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EXHIBIT 99.3
PRIVATE SECURITIES SUBSCRIPTION AGREEMENT
COMFORCE CORPORATION/SEACREST CAPITAL LIMITED
December 26, 1996
THIS PRIVATE SECURITIES SUBSCRIPTION AGREEMENT (hereinafter the
"Agreement") has been executed by the undersigned in connection with the sale in
a private placement pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), of certain shares of common stock, par value
$.01 per share, (hereinafter the "Common Shares") of COMFORCE Corporation (CFS),
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, a corporation organized under the
laws of Delaware (hereinafter "SELLER") to Seacrest Capital Limited located at
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇, a corporation organized under the laws of
Nevis, West Indies (hereinafter "BUYER"). SELLER and BUYER (hereinafter
collectively the "parties") each hereby represents, warrants and agrees as
follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE AND TERMS
(i) SELLER and BUYER are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 506
under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission under the Securities Act; and
(ii) BUYER hereby subscribes for One Hundred Thousand (100,000) Common
Shares of Seller for an aggregate purchase price of One Million Dollars
($1,000,000) payable in United States Dollars at the Closing, as defined in
Paragraph 7 hereof.
(iii) BUYER shall pay the purchase price by delivering same day funds
in United States Dollars as agreed between the parties, to be delivered to the
order of SELLER upon delivery of the Common Shares.
(iv) In addition, BUYER shall receive a Common Stock Purchase Warrant
(the "Warrant" or "Warrants") entitling BUYER to purchase Twenty-Nine Thousand
Two Hundred Fifty (29,250) Common Shares at an exercise price of $19 per share.
The Warrants shall be exercisable upon issuance to BUYER at Closing and will
expire on December 26, 1999. The Common Shares issuable upon exercise of the
Warrants are hereinafter referred to as the "Warrant Shares".
(v) In the event that SELLER files an S-1 registration statement in
connection with an underwritten public offering (the "Secondary Offering"), the
Common Shares referred to in subsection (ii) above will be included in such
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December 26, 1996 Page 2
registration statement and will be sold by such underwriters at the price to
the public set forth on the final prospectus therefor. These Common Shares may
not be sold until the closing of the Secondary Offering; provided, however,
that the Common Shares will be tradable on May 1, 1997, in the event the
effective date of said S-1 registration statement (the "Effective Date") has
not occurred by that date, it being understood that under such circumstances
SELLER will have registered the Common Shares for resale in a shelf
registration not calling for an underwritten offering (said period during which
the Common Shares may not be sold referred to herein as the "Lock-Up Period").
(vi) In the event the Market Price (defined as the lesser of (a) the
average of the closing bid price of SELLER'S common stock over the ten trading
days immediately preceding the date in question, or (b) the closing bid price
of SELLER'S common stock on the trading day immediately preceding the date in
question, in both instances as reported by Bloomberg, L.P.) is less than Twelve
Dollars and Five Cents ($12.05) per share on the earlier of the Effective Date
or May 1, 1997, then SELLER shall pay to BUYER the difference between the
Market Price and $12.05, multiplied by the number of Common Shares held by
BUYER on such date (the "Initial Payment Right"); provided, however, that if,
on May 1, 1997, (1) the Market Price is between $10.00 per share and $15.00 per
share (inclusive), and (2) the Effective Date has not yet occurred, and (3) the
average daily trading volume of SELLER'S common stock is less than 57,000
shares for the ten trading days immediately preceding May 1, 1997, then a
payment of $2.05 per share will be made to BUYER in lieu of the Initial Payment
Right. SELLER shall have the option to make the payment required under this
subsection in cash or in common stock of SELLER, or in any combination thereof,
and shall make such payment to BUYER on the earlier of the Effective Date or
May 1, 1997. Any shares of SELLER'S common stock delivered to BUYER in
satisfaction of SELLER'S obligations under this subsection are referred to
herein as "Bonus Shares."
2. BUYER'S REPRESENTATIONS AND AGREEMENTS
BUYER represents, warrants and agrees as follows:
(i) BUYER understands that the Common Shares, the Bonus Shares, the
Warrants, and the Warrant Shares (collectively, the "Securities") have not been
registered under the Securities Act, or any other applicable securities law,
and, accordingly, none of the Securities may be offered, sold, transferred,
pledged, hypothecated or otherwise disposed of unless registered pursuant to,
or in a transaction exempt from registration under, the Securities Act and any
other applicable securities law;
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(ii) BUYER is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3), or (7) of Regulation D (an "Accredited Investor") that is
acquiring the Securities either for its own account or as a fiduciary or agent
for one or more institutional accounts as to which it exercises sole
discretion, each of which is an Accredited Investor. BUYER has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the Securities. BUYER has
had a reasonable opportunity to ask questions of and receive answers from
SELLER concerning SELLER and the offering of the Securities. BUYER is not
subscribing for the Securities as a result of or pursuant to any advertisement,
article, notice, or other communication published in any newspaper, magazine,
or similar media or broadcast over television or radio. BUYER is aware that it
(or such institutional account) may be required to bear the economic risk of an
investment in the Securities for an indefinite period, and it (or such
institutional account ) is able to bear such risk for an indefinite period;
(iii) BUYER is acquiring the Securities for its own account or for one
or more institutional accounts as described in Paragraph 2(ii) hereof, in each
case for investment purposes and not with a view to, or for offer or sale in
connection with, any distribution thereof (subject to any requirement of law
that the disposition of its property or the property of such institutional
account or accounts remain within its or their control). BUYER agrees on its
own behalf and on behalf of any such institutional account for which it is
acquiring the Securities to offer, sell or otherwise transfer any Securities
only to Accredited Investors (subject to any requirement of law that the
disposition of its property or the property of such institutional account or
accounts remain within its or their control) in conformity with the Securities
Act and any other applicable securities law and with the restrictions on
transfer set forth on the certificate(s) evidencing the Common Shares and the
Bonus Shares. BUYER acknowledges that each certificate evidencing the Common
Shares or the Bonus Shares shall bear a legend substantially to the effect of
the foregoing paragraphs 2(i) and 2(ii) and this paragraph 2(iii). Such legend
shall be in substantially the following form:
"THE COMMON SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED OR SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF
CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A PRIVATE
SECURITIES SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND SEACREST
CAPITAL LIMITED DATED DECEMBER 26, 1996. A COPY
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OF THE PORTION OF THE AFORESAID SUBSCRIPTION AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE OFFICES."
