Exhibit 10.18
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (the "Agreement") is made and entered into as
of this 14th day of July, 2005 by and among PICIS, Inc., a Delaware corporation
(the "Corporation"), The 1818 Fund III, L.P., a Delaware limited partnership
("1818") and Camden Partners Strategic Fund III, L.P., a Delaware limited
partnership ("Camden I"), Camden Partners Strategic Fund III-A, L.P., a Delaware
limited partnership ("Camden II"), Xxxxxx Xxxxxxx Strategic Partners Fund, L.P.,
a Delaware limited partnership ("Camden III"), Strategic Associates, L.P., a
Delaware limited partnership (together with Camden I, Camden II and Camden III,
"Camden"), and each of the other stockholders of the Corporation that
subsequently becomes a party hereto as contemplated by Article II hereof
(together with 1818 and Camden, the "Stockholders").
BACKGROUND
As of the date hereof, the Corporation has issued and outstanding
10,191,030 shares of the Common Stock, 2,263,971 shares of the Series A1
Participating Convertible Preferred Stock, 78,261 shares of the Series A2
Participating Convertible Preferred Stock, 1,767,633 shares of the Series B
Participating Convertible Preferred Stock, and 3,453,939 shares of the Series C
Participating Convertible Preferred Stock. The Corporation is proposing a
recapitalization (the "Recapitalization") to its stockholders under the terms of
which the Corporation's Certificate of Incorporation will be amended and
restated, the Corporation's By-Laws will be amended and restated, the
Stockholders Agreement dated June 23, 2000, as amended to date, to which the
Corporation and certain of its stockholders are parties (the "Existing
Stockholders Agreement") will be terminated, the Corporation and some or all of
its stockholders will become parties to this Agreement, and the Company is
offering to sell up to 2,750,000 shares of the Common Stock as described in the
Corporation's Confidential Offering Memorandum dated July 15, 2005 (the "Rights
Offering"), all as described in the Corporation's Information Statement dated
July 15, 2005 (the "Information Statement"). Also at the same time, 1818, Camden
I and Camden II have offered to purchase Common Stock and Preferred Stock having
an aggregate purchase price of up to $15.1 million as described in their Offer
to Purchase dated July 15, 2005 (the "Tender Offer"). In anticipation of the
termination of the Existing Stockholders Agreement and completion of the
Recapitalization, the Corporation, 1818 and Camden are entering into this
Stockholders Agreement to take effect if, but only if, the Tender Offer and the
Recapitalization are completed. Any stockholder of the Corporation may become a
party hereto either before or after completion of the Recapitalization as
contemplated by Section 2.2, hereof.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following meanings.
"AFFILIATE" means, as to any particular person, any other person
controlling, controlled by and/or under common control with such particular
person, where "control" means the possession, directly or indirectly, of the
power to direct the management and policies of a person whether through the
ownership of voting securities, contract or otherwise. In addition, the
partners, members and shareholders of any Stockholder shall be deemed to be an
Affiliate of such Stockholder. Without limitation of the foregoing, if any
person manages an investment fund under contract with such investment fund, such
investment fund shall be deemed an "Affiliate" of such person. Notwithstanding
the foregoing, (a) 1818 shall not be deemed to be an "Affiliate" of Camden and
(b) Camden shall not be deemed to be an "Affiliate" of 1818.
"APPROVED EMPLOYEE STOCK OPTION PLAN" means any employee stock option plan
or other equity based compensation plan for executives, employees and/or agents
of the Corporation existing as of the date hereof or approved by the
Corporation's Board of Directors, provided the members of the Board of Directors
approving such action include at least a majority of the Non-Related Directors.
"ASSOCIATE" means, as to any particular person, any director, officer,
employee, general partner, agent and/or representative of such person or of any
Affiliate of such person.
"COMMON STOCK" means the Corporation's Common Stock, $.01 par value per
share.
"COMPETITOR" means any Person that, and/or any Person any Affiliate of
which develops, markets, distributes, licenses and/or sells clinical care
information systems for use in operating rooms, intensive care units, emergency
departments or other high acuity hospital settings.
"CONVERTIBLE SECURITIES" means any stock or securities directly or
indirectly convertible into or exchangeable for Common Stock.
"GROUP" means a group within the meaning of Section 13(d)(2) of the
Securities Exchange Act of 1934, as amended.
"IBEX SHARES" means shares of the Common Stock issued to the Ibex
Stockholders under that certain Acquisition Agreement dated June 3, 2004
pursuant to which the Corporation acquired Ibex Healthdata Systems, Inc., an
Illinois corporation, together with any shares of Common Stock issued with
respect to such shares under Article IX, hereof. For the avoidance of doubt, the
"Ibex Shares" shall not include Shares issued to the Ibex Stockholders in the
Rights Offering.
"IBEX STOCKHOLDERS" means the persons to whom the Corporation issued shares
of the Common Stock under that certain Acquisition Agreement dated June 3, 2004
pursuant to which the Corporation acquired Ibex Healthdata Systems, Inc., an
Illinois corporation, together with (A) any spouse of such persons, (B) any
issue of such persons, (C) any spouse of any issue of such persons, and/or (D)
any trust primarily for the benefit of such persons and/or any or all the
foregoing, to which such persons may transfer the Ibex Shares.
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"INDEPENDENT DIRECTOR" means a director who meets the requirements for
independence set forth in the rules of the Nasdaq National Market, except that
stock ownership alone shall not disqualify any individual as "Independent,"
notwithstanding any rule of the Nasdaq National Market to the contrary.
"INITIAL PUBLIC OFFERING" means a firm commitment underwritten offering by
the Corporation of its Common Stock to the public pursuant to an effective
registration statement under the Securities Act of 1933, as then in effect, or
any comparable statement under any similar federal statute then in force in
connection with which the Corporation's Common Stock is listed on a U.S.
National Securities Exchange or the NASDAQ National Market.
"MAJORITY VOTE" means, a vote or written consent approving the matter in
question by Stockholders holding not less than a majority of the shares of
Common Stock then entitled to antidilution rights pursuant to Article IX hereof,
voting together as a single class.
"MARKET PRICE" of any security means the average of the closing prices of
such security's sales on all securities exchanges on which such security may at
the time be listed, or, if there has been no sale on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of twenty-one (21) trading days
consisting of the day as of which "Market Price" is being determined and the
twenty (20) consecutive trading days prior to such day.
"NON-RELATED DIRECTOR" means a director who is (a) an Independent Director
and (b) not an Associate of any Person holding ten percent (10%) or more of the
issued and outstanding Common Stock. For purposes of clause (b), the Ibex
Stockholders shall be deemed to be a single Person.
