "PROSPECTUS" means the prospectus
(including, without limitation, any preliminary prospectus and any final
prospectus filed pursuant to Rule 424(b) under the Securities Act, including any
prospectus that discloses information previously omitted from a prospectus filed
as part of an effective registration statement in reliance on Rule 430A under
the Securities Act) included in the Registration Statement, as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement and by all other
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amendments and supplements to such prospectus, including all material
incorporated by reference in such prospectus and all documents filed after the
date of such prospectus by the Company under the Exchange Act and incorporated
by reference therein.
(x) "REGISTRABLE SECURITIES" means the Common
Stock issued or issuable (i) in lieu of cash dividend payments on the Preferred
Shares, (ii) upon conversion of the Preferred Shares or (iii) upon exercise of
the Warrants; provided, however, that a share of Common Stock shall cease to be
a Registrable Security for purposes of this Agreement when it no longer is a
Restricted Security.
(xi) "REGISTRATION STATEMENT" means a
registration statement of the Company filed on an appropriate form under the
Securities Act providing for the registration of, and the sale on a continuous
or delayed basis by the holders of, all of the Registrable Securities pursuant
to Rule 415 under the Securities Act, including the Prospectus contained therein
and forming a part thereof, any amendments to such registration statement and
supplements to such Prospectus, and all exhibits and other material incorporated
by reference in such registration statement and Prospectus.
(xii) "RESTRICTED SECURITY" means any share of
Common Stock issued or issuable in lieu of cash dividend payments on the
Preferred Shares, upon conversion of the Preferred Shares or exercise of the
Warrants except any such share that (i) has been registered pursuant to an
effective registration statement under the Securities Act and sold in a manner
contemplated by the Prospectus included in the Registration Statement, (ii) has
been transferred in compliance with the resale provisions of Rule 144 under the
Securities Act (or any successor provision thereto) or is transferable pursuant
to paragraph (d) of Rule 144 under the Securities Act (or any successor
provision thereto), or (iii) otherwise has been transferred and a new share of
Common Stock not subject to transfer restrictions under the Securities Act has
been delivered by or on behalf of the Company.
(xiv) "SECURITIES ACT" means the Securities Act of
1933, as amended, and the rules and regulations of the Commission thereunder, or
any similar successor statute.
(2) All capitalized terms used and not defined herein
have the respective meaning assigned to them in the
Securities Purchase Agreement.
(15) REGISTRATION.
(1) FILING AND EFFECTIVENESS OF
REGISTRATION STATEMENT. The Company shall
prepare and file with the Commission not
later than thirty (30) days after the
Funding Date, a Registration Statement
relating to the offer and sale of all of the
Registrable Securities and shall use its
best efforts to cause the Commission to
declare such Registration Statement
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effective under the Securities Act as
promptly as practicable but not later than
one hundred and twenty (120) days after the
Initial Funding Date, assuming for purposes
hereof a Conversion Price under the
Certificate of Amendment of $____ per share.
The Company shall not include any other
securities in the Registration Statement
relating to the offer and sale of the
Registrable Securities, except for ___
shares of Common Stock issued or issuable
upon exercise of stock options granted under
the Company's 1992 Stock Option Plan, as
amended. The Company shall notify the
Investor by written notice that such
Registration Statement has been declared
effective by the Commission within 24 hours
of such declaration by the Commission.
(2) REGISTRATION DEFAULT. (i) If the
Registration Statement covering the
Registrable Securities required to be filed
by the Company pursuant to Section 2 (a) or
2 (d) hereof, as the case may be, is not (A)
filed with the Commission within thirty (30)
days after the Funding Date or (B) declared
effective by the Commission within one
hundred and twenty (120) days after the
Funding Date (either of which, without
duplication, an "Initial Date"), then the
Company shall make the payments to the
Investor as provided in the next sentence as
liquidated damages and not as a penalty. The
amount to be paid by the Company to the
Investor shall be determined as of each
Computation Date (as defined below), and
such amount shall be equal to 2% (the
"Liquidated Damage Rate") of the Purchase
Price (as defined in the Securities Purchase
Agreement) from the Initial Date to the
first Computation Date and for each
Computation Date thereafter, calculated on a
pro rata basis to the date on which the
Registration Statement is filed with (in the
event of an Initial Date pursuant to (c)(A)
above) or declared effective by (in the
event of an Initial Date pursuant to (c) (B)
above) the Commission (the "Periodic
Amount"); provided, however, that in no
event shall the Liquidated Damages be less
than $25,000. The full Periodic Amount shall
be paid by the Company to the Investor by
wire transfer of immediately available funds
within three days after each Computation
Date.
