REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this "Agreement")
is
made and entered into as of August 9, 2007, by and among Jpak Group, Inc.,
a
Nevada corporation (f/k/a Rx Staffing, Inc., the "Company"),
and
the purchasers listed on Schedule
I
hereto
(the "Purchasers").
This
Agreement is being entered into in connection with the issuance by the Company
to the Purchasers of Series A Convertible Preferred Stock and Warrants of the
Company upon conversion of Notes (the “Notes”)
held
by the Purchasers.
The
Company and the Purchasers hereby agree as follows:
1. Definitions.
As
used
in this Agreement, the following terms shall have the following
meanings:
"Advice"
shall
have meaning set forth in Section 3(m).
"Affiliate"
means,
with respect to any Person, any other Person which directly or indirectly
through one or more intermediaries Controls, is controlled by, or is under
common control with, such Person. For the avoidance of doubt, with respect
to a
Purchaser which is a general or limited partnership, an Affiliate shall be
deemed to include affiliated partnerships managed by the same management company
or managing general partner or by an entity which controls, is controlled by,
or
is under common control with, such management company or managing general
partner.
"Board"
shall
have meaning set forth in Section 3(n).
"Business
Day"
means
any day except Saturday, Sunday and any day which shall be a legal holiday
or a
day on which banking institutions in the state of New York generally are
authorized or required by law or other government actions to close.
"Closing
Date"
means
the date of the closing of the issuance of the Preferred Stock and the
Warrants.
"Commission"
means
the Securities and Exchange Commission.
"Common
Stock"
means
the Company's Common Stock, par value $0.001 per share.
“Control”
(including the terms “controlling”, “controlled by” or “under common control
with”) means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Effectiveness
Date"
means,
subject to Section 2(b) hereof, with respect to the Registration Statement,
the
earlier of (A) the one hundred fiftieth (150th)
day
following the Closing Date (or in the event the Registration Statement is
reviewed by the Commission, the one hundred eightieth (180th)
day
following the Closing Date) or (B) the
date
which is within five (5) Business Days after the date on which the Commission
informs the Company (i) that the Commission will not review the Registration
Statement or (ii) that
the
Company may request the acceleration of the effectiveness of the Registration
Statement and the Company promptly makes such request; provided that,
if the
Effectiveness Date falls on a Saturday,
Sunday or any other day which shall be a legal holiday or a day on which the
Commission is authorized or required by law or other government actions to
close, the Effectiveness Date shall be the following Business Day.
"Effectiveness
Period"
shall
have the meaning set forth in Section 2.
"Event"
shall
have the meaning set forth in Section 7(e).
"Event
Date"
shall
have the meaning set forth in Section 7(e).
"Exchange
Act"
means
the Securities Exchange Act of 1934, as amended.
"Filing
Date"
means,
subject to Section 2(b) hereof, the sixtieth (60th)
day
following the Closing Date;
provided that,
if the
Filing Date falls on a Saturday,
Sunday or any other day which shall be a legal holiday or a day on which the
Commission is authorized or required by law or other government actions to
close, the Filing Date shall be the following Business Day.
"Holder"
or
"Holders"
means
the holder or holders, as the case may be, from time to time of Registrable
Securities.
"Indemnified
Party"
shall
have the meaning set forth in Section 5(c).
"Indemnifying
Party"
shall
have the meaning set forth in Section 5(c).
"Losses"
shall
have the meaning set forth in Section 5(a).
"Person"
means
an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
"Preferred
Stock"
means
shares of the Company’s Series A Convertible Preferred Stock, par value $0.001
per share, issued to the Purchasers upon conversion of the Notes.
"Proceeding"
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
"Prospectus"
means
the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), 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
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such
Prospectus.
"Registrable
Securities"
means
the shares of Common Stock issuable upon conversion of the Preferred Stock,
the
shares of Common Stock issuable upon exercise of the Warrants and any shares
of
Common Stock issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the foregoing;
provided,
that
the Holder has completed and delivered to the Company a Selling Stockholder
Questionnaire; and provided,
further,
that
the shares of Common Stock issuable upon conversion of the Preferred Stock
and
the shares of Common Stock issuable upon exercise of the Warrants shall cease
to
be Registrable Securities upon the earliest to occur of the following: (A)
sale
pursuant to a Registration Statement or Rule 144 under the Securities Act (in
which case, only such security sold shall cease to be a Registrable Security);
or (B) becoming eligible for sale by the Holder pursuant to Rule
144(k).
"Registration
Statement"
means
the registration statements and any additional registration statements
contemplated by Section 2, including (in each case) the Prospectus, amendments
and supplements to such registration statement or Prospectus, including pre-
and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference in such registration statement.
"Rule
144"
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
"Rule
158"
means
Rule 158 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
"Rule
415"
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
"Rule
424"
means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
"Securities
Act"
means
the Securities Act of 1933, as amended.
"Selling
Stockholder Questionnaire"
means a
questionnaire in the form attached as Exhibit
B
hereto,
or such other form of questionnaire as may reasonably be adopted by the Company
from time to time.
"Special
Counsel"
means
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP and/or another law firm retained by the
Holders of a majority of the Registrable Securities outstanding at such time,
for which the Holders will be reimbursed by the Company pursuant to Section
4.
"Warrants"
means
the Series A Warrants and the Series B Warrants to purchase shares of Common
Stock issued to the Purchasers upon conversion of the Notes.
2. Resale
Registration.