"OPTION" means any right, warrant or option to subscribe for or purchase
Common Stock or Convertible Securities.
"PERSON" means, whether capitalized or not capitalized, any individual,
corporation, limited liability company, partnership, trust, governmental
authority, Group or other organization or entity.
"QUALIFIED IPO" means an Initial Public Offering in which the net proceeds
(after underwriting discounts and commissions) to the Corporation equal at least
$50,000,000 and in which the underwriting is lead managed by a nationally
recognized investment banking firm.
"SECURITIES" has the meaning assigned thereto in the Securities Act of
1933, as amended.
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"SERIES A1 PREFERRED STOCK" means the Corporation's Series A1 Participating
Convertible Preferred Stock, par value $0.01 per share.
"SERIES A2 PREFERRED STOCK" means the Corporation's Series A2 Participating
Convertible Preferred Stock, par value $0.01 per share.
"SERIES A1 SHARES" means shares of the Common Stock issued to holders of
the Series A1 Preferred Stock in exchange for the Series A1 Preferred Stock in
the Recapitalization, together with any shares of the Common Stock issued with
respect to such shares under Article IX, hereof.
"SERIES B PREFERRED STOCK" means the Corporation's Series B Participating
Convertible Preferred Stock, par value $0.01 per share.
"SERIES C PREFERRED STOCK" means the Corporation's Series C Participating
Convertible Preferred Stock, par value $0.01 per share.
"SERIES C SHARES" means shares of the Common Stock issued to holders of the
Series C Preferred Stock in exchange for the Series C Preferred Stock in the
Recapitalization, together with shares of the Common Stock issued with respect
to such shares under Article IX, hereof.
"SHARES" shall mean any capital stock of the Corporation now owned by a
Stockholder or which a Stockholder may hereafter acquire, or any interest
therein.
"STOCKHOLDERS" means the stockholders of the Corporation parties hereto
from time to time.
"TRANSFER" means any sale, transfer, gift, assignment, bequest, pledge,
encumbrance or other transaction by which any Stockholder divests himself of
ownership or control of all or any part of his Shares, whether voluntarily or by
operation of law. To "Transfer" means to engage in any transaction resulting in
a Transfer.
ARTICLE II
EFFECTIVENESS AND JOINDER
2.1. EFFECTIVENESS. This Agreement shall become binding upon the
Corporation, 1818 and Camden upon their execution hereof. This Agreement shall
become binding upon stockholders of the Corporation submitting Joinder
Agreements as contemplated by Section 2.2, hereof, upon the acceptance of such
Joinder Agreements as provided in Section 2.2, hereof. This Agreement shall
become effective after the termination of the Existing Stockholders Agreement
has become effective and the filing of the Third Amended and Restated
Certificate of Incorporation of the Corporation (the "Restated Charter") in the
form attached hereto as EXHIBIT A with the Secretary of State of the State of
Delaware. If the Restated Charter has not been filed on or before September 30,
2005, this Agreement shall be null and void and of no further force or effect.
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2.2. JOINDER.
(a) Before the closing of the Tender Offer, any Person that is a
stockholder of the Corporation that desires to become a party hereto may
submit a Joinder Agreement in the form attached hereto as EXHIBIT B to the
Corporation. Upon acceptance of any such Joinder Agreement by the
Corporation, the Person that submitted such Joinder Agreement to the
Corporation shall become a party hereto as a "Stockholder," hereunder.
(b) After the closing of the Tender Offer, any Person that
desires to qualify as a Permitted Transferee under Section 3.2, hereof,
shall submit a Joinder Agreement in the form attached hereto as EXHIBIT B
to the Corporation to acknowledge that such Person is bound hereby. Upon
acceptance of any such Joinder Agreement by the Corporation, the Person
that submitted such Joinder Agreement to the Corporation shall become a
party hereto as a "Stockholder" hereunder, except that shares of the
Corporation's capital stock outstanding upon the closing of the Tender
Offer but not subject hereto as of such closing shall not become subject
hereto nor entitled to the benefits hereof unless 1818 and Camden consent
thereto.
ARTICLE III
PERMITTED TRANSFERS
3.1. PERMITTED TRANSFERS. A Stockholder may not Transfer all or any
part of his Shares except to: (i) the Corporation; or (ii) a Permitted
Transferee (as defined below). Upon the Transfer by a Stockholder of all such
Stockholder's Shares, such Person shall cease to be a "Stockholder" party to
this Agreement.
3.2. PERMITTED TRANSFEREES. A "Permitted Transferee" shall mean any
Person that is not a Competitor and that agrees to be bound hereby as a
Stockholder hereunder by executing a Joinder Agreement as contemplated by
Section 2.2(b) hereof. In any case, subject to Article VI, below, any Person to
which a Stockholder Transfers Shares shall be bound hereby as a "Stockholder"
hereunder. For the avoidance of doubt, any Affiliate of a Stockholder shall
qualify as a "Permitted Transferee" hereunder if such Affiliate agrees to be
bound hereby as a Stockholder hereunder by executing a Joinder Agreement as
contemplated by Section 2.2(b) hereof.