Upon expiration of the Lock-Up Period, SELLER shall promptly exchange
Buyer's legended Common Stock certificates representing Common Shares or Bonus
Shares for unlegended Common Stock certificates.
(iv) BUYER acknowledges that prior to the expiration of the Lock-Up
Period, SELLER or any transfer agent of SELLER shall register the transfer or
exchange of any of the Securities only upon receipt of the certificate(s)
evidencing such Securities with the transfer notice set forth thereon
appropriately completed and upon receipt in writing from the transferee or the
recipient of such Securities in such transfer or exchange (as the case may be)
of a certificate setting forth the representations in Paragraph 2 hereof and
only upon the availability of an exemption from registration under the
Securities Act;
(v) If BUYER is acquiring any of the Securities as fiduciary or agent
for one or more institutional accounts, BUYER represents that it has sole
investment discretion with respect to each such account and that it has full
power to make the foregoing acknowledgments, representations and agreements on
behalf of each such institutional account;
(vi) BUYER acknowledges that SELLER will rely upon the truth and
accuracy of the foregoing acknowledgments, representations and agreements and
further agrees that if, prior to any closing hereunder, any of such
acknowledgments, representations and agreements made by BUYER are no longer
accurate, BUYER will promptly notify SELLER;
(vii) BUYER has received SELLER'S latest Form 10-K, all Forms 10-Q and
8-K filed thereafter, any amendments thereto, and the Proxy Statement for its
latest fiscal year (collectively, the "Public Documents") and the Private
Placement Memorandum prepared by SELLER;
(viii) This Agreement has been duly authorized, validly executed, and
delivered on behalf of BUYER and is a valid and binding agreement enforceable
in accordance with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of creditors' rights
generally; and
(ix) BUYER has not engaged and agrees not to engage in any short sales
of the Company's common stock prior to the expiration of the Lock-Up Period,
except to the extent that any such short sale is fully covered by shares of
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common stock of SELLER owned by BUYER other than the Common Shares or Bonus
Shares purchased pursuant to this Agreement.
3. SELLER'S REPRESENTATIONS AND AGREEMENTS
SELLER represents, warrants and agrees as follows:
(i) SELLER has not conducted any general solicitation or general
advertising (as defined in Regulation D) with respect to any of its securities;
(ii) The Common Shares, the Bonus Shares and the Warrant Shares, when
issued and delivered will be duly and validly authorized and issued, fully-paid
and nonassessable, free and clear of any liens, encumbrances, charges, or
adverse claims of any nature whatsoever, and will not subject the holders
thereof to personal liability by reason of being such holders. There are no
preemptive rights of any shareholder of SELLER with respect to the transactions
contemplated by this Agreement or the Warrant;
(iii) Seller is duly organized, validly existing and in good standing
under the laws of Delaware. All subsidiaries of Seller are likewise duly
incorporated, validly existing and in good standing under the laws of the
jurisdictions in which they are organized.
(iv) This Agreement and the Warrant have each been duly authorized,
validly executed and delivered on behalf of SELLER and constitute valid and
binding agreements in accordance with their respective terms, subject to
general principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally;
(v) The execution and delivery of this Agreement and the Warrant and
the consummation of the issuance of the Securities and the transactions
contemplated by this Agreement do not and will not conflict with or result in a
breach by SELLER of any of the terms or provisions of, or constitute a default
under, the articles of incorporation (or charter) or bylaws of SELLER, or any
indenture, mortgage, deed of trust or other material agreement or instrument to
which SELLER is a party or by which it or any of its properties or assets are
bound, or any existing applicable decree, judgment or order of any court,
federal or state regulatory body, administrative agency or other governmental
body having jurisdiction over SELLER or any of its properties or assets;
(vi) No authorization, approval or consent of or filing with any
federal, state or local governmental body of the United States or any third
party is
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required for the issuance and sale of the Securities as contemplated by this
Agreement;
(vii) Neither the information provided by or on behalf of SELLER to
BUYER and referred to in Section 2(vii) of this Agreement, nor any
representation or warranty made by SELLER to BUYER hereunder contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make such statements, in the light of the circumstance
under which they are made, not misleading. All of such information (the "SEC
Filings") required to be filed under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), was timely filed and each such report, at the time
filed, complied as to form with the requirements of the 1934 Act. Since
December 31, 1995, there has been no material adverse development in the
business, properties, operations, financial condition or results of operations
of SELLER, except as disclosed in the documents referred to in the SEC Filings.
The audited and unaudited consolidated balance sheets of the Seller contained
in the SEC Filings, and the related consolidated statements of income, changes
in stockholders' equity and changes in cash flows for the periods then ended
(the consolidated balance sheet of the SELLER as of December 31, 1995 is
hereinafter referred to as the "Balance Sheet"), including footnotes thereto,
except as indicated therein, have been prepared in accordance with generally
accepted accounting principles consistently followed throughout the periods
indicated. The Balance Sheet fairly presents the financial condition of SELLER
at the date thereof and, except as indicated therein, reflects all claims
against and all debts and liabilities of SELLER, fixed or contingent, as of the
date thereof and the related statements of income, stockholders' equity and
changes in cash flows fairly present the results of the operations of SELLER
and its financial position for the period indicated. Since December 31, 1995,
(the "Balance Sheet Date") there has been (x) no material adverse change in the
assets or liabilities, or in the business condition, financial or otherwise, or
in the results of operations or prospects, of the SELLER and its subsidiaries,
whether as a result of any legislative or regulatory change, revocation of any
license or rights to do business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation, act of God, public force or
otherwise, and (y) no change in the assets or liabilities, or in the business
or condition, financial or otherwise, or in results of operations or prospects,
of the SELLER except the ordinary course of business; and, to the best
knowledge, information and belief of the SELLER, no fact or condition exists or
is contemplated or threatened which might cause such a change in the future.