(ii) As used in this Section 2(b), "Computation Date" means
the date which is 30 days after the Initial Date and, if the Registration
Statement required to be filed by the Company pursuant to Section 2(a) has not
theretofore been declared effective by the
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Commission, each date which is 30 days after the previous Computation Date until
such Registration Statement is so declared effective.
(iii) Notwithstanding the above, if the Registration Statement
covering the Registrable Securities required to be filed by the Company pursuant
to Section 2(a) hereof, as the case may be, is not filed with the Commission by
the thirtieth (30th) day after the Initial Funding Date, the Company shall be in
default of this Registration Rights Agreement.
[ (3) If the Company proposes to register
any of its warrants, Common Stock or any
other shares of common stock under the
Securities Act (other than a registration
(A) on Form S-8 or S-4 or any successor or
similar forms, (B) relating to Common Stock
or any other shares of common stock of the
Company issuable upon exercise of employee
share options or in connection with any
employee benefit or similar plan of the
Company or (C) in connection with a direct
or indirect acquisition by the Company of
another Person or any transaction with
respect to which Rule 145 (or any successor
provision) under the Securities Act applies,
whether or not for sale for its own account,
it will at each such time, give written
notice at least 20 days prior to the
anticipated filing date of the registration
statement relating to such registration to
the Investor, which notice shall set forth
such Investor's rights under this Section
3(e) and shall offer the Investor the
opportunity to include in such registration
statement such number of Registrable Shares
as the Investor may request. Upon the
written request of the Investor made within
ten (10) days after the receipt of notice
from the Company (which request shall
specify the number of Registrable Shares
intended to be disposed of by such
Investor), the Company will use its best
efforts to effect the registration under the
Securities Laws of all Registrable Shares
that the Company has been so requested to
register by the Investor, to the extent
requisite to permit the disposition of the
Registrable Shares so to be registered;
provided, however, that (A) if such
registration involves a Public Offering, the
Investor must sell its Registrable Shares to
the underwriters selected as provided in
Section 3(b) hereof on the same terms and
conditions as apply to the Company and
(B) if, at any time after giving written
notice of its intention to register any
Registrable
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Shares pursuant to this Section 3 and prior
to the effective date of the registration
statement filed in connection with such
registration, the Company shall determine
for any reason not to register such
Registrable Shares, the Company shall give
written notice to the Investor and,
thereupon, shall be relieved of its
obligation to register any Registrable
Shares in connection with such registration.
The Company's obligations under this Section
2(c) shall terminate on the date that the
registration statement to be filed in
accordance with Section 2(a) is declared
effective by the Commission.]
[ (1) If a registration
pursuant to this Section
2(c) involves a Public
Offering and the managing
underwriter thereof advises
the Company that, in its
view, the number of shares
of Common Stock, Warrants
or other shares of Common
Stock that the Company and
the Investor intend to
include in such
registration exceeds the
largest number of shares of
Common Stock or Warrants
(including any other shares
of Common Stock or Warrants
of the Company) that can be
sold without having an
adverse effect on such
Public Offering (the
"Maximum Offering Size"),
the Company will include in
such registration,
only that number of shares
of Common Stock or
Warrants, as applicable,
such that the number of
Registrable Shares
registered does not exceed
the Maximum Offering Size,
with the difference between
the number of shares in the
Maximum Offering Size and
the number of shares to be
issued by the Company to be
allocated (after including
all shares to be issued and
sold by the Company) among
the Company and the
Investor pro rata on the
basis of the relative
number of Registrable
Shares offered for sale
under such registration by
each of the Company and the
Investor.]