ARTICLE IV
CO-SALE RIGHTS
Except in the case of a Transfer to the Corporation or to an Affiliate, (a)
if any Stockholder and/or group of Stockholders (collectively, the "Stockholder
Transferors"), either individually or jointly, proposes, in one transaction
and/or a series of related transactions, to Transfer Shares representing forty
percent (40%) or more of the then outstanding shares of Common Stock of the
Corporation, determined on a fully diluted basis, to any Person, such
Stockholder Transferors shall deliver a written notice (a "Transfer Notice") to
each of the Stockholders, not including the Stockholder Transferors (the
"Stockholder Optionees"); (b) if
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1818 and/or any of its Affiliates (collectively, the "1818 Transferors"), either
individually or jointly, proposes, in one transaction and/or a series of related
transactions, to Transfer Shares representing seventy-five percent (75%) or more
of the number of Shares held by 1818 and/or its Affiliates, immediately after
giving effect to the Tender Offer, the Rights Offering and the Recapitalization
(other than in a transaction covered by clause (a) above), such 1818 Transferors
shall deliver a Transfer Notice to each of the Stockholders, not including the
1818 Transferors (the "1818 Optionees"); and (c) if Camden and/or any of its
Affiliates (the "Camden Transferors" and, together with the Stockholder
Transferors and the 1818 Transferors, the "Transferors") proposes, in one
transaction and/or a series of related transactions, to Transfer Shares
representing seventy-five percent (75%) or more of the number of Shares held by
Camden and/or its Affiliates immediately after giving effect to the Tender
Offer, the Rights Offering and the Recapitalization (other than in a transaction
covered by clause (a) above), such Camden Transferors shall deliver a Transfer
Notice to each of the Stockholders, not including the Camden Transferors
(together with the Stockholder Optionees and the 1818 Optionees, the
"Optionees"). The Transfer Notice shall specify the number of Shares proposed to
be Transferred (the "Subject Shares"), the Person to whom the Subject Shares are
proposed to be Transferred (the "Proposed Transferee"), the nature of the
proposed transaction, the form and amount of consideration per Share proposed to
be received by the Transferors (the "Transfer Price"), the terms of payment of
such consideration (the "Payment Terms"), and the date on which the proposed
Transfer is to occur (which date shall be not less than thirty-one (31) nor more
than one hundred eighty (180) days after the date of the Transfer Notice) and
the terms and conditions of the Transfer. Upon receipt of a Transfer Notice,
each Optionee may give written notice to the Transferor during the period of
thirty (30) days after the Transfer Notice is given (the "Option Period"), to
participate in the Transfer described in the Transfer Notice. If any Optionee so
elects to participate in such Transfer, such Optionee shall be entitled to sell
to the Proposed Transferee, at the Transfer Price which shall be payable
pursuant to the Payment Terms, a number of Shares equal to: (i) the number of
Shares owned by such Optionee; multiplied by (ii) a fraction, the numerator of
which is the number of Subject Shares and the denominator of which is the total
number of Shares owned by the Transferors. If any Optionee shall elect to
participate in a Transfer as provided in this Article IV, such Optionee shall
participate in such Transfer on the same terms and conditions as the
Transferors, except that (A) such Optionee shall not be required to make any
representation regarding the title of any other seller to the Shares being sold
by such other seller or the authority of any other seller and (B) such Optionee
may be required to provide indemnification solely with respect to (1) such
Optionee's own title and authority and (2) on a pro rata basis based on the
total number of Shares being sold, the assets, liabilities and business of the
Corporation. If any Optionee shall elect to participate in a Transfer described
in a Transfer Notice as contemplated by this Article IV, the Transferors in
question shall use their commercially reasonable efforts to obtain the agreement
of the Proposed Transferee to the participation of such Optionee in such
Transfer, and, in any case, the Transferors shall not Transfer any of the
Subject Shares to the Proposed Transferee if such Proposed Transferee fails to
purchase the Shares of such Optionee on the terms contemplated hereby. Each
Optionee who does not elect to participate in a Transfer in compliance with the
above requirements, including the Option Period, shall be deemed to have waived
all of such Optionee's rights with respect to such Transfer, and the Transferors
shall thereafter be free to Transfer the Subject Shares to the Proposed
Transferee, at a price per Share price no greater than the Transfer Price and on
other principal terms and conditions which are not materially more
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favorable to the Transferors than those set forth in the Transfer Notice,
without any further obligation to such non-participating Optionee pursuant to
this Article IV, provided such Transfer occurs within one hundred eighty (180)
days after the day of the Transfer Notice. Any Transfer of the Subject Shares
after such one hundred eighty (180) day period shall be again subject to this
Article IV.
ARTICLE V
TAKE-ALONG RIGHTS
If any Stockholder and/or group of Stockholders (collectively, the
"Sellers") determines, in one transaction and/or a series of related
transactions, to Transfer Shares representing sixty-six percent (66%) or more of
the then outstanding Common Stock to any non-related Person, the Sellers may
deliver a written notice (a "Sale Notice") to each of the Stockholders, not
including the Sellers (the "Remaining Stockholders"). The Sale Notice shall
specify the Person to whom the Sellers propose to Transfer their Shares (the
"Proposed Buyer"), the nature of the proposed transaction, the form and amount
of consideration per Share proposed to be received by the Sellers (the "Sale
Price"), the terms of payment of such consideration (the "Sale Terms"), and the
date on which the proposed Transfer is to occur (which date shall be not less
than thirty-one (31) nor more than ninety (90) day after the date of the Sale
Notice) and the terms and conditions of such Transfer. Upon receipt of a Sale
Notice, each Remaining Stockholder, subject to the last sentence of this Article
V, shall be obligated to (i) sell all Shares owned by such Remaining Stockholder
to the Proposed Buyer (and in the case of a proposed transaction including the
sale of substantially all of the assets of the Corporation or a merger, each
Remaining Stockholder shall be obligated to vote in favor of such transaction),
on the Sale Terms and at the Sale Price and upon the same terms and conditions
as the Sellers, except that (A) such Remaining Stockholder shall not be required
to make any representation regarding the title of any other seller to the Shares
being sold by such other seller or the authority of any other seller and (B)
such Remaining Stockholder may be required to provide indemnification solely
with respect to (1) such Remaining Stockholder's own title and authority and (2)
on a pro rata basis based on the total number of Shares being sold, the assets,
liabilities and business of the Corporation; and (ii) otherwise take all
necessary action to cause the consummation of such transaction, including voting
its Shares in favor of such transaction and not exercising any appraisal rights
in connection therewith. Upon the consummation of any Transfer subject to this
Article V, this Agreement shall be terminated and of no further force and
effect. If the Sellers give a Sale Notice under this Article V, provided the
Proposed Buyer buys the Shares of the Remaining Stockholders as contemplated
hereby, the provisions of Article IV, hereof, shall not apply to the Transfer in
question. In any case, the Remaining Stockholders shall not be required to sell
their Shares as contemplated hereby unless the Sellers complete the sale of the
Sellers' Shares as described in the Sale Notice.
ARTICLE VI
PROHIBITED TRANSFER
If any Stockholder shall Transfer any Shares in violation of the provisions
of this Agreement, the Corporation shall have the right and option, in addition
to such other rights and
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remedies as may be available to the Corporation and the other Stockholders
(including the right to restrain or set aside such Transfer), exercisable by
written notice to the transferee thereof (the "Prohibited Transferee"), at any
time within two (2) years after the Corporation's discovery of such Transfer, to
purchase any or all the Shares so Transferred from the Prohibited Transferee at
a purchase price equal to the book value of such Shares determined as of the end
of the Corporation's fiscal year last preceding the date of such Transfer, which
shall be payable in five (5) equal annual installments together with interest
thereon at the rate of five percent (5%) per annum with the first such
installment to be paid in cash upon the Corporation's purchase of such Shares
and the last such installment to be paid on the fourth anniversary of such
purchase. If the Corporation does not exercise such option within such two (2)
year period, title to the Shares which have been Transferred in violation of
this Agreement and as to which such option is not exercised, shall vest in the
Prohibited Transferee, but such Shares shall remain subject to this Agreement,
and such Prohibited Transferee shall be bound by this Agreement with respect to
such Shares as an original Stockholder hereunder. Upon the request of any party
hereto, any Prohibited Transferee shall agree to be bound hereby to the same
extent as if such Prohibited Transferee had been an original party hereto by
signing a Joinder Agreement in the form attached hereto as EXHIBIT A. Neither
the failure of any party hereto to request that a Prohibited Transferee execute
any such agreement, nor the failure of any Prohibited Transferee to execute any
such agreement, shall release any Prohibited Transferee or its Shares from this
Agreement or impair the right of any party hereto with respect to any such
Prohibited Transferee or its Shares.