(viii) SELLER will issue one or more certificates representing the
Common Shares in the name of BUYER in such denominations to be specified by
BUYER prior to closing. SELLER will issue one or more certificates
representing the Warrant in the name of BUYER in such denominations to be
specified by BUYER
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prior to closing. Until the end of the Lock-Up Period and prior to any
exchange for unlegended share certificates, certificates representing the
Common Shares and the Bonus Shares will bear the restrictive legend specified
in Section 2(iii) of this Agreement. Upon exercise of the Warrant in
accordance with its terms, SELLER will issue one or more certificates
representing Warrant Shares in such name or names and in such denominations
specified by BUYER in an election to purchase. Subject to the provisions of
the Registration Rights Agreement, the Warrant Shares shall not bear any
restrictive legends and shall be freely tradable, subject to compliance with
federal and state securities laws. SELLER further warrants that no
instructions other than these instructions and stop transfer instructions to
give effect to Section 2(i) hereof will be given to the transfer agent and also
warrants that the Securities shall otherwise be transferable on the books and
records of SELLER as and to the extent provided in this Agreement, subject to
compliance with federal and state securities laws. Following registration of
the Common Shares, the Bonus Shares and the Warrant Shares, SELLER agrees to
furnish new instructions to the transfer agent advising them of registration
and instructing them to reissue the Common Shares without a legend and to
notify Buyer of the delivery of such instructions. Nothing in this Section
shall affect in any way BUYER'S obligations and agreement to comply with all
applicable securities laws upon resale of the Securities.
(ix) Except as disclosed in the SEC Filings, there is no action, suit
or proceeding before or by any court or governmental agency or body, domestic
or foreign, now pending or, to the knowledge of SELLER, threatened against or
affecting SELLER, or any of its properties, which could reasonably be expected
to result in any material adverse change in the business, properties, results
of operations, condition (financial or otherwise), or prospects of SELLER, or
which could reasonably be expected to materially and adversely affect the
properties or assets of SELLER or which could reasonably be expected to
interfere with SELLER'S ability to consummate the transactions contemplated by
this Agreement and the Warrant.
(x) Private Placements. Except as set forth in the SEC Filings,
SELLER has not issued any shares of its Common Stock (or securities convertible
into or exercisable for shares of Common Stock), pursuant to any exemption from
registration under the Securities Act, except for shares of Common Stock issued
as an adjustment to, or in connection with a conversion or exercise of, such
securities, except as set forth or contemplated in the SEC Filings.
(xi) Commissions. Except for a fee which is payable by SELLER to
Shoreline Pacific, no other person, firm or corporation will be entitled to
receive any brokerage fee, commission or other similar payment from SELLER in
connection with the consummation of the transactions contemplated hereby and
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SELLER shall not make any such payment to any person, firm or corporation other
than as set forth herein.
(xii) Accountants. For as long as any Common Shares or Bonus Shares
remain subject to the Lock-Up Period, SELLER shall, until at least the second
anniversary of the date of the Closing (the "Closing Date"), maintain as its
independent auditors an accounting firm that is authorized to practice before
the SEC.
(xiii) Corporate Existence and Taxes. For as long as any Common Shares
or Bonus Shares remain subject to the Lock-Up Period, SELLER shall, until the
second anniversary of the Closing Date, maintain its corporate existence and
good standing, and shall pay all its taxes when due except for taxes which
SELLER disputes in good faith and for which adequate reserves are established
on SELLER'S books and records.
(xiv) Reserved Shares and Listings. For so long as any Common Shares
or Warrants remain outstanding:
(a) SELLER will reserve from its authorized but unissued
Common Shares a sufficient number of Common Shares to permit the
exercise of the then outstanding Warrants; and
(b) SELLER will maintain a listing of its common stock on the
Nasdaq National Stock Market or a national securities exchange.
(xv) Capitalization. SELLER has an authorized capitalization
consisting of (a) One Hundred Million (100,000,000) shares of common stock,
$0.01 par value, of which Ten Thousand (10,000,000) shares are issued and
outstanding and Zero (0) shares are held in SELLER'S treasury. All such
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable. There are no outstanding options, warrants, rights,
calls, commitments, conversion rights, rights of exchange, plans or other
agreements of any character providing for the purchase, issuance or sale of any
shares of the capital stock of SELLER, other than as contemplated by this
Agreement.
(xvi) Subsidiaries. Set forth in Exhibit A attached hereto is a list
of each corporation in which SELLER owns, directly or indirectly, any equity
security (a "subsidiary"). Each subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation (as set forth on Exhibit A), and has all requisite power to own
its property and to carry on its business as now being conducted. Set forth on
Exhibit A is a list of jurisdictions in which each subsidiary is qualified as a
foreign corporation. Such
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jurisdictions are the only jurisdictions in which the character or location of
the properties owned or leased by each subsidiary, or the nature of the
business conducted by each subsidiary, makes such qualifications necessary.
All of the outstanding shares of capital stock of each subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable, and,
except as set forth in Exhibit A, are owned, of record and beneficially, by
SELLER, free and clear of all liens, encumbrances, restrictions and claims of
every kind. No shares of capital stock of any subsidiary are reserved for
issuance and there are no outstanding options, warrants, rights, subscriptions,
claims, agreements, obligations, convertible or exchangeable securities or
other commitments, contingent or otherwise, relating to the capital stock of
any subsidiary or pursuant to which any subsidiary is or may become obligated
to issue or exchange any shares of capital stock. Neither SELLER nor any
subsidiary owns, directly or indirectly, any capital stock or other equity or
ownership or proprietary interest in any corporation, partnership, association,
trust, joint venture or other entity except as set forth on Exhibit A.