(a) On
or
prior to the Filing Date, the Company shall prepare and file with the Commission
a "resale" Registration Statement providing for the resale of all Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule
415. The Registration Statement shall be on Form SB-2 (except if the Company
is
not then eligible to register for resale the Registrable Securities on Form
SB-2, in which case such registration shall be on another appropriate form
in
accordance herewith and with the Securities Act and the rules promulgated
thereunder). Such Registration Statement shall cover to the extent allowable
under the Securities Act and the rules promulgated thereunder (including Rule
416), such indeterminate number of additional shares of Common Stock resulting
from stock splits, stock dividends or similar transactions with respect to
the
Registrable Securities. The Company shall (i) not permit any securities other
than the Registrable Securities and the securities listed on Schedule
II
hereto
to be included in the Registration Statement and (ii) use its commercially
reasonable efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof,
but
in any event prior to the Effectiveness Date, and to keep such Registration
Statement continuously effective under the Securities Act until such date as
is
the earlier of (x) the date when all Registrable Securities covered by such
Registration Statement have been sold or (y) the date on which the Registrable
Securities may be sold without any restriction pursuant to Rule 144(k) as
determined by the counsel to the Company pursuant to a written opinion letter,
addressed to the Company's transfer agent to such effect (the "Effectiveness
Period").
The
Company shall request that the effective time of the Registration Statement
is
4:00 p.m. Eastern Time on the effective date. If at any time and for any reason,
an additional Registration Statement is required to be filed because at such
time the actual number of shares of Common Stock into which the Preferred Stock
is convertible and the Warrants are exercisable plus the number of shares of
Common Stock exceeds the number of shares of Registrable Securities remaining
under the Registration Statement, the Company shall have thirty (30) days to
file such additional Registration Statement, and the Company shall use its
commercially reasonable efforts to cause such additional Registration Statement
to be declared effective by the Commission as soon as possible, but in no event
later than sixty (60) days after filing (one hundred twenty (120) days after
filing in the event the Registration Statement is reviewed by the Commission).
(b) Notwithstanding
anything to the contrary set forth in this Section 2, in the event the
Commission does not permit the Company to register all of the Registrable
Securities in the Registration Statement because of the Commission’s application
of Rule 415 or the Commission requires the Company to either exclude shares
held
by certain Holders or deem such Holders to be underwriters with respect to
their
Registrable Securities, the Company shall register in the Registration Statement
such number of Registrable Securities as is permitted by the Commission without
naming such Holder as an underwriter (unless such Holder agrees to be named
as
an underwriter), provided,
however,
that
the number of Registrable Securities to be included in such Registration
Statement or any subsequent registration statement shall be determined in the
following order: (i) first, the shares of Common Stock issuable upon conversion
of the Preferred Stock shall be registered on a pro rata basis among the holders
of the Preferred Stock, and (ii) second, the shares of Common Stock issuable
upon exercise of the Warrants shall be registered on a pro rata basis among
the
holders of the Warrants. In the event the Commission does not permit the Company
to register all of the Registrable Securities in the initial Registration
Statement, the Company shall use its commercially reasonable efforts to file
subsequent Registration Statements to register the Registrable Securities that
were not registered in the initial Registration Statement as promptly as
possible and in a manner permitted by the Commission. For purposes of this
Section 2(b), “Filing
Date”
means
with respect to each subsequent Registration Statement filed pursuant hereto,
the
later
of (i) sixty (60) days following the sale of substantially all of the
Registrable Securities included in the initial Registration Statement or any
subsequent Registration Statement and (ii) six (6) months following the
effective date of the initial Registration Statement or any subsequent
Registration Statement, as applicable, or such earlier or later date as
permitted or required by the Commission. For
purposes of this Section 2(b), “Effectiveness
Date”
means
with respect to each subsequent Registration Statement filed pursuant hereto,
the earlier of (A)
the
ninetieth (90th)
day
following the filing date of such Registration Statement (or in the event such
Registration Statement is reviewed by the Commission, the one hundred twentieth
(120th)
day
following such filing date) or (B) the date which is within five (5) Business
Days after the date on which the Commission informs the Company (i) that the
Commission will not review such Registration Statement or (ii) that
the
Company may request the acceleration of the effectiveness of such Registration
Statement and the Company promptly makes such request; provided that,
if the
Effectiveness Date falls on a Saturday, Sunday or any other day which shall
be a
legal holiday or a day on which the Commission is authorized or required by
law
or other government actions to close, the Effectiveness Date shall be the
following Business Day.
(c) Each
Holder agrees to furnish to the Company a completed Selling Stockholder
Questionnaire not more than fifteen (15) Trading Days following the date of
this
Agreement. Each Holder further agrees that it shall not be entitled to be named
as a selling security holder in the Registration Statement or use the Prospectus
for offers and resales of Registrable Securities at any time, unless such Holder
has returned to the Company a completed and signed Selling Stockholder
Questionnaire. If a Holder of Registrable Securities returns a Selling
Stockholder Questionnaire after the deadline specified in the previous sentence,
the Company shall use its commercially reasonable efforts to take such actions
as are required to name such Holder as a selling security holder in the
Registration Statement or any pre-effective or post-effective amendment thereto
and to include (to the extent not theretofore included) in the Registration
Statement the Registrable Securities identified in such late Selling Stockholder
Questionnaire; provided that the Company shall not be required to file an
additional Registration Statement solely for such shares. Each Holder
acknowledges and agrees that the information in the Selling Stockholder
Questionnaire will be used by the Company in the preparation of the Registration
Statement and hereby consents to the inclusion of such information in the
Registration Statement.
3. Registration
Procedures.
In
connection with the Company's registration obligations hereunder, the Company
shall:
(a)
Prepare
and file with the Commission, on or prior to the Filing Date, a Registration
Statement on Form SB-2 (or if the Company is not then eligible to register
for
resale the Registrable Securities on Form SB-2 such registration shall be on
another appropriate form in accordance herewith and with the Securities Act
and
the rules promulgated thereunder) in accordance with the plan of distribution
as
set forth on Exhibit
A
hereto
and in accordance with applicable law, regulations and Commission policies,
and
cause the Registration Statement to become effective and remain effective as
provided herein; provided,
however,
that
not less than three (3) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto,
the
Company shall (i) furnish to the Holders and any Special Counsel, copies of
all
such documents proposed to be filed, which documents will be subject to the
review of such Holders and such Special Counsel, and (ii) cause its officers
and
directors, counsel and independent certified public accountants to respond
to
such inquiries as shall be necessary, in the reasonable opinion of Special
Counsel, to conduct a reasonable review of such documents. The Company shall
not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities or any Special Counsel shall reasonably object in writing within
three (3) Business Days of their receipt thereof.
