Exhibit 10.86
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COMMON STOCK AND WARRANT
PURCHASE AGREEMENT
ATC Healthcare, Inc.
January 12, 2007
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COMMON STOCK AND WARRANT
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PURCHASE AGREEMENT
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THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT (this "Agreement"), dated
as of January 12, 2007, is by and among ATC Healthcare, Inc., a Delaware
corporation (the "Company"), and Roaring Fork Capital SBIC, L.P., a Delaware
limited partnership ("Roaring Fork" or the "Purchaser").
Recitals
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A. The Company and Roaring Fork are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act and Rule 506 of Regulation D as promulgated by the
SEC under the Securities Act.
B. Roaring Fork wishes to purchase, and the Company wishes to sell, upon
the terms and conditions stated in this Agreement, (i) 2,000,000 shares of
Common Stock (the "Shares") and (ii) warrants, in substantially the form
attached hereto as Exhibit A (the "Warrants") to acquire up to 1,000,000 shares
of Common Stock (the "Warrant Shares").
C. The Shares, the Warrants and the Warrant Shares collectively are
referred to herein as the "Securities".
The parties hereto, in consideration of the premises and their mutual
covenants and agreements herein set forth and intending to be legally bound
hereby, covenant and agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions. In addition to other words and terms defined
elsewhere in this Agreement, the following words and terms have the meanings set
forth below (and such meanings shall be equally applicable to both the singular
and plural form of the terms defined, as the context may require):
"Affiliate" shall mean with respect to any Person, any other Person that is
directly or indirectly controlling, controlled by or under common control with
such Person or entity or any of its Subsidiaries, and the term "control"
(including the terms "controlled by" and "under common control with") shall mean
having, directly or indirectly, the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities or by contract or otherwise. Without limiting the foregoing, (i) the
ownership of ten percent (10%) or more of the voting securities of a Person
shall be deemed to constitute control and notwithstanding anything to the
contrary herein, and (ii) neither Roaring Fork nor any of its Affiliates shall
be deemed to be Affiliates of the Company by virtue of the transactions
contemplated in this Agreement.
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"Agreement" shall mean this Common Stock and Warrant Purchase Agreement, as
the same may be amended, restated, supplemented or otherwise modified from time
to time.
"Board" shall mean the Board of Directors of ATC Healthcare, Inc.
"Business" shall mean the principal business of the Company as set forth in
Section 4.1(b) hereof and as such shall continue to be conducted following the
purchase and sale of the Common Stock and the Warrants hereby.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which banking institutions in Denver, Colorado are authorized or required
by law to close.
"Bylaws" shall mean the Bylaws or analogous instrument governing
operations, including all amendments and supplements thereto.
"Charter Documents" shall mean the certificate of incorporation filed with
the appropriate Governmental Authorities, including all amendments and
supplements thereto.
"Closing" shall mean the closing of the purchase and sale of the Common
Stock and the Warrants pursuant to this Agreement.
"Closing Date" shall mean January 12, 2007.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the Class A Common Stock of the Company.
"Company" shall have the meaning assigned to such term in the introductory
paragraph hereto, except as provided otherwise in this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may from time to time be amended, and the rules and regulations of any
governmental agency or authority, as from time to time in effect, promulgated
thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fiscal Year" or "fiscal year" shall mean each 12-month period ending on
December 31 of each year.
"Governmental Authorities" shall mean any federal, state or municipal court
or other governmental department, commission, board, bureau, agency or
instrumentality, governmental or quasi-governmental, domestic or foreign.
"IRS" shall mean the Internal Revenue Service and any governmental body or
agency succeeding to the functions thereof.
"Laws" shall mean all U.S. and foreign federal, state or local statutes,
laws, rules, regulations, ordinances, codes, policies, rules of common law, and
the like, now or hereafter in effect, including any judicial or administrative
interpretations thereof, and any judicial or administrative orders, consents,
decrees or judgments.
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"Lien" shall mean any security interest, pledge, bailment, mortgage,
hypothecation, deed of trust, conditional sales and title retention agreement
(including any lease in the nature thereof), charge, encumbrance or other
similar arrangement or interest in real or personal property, whether such
interest is based on common law, statute or contract.
"Material Adverse Effect" shall mean a material adverse effect on the
business, properties, assets, liabilities or condition (financial or otherwise)
of the Company, individually and/or taken as a whole.
"Person" shall mean any individual, partnership, limited partnership,
corporation, limited liability Company, association, joint stock company, trust,
joint venture, unincorporated organization or governmental entity or department,
agency or political subdivision thereof.
"Plan" shall mean any employee benefit plan (within the meaning of Section
3(3) of ERISA), established or maintained by the Company or any member of the
Controlled Group.
"Principal Market" shall mean the American Stock Exchange.
"Properties and Facilities" shall have the meaning assigned to such term in
Section 4.1(r) hereof.
"Property" shall mean, as to any Person, all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent balance sheet of such Person and its subsidiaries
under GAAP.
"Proprietary Rights" shall mean all patents, trademarks, trade names,
service marks, copyrights, inventions, production methods, licenses, formulas,
know-how, trade secrets and good will related to any of the foregoing,
regardless of whether such are registered with any Governmental Authorities,
including applications therefor.