ARTICLE VII
BOARD OF DIRECTORS
7.1. BOARD OF DIRECTORS. The Stockholders shall take any and all
actions: (i) to cause two (2) persons designated by 1818 to be elected and
continued in office as directors of the Corporation (each an "1818 Director");
(ii) to cause one (1) person designated by Camden to be elected and continued in
office as a director of the Corporation (the "Camden Director"); (iii) provided
the voting agreement dated June 3, 2004 between 1818, on the one hand, and the
Ibex Stockholders, on the other hand, has been terminated, for so long as the
Ibex Stockholders continue to hold, in the aggregate, not less than ten percent
(10%) of the outstanding capital stock of the Corporation, to cause one (1)
person designated by the Ibex Stockholders to be elected and continued in office
as a director of the Corporation (the "Ibex Director"); (iv) for so long as Xxxx
Xxxxxxx desires to serve as a director and remains an executive officer of the
Corporation, to cause Xxxx Xxxxxxx to be elected and continue in office as a
director of the Corporation; (v) for so long as Xxxxxxxxx Xxxxxxxx desires to
serve as director and remains an executive officer of the Corporation, to cause
Xxxxxxxxx Xxxxxxxx to be elected and continue in office as a director of the
Corporation; and (vi) to cause persons recommended by the Nominating and
Corporate Governance Committee of the Board of Directors of the Corporation to
be elected and continue in office as directors of the Corporation to occupy
positions on the Board of Directors of the Corporation which are not occupied by
designees described in clauses (i) through (v), above. Such actions shall
include the voting of all shares that any Stockholder may from time to time have
the power to vote, calling and attendance at meetings of the Stockholders of the
Corporation, and causing any necessary amendments to the Certificate of
Incorporation and/or By-Laws of the Corporation. 1818 and Camden will only
designate persons
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who will qualify as Independent Directors for election to the Board of Directors
of the Corporation.
7.2. REMOVAL OF DIRECTORS.
(a) If at any time 1818 notifies the other Stockholders of its
desire to remove at any time and for any reason (or no reason) an 1818
Director, then each Stockholder shall vote all of its Shares so as to
remove such 1818 Director.
(b) If at any time Camden notifies the other Stockholders of its
desire to remove at any time and for any reason (or no reason) the Camden
Director, then each Stockholder shall vote all of its Shares so as to
remove such Camden Director.
(c) If at any time the Ibex Stockholders notify the other
Stockholders of their desire to remove at any time and for any reason (or
no reason) the Ibex Director, then each Stockholder shall vote all of its
Shares so as to remove such Ibex Director.
7.3. REPLACEMENT OF DIRECTORS.
(a) If at any time, a vacancy is created on the Board of
Directors of the Corporation by reason of the incapacity, death, removal or
resignation of any of the 1818 Directors designated pursuant to Section 7.1
hereof, then 1818 shall designate an individual who shall be elected to
fill the vacancy until the next meeting of Stockholders.
(b) If at any time, a vacancy is created on the Board of
Directors of the Corporation by reason of the incapacity, death, removal or
resignation of the Camden Director designated pursuant to Section 7.1
hereof, then Camden shall designate an individual who shall be elected to
fill the vacancy until the next meeting of Stockholders.
(c) If at any time, a vacancy is created on the Board of
Directors of the Corporation by reason of the incapacity, death, removal or
resignation of the Ibex Director designated pursuant to Section 7.1 hereof,
then the Ibex Stockholders shall designate an individual who shall be
elected to fill the vacancy until the next meeting of the Stockholders.
(d) Upon receipt of notice of the designation of any director
nominee pursuant to this Section 7.3, each Stockholder shall, as soon as
practicable after the date of such notice, take all reasonable actions,
including the voting of its Shares, to elect the nominee so designated to
fill the vacancy.
7.4. TRANSITIONAL PROVISIONS. Until the Nominating and Corporate
Governance Committee of the Board of Directors of the Corporation has
recommended other individuals for appointment to the Nominating and Corporate
Governance Committee, the Audit Committee and the Compensation Committee of the
Board of Directors of the Corporation, it is the intention of the Stockholders
that the initial members of the Nominating and Corporate Governance Committee of
the Board of Directors of the Corporation shall be Xxxx Xxxxxxx, T. Xxxxxxx Xxxx
and Xxxx Xxxxxxxx, M.D., that the initial members of the Audit Committee of the
Board of Directors of the Corporation shall be Xxxxxxx Xxxxxxxx, Xxxxxx Xxxxx
and Xxxxx Xxxxxx, and
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that the initial members of the Compensation Committee of the Board of Directors
of the Corporation shall be T. Xxxxxxx Xxxx, Xxxxxxx Xxxxxx and Xxxxxxx
Xxxxxxxx. It is the intention of the Stockholders that on or before December 31,
2006, the Nominating and Corporate Governance Committee of the Board of
Directors shall recommend, and that the Board of Directors of the Corporation
shall appoint to the Nominating and Corporate Governance, Audit and Compensation
Committees of the Board of Directors of the Corporation individuals who satisfy
the criteria set forth in Sections 6, 7 and 8 of Article III of the
Corporation's Amended and Restated By-Laws as approved by the Board of Directors
of the Corporation on July 8, 2005.