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities Act; (iii)
respond as promptly as possible to any comments received from the Commission
with respect to the Registration Statement or any amendment thereto and as
promptly as possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to the Registration
Statement; (iv) file the final prospectus pursuant to Rule 424 of the Securities
Act no later than 9:00 a.m. Eastern Time on the second Business Day following
the date the Registration Statement is declared effective by the Commission;
and
(v) comply in all material respects with the provisions of the Securities Act
and the Exchange Act with respect to the disposition of all Registrable
Securities covered by the Registration Statement during the Effectiveness Period
in accordance with the intended methods of disposition by the Holders thereof
set forth in the Registration Statement as so amended or in such Prospectus
as
so supplemented.
(c) Notify
the Holders of Registrable Securities and any Special Counsel as promptly as
possible (and, in the case of (i)(A) below, not less than three (3) days prior
to such filing, and in the case of (iii) below, on the same day of receipt
by
the Company of such notice from the Commission) and (if requested by any such
Person) confirm such notice in writing no later than two (2) Business Days
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is filed; (B) when the
Commission notifies the Company whether there will be a "review" of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement and (C) with respect to the Registration Statement or
any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or
for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any
or
all of the Registrable Securities or the initiation or threatening of any
Proceedings for that purpose; (iv) if at any time any of the representations
and
warranties of the Company contained in any agreement contemplated hereby ceases
to be true and correct in all material respects; (v) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale
in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event that makes any statement made
in the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect
or
that requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material
fact
or omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading.
(d) Use
its
commercially reasonable efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of, as promptly as possible, (i) any order suspending the
effectiveness of the Registration Statement or (ii) any suspension of the
qualification (or exemption from qualification) of any of the
Registrable Securities
for sale in any jurisdiction.
(e) If
requested by the Holders of a majority in interest of the Registrable
Securities, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information as
the
Company reasonably agrees should be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to
be
incorporated in such Prospectus supplement or post-effective
amendment.
(f) If
requested by any Holder, furnish to such Holder and any Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished
or
incorporated by reference) promptly after the filing of such documents with
the
Commission.
(g) Promptly
deliver to each Holder and any Special Counsel, without charge, as many copies
of the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request; and
subject to the provisions of Sections 3(m) and 3(n), the Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
(h) Prior
to
any public offering of Registrable Securities, use its commercially reasonable
efforts to register or qualify or cooperate with the selling Holders and any
Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; provided,
however,
that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where it
is
not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(i) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a
Registration Statement, which certificates, to the extent permitted by
applicable federal and state securities laws, shall be free of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any Holder may request in connection with any
sale of Registrable Securities.
(j) Upon
the
occurrence of any event contemplated by Section 3(c)(vi), as promptly as
possible, prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein
by
reference, and file any other required document so that, as thereafter
delivered, neither the Registration Statement nor such Prospectus will 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, in the light
of the circumstances under which they were made, not misleading.
(k) Use
its
commercially reasonable efforts to cause all Registrable Securities relating
to
the Registration Statement to be listed or quoted on the OTC Bulletin Board
or
any other securities exchange, quotation system or market, if any, on which
similar securities issued by the Company are then listed or traded.
(l) Comply
in
all material respects with all applicable rules and regulations of the
Commission and make generally available to its security holders all documents
filed or required to be filed with the Commission, including, but not limited,
to, earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 90 days after the end of any 12-month
period if such period is a fiscal year commencing on the first day of the first
fiscal quarter of the Company after the effective date of the Registration
Statement, which statement shall conform to the requirements of Rule 158.
(m) The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by
such
Holder and the natural persons thereof that have voting and dispositive control
over the Registrable Securities. During any periods that the Company is unable
to meet its obligations hereunder with respect to the registration of the
Registrable Securities solely because any Holder fails to furnish such
information within five (5) Trading Days of the Company’s request, any
liquidated damages that are accruing at such time as to such Holder only shall
be tolled and any Event that may otherwise occur solely because of such delay
shall be suspended as to such Holder only, until such information is delivered
to the Company.
If
the
Registration Statement refers to any Holder by name or otherwise as the holder
of any securities of the Company, then such Holder shall have the right to
require (if such reference to such Holder by name or otherwise is not required
by the Securities Act or any similar federal or applicable state law then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each
Holder covenants and agrees that it will not sell any Registrable Securities
under the Registration Statement until the Company has electronically filed
the
Prospectus as then amended or supplemented as contemplated in Section 3(g)
and
notice from the Company that such Registration Statement and any post-effective
amendments thereto have become effective as contemplated by Section
3(c).
Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the
kind
described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(n),
such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of
the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing (the
"Advice")
by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
(n) If
(i)
there is material non-public information regarding the Company which the
Company's Board of Directors (the "Board")
determines not to be in the Company's best interest to disclose and which the
Company is not otherwise required to disclose, (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available
to
the Company which the Board determines not to be in the Company's best interest
to disclose, or (iii) the Company is required to file a post-effective amendment
to the Registration Statement to incorporate the Company’s quarterly and annual
reports and audited financial statements on Forms 10-QSB and 10-KSB, then the
Company may (x) postpone or suspend filing of a registration statement for
a
period not to exceed thirty (30) consecutive days or (y) postpone or suspend
effectiveness of a registration statement for a period not to exceed twenty
(20)
consecutive Business Days; provided that the Company may not postpone or suspend
effectiveness of a registration statement under this Section 3(n) for more
than
sixty (60) Business Days in the aggregate during any three hundred sixty (360)
day period; provided,
however,
that no
such postponement or suspension shall be permitted for consecutive thirty (30)
Business Day periods arising out of the same set of facts, circumstances or
transactions.