"Purchase Documents" shall mean this Agreement (including all schedules
attached to the Agreement), the Registration Rights Agreement, the Common Stock
and the Warrants as any or all of the foregoing may be supplemented or amended
from time to time.
"Purchaser" shall have the meaning assigned to such term in the
introductory paragraph hereto.
"Registrable Securities" shall mean the Shares, the Warrant Shares and any
shares issued or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event, or any exercise or other price adjustment
with respect to the Common Stock.
"Roaring Fork" shall mean Roaring Fork Capital SBIC, L.P., the Purchaser,
which is managed by Roaring Fork Capital Management, LLC.
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"SBA Compliance Agreement" means the SBA Compliance Agreement between the
Company and Roaring Fork dated as of January 12, 2007.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities" means the Shares, Warrants and the Warrant Shares.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" of any corporation shall mean any other corporation or limited
liability company of which the outstanding capital stock possessing a majority
of voting power in the election of directors (otherwise than as the result of a
default) is owned or controlled by such corporation directly or indirectly
through Subsidiaries.
"Trading Day" means (i) a day on which the Common Stock is traded on a
Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock
is not listed on a Trading Market (other than the OTC Bulletin Board), a day on
which the Common Stock is traded in the over-the-counter market, as reported by
the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any
Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
shall mean a Business Day.
"Trading Market" means whichever of the New York Stock Exchange, the
American Stock Exchange, the NASDAQ Global Market, the NASDAQ Global Select
Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common
Stock is listed or quoted for trading on the date in question.
"Transaction Documents" shall have the meaning assigned to such term in
Section 4.1(f) hereof.
"Transactions" shall mean the purchase of the Shares and the Warrants as
contemplated by this Agreement, and all other agreements contemplated hereby and
thereby.
1.2 Accounting Principles. The character or amount of any asset, liability,
capital account or reserve and of any item of income or expense to be
determined, and any consolidation or other accounting computation to be made,
and the construction of any definition containing a financial term, pursuant to
this Agreement shall be determined or made in accordance with generally accepted
accounting principles in the United States of America consistently applied
("GAAP").
1.3 Other Definitional Provisions; Construction. Whenever the context so
requires, neuter gender includes the masculine and feminine, the singular number
includes the plural and vice versa. The words "hereof" "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not in any particular provision of this agreement, and
references to section, article, annex, schedule, exhibit and like references are
references to this Agreement unless otherwise specified. References in this
Agreement to any Persons shall include such Persons' successors and permitted
assigns.
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ARTICLE 2
ISSUE AND SALE OF COMMON STOCK AND WARRANTS
2.1 Authorization and Issuance of the Shares and Warrants. The Company has
duly authorized the offering of the Shares and Warrants to Roaring Fork.
2.2 Purchase Price. Subject to the terms and conditions and in reliance
upon the representations, warranties and agreements set forth herein, the
Company shall sell to Roaring Fork for $600,000 invested in the Company (the
"Purchase Price"), and Roaring Fork shall purchase from the Company, the Shares
and the Warrants. Roaring Fork and the Company agree that the Shares and the
Warrants constitute an "investment unit" for purposes of Section 1273(c)(2) of
the Code. On or before the Closing Date, Roaring Fork shall notify the Company
of its determination of the allocation of the issue price of such investment
unit between the Shares and the Warrants in accordance with Section 1273(c)(2)
of the Code and Treasury Regulation Section 1.1273-2(h), and neither Roaring
Fork nor the Company shall take any position inconsistent with such allocation
in any tax return or in any judicial or administrative proceeding in respect of
taxes.
2.3 The Closing. Delivery of and payment for the Shares and the Warrants to
be sold to Roaring Fork will be made on the Closing Date at such place and date
as may be mutually agreeable to the Company and Roaring Fork. Delivery of the
Shares and Warrants shall be made to Roaring Fork against payment of the
$600,000, by check or by wire transfer of immediately available funds in the
manner agreed to by the Company and Roaring Fork. The Shares and the Warrants
shall be issued in the name of Roaring Fork.
ARTICLE 3
CONDITIONS
3.1 Conditions to Purchase of Securities. The obligation of Roaring Fork to
purchase and pay for the Shares and Warrants is subject to the satisfaction,
prior to or at the Closing, of the following conditions at the time of its
purchase:
(a) Representations and Warranties True. The representations and warranties
contained in Article 4 hereof shall be true and correct in all material respects
at and as of the Closing Date as though then made, except to the extent of
changes caused by the transactions expressly contemplated herein.
(b) Material Adverse Change. Except as described in the SEC Reports, there
will have been no material adverse change in the business of the Company since
September 30, 2006.
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(c) Closing Documents. The Company shall have delivered or ordered to be
delivered to the Purchaser all of the following documents in form and substance
satisfactory to the Purchaser:
(i) the certificate for the Shares, duly completed and executed by the
Company;
(ii) the Warrants, duly completed and executed by the Company;
(iii) the Registration Rights Agreement, duly completed and executed
by the Company;
(iv) the Amendments to the Certificate of Designation of the Series C
Preferred Stock and the warrants issued to Roaring Fork in connection with
the purchase and sale of the Series C Preferred Stock changing the
conversion price of the Series C Preferred Stock to $.40 and the exercise
price of the warrants to $.45, respectively.