[ (2) If as a result of
the proration provisions of
Section 2 (c) (ii) above,
any Investor is not
entitled to include all
such Registrable Shares in
such registration, such
Investor may elect to
withdraw its request to
include any Registrable
Shares in such
registration. With respect
to registrations
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pursuant to this Section
2(c), the number of
securities required to
satisfy any underwriters'
over-allotment option shall
be allocated pro rata among
the Company and the
Investor on the basis of
the relative number of
securities otherwise to be
included by each of them in
the registration with
respect to which such
over-allotment option
relates.]
(16) OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall:
(1) Promptly (i) prepare and file with the Commission such
amendments (including post-effective amendments) to the
Registration Statement and supplements to the Prospectus as
may be necessary to keep the Registration Statement
continuously effective and in compliance with the provisions
of the Securities Act applicable thereto so as to permit the
Prospectus forming part thereof to be current and useable by
Investors for resales of the Registrable Securities for a
period of two years from the date on which the Registration
Statement is first declared effective by the Commission (the
"Effective Time") or such shorter period that will terminate
when all the Registrable Securities covered by the
Registration Statement have been sold pursuant thereto in
accordance with the plan of distribution provided in the
Prospectus, transferred pursuant to Rule 144 under the
Securities Act or otherwise transferred in a manner that
results in the delivery of new securities not subject to
transfer restrictions under the Securities Act (the
"Registration Period") and (ii) take all lawful action such
that each of (A) the Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, not misleading and (B) the Prospectus
forming part of the Registration Statement, and any amendment
or supplement thereto, does not at any time during the
Registration Period include an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing provisions of this
Section 3(a), the Company may, during the Registration Period,
suspend the use of the Prospectus for a period not to exceed
60 days (whether or not consecutive) in any 12-month period if
the Board of Directors of the Company determines in good faith
that because of valid business reasons, including pending
mergers or other business combination transactions, the
planned acquisition or divestiture of assets, pending material
corporate developments and similar events, it is in the best
interests of the Company to suspend such use, and prior to or
contemporaneously with suspending such
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use the Company provides the Investors with written notice of
such suspension, which notice need not specify the nature of
the event giving rise to such suspension. At the end of any
such suspension period, the Company shall provide the
Investors with written notice of the termination of such
suspension.
(2) During the Registration Period, comply with the provisions of
the Securities Act with respect to the Registrable Securities
of the Company covered by the Registration Statement until
such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of
disposition by the Investors as set forth in the Prospectus
forming part of the Registration Statement;
(3) (i) Prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and
the distribution or delivery of any Prospectus (including any
supplements thereto), provide draft copies thereof to the
Investors and reflect in such documents all such comments as
the Investors (and their counsel) reasonably may propose and
(ii) furnish to each Investor whose Registrable Securities are
included in the Registration Statement and its legal counsel
identified to the Company, (A) promptly after the same is
prepared and publicly distributed, filed with the Commission,
or received by the Company, one copy of the Registration
Statement, each Prospectus, and each amendment or supplement
thereto, and (B) such number of copies of the Prospectus and
all amendments and supplements thereto and such other
documents, as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned
by such Investor;
(4) (i) Register or qualify the Registrable Securities covered by
the Registration Statement under such securities or "blue sky"
laws of such jurisdictions as the Investors who hold a
majority-in-interest of the Registrable Securities being
offered reasonably request, (ii) prepare and file in such
jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the
effectiveness thereof at all times during the Registration
Period, (iii) take all such other lawful actions as may be
necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv)
take all such other lawful 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 qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this
Section 3(d);
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(5) As promptly as practicable after becoming aware of such event,
notify each Investor of the occurrence of any event, as a
result of which the Prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of
a material fact or omits 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, and promptly prepare an amendment to the
Registration Statement and supplement to the Prospectus to
correct such untrue statement or omission, and deliver a
number of copies of such supplement and amendment to each
Investor as such Investor may reasonably request;