4. Registration
Expenses.
All
fees
and expenses incident to the performance of or compliance with this Agreement
by
the Company, except as and to the extent specified in this Section 4, shall
be
borne by the Company whether or not the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses referred to in
the
foregoing sentence shall include, without limitation, (i) all registration
and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with the OTC Bulletin Board and/or
each other securities exchange or market on which Registrable Securities are
required hereunder to be quoted or listed, if any (B) with respect solely to
filing fees required to be paid to the National Association of Securities
Dealers, Inc. and the NASD Regulation, Inc. and (C) in compliance with state
securities or Blue Sky laws (including, without limitation, the reasonable
fees
and disbursements of counsel for the Holders in connection with Blue Sky
qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of
such
jurisdictions as the Holders of a majority of Registrable Securities may
designate not to exceed $5,000 unless the Company elects to have such filings
completed by its counsel)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and
of
printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and Special Counsel for the Holders,
in
the case of the Special Counsel, up to a maximum amount of $3,500, (v)
Securities Act liability insurance, if the Company so desires such insurance,
and (vi) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement, including, without limitation, the Company's independent public
accountants. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation,
all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. The Company shall not be responsible
for any discounts, commissions, transfer taxes or other similar fees incurred
by
the Holders in connection with the sale of the Registrable
Securities.
5. Indemnification.
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Holder, the officers, directors, managers, partners, members,
shareholders, agents, brokers, investment advisors and employees of each of
them, each Person who controls any such Holder (within the meaning of Section
15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and reasonable attorneys' fees) and expenses (collectively, "Losses")
, as
incurred, arising out of or relating to any violation of securities laws by
the
Company or untrue or alleged untrue statement of a material fact contained
in
the Registration Statement, any Prospectus or any form of prospectus or in
any
amendment or supplement thereto or in any preliminary prospectus, or arising
out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case
of
any Prospectus or form of prospectus or supplement thereto, in the light of
the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that such untrue statements or omissions are based
solely upon information regarding such Holder or such other Indemnified Party
furnished in writing to the Company by such Holder expressly for use therein.
The Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with
the
transactions contemplated by this Agreement.
(b) Indemnification
by Holders.
Each
Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents and employees
of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses (as determined by a court of competent jurisdiction
in a final judgment not subject to appeal or review), as incurred, arising
solely out of or based solely upon any untrue statement of a material fact
contained in the Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely out
of
or based solely upon any omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in
any
information so furnished in writing by such Holder or other Indemnifying Party
to the Company specifically for inclusion in the Registration Statement or
such
Prospectus. Notwithstanding anything to the contrary contained herein, each
Holder shall be liable under this Section 5(b) for only that amount as does
not
exceed the net proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified
Party"),
such
Indemnified Party promptly shall notify the Person from whom indemnity is sought
(the "Indemnifying
Party)
in
writing, and the Indemnifying Party shall be entitled to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to
the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (2) the Indemnifying Party shall have failed promptly to assume
the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such parties shall have been advised by counsel
that a conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case,
if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened Proceeding in respect of which any Indemnified Party is a party
and
indemnity has been sought hereunder, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section) shall be paid to
the
Indemnified Party, as incurred, within ten (10) Business Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided,
that the Indemnified Party shall reimburse all such fees and expenses to the
extent it is finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder).
(d) Contribution.
If a
claim for indemnification under Section 5(a) or 5(b) is due but unavailable
to
an Indemnified Party because of a failure or refusal of a governmental authority
to enforce such indemnification in accordance with its terms (by reason of
public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates
to
information supplied by, such Indemnifying, Party or Indemnified Party, and
the parties'
relative intent, knowledge, access to information and opportunity to correct
or
prevent such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the
limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees
or
expenses if the indemnification provided for in this Section was available
to
such party in accordance with its terms. In no event shall any selling Holder
be
required to contribute an amount under this Section 5(d) in excess of the net
proceeds received by such Holder upon sale of such Holder’s Registrable
Securities pursuant to the Registration Statement giving rise to such
contribution obligation.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. 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
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties pursuant to the law.
6. Rule
144.
As
long
as any Holder owns Preferred Stock, Warrants or Registrable Securities, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by
the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act. As long as any Holder owns Preferred Stock, Warrants or Registrable
Securities, if the Company is not required to file reports pursuant to Section
13(a) or 15(d) of the Exchange Act, it will prepare and furnish to the Holders
and make publicly available in accordance with Rule 144(c) promulgated under
the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well
as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
such
Person to sell Conversion Shares and Warrant Shares without registration under
the Securities Act within the limitation of the exemptions provided by Rule
144
promulgated under the Securities Act, including providing any legal opinions
relating to such sale pursuant to Rule 144. Upon the request of any Holder,
the
Company shall deliver to such Holder a written certification of a duly
authorized officer as to whether it has complied with such
requirements.
7. Miscellaneous.
(a) Remedies.
In the
event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, such Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.
The Company and each Holder agree that monetary damages would not
provide adequate
compensation for any losses incurred by reason of a breach by it of any of
the
provisions of this Agreement and hereby further agrees that, in the event of
any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No
Inconsistent Agreements.
Neither
the Company nor any of its subsidiaries has, as of the date hereof entered
into
and currently in effect, nor shall the Company or any of its subsidiaries,
on or
after the date of this Agreement, enter into any agreement with respect to
its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Except as disclosed
in Schedule
II
hereto,
neither the Company nor any of its subsidiaries has previously entered into
any
agreement currently in effect granting any registration rights with respect
to
any of its securities to any Person. Without limiting the generality of the
foregoing, without the written consent of the Holders of a majority of the
then
outstanding Registrable Securities, the Company shall not grant to any Person
the right to request the Company to register any securities of the Company
under
the Securities Act unless the rights so granted are subject in all respects
to
the prior rights in full of the Holders set forth herein, and are not otherwise
in conflict with the provisions of this Agreement.