(v) a copy of the Charter Documents and Bylaws of the Company
certified by the Secretary or Assistant Secretary of the Company as of the
Closing Date;
(vi) copies of the resolutions duly adopted by the Board authorizing
the execution, delivery and performance by the Company of this Agreement
and each of the other agreements, instruments and documents contemplated
hereby to which the Company is a party, and the consummation of all of the
other Transactions, certified as of each Closing Date by the president or
secretary of the Company;
(vii) a certificate dated as of the Closing Date from the President
and Secretary, as officers of the Company, stating that the conditions
specified in this Section 3.1 have been fully satisfied or waived by
Roaring Fork with respect to its purchase;
(viii) the SBA Compliance Agreement, duly completed and executed by
the Company; and
(ix) such other documents relating to the Transactions contemplated by
this Agreement that Roaring Fork may reasonably request.
(d) Proceedings. All proceedings taken or required to be taken in
connection with the transactions contemplated hereby to be consummated at or
prior to the Closing and all documents incident thereto will be satisfactory in
form and substance to Roaring Fork.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Representations and Warranties of the Company. Unless the context
requires otherwise, all references to the "Company" shall include each of the
Company's Subsidiaries, unless the context requires otherwise. As a material
inducement to Roaring Fork to enter into this Agreement and purchase the Shares
and the Warrants, the Company hereby represents and warrants to Roaring Fork as
follows:
(a) Organization and Power. The Company is duly organized, validly existing
and in good standing under the laws of its state of organization. The Company
has all requisite corporate or other organizational power and authority and all
material licenses, permits, approvals and authorizations necessary to own and
operate its properties, to carry on its businesses as now conducted and
presently proposed to be conducted and to carry out the Transactions, and is
qualified to do business in every jurisdiction where the failure to so qualify
might reasonably be expected to have a Material Adverse Effect. The Company has
its principal place of business in Lake Success, New York. The copies of the
Charter Documents and Bylaws of the Company that have been furnished to Roaring
Fork reflect all amendments made thereto at any time prior to the date of this
Agreement and are correct and complete.
(b) Principal Business. The Company is primarily engaged in providing
medical supplemental staffing services (the "Business").
(c) SEC Reports; Financial Statements. Except as set forth on Schedule
4.1(c), the Company has filed all reports required to be filed by it under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof reports filed on Form 10-K, Form 10-Q, and Form 8-K, for the two
years preceding the date hereof (or such shorter period as the Company was
required by law to file such reports) (the foregoing materials being
collectively referred to herein as the "SEC Reports" and, together with the
Schedules to this Agreement (if any), the "Disclosure Materials") on a timely
basis or has timely filed a valid extension of such time of filing and has filed
any such SEC Reports prior to the expiration of any such extension. Attached as
Schedule 4.1(c) is a list of any SEC Reports not available on the ▇▇▇▇▇ system.
As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules
and regulations of the SEC promulgated thereunder, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the
SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position of
the Company and its consolidated Subsidiaries as of and for the dates thereof
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments. The Company's Common Stock is registered pursuant to Section
12(g) of the Exchange Act, and the Company has taken no action designed to, or
which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company
received any notification that the SEC is contemplating terminating such
registration. No other information provided by or on behalf of the Company to
Roaring Fork which is not included in the SEC Reports, including in any
disclosure schedules, contains any untrue statement of a material fact or omits
to state any material fact necessary in order to make the statements therein, in
the light of the circumstance under which they are or were made not misleading.
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(d) Capitalization and Related Matters. As of the Closing Date and
immediately thereafter, the authorized capital stock of the Company and the
shares of stock that are issued, outstanding and reserved for issuance upon
conversion of notes, exercise of warrants and Options and exercise of the
Warrants hereunder (after giving effect to anti-dilution adjustments) are as set
forth on Schedule 4.1(d) hereto. As of the Closing Date, the Company will not
have outstanding any capital stock or securities convertible or exchangeable for
any shares of its capital stock except as set forth in Schedule 4.1(d), and will
not have outstanding any rights or options to subscribe for or to purchase its
capital stock or any stock or securities convertible into or exchangeable for
its capital stock, except as set forth in Schedule 4.1(d). As of the Closing
Date, the Company will not be subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock, except as set forth herein and the Charter Documents,
respectively, as in effect on the date hereof. As of the Closing, all of the
outstanding shares of the Company's capital stock will be validly issued, fully
paid and nonassessable. Except as set forth on the Schedule 4.1(d), there are no
statutory or contractual stockholders' preemptive rights or notices with respect
to the issuance of the Shares and Warrants hereunder. Subject to and based on
the accuracy of all representations made by Roaring Fork in this Offering, the
Company has not violated any applicable federal or state securities laws in
connection with the offer, sale or issuance of any of its capital stock, and the
offer, sale and issuance of the Shares and Warrants hereunder do not require
registration under the Securities Act or any applicable state securities laws.
(e) Subsidiaries. Except as set forth on Schedule 4.1(e), the Company does
not own, or hold any rights to acquire, any shares of stock or any other
security or interest in any other Person. The Company has no Subsidiaries except
as set forth on Schedule 4.1(e).