ARTICLE VIII
REGISTRATION RIGHTS
8.1. DEMAND REGISTRATION RIGHTS OF THE STOCKHOLDERS.
8.1.1. REQUEST. Subject to the provisions of this Section 8.1, at any
time after a Qualified Initial Public Offering one or more Stockholders holding,
individually or in the aggregate, at least twenty-five percent (25%) of the
Common Shares (as defined below) may request registration for sale under the
Securities Act of 1933, as amended (the "Securities Act") of all or part of the
Common Shares then held by them, provided that such Stockholders shall in any
case request registration for sale of shares for which the anticipated aggregate
offering price will exceed Thirty Million Dollars ($30,000,000). Within ten (10)
days after receipt by the Corporation of such request (which request shall
specify the number of shares proposed to be registered and sold and the manner
in which such sale is proposed to be effected), the Corporation shall promptly
give written notice to all other Stockholders of the proposed demand
registration, and such other Stockholders shall have the right to join in such
proposed registration and sale, upon written request to the Corporation (which
request shall specify the number of shares proposed to be registered and sold)
within ten (10) days after receipt of such notice from the Corporation. The
Corporation shall thereafter, as expeditiously as practicable, use its best
efforts (i) to file with the United States Securities and Exchange Commission
(the "Commission") under the Securities Act a registration statement on the
appropriate form covering all Common Shares specified in the demand request and
all shares with respect to which the Corporation has received such written
request from the other Stockholders; and (ii) to cause such registration
statement to be declared effective. At the request of the Stockholders
requesting registration, the Corporation shall use its best efforts to cause
each offering pursuant to this Section 8.1 to be managed, on a firm commitment
basis, by a recognized national underwriter selected by the Corporation with the
consent, not to be unreasonably withheld, of the requesting Stockholders. The
Corporation shall not be obligated to effect more than three requests by the
Stockholders, collectively, for demand registrations pursuant to this subsection
8.1.1, subject to subsection 8.1.4, hereof, provided, however, that each such
request shall be deemed satisfied only when a registration statement covering
all Common Shares specified in notices received as aforesaid, for sale in
accordance with the method of disposition specified by the requesting
Stockholders, has become effective and all such shares have been sold pursuant
thereto. For purposes hereof, as of any date, "Common Shares" shall mean the
shares of the Corporation's Common Stock then issued and outstanding.
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8.1.2. DELAY BY CORPORATION. The Corporation shall not be required to
effect a demand registration under the Securities Act pursuant to subsection
8.1.1, above if (i) the Corporation receives such request for registration
within ninety (90) days preceding the anticipated effective date of a proposed
underwritten public offering of securities of the Corporation approved by the
Corporation's Board of Directors prior to the Corporation's receipt of such
request; (ii) within one hundred twenty (120) days prior to any such request for
registration, a registration of securities of the Corporation has been effected
in which the Stockholders had the right to participate pursuant to this Section
8.1 or Section 8.2 hereof; or (iii) the Board of Directors of the Corporation
reasonably determines in good faith that effecting such a demand registration at
such time would not be in the Corporation's best interests; provided, however,
that the Corporation may only delay a demand registration pursuant to this
clause (iii) for a period not exceeding one hundred twenty (120) days and may
only defer a given demand registration pursuant to this clause (iii) on one
occasion. The Corporation shall promptly notify in writing the Stockholders
requesting registration of any decision not to effect any such request for
registration pursuant to this subsection 8.1.2, which notice shall set forth in
reasonable detail the reason for such decision and shall include an undertaking
by the Corporation promptly to notify such Stockholders as soon as a demand
registration may be effected.
8.1.3. PRO RATA REDUCTION. If a demand registration is an underwritten
registration and the managing underwriters advise the Corporation and the
Stockholders participating in the demand registration in writing that in their
opinion the number of Common Shares requested to be included in such
registration exceeds the number which can be sold in such offering, then the
amount of such shares that may be included in such registration shall be
allocated pro rata among all of such participants in proportion to the total
number of Common Shares held by such participants.
8.1.4. WITHDRAWAL. Stockholders participating in any demand registration
pursuant to this Section 8.1 may withdraw at any time before a registration
statement is declared effective, in which event the Corporation shall withdraw
such registration statement (and the Stockholders shall not be deemed to have
requested a demand registration for purposes of subsection 8.1.1 hereof) unless
Common Shares having an expected offering price of at least Thirty Million
Dollars ($30,000,000) remain covered by such registration statement. If the
Corporation withdraws a registration statement under this subsection 8.1.4 in
respect of a registration for which the Corporation would otherwise be required
to pay expenses under subsection 8.6.2 hereof, the Stockholders that shall have
withdrawn shall be liable to the Corporation for all expenses of such
registration in proportion to the number of Shares each such withdrawing
Stockholder shall have requested to be registered.
8.2. PIGGYBACK REGISTRATION RIGHTS.
8.2.1. REQUEST. If at any time or times after the date hereof the
Corporation proposes to make a registered public offering of any of its
securities under the Securities Act other than an offering pursuant to a demand
registration under Section 8.1 hereof or an offering registered on Form X-0,
Xxxx X-0, or comparable forms, the Corporation shall, not less than twenty (20)
days prior to the proposed filing date of the registration form, give written
notice of the proposed registration to each Stockholder having rights at such
time pursuant to this subsection 8.2.1, specifying in reasonable detail the
proposed method of disposition, and at the written request of a
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Stockholder delivered to the Corporation within fifteen (15) days after the
receipt of such notice, shall include in such registration and offering, and in
any underwriting of such offering, all Common Shares as may have been designated
in such Stockholder's request.
8.2.2. PRO RATA REDUCTION. If a registration in which any Stockholder
has the right to participate pursuant to this Section 8.2 is an underwritten
offering, and the managing underwriters advise the Corporation in writing that
in their opinion the number of securities requested to be included in such
offering exceeds the number which can be sold in such offering, the Corporation
shall include in such registration if the proposed offering is an Initial Public
Offering; (i) first, the securities of the Corporation proposed to be sold by
the Corporation; (ii) second, the Common Shares proposed to be sold by any
Stockholders (allocated pro rata among such Stockholders in proportion to the
total number of Common Shares held by such Stockholders); and (iii) third, the
securities proposed to be sold by all other participants. If the offering is
other than an Initial Public Offering, the Corporation shall include in such
offering securities proposed to be sold by Stockholders (allocated as aforesaid)
in preference to securities proposed to be included by the Corporation or any
other participant.
8.3. TERMINATION OF REGISTRATION RIGHTS. The obligation of the
Corporation to register Common Shares under Sections 8.1 and 8.2 shall terminate
as to any Stockholder at such time as the Stockholder: (i) may sell all shares
held by it pursuant to Rule 144(k) under the Securities Act; and (ii) holds less
than two percent (2%) of the Common Stock then outstanding on a fully diluted
basis.