(c) No
Piggyback on Registrations.
Neither
the Company nor any of its security holders (other than the Holders in such
capacity pursuant hereto or as disclosed on Schedule
II
hereto)
may include securities of the Company in the Registration Statement, and the
Company shall not after the date hereof enter into any agreement providing
such
right to any of its securityholders, unless the right so granted is subject
in
all respects to the prior rights in full of the Holders set forth herein, and
is
not otherwise in conflict with the provisions of this Agreement.
(d) Piggy-Back
Registrations.
If at
any time when there is not an effective Registration Statement covering (i)
Conversion Shares or (ii) Warrant Shares, the Company shall determine to prepare
and file with the Commission a registration statement relating to an offering
for its own account or the account of others under the Securities Act of any
of
its equity securities, other than on Form S-4 or Form S-8 (each as promulgated
under the Securities Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with stock option or
other employee benefit plans, the Company shall send to each Holder of
Registrable Securities written notice of such determination and, if within
thirty (30) days after receipt of such notice, or within such shorter period
of
time as may be specified by the Company in such written notice as may be
necessary for the Company to comply with its obligations with respect to the
timing of the filing of such registration statement, any such Holder shall
so
request in writing, (which request shall specify the Registrable Securities
intended to be disposed of by the Purchasers), the Company will cause the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the Holder, to the extent requisite
to permit the disposition of the Registrable Securities so to be registered,
provided that if at any time after giving written notice of its intention to
register any securities 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 or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to such Holder and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation
to
pay expenses in accordance with Section 4 hereof), and (ii) in the case of
a
determination to delay registering, shall be permitted to delay registering
any
Registrable Securities being registered pursuant to this Section 7(d) for the
same period as the delay in registering such other securities. The Company
shall
include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided,
however,
that
the Company shall not be required to register any Registrable Securities
pursuant to this Section 7(d) that are eligible for sale pursuant to Rule 144(k)
of the Securities Act. In the case of an underwritten public offering, if the
managing underwriter(s) or underwriter(s) should reasonably object to the
inclusion of the Registrable Securities in such registration statement, then
if
the Company after consultation with the managing underwriter should reasonably
determine that the inclusion of such Registrable Securities would materially
adversely affect the offering contemplated in such registration statement,
and
based on such determination recommends inclusion in such registration statement
of fewer or none of the Registrable Securities of the Holders, then (x) the
number of Registrable Securities of the Holders included in such registration
statement shall be reduced pro-rata among such Holders (based
upon the number of Registrable Securities requested to be included in the
registration), if the Company after consultation with the underwriter(s)
recommends the inclusion of fewer Registrable Securities, or (y) none of the
Registrable Securities of the Holders shall be included in such registration
statement, if the Company after consultation with the underwriter(s) recommends
the inclusion of none of such Registrable Securities; provided,
however,
that if
securities are being offered for the account of other persons or entities as
well as the Company, such reduction shall not represent a greater fraction
of
the number of Registrable securities intended to be offered by the Holders
than
the fraction of similar reductions imposed on such other persons or entities
(other than the Company).
(e) Failure
to File Registration Statement and Other Events.
The
Company and the Purchasers agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date
and
maintained in the manner contemplated herein during the Effectiveness Period
or
if certain other events occur. The Company and the Holders further agree that
it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if (A) the Registration Statement is not filed on or prior to
the
Filing Date, or (B) the Registration Statement is not declared effective by
the
Commission on or prior to the Effectiveness Date, or (C) the
Registration Statement is filed with and declared effective by the Commission
but thereafter ceases to be effective as to all Registrable Securities at any
time prior to the expiration of the Effectiveness Period, without being
succeeded by a subsequent Registration Statement filed with and declared
effective by the Commission in accordance with the terms of this Agreement,
or
(D)
the
Company has breached Section 3(n) hereof, or
(E)
following the date that the shares of Common Stock initially commence trading
or
quotation, trading in the Common Stock shall be suspended or if the Common
Stock
is no longer quoted on or delisted from the principal exchange on which the
Common Stock is then traded for any reason for more than five (5) Business
Days
in the aggregate, in
each
case other than as a result of a breach of this Agreement by a Holder or a
Holder’s failure to return a Selling Stockholder Questionnaire within the time
period provided by Section 2(c) hereof (any such failure or breach being
referred to as an "Event,"
and
for purposes of clauses (A), (B) and (D) the date on which such Event occurs,
or
for purposes of clause (C) after
more than thirty (30) days, or for purposes of clause (E) the date on which
such
five (5) Business Day period is exceeded
being
referred to as "Event
Date"),
the
Company shall pay an amount as liquidated damages to each Holder, payable in
cash, equal to two percent (2.0%) of the amount of the Holder’s initial
investment in the Preferred Stock for each calendar month or portion thereof
thereafter from the Event Date until the applicable Event is cured; provided,
however,
that in
no event shall the amount of liquidated damages payable at any time and from
time to time to any Holder pursuant to this Section 7(e) exceed an aggregate
of
ten percent (10%) of the amount of the Holder’s initial investment in the
Preferred Stock. The Company shall not be liable for liquidated damages under
this Agreement as to any Registrable Securities which are not permitted by
the
Commission to be included in a Registration Statement because of its application
of Rule 415 until such time as the provisions of this Agreement as to the
Registration Statements required to be filed pursuant to Section 2(b) are
triggered, in which case the provisions of this Section 7(e) shall once again
apply, if applicable. In such case, the liquidated damages shall be calculated
to only apply to the percentage of Registrable Securities which are permitted
by
the Commission to be included in the Registration Statement. Notwithstanding
anything to the contrary in this paragraph (e), if (a) any of the Events
described in clauses (A), (B),
(C) or
(D)
shall
have occurred, (b) on or prior to the applicable Event Date, the Company shall
have exercised in good faith its rights under Section 3(n) hereof and (c) the
postponement or suspension permitted pursuant to such Section 3(n) shall remain
effective as of such applicable Event Date, then the applicable Event Date
shall
be deemed instead to occur on the second Business Day following the termination
of such postponement or suspension. Liquidated damages payable by the Company
pursuant to this Section 7(e) shall be payable on the first (1st)
Business Day of each thirty (30) day period following the Event Date.