(f) Authorization; No Breach. The execution, delivery and performance of
the Purchase Documents, and the SBA Compliance Agreement (collectively, the
"Transaction Documents"), and the consummation of the Transactions have been
duly authorized by the Company. The Company has the requisite corporate power
and authority to enter into and perform its obligations under the Transaction
Documents and to issue the Shares, Warrants and Warrant Shares in accordance
with the terms hereof and thereof. Except as set forth in Section 4.1(f), no
further filing, consent, or authorization is required by the Company, its Board
of Directors, or its stockholders. Except as set forth on Schedule 4.1(f), the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance of the Shares and Warrants
and reservation for issuance and issuance of the Warrant Shares) will not (i)
result in a violation of any certificates or articles of incorporation, articles
of formation, certificates or articles of designations or other constituent
documents of the Company or any of its Subsidiaries, any capital stock of the
Company or any of its Subsidiaries or bylaws of the Company or any of its
Subsidiaries or (ii) conflict with, or constitute a default (or an event which
would with notice or lapse of time or both would become a default) in any
respect under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree, including
foreign, federal and state securities laws and regulations and the rules and
regulations of the Principal Market, applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or effective.
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(g) Enforceability. This Agreement constitutes, and each of the other
Transaction Documents when duly executed and delivered by the Company will
constitute, legal, valid and binding obligations of the Company enforceable in
accordance with their respective terms.
(h) No Material Adverse Change. Except as disclosed in Schedule 4.1(h),
since the date of the latest audited financial statements included within the
SEC Reports, except as specifically disclosed in the SEC Reports, (i) there has
been no event, occurrence or development that has had or that could reasonably
be expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade
payables, accrued expenses and other liabilities incurred in the ordinary course
of business consistent with past practice and (B) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or required to
be disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting or the identity of its auditors, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) except as set forth
on Schedule 4.1(h), the Company has not issued any equity securities to any
officer, director or Affiliate. The Company does not have pending before the SEC
any request for confidential treatment of information.
(i) Litigation. Except as described in the SEC Reports, the Company has not
received notice of the filing of any material actions, suits or proceedings at
law or in equity or by or before any arbitrator or any Governmental Authority
(collectively, "Lawsuits") now pending nor, to the best knowledge of the
Company's management after due inquiry, have any material Lawsuits been
threatened against or filed by or materially affecting the Company or against
any of its directors or officers or Affiliates relating to the assets or rights
of the Company or the Business.
(j) Compliance with Laws. The Company is not in violation of any applicable
Law in any material respect. The Company is not in default with respect to any
judgment, order, writ, injunction, decree, rule or regulation of any
Governmental Authority. There is no investigation, enforcement action or
regulatory action pending or threatened against or affecting the Company by any
Governmental Authority. There is no remedial or other corrective action that the
Company is required to take to remain in compliance with any judgment, order,
writ, injunction or decree of any Governmental Authority or to maintain any
material permits, approvals or licenses granted by any Governmental Authority in
full force and effect. During the past five (5) years, none of the officers,
directors or management of the Company have been arrested or convicted of any
material crime nor have any of them been bankrupt or an officer or director of a
bankrupt company.
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(k) Transactions With Affiliates and Employees. Except as set forth in the
SEC Reports referenced in Schedule 4.1(k), none of the officers or directors of
the Company or the Principal Shareholders and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
(l) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Company is in material compliance with any and
all applicable material requirements of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 that are
effective as of the date hereof, and any and all applicable material rules and
regulations promulgated by the SEC thereunder that are effective as of the date
hereof.
(m) Certain Fees. Neither the Company, nor any of its Subsidiaries or
Affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Shares and Warrants.
Except for any payments that may be due to Bathgate Capital Partners LLC, no
brokerage or finder's fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. Roaring Fork shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement.
(n) Application of Takeover Protections. The Company has taken all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company's
Charter Documents, or the laws of its state of incorporation that is or could
become applicable to the Purchaser as a result of the Purchaser and the Company
fulfilling their obligations or exercising their rights under the Transaction
Documents, including without limitation the Company's issuance of the Shares,
the Warrants and the Warrant Shares and Roaring Fork's ownership of the Shares,
the Warrants, and the Warrant Shares.
(o) Taxes. Except as set forth on Schedule 4.1(o), the Company has filed or
caused to be filed all Federal, state and local tax returns that are required to
be filed by it, and has paid or caused to be paid all taxes shown to be due and
payable on such returns or on any assessments received by it, including payroll
taxes.
(p) Labor and Employment. The Company is and each of its Plans are in
compliance in all material respects with those provisions of ERISA, the Code,
the Age Discrimination in Employment Act, and the regulations and published
interpretations thereunder which are applicable to the Company or any such Plan.
The Company is in compliance in all material respects with all labor and
employment laws, rules, regulations and requirements of all applicable domestic
and foreign jurisdictions. There are no pending or threatened labor disputes,
work stoppages or strikes.
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(q) Properties; Security Interests. Except as set forth in Schedule 4.1(q),
the Company has good and marketable title to, or valid leasehold interests in,
all of the material assets and properties used or useful by the Company in the
Business (collectively, the "Properties and Facilities"). All of the Properties
and Facilities are in good repair, working order and condition and all such
assets and properties are, except as set forth in the SEC Reports. The
Properties and Facilities constitute all of the material assets, properties and
rights of any type used in or necessary for the conduct of the Business.