8.4. REGISTRATION PROCEDURES. The Corporation shall have no obligation
to file a registration statement pursuant to Section 8.1 hereof, or to include
Common Shares owned by any Stockholder in an offering pursuant to Section 8.2,
hereof, unless and until such Stockholder shall have furnished the Corporation
with all information and statements about or pertaining to such Stockholder in
such reasonable detail and on such timely basis as is reasonably deemed by the
Corporation to be necessary or appropriate with respect to the preparation of
any registration statement or similar filing, and each Stockholder shall provide
such information. Whenever any Stockholder has requested that any Common Shares
be registered pursuant hereto, subject to the fulfillment of the Corporation's
obligations hereunder, (i) the Stockholders and other participants in the
registration shall enter into an underwriting agreement in customary form having
terms not inconsistent with this Agreement, if requested to do so by the
Corporation; and (ii) the Corporation shall, as expeditiously as reasonably
possible:
(a) prepare and file with the Commission or any other
appropriate body a registration statement or similar filing with respect to
such shares and use its best efforts to cause such registration statement
or similar filing to become effective as soon as reasonably practicable
thereafter (provided that before filing a registration statement or similar
filing or prospectus or any amendments or supplements thereto, the
Corporation shall furnish counsel for such Stockholder with copies of all
such documents proposed to be filed);
(b) prepare and file with the Commission or any other
appropriate body such amendments and supplements to such registration
statement or similar filing and prospectus used in connection therewith as
may be necessary to keep such registration
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statement effective for a period of not less than nine months or until such
Stockholder has completed the distribution described in such registration
statement, whichever occurs first;
(c) furnish to such Stockholder such number of copies of such
registration statement or similar filing, each amendment and supplement
thereto, the prospectus included in such registration statement (including
each preliminary prospectus), and such other documents as such Stockholder
may reasonably request;
(d) use its best efforts to register or qualify such shares
under such other securities or blue sky laws of such United States
jurisdictions as such Stockholder requests (and to maintain such
registrations and qualifications effective for a period of nine months or
until such Stockholder has completed the distribution of such shares,
whichever occurs first), and to do any and all other acts and things which
may be necessary or advisable to enable such Stockholder to consummate the
disposition in such jurisdictions of such shares (provided that the
Corporation will not be required to (i) qualify generally to do business in
any jurisdiction where it would not be required but for this subsection
8.4(d); (ii) subject itself to taxation in any such jurisdiction; or (iii)
file any general consent to service of process in any such jurisdiction);
provided that, notwithstanding anything to the contrary in this Agreement
with respect to the bearing of expenses, if any such jurisdiction shall
require that expenses incurred in connection with the qualification of such
shares in that jurisdiction be borne in part or full by such Stockholder,
then such Stockholder shall pay such expenses to the extent required by
such jurisdiction;
(e) notify such Stockholder, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act
within the period that the Corporation is required to keep a registration
statement effective, of the happening of any event as a result of which the
prospectus included in any such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and promptly prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such shares, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading, which supplement or amendment shall
be filed as soon as possible (and in any case within that number of days
equal to the excess of one hundred twenty (120) days over the number of
days, if any, the Corporation delayed the registration in question pursuant
to clause (iii) of subsection 8.1.2, above) after the happening of the
event as a result of which the prospectus included in any such registration
statement contains an untrue statement of material fact or omits any fact
necessary to make the statements therein not misleading;
(f) cause all such shares to be listed on securities exchanges,
if any, on which similar securities issued by the Corporation are then
listed;
(g) provide a transfer agent and registrar (if applicable) for
all such shares not later than the effective date of such registration
statement;
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(h) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other actions,
including participating in such "road show" activities as the managing
underwriter may recommend, as such Stockholder reasonably requests (and
subject to its reasonable approval) in order to expedite or facilitate the
disposition of such shares; and
(i) make available for inspection by such Stockholder, by any
underwriter participating in any distribution pursuant to such registration
statement, and by any attorney, accountant or other agent retained by such
Stockholder or by any such underwriter, all financial and other records,
pertinent corporate documents, and properties (other than confidential
intellectual property) of the Corporation.
Anything to the contrary herein notwithstanding, no Stockholder entering into an
underwriting agreement as contemplated above shall be required to make any
representation other than as to its title to the shares it proposes to sell, its
authority to participate in the transactions contemplated by such underwriting
agreement and the accuracy of the information regarding such Stockholder
required to be included in the registration form involved in such registration.
8.5. HOLDBACK AGREEMENT. In the event that the Corporation effects, or
any registration statement filed pursuant hereto is effected as, an underwritten
public offering of any equity security, each Stockholder agrees, if requested by
the underwriters managing such public offering, not to effect any public sale or
distribution, including any sale pursuant to Rule 144 under the Securities Act,
of any equity securities (except as part of such underwritten offering) during
the one hundred eighty (180) day period commencing with the trade date of the
offering (if an Initial Public Offering) or the ninety (90) day period
commencing with the trade date of the offering (if a follow-on public offering),
provided that the forgoing agreement will not apply to (i) any Stockholder then
holding less than 1% of the then outstanding Corporation equity securities in
any underwritten public offering (other than an Initial Public Offering) in
which such Stockholder is not selling any equity securities or; (ii) any
Stockholder then holding more than 1% of the then outstanding Corporation equity
securities unless the underwriters managing such public offering require all
such Stockholders not to effect such sale or distribution.
8.6. REGISTRATION EXPENSES.
8.6.1. STOCKHOLDER EXPENSES. If Common Shares owned by any Stockholder
are included in an offering pursuant hereto, then such Stockholder shall pay all
transfer taxes, if any, relating to the sale of its shares, and any underwriting
discounts or commissions or the equivalent thereof applicable to the sale of its
shares.
8.6.2. CORPORATION EXPENSES. Except for the fees and expenses specified
in subsections 8.4(d) and 8.6.1 hereof and except as provided below in this
subsection 8.6.2, the Corporation shall pay all expenses incident to the
offering of shares pursuant to Sections 8.1 or 8.2, hereof, and to the
Corporation's performance of or compliance with this Agreement, including,
without limitation, all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, underwriting discounts, fees and
expenses (other than such Stockholder's portion of any underwriting discounts or
commissions or the equivalent thereof), printing expenses, messenger and
delivery expenses, and fees and expenses of counsel for the
14
Corporation and a single counsel for all Stockholders selling shares (such
selling stockholder counsel fees not to exceed $10,000) and all independent
certified public accountants and other persons retained by the Corporation.