Notwithstanding anything to the contrary contained herein, in no event shall
any
liquidated damages be payable with respect to the Warrants or the Warrant
Shares.
(f) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to departures
from
the provisions hereof may not be given, unless the same shall be in writing
and
signed by the Company and the Holders of seventy-five percent (75%) of the
Registrable Securities outstanding.
(g) Notices.
Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, telecopy, e-mail or facsimile at the address or number designated
below (if delivered on a business day during normal business hours where such
notice is to be received), or the first business day following such delivery
(if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
|
If
to the Company:
|
Jpak
Group, Inc.
c/o
Qingdao Renmin Printing Co., Ltd.
Xx.
00, Xxxxxxx Xxxx
Xxxxxxx,
Xxxxxxxx Xxxxxxxx
Postal
Code 266401
P.R.
China
Attention:
Xx. Xxxxx Xxxx
Tel.
No.: (000) 0000 0000
Fax
No.: (000) 0000 0000
|
|
with
copies (which shall not constitute notice) to:
|
Xxxxxxxxxx
Xxxxxxx PC
00
Xxxxxxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attention:
Xxxxxx X. Xxxxxxxx
Tel
No.: (000) 000-0000
Fax
No.: (000) 000-0000
|
|
If
to any Purchaser:
|
At
the address of such Purchaser set forth on Exhibit
A
to
this Agreement, with copies to Purchaser’s counsel as set forth below or
as specified in writing by such Purchaser:
|
|
with
copies (which shall not constitute notice) to:
|
Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxxxxxx X. Xxxxxxx
Tel
No.: (000) 000-0000
Fax
No.: (000) 000-0000
|
Any
party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.
(h) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns and shall inure to the benefit of each
Holder and its successors and assigns. The Company may not assign this Agreement
or any of its rights or obligations hereunder without the prior written consent
of each Holder.
(i) Assignment
of Registration Rights.
The
rights of each Holder hereunder, including the right to have the Company
register for resale Registrable Securities in accordance with the terms of
this
Agreement, shall be automatically assignable by each Holder to any Person of
all
or a portion of
the
Preferred Stock or the Registrable Securities if: (i) the Holder agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer
or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws, or (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this Section, the transferee
or
assignee agrees in writing with the Company to be bound by all of the provisions
of this Agreement. The rights to assignment shall apply to the Holders (and
to
subsequent) successors and assigns.
(j) Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement and shall become effective when
counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or
on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
(k) Governing
Law; Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to any of the conflicts
of
law principles which would result in the application of the substantive law
of
another jurisdiction. This Agreement shall not be interpreted or construed
with
any presumption against the party causing this Agreement to be drafted. The
Company and the Holders agree that venue for any dispute arising under this
Agreement will lie exclusively in the state or federal courts located in New
York County, New York, and the parties irrevocably waive any right to raise
forum
non conveniens
or any
other argument that New York is not the proper venue. The Company and the
Holders irrevocably consent to personal jurisdiction in the state and federal
courts of the state of New York. The Company and the Holders consent to process
being served in any such suit, action or proceeding by delivering a copy thereof
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing in this Section 7(k) shall affect or limit
any right to serve process in any other manner permitted by law. The Company
and
the Holders hereby agree that the prevailing party in any suit, action or
proceeding arising out of or relating to this Agreement, shall be entitled
to
reimbursement for reasonable legal fees from the non-prevailing party. The
parties hereby waive all rights to a trial by jury.
(l) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(m) Severability.
If any
term, provision, covenant or restriction of this Agreement is held to be
invalid, illegal, void or unenforceable in any respect, the remainder of the
terms, provisions, 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 reasonable 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.
(n) Headings.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
(o) Shares
Held by the Company and its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the
Company or its Affiliates (other than any Holder or transferees or successors
or
assigns thereof if such Holder is deemed to be an Affiliate solely by reason
of
its holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
(p) Independent
Nature of Purchasers.
The
Company acknowledges that the obligations of each Purchaser under this Agreement
are several and not joint with the obligations of any other Purchaser, and
no
Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser under this Agreement. The Company acknowledges that
the
decision of each Purchaser to purchase Securities upon conversion of the Notes
has been made by such Purchaser independently of any other Purchaser and
independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company
or of
its Subsidiaries which may have been made or given by any other Purchaser or
by
any agent or employee of any other Purchaser, and no Purchaser or any of its
agents or employees shall have any liability to any Purchaser (or any other
person) relating to or arising from any such information, materials, statements
or opinions. The Company acknowledges that nothing contained herein, and no
action taken by any Purchaser pursuant hereto or thereto (including, but not
limited to, the (i) inclusion of a Purchaser in the Registration Statement
and
(ii) review by, and consent to, such Registration Statement by a Purchaser)
shall be deemed to constitute the Purchasers as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement. The Company
acknowledges that each Purchaser shall be entitled to independently protect
and
enforce its rights, including without limitation, the rights arising out of
this
Agreement, and it shall not be necessary for any other Purchaser to be joined
as
an additional party in any proceeding for such purpose. The Company acknowledges
that for reasons of administrative convenience only, this Agreement has been
prepared by counsel for one of the Purchasers and such counsel does not
represent all of the Purchasers. The Company acknowledges that it has
elected to provide all Purchasers with the same terms for the convenience of
the
Company and not because it was required or requested to do so by the Purchasers.