(6) As promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being
sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance by the Commission of
any stop order or other suspension of the effectiveness of the
Registration Statement at the earliest possible time and take
all lawful action to effect the withdrawal, recession or
removal of such stop order or other suspension;
(7) Cause all the Registrable Securities covered by the
Registration Statement to be listed on the principal national
securities exchange, and included in an inter-dealer quotation
system of a registered national securities association, on or
in which securities of the same class or series issued by the
Company are then listed or included;
(8) Maintain a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the
effective date of the Registration Statement;
(9) Cooperate with the Investors who hold Registrable Securities
being offered to facilitate the timely preparation and
delivery of certificates for the Registrable Securities to be
offered pursuant to the Registration Statement and enable such
certificates for the Registrable Securities to be in such
denominations or amounts, as the case may be, as the Investors
reasonably may request and registered in such names as the
Investor may request; and, within three business days after a
Registration Statement which includes Registrable Securities
is declared effective by the Commission, deliver and
cause legal counsel selected by the Company to deliver to the
transfer agent for the Registrable Securities (with copies to
the Investors whose Registrable Securities are included in
such Registration Statement) an appropriate instruction and,
to the extent necessary, an opinion of such counsel;
(10) Take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Investors of
their Registrable Securities
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in accordance with the intended methods therefor provided in
the Prospectus which are customary under the circumstances;
(11) Make generally available to its security holders as soon as
practicable, but in any event not later than three (3) months
after (i) the effective date (as defined in Rule 158(c) under
the Securities Act) of the Registration Statement, and (ii)
the effective date of each post-effective amendment to the
Registration Statement, as the case may be, an earnings
statement of the Company and its subsidiaries complying with
Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);
(12) In the event of an underwritten offering, promptly include or
incorporate in a Prospectus supplement or post-effective
amendment to the Registration Statement such information as
the managers reasonably agree should be included therein and
to which the Company does not reasonably object and make all
required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after it is
notified of the matters to be included or incorporated in such
Prospectus supplement or post-effective amendment;
(13) (i) Make reasonably available for inspection by Investors, any
underwriter participating in any disposition pursuant to the
Registration Statement, and any attorney, accountant or other
agent retained by such Investors or any such underwriter all
relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries,
and (ii) cause the Company's officers, directors and employees
to supply all information reasonably requested by such
Investors or any such underwriter, attorney, accountant or
agent in connection with the Registration Statement, in each
case, as is customary for similar due diligence examinations;
provided, however, that all records, information and documents
that are designated in writing by the Company, in good faith,
as confidential, proprietary or containing any material
nonpublic information shall be kept confidential by such
Investors and any such underwriter, attorney, accountant or
agent (pursuant to an appropriate confidentiality agreement in
the case of any such holder or agent), unless such disclosure
is made pursuant to judicial process in a court proceeding
(after first giving the Company an opportunity promptly to
seek a protective order or otherwise limit the scope of the
information sought to be disclosed) or is required by law, or
such records, information or documents become available to the
public generally or through a third party not in violation of
an accompanying obligation of confidentiality; provided,
however, that such records, information and documents shall be
used by such person solely for the purpose of determining that
disclosures made in the Registration Statement
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are true and correct, and for no other purpose; and provided
further that, if the foregoing inspection and information
gathering would otherwise disrupt the Company's conduct of its
business, such inspection and information gathering shall, to
the maximum extent possible, be coordinated on behalf of the
Investors and the other parties entitled thereto by one firm
of counsel designed by and on behalf of the majority in
interest of Investors and other parties;
(14) In connection with any underwritten offering, make such
representations and warranties to the Investors participating
in such underwritten offering and to the managers, in form,
substance and scope as are customarily made by the Company to
underwriters in secondary underwritten offerings;
(15) In connection with any underwritten offering, obtain opinions
of counsel to the Company (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to
the managers) addressed to the underwriters, covering such
matters as are customarily covered in opinions requested in