8.7. INDEMNITY; CONTRIBUTION.
8.7.1. INDEMNITY. In the event that any Common Shares owned by a
Stockholder are sold by means of a registration statement, prospectus or similar
filing pursuant hereto, the Corporation agrees to indemnify and hold harmless
such Stockholder, each of its officers, directors and partners, and each person,
if any, who controls or may control such Stockholder within the meaning of the
Securities Act (such Stockholder, its officers and directors, and any such other
persons being hereinafter referred to individually as an "Indemnified Person"
and collectively as "Indemnified Persons") from and against all demands, claims,
actions or causes of action, assessments, losses, damages, liabilities, costs,
and expenses, including, without limitation, interest, penalties, and reasonable
attorneys' fees and disbursements, asserted against, resulting to, imposed upon
or incurred by such Indemnified Person, directly or indirectly (hereinafter
referred to in this Section 8.7 in the singular as a "claim" and in the plural
as "claims"), based upon, arising out of or resulting from any untrue statement
of a material fact contained in the registration statement, prospectus or
similar filing or any omission to state therein a material fact necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading, except insofar as such claim is based upon,
arises out of or results from information furnished to the Corporation in
writing by such Stockholder for use in connection with the registration
statement, prospectus or similar filing. Such Stockholder agrees to indemnify
and hold harmless the Corporation, its officers and directors, and each person,
if any, who controls or may control the Corporation within the meaning of the
Securities Act (the Corporation, its officers and directors, and any such other
persons also being hereinafter referred to individually as an "Indemnified
Person" and collectively as "Indemnified Persons") from and against all claims
based upon, arising out of or resulting from any untrue statement of a material
fact contained in the registration statement or any omission to state therein a
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, to the
extent that such claim is based upon, arises out of or results from information
furnished to the Corporation in writing by such Stockholder for use in
connection with the registration statement, prospectus or similar filing. The
indemnifications set forth herein shall be in addition to any liability the
Corporation or such Stockholder may otherwise have to the Indemnified Persons.
Promptly after actually receiving definitive notice of any claim in respect of
which an Indemnified Person may seek indemnification under this Section 8.7.1,
such Indemnified Person shall submit written notice thereof to either the
Corporation or such Stockholder, as the case may be (sometimes being hereinafter
referred to as an "Indemnifying Person"). The omission of the Indemnified Person
so to notify the Indemnifying Person of any such claim shall not relieve the
Indemnifying Person from any liability it may have hereunder except to the
extent that (i) such liability was caused or increased by such omission; or (ii)
the ability of the Indemnifying Person to reduce such liability was materially
adversely affected by such omission. In addition, the omission of the
Indemnified Person so to notify the Indemnifying Person of any such claim shall
not relieve the Indemnifying Person from any liability it may have otherwise
than hereunder. The Indemnifying Person shall have the right to undertake, by
counsel or representatives of its own choosing, the defense, compromise or
settlement (without admitting liability of the
15
Indemnified Person) of any such claim asserted, such defense, compromise or
settlement to be undertaken at the expense and risk of the Indemnifying Person,
and the Indemnified Person shall have the right to engage separate counsel, at
its own expense, whom counsel for the Indemnifying Person shall keep informed
and consult with in a reasonable manner. In the event the Indemnifying Person
shall elect not to undertake such defense by its own representatives, the
Indemnifying Person shall give prompt written notice of such election to the
Indemnified Person, and the Indemnified Person shall undertake the defense,
compromise or settlement (without admitting liability of the Indemnified Person)
thereof on behalf of and for the account, expense and risk of the Indemnifying
Person by counsel or other representatives designated by the Indemnified Person.
The foregoing notwithstanding, in any action or proceeding in which both the
Indemnifying Person and an Indemnified Person are, or are reasonably likely to
become, parties, such Indemnified Person shall have the right to employ separate
counsel at the expense of the Indemnifying Person, and such Indemnified Person
shall have the right to control its own defense of such action or proceeding if,
in the reasonable opinion of counsel to such Indemnified Person, (i) there are
or may be legal defenses available to such Indemnified Person that are different
from or additional to those available to the Indemnifying Person; or (ii) any
conflict or potential conflict exists between the Indemnifying Person and such
Indemnified Person that would make such separate representation advisable;
provided, further, however, that in no event shall an Indemnifying Person be
required to pay fees and expenses under this Section 8.8.1 for more than one
firm of attorneys for Indemnified Persons in any jurisdiction in any one legal
action or group of related legal actions. In any case, the Indemnifying Person
shall not, without the consent of the Indemnified Person, consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Person of a release from all liability in respect to such claim or
litigation or which requires action other than the payment of money by the
Indemnifying Person. In any case, no Indemnifying Person shall be obligated
hereunder with respect to amounts paid in settlement of any claim if such
settlement is effected without the consent of such Indemnifying Person (which
consent shall not be unreasonably withheld). A Stockholder's obligation to
indemnify as provided in this Section 8.7.1 shall be limited to the amount of
net proceeds received by such Stockholder in the transaction to which the claims
relate.
8.7.2. CONTRIBUTION. If the indemnification provided for in Section
8.7.1 shall for any reason be held by a court to be unavailable to an
Indemnified Person under Section 8.7.1 in respect of any loss, claim, damage or
liability, or any action in respect thereof, then, in lieu of the amount paid or
payable under Section 8.7.1, the Indemnifying Person under Section 8.7.1 and
such Indemnified Person shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating the same, including those incurred in
connection with any claim for indemnity hereunder), (i) in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Person and the
Indemnified Person which resulted in such loss, claim, damage or liability, or
action or proceeding in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Indemnifying Person and the
Indemnified Person; PROVIDED, HOWEVER, that for purposes of this clause (ii),
the relative benefits received by any Indemnified Person shall be deemed not to
exceed the amount of proceeds received by such Indemnified Person in the
16
transaction to which the losses, claims, damages and/or liabilities relate. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. A Stockholder's
obligation to contribute as provided in this Section 8.7.2 is several in
proportion to the relative value of the Common Shares such Stockholder proposes
to sell under a registration statement, prospectus or similar filing pursuant
hereto, and not joint, and shall be limited to the amount of net proceeds
received by such Stockholder in the transaction to which the losses, claims,
damages and/or liabilities relate. No Person shall be obligated to contribute
hereunder any amounts in payment for any settlement of any action or claim
effected without such Person's consent, which consent shall not be unreasonably
withheld.
8.8. ADDITIONAL REGISTRATION RIGHTS; TRANSFER OF REGISTRATION RIGHTS.
The Corporation shall not grant any registration rights to any subsequent
investor, or any additional registration rights to any current investor, in the
Corporation unless such rights provide that such subsequent investor or current
investor would give priority in the event of an underwriter cutback to the
Stockholders. The registration rights provided pursuant to Section 8.1 and
Section 8.2, hereof, shall be automatically transferred to any Permitted
Transferee. All obligations of the Corporation hereunder shall survive any such
transfer.