(xviii) Private Offering. Assuming (without any independent
investigation or verification by or on behalf of SELLER) the accuracy of the
representations and warranties of BUYER set forth herein, the offer and sale of
the Common Shares, the Bonus Shares, the Warrants, and the Warrant Shares are
exempt from registration under Section 5 of the Securities Act of 1933, as
amended (the "Securities Act"). Neither SELLER nor any person acting on its
behalf has taken or will take any action (including, without limitation, any
offering of any securities of SELLER under circumstances which would require
the integration of such offering with the offering of the shares under the
Securities Act) which might subject the offering, issuance or sale of the
Common Shares, the Bonus Shares, the Warrants, or the Warrant Shares to the
registration requirements of Section 5 of the Securities Act.
(xix) Consents and Approvals. Neither SELLER nor any Subsidiary is
required to obtain any consent, waiver, authorization or order of, or make any
filing or registration with, any court or other federal, state local, or other
governmental authority or other person in connection with the execution,
delivery and performance by SELLER of the transaction documents except for (i)
the filing of the registration statements contemplated by the Registration
Rights Agreement with the Securities and Exchange Commission, which shall be
filed in the time periods set forth in the Registration Rights Agreement, (ii)
applications for the listing of the Common Shares, the Bonus Shares and the
Warrant Shares with the American Stock Exchange (and with any other national
securities exchange or market on which SELLER'S common stock is then listed),
and (iii) other than, in all other cases, where the failure to obtain such
consent, waiver, authorization or order, or to give or make such notice of
filing, would
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not materially impair or delay the ability of SELLER to effect the Closings and
to deliver to BUYER the Common Shares, the Bonus Shares, the Warrants (and,
upon exercise of the Warrants, the Warrant Shares) in the manner contemplated
hereby and the Registration Rights Agreement free and clear of all liens and
encumbrances of any nature whatsoever.
(xx) SELLER hereby covenants and agrees to comply with all terms and
conditions of the Registration Rights Agreement which is annexed hereto.
4. CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER TO SELL THE COMMON
SHARES
The obligation of SELLER to sell the Common Shares hereunder is subject
to the satisfaction or waiver by SELLER, at or before the Closing of the
purchase thereof, of each of the following conditions:
(i) Accuracy of BUYER'S Representations and Warranties. The
representations and warranties of BUYER shall be true and correct in all
material respects as of the date when made and as of the Closing Date, as
though made on and as of such date (except that representations and warranties
that are made as of a specific date need be true in all material respects only
as of such date);
(ii) Performance by BUYER. BUYER shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by BUYER
at or prior to the Closing;
(iii) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement; and
(iv) Required Approvals. All Required Approvals shall have been
obtained.
5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER TO PURCHASE THE
COMMON SHARES.
The obligation of BUYER hereunder to acquire and pay for the Common
Shares is subject to the satisfaction or waiver by BUYER, at or before the
closing of the purchase of the Common Shares, of each of the following
conditions:
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(i) Accuracy of SELLER'S Representations and Warranties. The
representations and warranties of SELLER contained herein and in the
Registration Rights Agreement shall be true and correct in all material
respects as of the date when made and as of the Closing, as though made on and
as of such date, and SELLER shall have delivered to BUYER a certificate of its
Chief Executive Officer or Chief Financial Officer, dated the Closing Date to
that effect;
(ii) Performance by SELLER. SELLER shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement and the Registration Rights Agreement to
be performed, satisfied or complied with by SELLER at or prior to the Closing;
and SELLER shall have delivered to BUYER a certificate of its Chief Executive
Officer or Chief Financial Officer, dated the Closing Date to that effect;
(iii) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement relating to the issuance or
exercise of any of the Warrants;
(iv) Adverse Changes. Since the date of the financial statements
included in SELLER'S last filed Quarterly Report on Form 10-Q or Annual Report
on Form 10-K, whichever is more recent, last filed prior to the date of this
Agreement, no event which in the judgment of BUYER had a Material Adverse
Effect shall have occurred, nor shall there have occurred in the judgment of
BUYER a material adverse change in the financial conditions or prospects of
SELLER, which is not disclosed in the SEC Filings (for the purposes hereof,
changes in the market price of SELLER'S common stock may be considered in
determining whether there has occurred an event which has had a Material
Adverse Effect or whether a material adverse change has occurred), and SELLER
shall have delivered to BUYER a certificate of its Chief Executive Officer or
Chief Financial Officer, dated the Closing Date to that effect;
(v) Litigation. No material litigation shall have been instituted or
threatened against SELLER, and no proceedings for the dissolution of SELLER
shall have been commenced;
(vi) No Suspensions of Trading in Common Stock. The trading in
SELLER'S common stock shall not have been suspended by the Securities and
Exchange Commission or the American Stock Exchange (except for any
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suspension of trading of limited duration solely to permit dissemination of
material information regarding SELLER);
(vii) Listing of Common Stock. SELLER'S common be, on the dates of
Closing, listed for trading on the American Stock Exchange.
(viii) Legal Opinion. SELLER shall have delivered to the escrow agent
on behalf of BUYER the opinion of Doepken Keevican & ▇▇▇▇▇, counsel to SELLER;
(ix) Required Approvals. All Required Approvals shall have been
obtained;
(x) Shares of Common Stock. On or prior to the closing of the
purchase of the Common Shares, SELLER shall have duly reserved for exercise of
the Warrants sufficient common shares to meet the obligations of SELLER under
this Agreement;
(xi) Delivery of Stock Certificates. SELLER shall have delivered to
the escrow agent on behalf of BUYER or its designee the stock certificate(s)
representing the Common Shares, registered in the name of BUYER, each in form
satisfactory to BUYER;
(xii) Registration Rights Agreement. SELLER shall have executed and
delivered the Registration Rights Agreement;
(xiii) Warrant. SELLER shall have executed and delivered the Warrants
in accordance with the terms of this Agreement;
(xiv) Company Certificates. BUYER shall receive a certificate, dated
the closing date of the purchase of the Common Shares, signed by the Secretary
or an Assistant Secretary of SELLER and certifying (a) that attached thereto is
a true, correct and complete copy of (1) SELLER'S Restated Articles of
Organization, as amended to the date thereof, (2) SELLER'S By-Laws, as amended
to the date thereof, and (3) resolutions duly adopted by the Board of Directors
of Seller authorizing the execution, delivery and (where appropriate) filing of
the transaction documents and the issuance and sale of the Common Shares, the
Bonus Shares, the Warrants, and the Warrant Shares underlying the Warrants; and
(b) the incumbency of the officers executing the transaction documents with
their signatures thereon.