secondary underwritten offerings (it being agreed that the
matters to be covered by such opinions shall include, without
limitation, as of the date of the opinion and as of the
Effective Time of the Registration Statement or most recent
post-effective amendment thereto, as the case may be, the
absence from the Registration Statement and the Prospectus,
including any documents incorporated by reference therein, of
an untrue statement of a material fact or the omission of a
material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not
misleading, subject to customary limitations);
(16) In connection with any underwritten offering, obtain "cold
comfort" letters and updates thereof from the independent
public accountants of the Company (and, if necessary, from the
independent public accountants of any subsidiary of the
Company or of any business acquired by the Company, in each
case for which financial statements and financial data are, or
are required to be, included in the Registration Statement),
addressed to each underwriter participating in such
underwritten offering (if such underwriter has provided
such letter, representations or documentation, if any,
required for such cold comfort letter to be so addressed), in
customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with secondary
underwritten offerings;
(17) In connection with any underwritten offering, deliver such
documents and certificates as may be reasonably required by
the managers, if any; and
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(18) In the event that any broker-dealer registered under the
Exchange Act shall be an "Affiliate" (as defined in Rule
2729(b)(1) of the rules and regulations of the NASD (the "NASD
Rules") (or any successor provision thereto)) of the Company
or has a "conflict of interest" (as defined in Rule 2720(b)(7)
of the NASD Rules (or any successor provision thereto)) and
such broker-dealer shall underwrite, participate as a member
of an underwriting syndicate or selling group or assist in the
distribution of any Registrable Securities covered by the
Registration Statement, whether as a holder of such
Registrable Securities or as an underwriter, a placement or
sales agent or a broker or dealer in respect thereof, or
otherwise, the Company shall assist such broker-dealer in
complying with the requirements of the NASD Rules, including,
without limitation, by (A) engaging a "qualified independent
underwriter" (as defined in Rule 2720(b) (15) of the NASD
Rules (or any successor provision thereto)) to participate in
the preparation of the Registration Statement relating to such
Registrable Securities, to exercise usual standards of due
diligence in respect thereof and to recommend the public
offering price of such Registrable Securities, (B)
indemnifying such qualified independent underwriter to the
extent of the indemnification of underwriters provided in
Section 6(a) hereof, and (C) providing such information to
such broker-dealer as may be required in order for such broker
-dealer to comply with the requirements of the NASD Rules.
(17) OBLIGATIONS OF THE INVESTORS. In connection with the
registration of the Registrable Securities, the Investors
shall have the following obligations:
(1) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition
of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in
connection with such registration as the Company may
reasonably request. As least seven days prior to the first
anticipated filing date of the Registration Statement, the
Company shall notify each Investor of the information the
Company requires from each such Investor (the "Requested
Information") if such Investor elects to have any of its
Registrable Securities included in the Registration Statement.
If at least two business days prior to the anticipated filing
date the Company has not received the Requested Information
from an Investor (a "Non-Responsive Investor") , then the
Company may file the Registration Statement without including
Registrable Securities of such Non-Responsive Investor and
have no further obligations to the Non-Responsive Investor;
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(2) Each Investor by its acceptance of the Registrable Securities
agrees to cooperate with the Company in connection with the
preparation and filing of the Registration Statement
hereunder, unless such Investor has notified the Company in
writing of its election to exclude all of its Registrable
Securities from the Registration Statement; and
(3) Each Investor agrees that, upon receipt of any notice from the
Company of the occurrence of any event of the kind described
in Section 3(e) or 3(f), it shall immediately discontinue its
disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities
until such Investor's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section
3(e) and, if so directed by the Company, such Investor shall
deliver to the Company (at the expense of the Company) or
destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the
Prospectus covering such Registrable Securities current at the
time of receipt of such notice.
(18) EXPENSES OF REGISTRATION. All expenses, other than
underwriting discounts and commissions, incurred in connection
with registrations, filings or qualifications pursuant to
Section 3, but including, without limitation, all
registration, listing, and qualifications fees, printing and
engraving fees, accounting fees, and the fees and
disbursements of counsel for the Company, and the reasonable
fees of one firm of counsel to the holders of a majority in
interest of the Registrable Securities shall be borne by the
Company.
(19) INDEMNIFICATION AND CONTRIBUTION.
