1
EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated as of the 25th day of January 1999, between the person
whose name and address appears on the signature page hereto (individually, a
"Holder" or, collectively with each of the holders, the "Holders") and Digital
Solutions, Inc., a New Jersey corporation having its principal executive office
at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"). Terms that are
not otherwise defined in this Agreement shall have the meaning given them in the
Plan and Agreement of Merger and Reorganization dated as of October 29, 1998
(the "Merger Agreement") by and among the Company, the TeamStaff Entities and
the Holders.
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Holders have received from the Company shares ("Shares") of the
Company's common stock, par value $.001 per share (the "Common Stock"), pursuant
to the terms of the Merger Agreement; and
WHEREAS, the Company desires to grant to the Holder the registration
rights set forth herein with respect to the Shares.
NOW, THEREFORE, the parties hereto mutually agree as follows:
1. REGISTRABLE SECURITIES. As used herein the term "Registrable
Security" means each of the Shares owned by the Holders as set forth on Exhibit
A annexed hereto; provided, however, that with respect to any particular
Registrable Security, such security shall cease to be a Registrable Security
when, as of the date of determination, (i) it has been effectively registered
under the Securities Act of 1933, as amended (the "Act") and disposed of
pursuant thereto, (ii) registration under the Act is no longer required for the
immediate public distribution of such security, or (iii) it has ceased to be
outstanding. The term "Registrable Securities" means any and/or all of the
securities falling within the foregoing definition of a "Registrable Security."
In the event of any merger, reorganization, consolidation, recapitalization or
other change in corporate structure affecting the Common Stock, such adjustment
shall be made in the definition of "Registrable Security" as is appropriate in
order to prevent any dilution or enlargement of the rights granted pursuant to
this Section 1.
2. AUTOMATIC REGISTRATION. (a) The Company shall use its best efforts
to file a registration statement covering thirty three and one-third percent
(33-1/3%) of the Registrable Securities (registration of 500,000 of such shares
shall be designated by ▇▇▇▇ ▇▇▇▇▇▇▇▇ and the remainder by ▇▇▇▇▇▇ ▇▇▇▇▇) (the
"Initial Registration Statement") with the Securities and Exchange Commission
(the "SEC") under the Act as soon as practicable following the first anniversary
of this Agreement (the "First Required Filing Date"). The Company shall use its
best efforts to cause such Initial Registration Statement to become effective
under the Act as soon as practicable thereafter and shall maintain the
effectiveness of the Initial Registration Statement until the earlier of (i) the
date that all of the Registrable Securities have been sold or (ii) the date that
all of the Holders thereof receive an opinion of counsel to the Company that the
Registrable
1
2
Securities may be sold under the provisions of Rule 144(k) promulgated under the
Act (or any successor provision), so as to permit the public offer and sale of
the Registrable Securities.
(b) In addition to the First Registration Statement, the Company shall
use its best efforts to file a registration statement covering an additional
thirty three and one-third percent (33-1/3%) of the Registrable Securities
(registration of 1,872,223 of such shares shall be designated by ▇▇▇▇▇▇ ▇▇▇▇▇
and the remainder by ▇▇▇▇ ▇▇▇▇▇▇▇▇) (the "Second Registration Statement") with
the Securities and Exchange Commission (the "SEC") under the Act as soon as
practicable following the second anniversary of this Agreement (the "Second
Required Filing Date"). The Company shall use its best efforts to cause such
Second Registration Statement to become effective under the Act as soon as
practicable thereafter and shall maintain the effectiveness of the Second
Registration Statement until the earlier of (i) the date that all of the
Registrable Securities have been sold or (ii) the date that all of the Holders
thereof receive an opinion of counsel to the Company that the Registrable
Securities may be sold under the provisions of Rule 144(k) promulgated under the
Act (or any successor provision), so as to permit the public offer and sale of
the Registrable Securities.
(c) In addition to the Initial Registration Statement and the Second
Registration Statement, the Company shall use its best efforts to file a
registration statement covering the remaining thirty three and one-third percent
(33-1/3%) of the Registrable Securities owned by each Holder (the "Final
Registration Statement") with the SEC under the Act as soon as practicable
following the date which is three years from the date of Closing (as defined in
the Merger Agreement) (the "Final Required Filing Date"). The Company shall use
its best efforts to cause such Final Registration Statement to become effective
under the Act as soon as practicable thereafter and shall maintain the
effectiveness of the Final Registration Statement until the earlier of (i) the
date that all of the Registrable Securities have been sold or (ii) the date that
all of the holders thereof receive an opinion of counsel to the Company that the
Registrable Securities may be sold under the provisions of Rule 144(k)
promulgated under the Act (or any successor provision), so as to permit the
public offer and sale of the Registrable Securities.