6. THIRD PARTY BENEFICIARY. The parties acknowledge and agree that
Shoreline Pacific, the Institutional Division of Financial West Group
("Shoreline Pacific"), shall be deemed a third party beneficiary of SELLER'S
agreements and
13
Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 13
representations set forth in this Agreement, entitled to enforce the terms
thereof, and to indemnification for any damages resulting to Shoreline Pacific
from any actual or threatened breach thereof by SELLER, both in Shoreline
Pacific's personal capacity and, should Shoreline Pacific so elect, on behalf
of BUYER.
7. CLOSING. Subject to the Conditions of Closing set forth below, the
investment of Seacrest Capital Limited (which includes Buyer's investment
hereunder, together with the $2,500,000 investment of Infinity Investors
Limited on like terms) shall close on December 26, 1996 or at such other time
as is mutually agreed to by the parties. The appropriate Common Share
certificates and Warrants shall be delivered to BUYER and the funds therefor
shall be delivered to SELLER at each Closing.
8. CONDITIONS TO CLOSING
(i) BUYER understands that SELLER'S obligation to sell the Common
Shares is conditioned upon delivery as agreed between BUYER and SELLER by BUYER
of the amount set forth in Paragraph 1 hereof.
(ii) SELLER understands that BUYER'S obligation to purchase the Common
Shares is conditioned upon delivery of certificate(s) representing Common
Shares as described in Paragraph 1(ii) hereto and provision of an opinion of
counsel confirming the matters set out in Section 3(ii), (iii), (iv) and (v)
above.
(iii) SELLER understands that BUYER'S obligation to purchase the Common
Shares is conditioned upon SELLER and BUYER entering into a Registration Rights
Agreement substantially in the form of Annex I hereto.
9. GOVERNING LAW; INTERPRETATION. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without giving
effect to rules governing the conflict of laws. Facsimile signatures of this
agreement shall be binding on all parties hereto.
10. AMENDMENT. Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any
such amendment, waiver, discharge or termination is sought.
11. NOTICES, ETC. Any notice, demand or request required or permitted to be
given by either SELLER or BUYER pursuant to the terms of this Agreement shall
be in writing and shall be deemed given when delivered personally or by
facsimile, with a hard copy to follow by two (2) day courier addressed to the
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Private Sec. Sub. Agreement: COMFORCE Corporation/[BUYER]
[DATE] Page 14
parties at the addresses of the parties set forth at the beginning of this
Agreement or such other address as a party may request by notifying the other
in writing.
12. CONFIDENTIALITY. BUYER will keep confidential all non-public
information regarding SELLER that they received from SELLER unless disclosure
of such information is compelled by a court or other administrative body or
otherwise necessary, in the opinion of BUYER'S counsel, to comply with
applicable law. Neither party shall disclosure any information regarding any
of the transactions contemplated hereby without prior consent of the other
party, unless such disclosure is required in filings made with the SEC.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument. A facsimile transmission of a signature hereto shall be valid as
if an original and binding on all parties.
14. SEVERABILITY. In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective
if it materially changes the economic benefit of this Agreement to any party.
15. PARTIES IN INTEREST. This Agreement may not be transferred, assigned,
pledged or hypothecated by any party hereto, other than by operation of law.
This Agreement shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.
IN WITNESS WHEREOF, this Agreement was duly executed and is made effective as
of the 26th day of December, 1996.
Official Signatory of BUYER:
Seacrest Capital Limited
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Director
Official Signatory of SELLER:
COMFORCE CORPORATION
BY: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Assistant Secretary
15
ANNEX I
ANNEX I
TO
SUBSCRIPTION
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 26, 1996 (this
"Agreement"), is made by and among COMFORCE Corporation a Delaware corporation
(the "Company"), and the person named on the signature page hereto (the
"Initial Investor").
W I T N E S S E T H :
WHEREAS, in connection with the Private Securities Subscription
Agreement, dated as of [DATE], between the Initial Investor and the Company
(the "Subscription Agreement"), the Company has agreed, upon the terms and
subject to the conditions of the Subscription Agreement, to issue and sell to
the Initial Investor shares of Common Stock (the "Common Stock") and Warrants
to purchase shares of Common Stock (such shares referred to as "Warrant
Shares.") In addition, the Initial Investor may receive additional Common
Stock of the Company (the "Bonus Shares") pursuant to the provisions of the
Subscription Agreement between the parties hereto, to which this Registration
Rights Agreement is annexed. The Common Stock, the Warrant Shares and the
Bonus Shares are sometimes collectively referred to herein as "Shares"); and
WHEREAS, to induce the Initial Investor to execute and deliver the
Subscription Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investor" means the Initial Investor and any transferee
or assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof; provided, however, that if the Company has
requested acceleration of
16
COMFORCE Corporation/Seacrest Capital Limited December 26, 1996
Registration Rights Agreement
Page 2
any Registration Statement to register the shares of Common Stock of any
Investor then the term "Investor" shall not include any subsequent transferee
of such Investor. Notwithstanding such proviso, the Investor shall not be
prohibited from transferring a beneficial interest in the Shares so long as the
same is permitted under applicable securities laws, and the Company shall do
all things necessary or appropriate to give effect to any such transfer so as
to facilitate the subsequent resale of the Shares pursuant to a Registration
Statement, all as contemplated in this Agreement.
(ii) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act on such appropriate
registration form promulgated by the Commission as shall be selected by the
Company, and when requested by the Initial Investor or any Investor pursuant to
Section 2(b) hereof, shall (A) be reasonably acceptable to the holders of a
majority of the Registrable Securities to which such registration relates, and
(B) shall permit the disposition of Registrable Securities in accordance with
the intended method or methods specified in the Investor's request for such
registration, and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
("SEC").
(iii) "Registrable Securities" means the Shares.
(iv) "Registration Statement" means a registration statement
under the Securities Act registering securities of the Company.