(1) The Company shall indemnify and hold harmless each Investor
and each underwriter, if any, which facilitates the
disposition of Registrable Securities, and each of their
respective officers and directors and each person who controls
such Investor or underwriter within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act (each
such person being sometimes hereinafter referred to as an
"Indemnified Person") from and against any losses, claims,
damages or liabilities, joint or several, to which such
Indemnified Person 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 an untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement or
an omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein, not misleading, or arise out of or are
based upon an untrue statement or alleged untrue statement of
a material fact contained in any Prospectus or an omission or
alleged omission to state therein a material fact required to
be stated therein
13
or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
and the Company hereby agrees to reimburse such Indemnified
Person for all reasonable legal and other expenses incurred by
them in connection with investigating or defending any such
action or claim as and when such expenses are incurred;
provided, however, that the Company shall not be liable to any
such Indemnified Person in any such case to the extent that
any such loss, claim, damage or liability arises out of or is
based upon (i) an untrue statement or alleged untrue statement
made in, or an omission or alleged omission from, such
Registration Statement or Prospectus in reliance upon and in
conformity with written information furnished to the Company
by such Indemnified Person expressly for use therein or (ii)
in the case of the occurrence of an event of the type
specified in Section 3(e), the use by the Indemnified Person
of an outdated or defective Prospectus after the Company has
provided to such Indemnified Person an updated Prospectus
correcting the untrue statement or alleged untrue statement or
omission or alleged omission giving rise to such loss, claim,
damage or liability.
(2) Indemnification by the Investors and Underwriters. Each
Investor agrees, as a consequence of the inclusion of any of
its Registrable Securities in a Registration Statement, and
each underwriter, if any, which facilitates the disposition of
Registrable Securities shall agree, as a consequence of
facilitating such disposition of Registrable Securities,
severally and not jointly, to (i) indemnify and hold harmless
the Company, its directors (including any person who, with his
or her consent, is named in the Registration Statement as a
director nominee of the Company), its officers who sign any
Registration Statement and each person, if any, who controls
the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any
losses, claims, damages or liabilities to which the Company or
such other persons 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 an untrue statement or alleged untrue statement of a material
fact contained in such Registration Statement or 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 (in
light of the circumstances under which they were made, in the case of the
Prospectus), not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such holder or underwriter expressly for use
therein; provided, however, that no Investor or underwriter shall be liable
under this Section 6(b) for any amount in excess of the net proceeds paid to
such Investor or underwriter in respect of shares sold by it, and (ii) reimburse
the Company for any legal or other expenses incurred by the Company in
14
connection with investigating or defending any such action or claim as such
expenses are incurred.
(3) Notice of Claims, etc. Promptly after receipt by a party
seeking indemnification pursuant to this Section 6 (an
"Indemnified Party") of written notice of any investigation,
claim, proceeding or other action in respect of which
indemnification is being sought (each, a "Claim"), the
Indemnified Party promptly shall notify the party against whom
indemnification pursuant to this Section 6 is being sought
(the "Indemnifying Party") of the commencement thereof; but
the omission to so notify the Indemnifying Party shall not
relieve it from any liability that it otherwise may have to
the Indemnified Party, except to the extent that the
Indemnifying Party is materially prejudiced and forfeits
substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying
Party and the Indemnified Party are parties, the Indemnifying
Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by
the Indemnifying Party, the Indemnified Party shall have the
right to employ separate legal counsel and to participate in
the defense of such Claim, and the Indemnifying Party shall
bear the reasonable fees, out-of-pocket costs and expenses of
such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay
such fees, costs and expenses, (y) the Indemnified Party and
the Indemnifying Party shall reasonably have concluded that
representation of the Indemnified Party by the Indemnifying
Party by the same legal counsel would not be appropriate due
to actual or, as reasonably determined by legal counsel to the
Indemnified Party, potentially differing interests between
such parties in the conduct of the defense of such Claim, or
if there may be legal defenses available to the Indemnified
Party that are in addition to or disparate from those
available to the Indemnifying Party, or (z) the Indemnifying
Party shall have failed to employ legal counsel reasonably
satisfactory to the Indemnified Party within a reasonable
period of time after notice of the commencement of such Claim.
If the Indemnified Party employs separate legal counsel in
circumstances other than as described in clauses (x) , (y) or
(z) above, the fees, costs and expenses of such legal counsel
shall be borne exclusively by the Indemnified Party. Except as
provided above, the Indemnifying Party shall not, in
connection with any Claim in the same jurisdiction, be liable
for the fees and expenses of more than one firm of counsel for
the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior
written consent of the Indemnifying Party (which consent shall
not unreasonably be withheld), settle or compromise any Claim
or consent to the entry of any judgment that does not include
an unconditional release of the Indemnifying Party from all
liabilities with respect to such Claim or judgment.