The Company acknowledges that such procedure with respect to this Agreement
in
no way creates a presumption that the Purchasers are in any way acting in
concert or as a group with respect to this Agreement or the transactions
contemplated hereby.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of
the
date first indicated above.
| JPAK GROUP, INC. | ||
| By:________________________________ | ||
| Name: | ||
| Title: | ||
| PURCHASER: | ||
| By:_____________________________________ | ||
| Name: | ||
| Title: |
Schedule
I
Purchasers
|
Names
and
Addresses
of
Purchasers
|
Number
of Preferred
Shares
& Warrants
Purchased
|
Dollar
Amount of
Investment
|
Schedule
II
Other
Securities to be Included on the Registration Statement
| Joyrich Group Limited | 11,285,300 | |||
| Fabregas Group Limited | 2,097,588 | |||
| Statepro Investments Ltd. | 774,954 | |||
| Raytech Investments Limited | 1,085,836 | |||
| Capital American Markets Limited | 561,322 |
Exhibit
A
Plan
of Distribution
The
selling security holders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock being offered under this prospectus on any stock exchange,
market or trading facility on which shares of our common stock are traded or
in
private transactions. These sales may be at fixed or negotiated prices. The
selling security holders may use any one or more of the following methods when
disposing of shares:
| · |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
| · |
block
trades in which the broker-dealer will attempt to sell the shares as
agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
| · |
purchases
by a broker-dealer as principal and resales by the broker-dealer for
its
account;
|
| · |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
| · |
privately
negotiated transactions;
|
| · |
to
cover short sales made after the date that the registration statement
of
which this prospectus is a part is declared effective by the
Commission;
|
| · |
broker-dealers
may agree with the selling security holders to sell a specified number
of
such shares at a stipulated price per
share;
|
| · |
a
combination of any of these methods of sale;
and
|
| · |
any
other method permitted pursuant to applicable
law.
|
The
shares may also be sold under Rule 144 under the Securities Act of 1933, as
amended (“Securities Act”), if available, rather than under this prospectus. The
selling security holders have the sole and absolute discretion not to accept
any
purchase offer or make any sale of shares if they deem the purchase price to
be
unsatisfactory at any particular time.
The
selling security holders may pledge their shares to their brokers under the
margin provisions of customer agreements. If a selling security holder defaults
on a margin loan, the broker may, from time to time, offer and sell the pledged
shares.
Broker-dealers
engaged by the selling security holders may arrange for other broker-dealers
to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling security holders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, which
commissions as to a particular broker or dealer may be in excess of customary
commissions to the extent permitted by applicable law.
If
sales
of shares offered under this prospectus are made to broker-dealers as
principals, we would be required to file a post-effective amendment to the
registration statement of which this prospectus is a part. In the post-effective
amendment, we would be required to disclose the names of any participating
broker-dealers and the compensation arrangements relating to such
sales.
The
selling security holders and any broker-dealers or agents that are involved
in
selling the shares offered under this prospectus may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with these
sales. Commissions received by these broker-dealers or agents and any profit
on
the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Any broker-dealers or agents
that are deemed to be underwriters may not sell shares offered under this
prospectus unless and until we set forth the names of the underwriters and
the
material details of their underwriting arrangements in a supplement to this
prospectus or, if required, in a replacement prospectus included in a
post-effective amendment to the registration statement of which this prospectus
is a part.
The
selling security holders and any other persons participating in the sale or
distribution of the shares offered under this prospectus will be subject to
applicable provisions of the Exchange Act, and the rules and regulations under
that act, including Regulation M. These provisions may restrict activities
of,
and limit the timing of purchases and sales of any of the shares by, the selling
security holders or any other person. Furthermore, under Regulation M, persons
engaged in a distribution of securities are prohibited from simultaneously
engaging in market making and other activities with respect to those securities
for a specified period of time prior to the commencement of such distributions,
subject to specified exceptions or exemptions. All of these limitations may
affect the marketability of the shares.
If
any of
the shares of common stock offered for sale pursuant to this prospectus are
transferred other than pursuant to a sale under this prospectus, then subsequent
holders could not use this prospectus until a post-effective amendment or
prospectus supplement is filed, naming such holders. We offer no assurance
as to
whether any of the selling security holders will sell all or any portion of
the
shares offered under this prospectus.
We
have
agreed to pay all fees and expenses we incur incident to the registration of
the
shares being offered under this prospectus. However, each selling security
holder and purchaser is responsible for paying any discounts, commissions and
similar selling expenses they incur.
We
and
the selling security holders have agreed to indemnify one another against
certain losses, damages and liabilities arising in connection with this
prospectus, including liabilities under the Securities Act.
Exhibit
B
Selling
Stockholder Notice and Questionnaire
The
undersigned understands that Jpak Group, Inc. (the “Company”)
intends to file with the Securities and Exchange Commission a registration
statement on Form SB-2 (the “Resale
Registration Statement”)
for
the registration and the resale under Rule 415 of the Securities Act of 1933,
as
amended (the “Securities
Act”),
of
the Registrable Securities in accordance with the terms of the Registration
Rights Agreement entered into by the Company and the undersigned (the
“Agreement”).
All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement.
In
order
to sell or otherwise dispose of any Registrable Securities pursuant to the
Resale Registration Statement, a holder of Registrable Securities generally
will
be required to be named as a selling stockholder in the related prospectus
or a
supplement thereto (as so supplemented, the “Prospectus”),
deliver the Prospectus to purchasers of Registrable Securities (including
pursuant to Rule 172 under the Securities Act) and be bound by the provisions
of
the Agreement (including certain indemnification provisions, as described
below). Holders must complete and deliver this Notice and Questionnaire in
order
to be named as selling stockholders in the Prospectus. Holders
of Registrable Securities who do not complete, execute and return this Notice
and Questionnaire within five (5) Trading Days following the date of the
Agreement (1) will not be named as selling stockholders in the Resale
Registration Statement or the Prospectus and (2) may not use the Prospectus
for
resales of Registrable Securities.