(r) Intellectual Property. The Company has good title and ownership of, or
has sufficient rights to, all trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes and patents, including without limitation the Proprietary Rights
(collectively, the "Intellectual Property") used in or necessary for its
business as now conducted or as proposed to be conducted. None of the
Intellectual Property used in or necessary for the Company's business as now
conducted conflicts with or infringes, nor has the Company received any written
or oral communications alleging that the Company has violated or, by conducting
its business, would violate, any Intellectual Property of any other Person. The
transactions contemplated under this Agreement will not alter, impair or
otherwise affect any rights of the Company in the Intellectual Property. The
Company has taken commercially reasonable measures to protect the proprietary
nature of the Intellectual Property and to maintain in confidence all trade
secrets and confidential information owned or used by the Company.
There are no legal or governmental proceedings, including interference,
re-examination, reissue, opposition, nullity, or cancellation proceedings
pending that relate to any of the Intellectual Property, other than review of
pending patent applications, and the Company is not aware of any information
indicating that such proceedings are threatened or contemplated by any
governmental entity or any other Person.
(s) Employment Agreements; Intellectual Property Agreements. The Company is
not aware that any of its employees or independent contractors is obligated
under any contract (including licenses, covenants or commitments of any nature)
or other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee's or
independent contractor's best efforts to promote the interest of the Company or
that would conflict with the Company's business as now conducted or as proposed
to be conducted. Neither the execution or delivery of this Agreement, nor the
carrying on of the Company's business by the employees and independent
contractors of the Company, nor the conduct of the Company's business as now
conducted, or as currently proposed to be conducted, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any such employee or independent contractor is now
obligated. It is not and will not be necessary to use any inventions of any of
the Company's employees (or persons the Company currently intends to hire) made
prior to their employment by the Company. Schedule 4.1(s) and the specific SEC
Reports referenced therein list all material employment agreements, including
non-competition agreements, confidentiality and intellectual property
agreements, between the Company and its directors, officers, key employees and
agents. To the knowledge of the Company, no key employee of the Company is in
violation of any term of any employment contract, patent disclosure agreement,
proprietary information agreement, noncompetition agreement, or any other
contract or agreement or any restrictive covenant relating to the right of any
such key employee to be employed by the Company because of the nature of the
business conducted or to be conducted by the Company or relating to the use of
trade secrets or proprietary information of others, and the continued employment
of the key employees does not subject the Company or Roaring Fork to any
material liability to third parties.
- 11 -
To the knowledge of the Company, no key employee of the Company whose
termination, either individually or in the aggregate, would have a Material
Adverse Effect, has expressed any present intention of terminating his
employment with the Company
(t) Complete Disclosure. All factual information furnished by or on behalf
of the Company to Roaring Fork for purposes of or in connection with this
Agreement or the Transactions is, and all other such factual information
hereafter furnished by or on behalf of the Company will be, true and accurate in
all material respects on the date as of which such information is furnished and
not incomplete by omitting to state any fact necessary to make such information
not misleading at such time in light of the circumstances under which such
information was provided.
(u) Side Agreements. Neither the Company nor any Affiliate of the Company
nor any director, officer or employee of the Company or any of its Affiliates
has entered into, as of the date hereof, any side agreement, either oral or
written, with any individual or business, pursuant to which the director,
officer, employee, Company or Affiliate agreed to do anything beyond the
requirements of the formal, written contracts executed by the Company and
disclosed in the SEC reports.
(v) Product Liabilities. There are no product recalls, trade disputes,
product liabilities or product tampering claims now pending, threatened against
or made by or affecting the Company or any of its directors, officers or
employees or the businesses, assets or rights of the Company.
(w) Business Plan. The business plan which the Company delivered to Roaring
Fork on or about December 14, 2006, has been prepared honestly and in good
faith, with reasonable basis, by management of the Company. All potential
material changes that have become known to Management since December 14, 2006,
with respect to the Company's business plan are listed on Schedule 4.1(h).
(x) Environmental Laws. Except as set forth in Schedule 4.1(x), the Company
and its Subsidiaries, to their knowledge, (i) are in material compliance with
any and all Environmental Laws (as hereinafter defined), (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect. The term "Environmental Laws" means all federal, state,
local or foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, "Hazardous Materials") into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
- 12 -
(y) Subsidiary Rights. The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such Subsidiary.
(z) Internal Accounting and Disclosure Controls. The Company and each of
its Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference. The
Company maintains disclosure controls and procedures (as such term is defined in
Rule 13a-14 under the Exchange Act) that are effective in ensuring that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of the SEC,
including, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is accumulated and communicated to the
Company's management, including its principal executive officer or officers and
its principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure. During the twelve months prior to the
date hereof neither the Company nor any of its Subsidiaries have received any
notice or correspondence from any accountant relating to any potential material
weakness in any part of the system of internal accounting controls of the
Company or any of its Subsidiaries.