(v) "Rule 144" means Rule 144 promulgated under the Securities
Act.
(b) As used in this Agreement, the term Investor includes (i) each
Investor (as defined above) and (ii) each person who is a permitted transferee
or assignee of the Registrable Securities pursuant to Section 9 of this
Agreement.
(c) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Subscription Agreement.
2. REGISTRATION.
(a) REGISTRATION RIGHTS/UNDERWRITTEN OFFERING. The Company shall
cause the Registrable Securities to be included for registration for resale
under the Securities Act on Form S-1 (or on Forms S-2 or S-3 or any other form
appropriately selected by the Company for the resale registration of securities
other than a registration statement on Forms S-4 or S-8). Company shall keep
such Registration Statement and the Prospectus used in connection therewith
effective for a period of two years thereafter. The Company shall be permitted
to replace any Registration Statement with another (as, for example, by
replacing a Registration Statement on Form S-1 with one on Form S-3) so long
the shares of Common Stock registered thereby are continuously registered for
resale. In the event the Company files a Registration Statement for an
underwritten
17
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 3
offering ("Underwritten Offering") on or before March 31, 1997, the Company
will, at the option of the Investor, include the Common Stock in such
Registration Statement. The Company agrees to provide the Investor with notice
of the filing of the Registration Statement for such Underwritten Offering in a
manner reasonably designed to afford the Investor the opportunity to decide
whether to instruct the Company to include the Common Stock in such
Underwritten Offering. In the underwriting agreement executed in connection
with such Underwritten Offering, the underwriters or managing underwriters will
agree to purchase the Common Stock on a "firm commitment" basis. In the event
that the underwriters or managing underwriters for such Underwritten Offering
decide that the number of shares of the Company's Common Stock to be sold in
such Underwritten Offering cannot be sold without materially interfering with
such offering or the market for the Company's Common Stock, then the number of
shares of Common Stock to be sold in such Underwritten Offering shall be
reduced first, by excluding shares of Common Stock to be sold by officers,
directors and other affiliates of the Company (excluding the Holders), second,
by excluding shares of Common Stock to be sold pursuant to other registration
rights granted by the Company (excluding any other persons who received Common
Stock contemporaneously with the execution and delivery of the Subscription
Agreement) and third, by excluding shares of Common Stock to be sold in such
Underwritten Offering by the Company. The Initial Investor agrees that it will
(a) enter into an underwriting agreement with the underwriters or managing
underwriters for such Underwritten Offering (containing normal and customary
terms) and (b) agrees to indemnify the underwriters for such Underwritten
Offering to the same extent that the Company is indemnified hereunder.
(b) DEMAND REGISTRATION. If, at any time after 90 days after the
last Closing, the Company has failed to cause to be declared effective or
failed to keep effective a Registration Statement covering the Shares as
described in Paragraph 2(a) above, and any Investor holding a majority of the
Registrable Securities shall notify the Company in writing that it intends to
offer or cause to be offered for public sale Registrable Securities held by
such Investor, the Company shall cause such of the Registrable Securities as
may be requested by any Investor to be registered, on one occasion only, under
the Securities Act and applicable state laws as expeditiously as possible.
Once the right for registration of any Registrable Securities under this
Section 2(b) has been exercised by any Investor, the Company shall prepare and
file a Registration Statement covering such Registrable Securities with the SEC
within ten (10) days of the exercise of such registration right and such
Registration Statement shall be kept effective for a period of no less than two
years thereafter.
(c) PAYMENTS BY THE COMPANY. If a Registration Statement covering
the Registrable Securities is not effective by April 30, 1997 (the "Required
Date"), or within five (5) business days after receipt of an "no action" or "no
review" letter as noted in Section 2(a) above, then the Company will make
payments to each holder of Registrable Securities (each, a "Holder") in such
amounts and at such times as shall be determined
18
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 4
pursuant to this Section 2(c). The amount to be paid by the Company to the
Holders shall be equal to: (1) 1/2% per month in the event the Registration
Statement is not effective by the Required Date; (2) 1% per month in the event
the Registration Statement is not effective within 30 days after the Required
Date; and (3) 2% per month in the event the Registration Statement is not
effective within 60 days after the Required Date, in each case of the aggregate
subscription price paid by the Initial Investor for the Shares pursuant to the
Subscription Agreement (the "Periodic Amount"). In the event the Company
receives a "no comment letter" from the SEC with regard to the S-1 filing, then
the Company shall cause the S-1 to be effective within 5 business days of the
no comment letter; and if it is not so effective, then the monthly penalties
noted above will apply beginning on the 6th day following the date of the no
comment letter. The Periodic Amount shall be divided among all the Holders in
the same proportion as each Holder's Registrable Securities bears to the total
of the outstanding Registrable Securities. The Periodic Amount shall be paid
by the Company within five business days after each Computation Date and shall
be payable in cash; provided, however, that the Company may elect in lieu of
payment of any Periodic Amount in cash to deliver to the Initial Investor
shares of Common Stock having an Aggregate Market Value equal to the amount of
the Periodic Amount if, but only if, such shares are freely tradable by the
Initial Investor without any restriction under the Securities Act or any state
securities or "blue sky" law.
As used in this Section 2(c), the following terms shall have the
following meanings:
"Aggregate Market Value" of any shares of Common Stock as of any
Computation Date means the product obtained by multiplying (a) such number of
shares of Common Stock times (b) the Average Market Price of the Common Stock
for the Measurement Period for such Computation Date.
"Average Market Price" of any security for any period shall be computed
as the average closing bid price of the shares over the five trading-day period
ending on the relevant Computation Date, as reported by Bloomberg, L.P.
"Computation Date" means the date which is 60 days after the exercise of
demand registration rights under Section 2(b) and, if the Registration
Statement required to be filed by the Company pursuant to Section 2(b) has not
theretofore been declared effective by the SEC, each date which is 30 days
after a Computation Date and, if the Registration Statement required to be
filed by the Company pursuant to Section 2(b) is not declared effective by the
SEC within 60 days after the exercise of demand registration rights under
Section 2(b), the date on which such Registration Statement is declared
effective.