(d) Notwithstanding the provision under Section 2(a), 2(b) or 2(c)
hereof, if, at the time of the First Required Filing Date, the Second Required
Filing Date or the Final Required Filing Date, as the case may be, the Company
is negotiating a merger, consolidation, acquisition or sale of all or
substantially all of its assets or a similar transaction and in the written
opinion of counsel to the Company, the Initial Registration Statement, the
Second Registration Statement or the Final Registration Statement, as the case
may be, would be required to include information concerning such transactions or
the parties thereto that is not available at the time, the Company shall
promptly so advise the Holders of the Registrable Securities and, at the
Company's election, to be set forth in such notice ("Notice of Postponement"),
the filing of either the Initial Registration Statement, the Second Registration
Statement or the Final Registration Statement, as the case may be, may be
postponed for a period not to exceed the lesser of (i) the date such information
becomes available to the Company or (ii) ninety (90) days from the First
Required Filing Date, the Second Required Filing Date or the Final Required
Filing Date, as the case may be (the
2
3
"Postponement Period"); provided, however, that the Company shall not be
permitted to give any such Notice of Postponement and to so postpone the filing
of the registration statement more than once.
3. COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. The Company
covenants and agrees as follows:
(a) In connection with any registration under Article 2 hereof, the
Company shall use its best efforts to cause the Initial Registration Statement,
the Second Registration Statement or the Final Registration Statement, as the
case may be, to become effective as promptly as possible and prevent the SEC
from issuing a stop order suspending the effectiveness of the Initial
Registration Statement, the Second Registration Statement or the Final
Registration Statement, as the case may be, or, if any stop order shall be
issued by the SEC in connection therewith, to use its best efforts to obtain the
removal of such order. Following the effective date of the Initial Registration
Statement, the Second Registration Statement or the Final Registration
Statement, as the case may be, the Company shall, upon the request of the
Holder, forthwith supply such reasonable number of copies of the applicable
registration statement, preliminary prospectus and prospectus meeting the
requirements of the Act, and other documents necessary or incidental to the
public offering of the Registrable Securities, as shall be reasonably requested
by the Holder to permit the Holder to make a public distribution of the Holder's
Registrable Securities. The obligations of the Company hereunder with respect to
the Holder's Registrable Securities are subject to the Holder's furnishing to
the Company such appropriate information concerning the Holder, the Holder's
Registrable Securities and the terms of the Holder's offering of such
Registrable Securities as the Company may reasonably request in writing.
(b) The Company shall pay all costs, fees and expenses in connection
with all registration statements filed pursuant to Article 2 hereof, including,
without limitation, the Company's legal and accounting fees, printing expenses,
and blue sky fees and expenses; provided, however, that the Holder shall be
solely responsible for the fees of any counsel retained by the Holder in
connection with such registration and any transfer taxes or underwriting
discounts, commissions or fees applicable to the Registrable Securities sold by
the Holder pursuant thereto.
(c) The Company will take all necessary action which may be required in
qualifying or registering the Registrable Securities included in a registration
statement for offering and sale under the securities or blue sky laws of such
states as are reasonably requested by the Holders of such securities, provided
that the Company shall not be obligated to qualify as a foreign corporation to
do business under the laws of any such jurisdiction.
(d) During the period when a prospectus is required to be delivered
under the Act, promptly file all documents required to be filed by it with the
SEC pursuant to Section 13(a), 13(c), or 14 of the Securities and Exchange Act
of 1934, as amended;
3
4
(e) Promptly notify the Holders in writing of the following: (i) the
date when the registration statement or any post-effective amendment to it
becomes effective, and the date when any amendment to the registration statement
or supplement to a prospectus is filed with the SEC; (ii) the issuance by the
SEC of the stop order suspending the effectiveness of the registration statement
or the initial proceedings for that purpose; (iii) the suspension of
qualification of any Shares for sale in any jurisdiction or the initiation of
any proceedings for that purpose; and (iv) the Company's intention to file an
amendment to the registration statement, or a supplement to any prospectus, that
differs from the prospectus on file when the registration statement became
effective and including documents deemed to be incorporated by reference into a
prospectus.