(aa) Indebtedness and Other Contracts. Except as disclosed in Schedule
4.1(aa) or in the SEC Reports, neither the Company nor any of its Subsidiaries
(i) has any outstanding Indebtedness (as defined below), (ii) is a party to any
contract, agreement or instrument, the violation of which, or default under
which, by the other party(ies) to such contract, agreement or instrument could
reasonably be expected to result in a Material Adverse Effect, (iii) is in
violation of any term of or in default under any contract, agreement or
instrument relating to any Indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a Material
Adverse Effect, or (iv) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the judgment of the
Company's officers, has or is expected to have a Material Adverse Effect.
Schedule 4.1(aa) provides a detailed description of the material terms of any
such outstanding Indebtedness. For purposes of this Agreement: (x)
"Indebtedness" of any Person means, without duplication (A) all indebtedness for
borrowed money in excess of $100,000 individually (the "Debt Threshold"), (B)
all obligations in excess of the Debt Threshold issued, undertaken or assumed as
the deferred purchase price of property or services (other than trade payables
entered into in the ordinary course of business), (C) all reimbursement or
payment obligations with respect to letters of credit, surety bonds and other
similar instruments in excess of the Debt Threshold, (D) all obligations in
excess of the Debt Threshold evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses, (E) all indebtedness in excess of
the Debt Threshold created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations in excess of the Debt Threshold under any leasing or
similar arrangement which, in connection with generally accepted accounting
principles, consistently applied for the periods covered thereby, is classified
as a capital lease, (G) all indebtedness referred to in clauses (A) through (F)
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any mortgage, lien, pledge,
charge, security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become liable for
the payment of such indebtedness, and (H) all Contingent Obligations in excess
of the Debt Threshold in respect of indebtedness or obligations of others of the
kinds referred to in clauses (A) through (G) above; (y) "Contingent Obligation"
means, as to any Person, any direct or indirect liability, contingent or
otherwise, of that Person with respect to any Indebtedness of another Person if
the primary purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of such liability
that such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; and (z)
"Person" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
- 13 -
(bb) Off Balance Sheet Arrangements. There is no transaction, arrangement,
or other relationship between the Company and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the Company in its
Exchange Act filings and is not so disclosed or that otherwise would be
reasonably likely to have a Material Adverse Effect.
(cc) Investment Company Status. The Company is not, and upon consummation
of the sale of the Securities will not be, an "investment company," a company
controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
- 14 -
(dd) Transfer Taxes. On the Closing Date, all stock transfer or other taxes
(other than income or similar taxes) which are required to be paid in connection
with the sale and transfer of the Securities to be sold to Roaring Fork
hereunder will be, or will have been, fully paid or provided for by the Company,
and all laws imposing such taxes will be or will have been complied with.
(ee) Foreign Corrupt Practices. Neither the Company nor any of its
Subsidiaries nor any director, officer, agent, employee or other Person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company or any of its Subsidiaries (i) used
any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.
(ff) No Undisclosed Events, Liabilities, Developments or Circumstances. No
event, liability, development or circumstance has occurred or exists, or is
contemplated to occur with respect to the Company, its Subsidiaries or their
respective business, properties, prospects, operations or financial condition,
that would be required to be disclosed by the Company under applicable
securities laws on a registration statement on Form S-1 filed with the SEC
relating to an issuance and sale by the Company of its Common Stock and which
has not been publicly announced.
(gg) No Integrated Offering. None of the Company, its Subsidiaries, any of
their affiliates, and any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the Securities Act or cause this offering of the Securities
to be integrated with prior offerings by the Company for purposes of the
Securities Act or any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated. None of the Company, its Subsidiaries, their affiliates and any
Person acting on their behalf will take any action or steps referred to in the
preceding sentence that would require registration of any of the Securities
under the Securities Act or cause the offering of the Securities to be
integrated with other offerings.
(hh) Dilutive Effect. The Company understands and acknowledges that the
number of Warrant Shares issuable upon exercise of the Warrants will increase in
certain circumstances. The Company further acknowledges that its obligation to
issue the Warrant Shares upon exercise of the Warrants in accordance with this
Agreement and the Warrants is, in each case, absolute and unconditional,
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.
(ii) No Changes to Bylaws or Charter Documents. There have been no changes
in the Bylaws or the charter documents for the Company and its Subsidiaries
since the closing of the Series C Preferred Stock.
- 15 -
4.2 Survival of Company Representations and Warranties. All representations
and warranties contained in this Agreement and any financial statements,
instruments, certificates, schedules or other documents delivered in connection
herewith, shall survive the execution and delivery of this Agreement only for a
period of eighteen (18) months from the date of this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Roaring Fork hereby represents and warrants to the Company as follows:
5.1 Purchase Entirely for Its Own Account. This Agreement is made with
Roaring Fork in reliance upon its representation to the Company that the Shares
and the Warrants will be acquired for investment for the Purchaser's own
account, not as a nominee or agent, and not with any agreement for the resale or
distribution of any part thereof. Subject to the immediate preceding sentence,
nothing contained herein shall be deemed a representation or warranty by Roaring
Fork to hold any of the Securities for any period of time.
5.2 Disclosure of Information. Roaring Fork has had the opportunity to ask
questions of, and receive answers from officers and directors of the Company, to
review the SEC Reports, and to obtain additional information regarding the
Company and this Offering. Neither such inquiries nor any other investigation
conducted by or on behalf of Roaring Fork or its representatives or counsel
shall modify, amend or affect Roaring Fork's right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company's
representations and warranties contained in the Purchase Documents.