15
(4) Contribution. If the indemnification provided for in this
Section 6 is unavailable to or insufficient to hold harmless
an Indemnified Person under subsection (a) or (b) above in
respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each
Indemnifying Party shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and the Indemnified Party in
connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in
respect thereof), 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 the untrue or alleged untrue
statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by
such Indemnified Party or by such Indemnified Party, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were
determined by pro rata allocation (even if the Investors or
any underwriters were treated as one entity for such purpose)
or by any other method of allocation which does not take
account of the equitable considerations referred to in this
Section 6 (d) . The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above
shall be deemed to include any legal or other fees or expenses
reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. 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. The obligations of the
Investors and any underwriters in this Section 6(d) to
contribute shall be several in proportion to the percentage of
Registrable Securities registered or underwritten, as the case
may be, by them and not joint.
(5) Notwithstanding any other provision of this Section 6, in no
event shall any (i) Investor be required to undertake
liability to any person under this Section 6 for any amounts
in excess of the dollar amount of the proceeds to be received
by such Investor from the sale of such Investor's Registrable
Securities (after deducting any fees, discounts and
commissions applicable thereto) pursuant to any Registration
Statement under which such Registrable Securities are to be
registered under the Securities Act and (ii) underwriter be
required to undertake liability to any Person hereunder for
any amounts in excess of the aggregate discount, commission or
other compensation payable
16
to such underwriter with respect to the Registrable Securities
underwritten by it and distributed pursuant to the
Registration Statement.
(6) The obligations of the Company under this Section 6 shall be
in addition to any liability which the Company may otherwise
have to any Indemnified Person and the obligations of any
Indemnified Person under this Section 6 shall be in addition
to any liability which such Indemnified Person may otherwise
have to the Company. The remedies provided in this Section 6
are not exclusive and shall not limit any rights or remedies
which may otherwise be available to an indemnified party at
law or in equity.
(20) RULE 144. With a view to making available to the Investors the
benefits of Rule 144 under the Securities Act or any other
similar rule or regulation of the Commission that may at any
time permit the Investors to sell securities of the Company to
the public without registration ("Rule 144"), the Company
agrees to use its best efforts to:
(1) comply with the provisions of paragraph (c) (1) of Rule 144;
and
(2) file with the Commission in a timely manner all reports and
other documents required to be filed by the Company pursuant
to Section 13 or 15(d) under the Exchange Act; and, if at any
time it is not required to file such reports but in the past
had been required to or did file such reports, it will, upon
the request of any Holder, make available other information as
required by, and so long as necessary to permit sales of, its
Registrable Securities pursuant to Rule 144.
(21) ASSIGNMENT. The rights to have the Company register
Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to any permitted
transferee of all or any portion of such securities (or all or
any portion of any Preferred Shares or Warrant of the Company
which is convertible into such securities) of Registrable
Securities only if: (a) 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, (b) the Company is,
within a reasonable time after such transfer or assignment,
furnished with written notice of (i) the name and address of
such transferee or assignee and (ii) the securities with
respect to which such registration rights are being
transferred or assigned, (c) immediately following such
transfer or assignment, the securities so transferred or
assigned to the transferee or assignee constitute Restricted
Securities, and (d) at or before the time the Company received
the written notice contemplated by clause (b) of this sentence
the transferee or assignee agrees in writing with the Company
to be bound by all of the provisions contained herein.
17
(22) AMENDMENT AND WAIVER. Any provision 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 Investors who hold a majority-in-interest of the
Registrable Securities. Any amendment or waiver effected in
accordance with this Section 9 shall be binding upon each
Investor and the Company.
(23) MISCELLANEOUS.
(1) A person or entity shall be deemed to be a holder of
Registrable Securities whenever such person or entity owns of
record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or
more persons or entities 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.
(2) If, after the date hereof and prior to the Commission
declaring the Registration Statement to be filed pursuant to
Section 2(a) effective under the Securities Act, the Company
grants to any Person any registration rights with respect to
any Company securities which are more favorable to such other
Person than those provided in this Agreement, then the Company
forthwith shall grant (by means of an amendment to this
Agreement or otherwise) identical registration rights to all
Investors hereunder.