19
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 5
"Measurement Period" means the period of ten consecutive trading days
for the Common Stock ending on (or on the last trading day preceding) each
Computation Date.
3. OBLIGATIONS OF THE COMPANY. In connection with the registration
of the Registrable Securities, the Company shall:
(a) prepare promptly and file with the SEC promptly (but in no event
later than 10 days) after a request in accordance with Section 2(b) hereof a
Registration Statement or Statements with respect to all Registrable Securities
to be included therein, and thereafter use its best efforts to cause the
Registration Statement to become effective as soon as reasonably possible after
such filing. If such Registration Statement is filed pursuant to Rule 415, the
Company shall keep the Registration Statement effective pursuant to Rule 415 at
all times until such date as is two years after the date such Registration
Statement is first ordered effective by the SEC. In any case, the Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) filed by the Company shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that,
subject to the conditions set forth in Section 4(a) below, each Investor may
notify the Company in writing that it wishes to exclude all or a portion of its
Registrable Securities from such Registration Statement; provided further,
however, that if at any time the Investors shall be entitled to sell all
Registrable Securities held by them pursuant to Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at
any time permit the Investors to sell securities of the Company to the public
without registration and without imposing restrictions arising under the
federal securities laws on the purchases thereof in a period of two consecutive
months, then the Company shall, so long as it meets the current public
information requirements of Rule 144, thereafter no longer be required to
maintain the registration of Registrable Securities pursuant to this Agreement;
(b) prepare and file with the SEC such amendments (including post-
effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times until such
date as is two years after the date such Registration Statement is first
ordered effective by the SEC, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until the earlier of (i) such two-year period or (ii) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in the
Registration Statement;
20
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 6
(c) furnish to each Investor whose Registrable Securities are
included in the Registration Statement, such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Investor;
(d) use reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Investors who hold a
majority in interest of the Registrable Securities being offered reasonably
request, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications
in effect at all times until such date as is the earlier of three years after
the date such Registration Statement is first ordered effective by the SEC or
is three years after the Initial Investor acquired the Shares and (iv) take all
other actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to (I)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (II) subject itself to general
taxation in any such jurisdiction, (III) file a general consent to service of
process in any such jurisdiction, (IV) provide any undertakings that cause more
than nominal expense or burden to the Company or (V) make any change in its
charter or by-laws, which in each case the Board of Directors of the Company
determines to be contrary to the best interests of the Company and its
stockholders;
(e) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver a number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request;
(f) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold pursuant to
such registration (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any stop order or other suspension
of effectiveness of the Registration Statement at the earliest possible time;
21
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 7
(g) permit a single firm of counsel designated as selling
stockholders' counsel (such counsel to be retained at such Investor(s)'
expense) by the Investors who hold a majority in interest of the Registrable
Securities being sold pursuant to such registration to review the Registration
Statement and all amendments and supplements thereto a reasonable period of
time prior to their filing with the SEC, and shall not file any document in a
form to which such counsel reasonably objects; provided that counsel shall
expeditiously complete its review so that the registration can be timely
effected;
(h) make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions
of Rule 158 under the Securities Act) covering a twelve-month period beginning
not later than the first day of the Company's fiscal quarter next following the
date of the Registration Statement;
(i) make its officers available from time to time to respond to
inquires of Investors and make available to any Investor, all pertinent
financial and other records, pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably necessary to
enable such Investor to exercise its due diligence responsibility, and cause
the Company's officers, directors and employees to supply all information which
such Investor may reasonably request for purposes of such due diligence;
provided, however, that such Investor shall not make any disclosure (except to
an Investor who has previously entered into a written confidentiality agreement
with the Company) of any Record or other information which the Company
determines in good faith to be confidential and of which determination the
Investor is so notified unless (i) in the event an Investor believes that
disclosure of Records is necessary to avoid or correct a misstatement or
omission in any Registration Statement, then it shall notify the Company in
writing of its belief and the basis therefor and shall provide the Company with
reasonable opportunity to correct the misstatement or omission or provide to
Investor reasonably satisfactory evidence that such a correction is not
required (ii) the release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent jurisdiction or (iii)
the information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. Such
Investor shall, upon completing such due diligence, destroy or return to the
Company all such Records and all copies or distillation thereof and all notes
or other stored information containing information derived in whole or in part
from such Records; provided further that such Investor may retain one copy of
the Records in its office of its legal counsel solely for the purpose of
preserving the record of the materials received by it and using the same to
defend against any claims or actions threatened or instituted involving the
Records and such Records may not be made available to any person for any other
purpose at any time hereafter. The Company shall not be required to disclose
any confidential information in such Records to any Investor until and unless
such Investor shall have entered into confidentiality agreements (in form and
22
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 8
substance satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3(i). Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. The Company shall hold
in confidence and shall not make any disclosure of information concerning an
Investor provided to the Company unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii) the disclosure
of such information is necessary to avoid or correct a misstatement or omission
in any Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other order from a court or governmental body of
competent jurisdiction or (iv) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement or fiduciary obligation. The Company agrees that it shall,
upon learning that disclosure of such information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Investor, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, such information;
(j) use its best efforts either to (i) cause all the Registrable
Securities covered by the Registration Statement to be listed on a national
securities exchange and on each additional national securities exchange on
which similar securities issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of
such exchange or (ii) secure designation of all the Registrable Securities
covered by the Registration Statement as a National Association of Securities
Dealers Automated Quotations System ("Nasdaq") "national market system
security" within the meaning of Rule 11Aa2-1 of the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the quotation of the
Registrable Securities on the Nasdaq National Market System or, if, despite the
Company's best efforts to satisfy the preceding clause (i) or (ii), the Company
is unsuccessful in satisfying the preceding clause (i) or (ii), to secure
listing on a national securities exchange or Nasdaq authorization and quotation
for such Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. ("NASD") as such with respect
to such Registrable Securities;
(k) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(l) cooperate with the Investors who hold Registrable Securities
being sold to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to the denominations or
amounts as the case may be, and
23
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 9
registered in such names as the Investors may reasonably request; and, within
five business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall cause legal counsel selected by the Company to deliver, to the transfer
agent for the Registrable Securities (with copies to the Investors whose
Registrable Securities are included in such Registration Statement)