5.3 Accredited and Sophisticated Investor; Investment Experience. Roaring
Fork represents that it is a sophisticated investor and an "accredited investor"
as defined in Rule 501 under the Securities Act. Roaring Fork also represents
that it is an investor in restricted securities and acknowledges that it is able
to fend for itself, can bear the economic risk of its investment, and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Shares and Warrants and
can bear the economic risk of loss of the investment in the Securities being
purchased.
5.4 Restricted Securities. Roaring Fork acknowledges that the Shares, the
Warrants and the Warrant Shares have not been registered under the Securities
Act and may be resold only if registered pursuant to the provisions of the
Securities Act or if an exemption from registration is available.
5.5 Legends. Unless the Shares and the Warrants have been registered under
the Securities Act, the Company shall instruct its transfer agent to enter stop
transfer orders with respect to such Shares and Warrants (including any Common
Stock issued pursuant to exercise of the Warrants), and all certificates or
instruments representing such Shares and Warrants shall bear on the face thereof
substantially the following legend:
- 16 -
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED, IN THE ABSENCE OF
SUCH REGISTRATION, UNLESS THE COMPANY IS REASONABLY SATISFIED THAT THE PROPOSED
SALE OR TRANSFER IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS.
5.6 Assignment. Upon the assignment or transfer by Roaring Fork or any of
its successors or assignees of all or any part of the Warrants, the term
"Purchaser" as used herein shall thereafter mean, to the extent thereof, the
then holder or holders of such Warrants, or portion thereof.
5.7 Survival of Purchaser Representations. All representations and
warranties contained in this Agreement by Purchaser and any financial
statements, instruments, certificates, schedules or other documents delivered in
connection herewith, shall survive the execution and delivery of this Agreement,
regardless of any investigation made by the Company or on the Company's behalf.
ARTICLE 6
COVENANTS
6.1 Affirmative Covenants. The Company covenants that, so long as Roaring
Fork owns any Shares, Warrants or Warrant Shares the Company shall:
(a) Existence. Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence.
(b) Furnishing of Information. Timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be
filed by the Company pursuant to the Exchange Act, and if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish to
the Purchaser and make publicly available in accordance with Rule 144(c) such
information as is required for the Purchaser to sell the Conversion Shares and
Warrant Shares under Rule 144. The Company further covenants that it will take
such further action as any holder of Shares, Warrants and or the Warrant Shares
may reasonably request, all to the extent required from time to time to enable
such Person to sell the Shares or Warrant Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
(c) Indemnification of Investors. In addition to the indemnity provided in
Article 7, indemnify and hold each Purchaser and its respective directors,
officers, partners, representatives, employees and agents (each, an "Investor
Party") harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys' fees and costs of
investigation (collectively, "Losses") that any such Investor Party may suffer
or incur as a result of or relating to any misrepresentation, breach or
inaccuracy of any representation, warranty, covenant or agreement made by the
Company in any Transaction Document. In addition to the indemnity contained
herein, the Company will reimburse each Investor Party for its reasonable legal
and other expenses (including the cost of any investigation, preparation and
travel in connection therewith) incurred in connection therewith, as such
expenses are incurred.
- 17 -
(d) Common Stock Reserve. Maintain in reserve, at all times that the
Warrants are unexercised, authorized, but unissued and unreserved, shares of
Common Stock for issuance upon exercise of the Warrants.
(e) Use of Proceeds. Use the funds received from Roaring Fork in connection
with the Transactions substantially in accordance with the "Use of Proceeds
Schedule" attached hereto as Schedule 6.1(e).
(f) Further Assurances. With reasonable promptness, execute and deliver to
the Purchaser, from time to time, upon the reasonable request of the Purchaser,
such supplemental agreements, statements, assignments and transfers, or
instructions on documents as the Purchaser may request in order that the full
intent of this Agreement and the other Purchase Documents may be carried into
effect.
6.2. Amendment of Note. The Company will deliver to the Purchaser within
ten (10) days of the Closing, an amendment to that certain 15% Secured
Convertible Subordinated Note Dated December 15, 2004 from the Company to ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ (the "Note") that will (i) extend the maturity date of the Note to
January 15, 2009, (ii) have the payee forebear on the Company's obligations to
make principal payments on the Note until the maturity date, (iii) acknowledge
that the conversion price is fixed at $0.38 per share, the current price under
the formula in the Note, and (iv) provide for the Company's issuance to ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ in connection with such amendment of a Warrant to Purchase 350,000
shares of Class A Common Stock at an exercise price of $0.50 per share, and
which will not include any provision for anti-dilution price adjustment.
ARTICLE 7
MISCELLANEOUS
7.1 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that (a) the Company may not assign or transfer its rights
hereunder or any interest herein or delegate its duties hereunder.
7.2 Modifications and Amendments. The provisions of this Agreement may be
modified, waived or amended, but only by a written instrument signed by the
Company and the Purchaser.