Certain
legal consequences arise from being named as a selling stockholder in the Resale
Registration Statement and the Prospectus. Holders of Registrable Securities
are
advised to consult their own securities law counsel regarding the consequences
of being named or not named as a selling stockholder in the Resale Registration
Statement and the Prospectus.
NOTICE
The
undersigned holder (the “Selling
Stockholder”)
of
Registrable Securities hereby gives notice to the Company of its intention
to
sell or otherwise dispose of Registrable Securities owned by it and listed
below
in Item (3), unless otherwise specified in Item (3), pursuant to the Resale
Registration Statement. The undersigned, by signing and returning this Notice
and Questionnaire, understands and agrees that it will be bound by the terms
and
conditions of this Notice and Questionnaire and the Agreement.
The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate and complete:
QUESTIONNAIRE
1. Name.
|
(a)
|
Full
Legal Name of Selling Stockholder:
|
| ___________________________________________________________ |
|
(b)
|
Full
Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities Listed in Item 3 below are
held:
|
| ___________________________________________________________ |
|
(c)
|
Full
Legal Name of Natural Control Person (which means a natural person
who
directly or indirectly alone or with others has power to vote or
dispose
of the securities covered by the
questionnaire):
|
| ___________________________________________________________ |
2.
Address for Notices to Selling Stockholder:
| ___________________________________________________________________________ |
| ___________________________________________________________________________ |
| ___________________________________________________________________________ |
|
Telephone:__________________________________________
|
|
Fax:________________________________________________
|
|
Contact
Person:_______________________________________
|
|
E-mail
address of Contact
Person:__________________________
|
3.
Beneficial Ownership of Registrable Securities:
|
(a)
|
Type
and Number of Registrable Securities beneficially
owned:
|
| ___________________________________________________________________________ |
| ___________________________________________________________________________ |
| ___________________________________________________________________________ |
|
(b)
|
Number
of shares of Common Stock to be registered pursuant to this Notice
for
resale:
|
| ___________________________________________________________________________ |
| ___________________________________________________________________________ |
| ___________________________________________________________________________ |
4.
Broker-Dealer Status:
|
(a)
|
Are
you a broker-dealer?
|
Yes
o No
o
(b) If
“yes”
to Section 4(a), did you receive your Registrable Securities as compensation
for
investment
banking services to the Company?
Yes
o No
o
|
Note:
|
If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
|
|
(c)
|
Are
you an affiliate of a
broker-dealer?
|
Yes
o No
o
|
Note:
|
If
yes, provide a narrative explanation
below:
|
|
(c)
|
If
you are an affiliate of a broker-dealer, do you certify that you
bought
the Registrable Securities in the ordinary course of business, and
at the
time of the purchase of the Registrable Securities to be resold,
you had
no agreements or understandings, directly or indirectly, with any
person
to distribute the Registrable
Securities?
|
Yes
o No
o
|
Note:
|
If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
|
5.
Beneficial Ownership of Other Securities of the Company Owned by the Selling
Stockholder.
Except
as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.
Type
and
amount of other securities beneficially owned:
______________________________________________________________________________
______________________________________________________________________________
6.
Relationships with the Company:
Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.
State
any
exceptions here:
______________________________________________________________________________
______________________________________________________________________________
7.
Plan of Distribution:
The
undersigned has reviewed the form of Plan of Distribution attached as Exhibit
A
to the Agreement, and hereby confirms that, except as set forth below, the
information contained therein regarding the undersigned and its plan of
distribution is correct and complete.
State
any
exceptions here:
______________________________________________________________________________
______________________________________________________________________________
***********
The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
and prior to the effective date of any applicable Resale Registration Statement.
All notices hereunder shall be made in writing, by hand delivery, confirmed
or
facsimile transmission, first-class mail or air courier guaranteeing overnight
delivery at the address set forth below. In the absence of any such
notification, the Company shall be entitled to continue to rely on the accuracy
of the information in this Notice and Questionnaire.
By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items (1) through (7) above and the inclusion
of such information in the Resale Registration Statement and the Prospectus.
The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of any such Registration
Statement and the Prospectus.
By
signing below, the undersigned acknowledges that it understands its obligation
to comply, and agrees that it will comply, with the provisions of the Exchange
Act and the rules and regulations thereunder, particularly Regulation M in
connection with any offering of Registrable Securities pursuant to the Resale
Registration Statement. The undersigned also acknowledges that it understands
that the answers to this Questionnaire are furnished for use in connection
with
Registration Statements filed pursuant to the Agreement and any amendments
or
supplements thereto filed with the Commission pursuant to the Securities
Act.
The
undersigned hereby acknowledges and is advised of the following Interpretation
A.65 of the July 1997 SEC Manual of Publicly Available Telephone Interpretations
regarding short selling:
“An
Issuer filed a Form S-3 registration statement for a secondary offering of
common stock which is not yet effective. One of the selling stockholders wanted
to do a short sale of common stock “against the box” and cover the short sale
with registered shares after the effective date. The issuer was advised that
the
short sale could not be made before the registration statement become effective,
because the shares underlying the short sale are deemed to be sold at the time
such sale is made. There would, therefore, be a violation of Section 5 if the
shares were effectively sold prior to the effective date.”
By
returning this Questionnaire, the undersigned will be deemed to be aware of
the
foregoing interpretation.
I
confirm
that, to the best of my knowledge and belief, the foregoing statements
(including without limitation the answers to this Questionnaire) are
correct.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Questionnaire to be executed and delivered either in person or by its duly
authorized agent.
| Dated:_________________________ | Beneficial Owner: _______________ | |
| By:__________________________ | ||
| Name: | ||
| Title: | ||