4. ADDITIONAL TERMS.
(a) The Company shall indemnify and hold harmless the Holder and each
underwriter, within the meaning of the Act, who may purchase from or sell for
the Holder, any Registrable Securities, from and against any and all losses,
claims, damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in the either registration statement
filed pursuant to Article 2 of this Agreement, any other registration statement
filed by the Company under the Act with respect to the registration of the
Registrable Securities, any post-effective amendment to such registration
statements, or any prospectus included therein or caused by any omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission based
upon information furnished or required to be furnished in writing to the Company
by the Holder or underwriter expressly for use therein, which indemnification
shall include each person, if any, who controls either the Holder or underwriter
within the meaning of the Securities Act and each officer, director, employee
and agent of the Holder and underwriter; provided, however, that the
indemnification in this Section 4(a) with respect to any prospectus shall not
inure to the benefit of the Holder or underwriter (or to the benefit of any
person controlling the Holder or underwriter) on account of any such loss,
claim, damage or liability arising from the sale of Registrable Securities by
the Holder or underwriter, if a copy of a subsequent prospectus correcting the
untrue statement or omission in such earlier prospectus was provided to the
Holder or underwriter by the Company prior to the subject sale and the
subsequent prospectus was not delivered or sent by the Holder or underwriter to
the purchaser prior to such sale; and provided further, that the Company shall
not be obligated to so indemnify the Holder or any such underwriter or other
person referred to above unless the Holder or underwriter or other person, as
the case may be, shall at the same time indemnify the Company, its directors,
each officer signing the applicable registration statement and each person, if
any, who controls the Company within the meaning of the Act, from and against
any and all losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in the applicable registration statement,
any registration statement or any prospectus required to be filed or furnished
by reason of this Agreement or caused by any omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, insofar as such losses, claims, damages or liabilities
are caused by any untrue statement or omission based upon information furnished
in writing to the Company by the Holder
4
5
or underwriter expressly for use therein.
(b) If for any reason the indemnification provided for in the preceding
section is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, liability or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative benefits
received by the indemnified party and the indemnifying party, but also the
relative fault of the indemnified party and the indemnifying party, as well as
any other relevant equitable considerations.
(c) Neither the filing of a registration statement by the Company
pursuant to this Agreement nor the making of any request for prospectuses by the
Holder shall impose upon the Holder any obligation to sell the Holder's
Registrable Securities.
(d) The Holder, upon receipt of notice from the Company that an event
has occurred which requires a post-effective amendment to the registration
statement or a supplement to the prospectus included therein, shall promptly
discontinue the sale of Registrable Securities until the Holder receives a copy
of a supplemented or amended prospectus from the Company, which the Company
shall provide as soon as practicable after such notice.
(e) If the Company fails to keep the registration statement referred to
in Article 2 above continuously effective during the requisite period, then the
Company shall promptly use its best efforts to update the registration statement
or file a new registration statement covering the Registrable Securities
remaining unsold, subject to the terms and provisions hereof.
5. GOVERNING LAW. The Registrable Securities will be, if and when
issued, delivered in New York. This Agreement shall be deemed to have been made
and delivered in the State of New York and shall be governed as to validity,
interpretation, construction, effect and in all other respects by the internal
substantive laws of the State of New Jersey, without giving effect to the choice
of law rules thereof.
6. AMENDMENT. This Agreement may only be amended by a written
instrument executed by the Company and the Holder.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.
8. EXECUTION IN COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
9. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication
5
6
hereunder shall be deemed (i) duly given if (and then delivered three business
days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient or (ii) duly
given if (and then delivered one business day after) it is sent by overnight
courier and addressed to the intended recipient. All notices shall be sent to
the addresses as set forth below:
If to the Sellers: Copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Holland & Knight LLP
c/o Holland & Knight LLP ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ (Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.)
If to the Sellers: (continued)
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Digital: Copy to:
Digital Solutions, Inc. ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 369 Lexington Avenue, 18th Fl
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
10. BINDING EFFECT; BENEFITS. The Holder may not assign his or her
rights hereunder. This Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective heirs, legal representatives and
successors. Nothing herein contained, express or implied, is intended to confer
upon any person other than the parties hereto and their respective heirs, legal
representatives and successors, any rights or remedies under or by reason of
this Agreement.
11. HEADINGS. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
6
7
12. SEVERABILITY. Any provision of this Agreement which is held by a
court of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Holder
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Holder
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Holder
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Trustee
of the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1997
Three Year Grantor Retained Annuity
Trust, dated 7/1/97, Holder
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., as Trustee
of the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 1997
Three Year Grantor Retained Annuity
Trust, dated 7/1/97, Holder
DIGITAL SOLUTIONS, INC.
By:_______________________________
Name:
Title:
7