7.3 No Implied Waivers; Cumulative Remedies; Writing Required. No delay or
failure in exercising any right, power or remedy hereunder shall affect or
operate as a waiver thereof; nor shall any single or partial exercise thereof or
any abandonment or discontinuance of steps to enforce such a right, power or
remedy preclude any further exercise thereof or of any other right, power or
remedy. The rights and remedies hereunder are cumulative and not exclusive of
any rights or remedies that the Purchaser or any holder of Warrants or Warrant
Shares would otherwise have. Any waiver, permit, consent or approval of any kind
or character of any breach or default under this Agreement or any such waiver of
any provision or condition of this Agreement must be in writing, and shall be
effective only to the extent in such writing specifically set forth.
- 18 -
7.4 Fees and Expenses. The Company agrees to pay Roaring Fork $15,000] at
Closing as reimbursement of Roaring Fork's legal fees in connection with the
preparation of the Purchase Documents and other expenses. It is understood that
counsel for Roaring Fork has only rendered legal advice to Roaring Fork, and not
to the Company or any other Person in connection with the transactions
contemplated hereby, and that each of the Company and Roaring Fork has relied
for such matters on the advice of its own respective counsel. Except as
specified in the immediately preceding sentence, each party shall pay the fees
and expenses of its advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of the Purchase Documents.
7.5 Reimbursement of Expenses-Enforcement and Collection. The Company upon
demand shall pay or reimburse the Purchaser for all fees and expenses incurred
or payable by the Purchaser (including, without limitation, reasonable fees and
expenses of counsel for the Purchaser), from time to time arising in connection
with the enforcement of this Agreement.
7.6 Notices. All notices and other communications given to or made upon any
party hereto in connection with this Agreement shall, except as otherwise
expressly herein provided, be in writing (including telecopy, but in such case,
a confirming copy will be sent by another permitted means) and mailed via
certified mail, telecopied or delivered by guaranteed overnight parcel express
service or courier to the respective parties, as follows:
to the Company:
---------------
ATC Healthcare, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Keevican ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLC
11th Floor, Federated Investors Tower
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
To Roaring Fork and its counsel at the addresses set forth below the
--------------------------------------------------------------------
signature of Roaring Fork;
--------------------------
- 19 -
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective upon delivery if delivered by
courier or overnight parcel express service; in the case of certified mail,
three (3) Business Days after the date sent; or in the case of telecopy, when
received.
7.7 Survival. All representations, warranties, covenants and agreements of
the Company contained herein or made in writing in connection herewith shall
survive the execution and delivery of this Agreement, the Closing and the
purchase and delivery of the Common Stock and Warrants.
7.8 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Colorado, without regard to conflict of laws principles. Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of the courts of the
State of Colorado, County of Arapahoe, and the United States District Court for
the District of Colorado for the purpose of any suit, action, proceeding or
judgment relating or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
7.9 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, the Purchaser will be
entitled to specific performance under the Purchase Documents. The parties agree
that monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
7.10 Adjustment Provisions. The Company has represented to Roaring Fork
that it plans to raise between $900,000 and $1,900,000 in additional funds in a
private offering to be completed no later than May 31, 2007 on terms no more
favorable than those made to Roaring Fork pursuant to the Purchase Documents. If
the Company does not raise at least $900,000 by May 31, 2007 either through such
a private offering or through a mezzanine debt arrangement involving a note with
a minimum term of two years or more that includes a warrant, then the Company
shall, for no additional consideration, issue an additional 1,000,000 shares of
Common Stock to Roaring Fork and the exercise price of the Warrants shall be
reduced to $.30 and the Warrant Shares shall be increased by 500,000 shares. If
the Company enters into a subsequent placement involving an equity issuance from
and after the date hereof until September 30, 2007 and any of the terms of such
subsequent placement are more beneficial to the investors than those provided in
this Agreement or in any of the other Transaction Documents, the relevant
Transaction Document(s) shall be, without any further action by Roaring Fork or
the Company, deemed amended and modified in an economically and legally
equivalent manner such that Roaring Fork shall receive the benefit of the more
favorable terms of such subsequent placement. The Company hereby agrees, at its
expense, to take such other actions (such as entering into amendments to this
Agreement or any other Transaction Document) as Roaring Fork may reasonably
request to further effectuate the foregoing.
- 20 -
7.11 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law in any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Agreement.
7.12 Headings. Article, section and subsection headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
7.13 Counterparts. This Agreement may be executed in any number of
counterparts and by any party hereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute one and the same instrument.
7.14 Integration. This Agreement and the other Purchase Documents set forth
the entire understanding of the parties hereto with respect to all matters
contemplated hereby and supersede all previous agreements and understandings
among them concerning such matters. No statements or agreements, oral or
written, made prior to or at the signing hereof, shall vary, waive or modify the
written terms hereof.
[remainder of page intentionally left blank; signature page follows]
- 21 -
SIGNATURE PAGE TO
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
ATC Healthcare, Inc., a Delaware corporation
By:_________________________________________
Name:_______________________________________
Title:______________________________________
PURCHASER:
ROARING FORK CAPITAL SBIC, L.P.,
a Delaware limited partnership
By: Roaring Fork Capital Management, LLC,
its general partner
By:_____________________________________
Name:
Title: Manager
Purchase Price: $600,000
------------------------
Address for Notices to:
Roaring Fork Capital SBIC, L.P.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to its counsel:
▇▇▇▇▇▇ ▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