(3) Except as may be otherwise provided herein, any notice or
other communication or delivery required or permitted
hereunder shall be in writing and shall be delivered
personally or sent by certified mail, postage prepaid, or by a
nationally recognized overnight courier service, and shall be
deemed given when so delivered personally or by overnight
courier service, or, if mailed, three (3) days after the date
of deposit in the United States mails, as follows:
18
(1) if to the Company, to:
STAR MULTI CARE SERVICES, INC.
00 Xxxxxxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx,
Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxx & Meritz, PC
0 Xxxxxx Xxxxx
Xxx Xxxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxx, Esq..
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(2) if to the Investor, to:
THE SHAAR FUND LTD.,
c/o SHAAR ADVISORY SERVICES LTD.
00 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx 0X
Xxxxxxxxx, Xxxxxx
Attention: Xxx Xxxxxxxx
with a copy to:
XXXXXXX, XXXXXXXXX LLP
0 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(3) if to any other Investor, at such address as
such Investor shall have provided in
writing to the Company.
The Company or any Investor may change the foregoing address by notice given
pursuant to this Section 10(c).
19
(4) 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.
(5) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York. Each of the parties
consents to the jurisdiction of the federal courts whose
districts encompass any part of the City of New York or the state
courts of the State of New York sitting in the City of New York
in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any
objection including any objection based on forum non conveniens,
to the bringing of any such proceeding in such jurisdictions.
(6) The remedies provided in this Agreement are cumulative and not
exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provision, covenants
and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially
the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.
(7) The Company shall not enter into any agreement with respect to
its securities that is inconsistent with the rights granted to
the holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. The Company is
not currently a party to any agreement granting any registration
rights with respect to any of its securities to any person which
conflicts with the Company's obligations hereunder or gives any
other party the right to include any securities in any
Registration Statement filed pursuant hereto, except for such
rights and conflicts as have been irrevocably waived, and except
for the Company's agreement with Perry and Co. to register the
underlying Common Stock with respect to 90,000 stock options
granted to Perry and Co. Without limiting the generality of the
foregoing, without the written consent of the Holders of a
majority in interest of the Registrable Securities, the Company
shall not grant to any person the right to request it to register
any of its securities under the Securities Act unless the rights
so granted are subject in all respect to the prior rights of the
holders of Registrable Securities set forth herein, and are not
otherwise in conflict or inconsistent with the provisions of this
Agreement. The restrictions on the Company's rights to grant
registration rights under this paragraph shall terminate on the
date the Registration Statement to be filed pursuant to Section
2(a) is declared effective by the Commission.
20
(8) This Agreement, the Securities Purchase Agreement, the Escrow
Instructions, dated as of the date hereof (the "Escrow
Instructions"), between the Company, the Investor and Xxxxxxx,
Xxxxxxxxx LLP, the Preferred Shares and the Warrants
constitute the entire agreement among the parties hereto with
respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein. This Agreement, the
Securities Purchase Agreement, the Escrow Instructions, the
Certificate of Amendment and the Warrants supersede all prior
agreements and undertakings among the parties hereto with
respect to the subject matter hereof.
(9) Subject to the requirements of Section 8 hereof, this
Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto.
(10) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the
context may require.
(11) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the
meaning thereof.
(12) The Company acknowledges that any failure by the Company to
perform its obligations under Section 3, or any delay in such
performance could result in direct damages to the Investors
and the Company agrees that, in addition to any other
liability the Company may have by reason of any such failure
or delay, the Company shall be liable for all direct damages
caused by such failure or delay.
(13) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which
shall constitute one and the same agreement. A facsimile
transmission of this signed Agreement shall be legal and
binding on all parties hereto.
21
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
THE COMPANY:
STAR MULTI CARE SERVICES, INC.
By:s/Xxxxxxx Xxxxxxxxx
-------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Chairman of the Board,
President and
Chief Executive Officer
BUYER:
THE SHAAR FUND LTD.
By: INTERCARRIBBEAN SERVICES, INC.
By:s/Xxxxxx Xxxxxxxx
-----------------
Name:
Title:
22