instructions to the transfer agent to issue new stock certificates without a
legend and an opinion of such counsel that the shares have been registered; and
(m) take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant
to the Registration Statement;
4. OBLIGATIONS OF THE INVESTORS. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to each
Investor that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least fifteen (15) days prior to the first anticipated
filing date or five (5) days prior to the effective date of the Registration
Statement, the Company shall notify each Investor of the information the
Company requires from each such Investor (the "Requested Information") if such
Investor elects to have any of such Investor's Registrable Securities included
in the Registration Statement. If within five (5) business days prior to the
filing date the Company has not received the Requested Information from an
Investor (a "Non-Responsive Investor"), then the Company may file the
Registration Statement without including Registrable Securities of such Non-
Responsive Investor;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement;
(c) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e) or
3(f), or that the Board of Directors of the Company has determined, in its good
faith reasonable judgment, that the disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
would materially interfere with, or
24
COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 10
require the premature disclosure of, any financing, acquisition or
reorganization involving the Company or any of its subsidiaries or otherwise
would require premature disclosure or any other material nonpublic information
as to which the Company has a bona fide business purpose for maintaining its
confidentiality, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or 3(f), or
upon receipt of written authorization from the Company and , if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice; and
5. EXPENSES OF REGISTRATION. All expenses (other than commissions
and other fees and expenses of investment bankers and other than brokerage
commissions) incurred in connection with registrations, filings or
qualifications pursuant to Section 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees and
the fees and disbursements of counsel for the Company, shall be borne by the
Company; provided, however, that the Investors shall bear the fees and out-of-
pocket expenses of the one legal counsel selected by the Investors pursuant to
Section 3(h) hereof.
6. INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, employees, agents, and
representatives, if any, of such Investor, and each person, if any, who
controls any Investor within the meaning of the Securities Act or the Exchange
Act (each, an "Indemnified Person"), against any losses, claims, damages,
expenses or liabilities (joint or several) (collectively "Claims") to which any
of them become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any post-effective amendment thereof or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained
in any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
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COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 11
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act or any state securities law or any rule or regulation (the
matters in the foregoing clauses (i) through (iv) being, collectively,
"Violations"). Subject to the restrictions set forth in Section 6 (d) with
respect to the number of legal counsel, the Company shall reimburse the
Investors and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a) (I) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by any Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof; (II) with respect to any preliminary prospectus shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(c) hereof; and (III)
shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of the Company, which consent
shall not be unreasonably withheld. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Persons and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify and hold
harmless, to the same extent and in the same manner set forth in Section 6(a),
the Company, each of its directors, each of its officers who signs the
Registration Statement, each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder within the
meaning of the Securities Act or the Exchange Act (collectively and together
with an Indemnified Person, an "Indemnified Party"), against any Claim to which
any of them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon any Violation,
in each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished to the
Company by such Investor expressly for use in
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COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 12
connection with such Registration Statement; provided, however, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented.
(c) The Company shall be entitled to receive indemnities from selling
brokers, dealer managers and similar securities industry professionals
participating in any distribution, to the same extent as provided above, with
respect to information such persons so furnished in writing by such persons
expressly for inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof and this indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying parties;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and other party represented by such counsel in such
proceeding. The Company shall pay for only one separate legal counsel for the
Investors; such legal counsel shall be selected by the Investors holding a
majority in interest of the Registrable Securities. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of
any liability to the Indemnified Person or Indemnified Party under this Section
6, except to the extent that the indemnifying party
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COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 13
is prejudiced in its ability to defend such action. The indemnification
required by this Section 6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
7. CONTRIBUTION. To the extent any indemnification provided for
herein is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that (a) no contribution shall be made under circumstances
where the maker would not have been liable for indemnification under the fault
standards set forth in Section 6, (b) no seller of Registrable Securities
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent misrepresentation
and (c) contribution by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale
of such Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making available to
the Investors the benefits of Rule 144 or any other similar rule or regulation
of the SEC that may during the period beginning two years after and ending
three years from the earliest conversion date allowed hereunder, permit the
Investors to sell securities of the Company to the public without registration,
until such time as the Investors have sold all the Registrable Securities
pursuant to a Registration Statement or Rule 144, the Company agrees to during
such period:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold a majority in interest of
the
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COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 14
Registrable Securities. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company.
10. THIRD PARTY BENEFICIARY. The parties acknowledge and agree that
Shoreline Pacific, the Institutional Division of Financial West Group
("Shoreline Pacific"), shall be deemed a third party beneficiary of the
Company's agreements and representations set forth in this Agreement, entitled
to enforce the terms thereof, and to indemnification for any damages resulting
to Shoreline Pacific from any actual or threatened breach thereof by the
Company, both in Shoreline Pacific's personal capacity and, should Shoreline
Pacific so elect, on behalf of the Investor.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when delivered by
facsimile transmission, when personally delivered or when sent by registered
mail, return receipt requested, addressed (i) if to the Company, at COMFORCE
Corporation, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇, Chief Financial Officer, (ii) if to the Initial Investor, at the
address set forth under its name in the Subscription Agreement and (iii) if to
any other Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes
by notice given in accordance with this Section 12(b), and shall be effective,
when delivered by facsimile, upon conversion; when personally delivered, upon
receipt; and when sent by certified mail, four business days after deposit with
the United States Postal Service.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of New York applicable to the agreements
made and to be performed entirely within such state, without giving effect to
rules governing the conflict of laws. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof which may
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COMFORCE Corporation/Seacrest Capital Limited [DATE]
Registration Rights Agreement
Page 15
prove invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
(e) This Agreement and the Subscription Agreement to which it is
annexed constitute the entire agreement among the parties hereto with respect
to the subject matter hereof. There are no other restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The headings in the Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(i) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of day and
year first above written.
COMFORCE CORPORATION Seacrest Capital Limited
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------- ----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Secretary Director