ARTICLE IX
ANTI-DILUTION PROTECTION
9.1. PROTECTION. For purposes hereof, the "Series A1 Effective Per
Share Price" shall mean $4.38 per share subject to adjustment from time to time
as set forth in Section 9.2, below. The "Ibex Effective Per Share Price" shall
mean $4.66 per share subject to adjustment from time to time as set forth in
Section 9.2, below. The "Series C Effective Per Share Price" shall mean $6.31
per share subject to adjustment from time to time as set forth in Section 9.2,
below. Notwithstanding any other provision hereof, there shall be no adjustment
to the Series A1 Effective Per Share Price, the Ibex Effective Per Share Price
and/or the Series C Effective Per Share Price (together, the "Effective Per
Share Prices") with respect to: (a) the issuance (or deemed issuance) of shares
of Common Stock under Options or Convertible Securities outstanding as of the
date hereof; (b) the granting of Options by the Corporation to employees or
directors of the Corporation and/or its Affiliates under any Approved Employee
Stock Option Plan; or (c) the issuance of Common Stock (or securities in
substitution therefor as contemplated by such plans) under any Approved Employee
Stock Option Plan. If at any time the Series A1 Effective Per Share Price shall
be reduced as set forth in this Article IX (except with respect to any
subdivision, combination, reclassification or other recapitalization of the
Common Stock), the Corporation shall within thirty (30) days thereafter issue
additional shares of Common Stock to each Stockholder holding Series A1 Shares
so that the total number of such shares held by such Stockholder equals: (i) the
total number of such shares held by such Stockholder immediately prior to such
reduction of the Series A1 Effective Per Share Price multiplied by the Series A1
Effective Per Share Price in effect immediately prior to such reduction; divided
by (ii) the Series A1 Effective Per Share Price as so adjusted. If at any time
the Ibex Effective Per Share Price shall be reduced as set forth in this Article
IX (except with respect to any subdivision, combination, reclassification or
other recapitalization of the Common Stock), the Corporation shall within thirty
(30) days thereafter issue additional shares of Common Stock to
17
each Stockholder holding Ibex Shares so that the total number of such shares
held by such Stockholder equals: (i) the total number of such shares held by
such Stockholder immediately prior to such reduction of the Ibex Effective Per
Share Price multiplied by the Ibex Effective Per Share Price in effect
immediately prior to such reduction; divided by (ii) the Ibex Effective Per
Share Price as so adjusted. If at any time the Series C Effective Per Share
Price shall be reduced as set forth in this Article IX (except with respect to
any subdivision, combination, reclassification or other recapitalization of the
Common Stock), the Corporation shall within thirty (30) days thereafter issue
additional shares of Common Stock to each stockholder holding Series C Shares so
that the total number of such shares held by such stockholder equals: (i) the
total number of such shares held by such stockholder immediately prior to such
reduction of the Series C Effective Per Share Price multiplied by the Series C
Effective Per Share Price in effect immediately prior to such reduction; divided
by (ii) the Series C Effective Per Share Price as so adjusted. Notwithstanding
the foregoing, the Corporation shall only issue additional shares of Common
Stock to Stockholders pursuant to this Article IX upon the payment by such
Stockholders of a purchase price equal to the par value of such shares.
9.2. ADJUSTMENTS TO THE EFFECTIVE PER SHARE PRICE.
(a) If the Corporation at any time subdivides (by any stock
split, stock dividend, recapitalization, or otherwise) its outstanding
shares of Common Stock into a greater number of shares, the Effective Per
Share Prices, in effect immediately prior to such subdivision, shall be
proportionally reduced, and if the Corporation at any time combines (by
reverse stock split or otherwise) its outstanding shares of Common Stock
into a smaller number of shares, the Effective Per Share Prices, in effect
immediately prior to such combination shall be proportionally increased.
(b) If and whenever the Corporation issues or sells, or in
accordance with subsection 9.2(c) is deemed to have issued or sold, any
shares of Common Stock for a consideration per share less than the Series
A1 Effective Per Share Price in effect immediately prior to the time of
such issuance or sale, and, if and whenever the Corporation issues or
sells, or in accordance with subsection 9.2(c) is deemed to have issued or
sold any shares of its Common Stock for consideration per share less than
the Ibex Effective Per Share Price in effect immediately prior to the time
of such issuance or sale, and/or if and whenever the Corporation issues or
sells, or in accordance with subsection 9.2(c) is deemed to have issued or
sold any shares of Common Stock for consideration per share less than the
Series C Effective Per Share Price in effect immediately prior to the time
of such issuance or sale, then, immediately upon such issuance or sale or
deemed issuance or sale, the Series A1 Effective Per Share Price, the Ibex
Effective Per Share Price and/or the Series C Effective Per Share Price, as
the case may be, shall be adjusted to an amount determined by multiplying
such Effective Per Share Price in effect immediately prior to such issuance
or sale by a fraction:
(i) the numerator of which shall be (x) the number of
shares of Common Stock outstanding immediately prior to the
issuance of such additional shares of Common Stock, plus (y) the
number of shares of Common Stock that the net aggregate
consideration received by the Corporation for the total number
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of such additional shares of the Common Stock so issued would
purchase at such Effective Per Share Price, and
(ii) the denominator of which shall be (x) the number of
shares of Common Stock outstanding immediately prior to the
issuance of such additional shares of Common Stock, plus (y) the
number of such additional shares of Common Stock so issued.
(c) For purposes of determining the adjusted Effective Per Share
Prices under subsection 9.2(b), the following shall be applicable:
(i) If the Corporation in any manner grants or sells any
Option and the lowest price per share for which Common Stock is
issuable upon the exercise of any such Option, or upon conversion
or exchange of any Convertible Securities issuable upon exercise
of such Option, is less than the Series A1 Effective Per Share
Price, the Ibex Effective Per Share Price and/or the Series C
Effective Per Share Price in effect immediately prior to the time
of the granting or sale of such Option, then with respect to such
Effective Per Share Price the total maximum number of shares of
Common Stock issuable upon the exercise of such Option or upon
conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Option
shall be deemed to be outstanding and to have been issued and
sold by the Corporation at the time of the granting or sale of
such Option for such price per share. For purposes of this
subsection 9.2(c)(i), the "lowest price per share for which
Common Stock is issuable" shall be determined by dividing (A) the
total amount, if any, received or receivable by the Corporation
as consideration for the granting or sale of such Option, plus
the minimum aggregate amount of additional consideration payable
to the Corporation upon exercise of such Option, plus in the case
of any such Option which relates to Convertible Securities, the
minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by
(B) the total maximum number of shares of Common Stock issuable
upon the exercise of such Option or upon the conversion or
exchange of all such Convertible Securities issuable upon the
exercise of such Option. No further adjustment of such Effective
Per Share Price shall be made upon the actual issue of such
Common Stock or such Convertible Security upon the exercise of
such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Security.
(ii) If the Corporation in any manner issues or sells any
Convertible Security and the lowest price per share for which
Common Stock is issuable upon conversion or exchange thereof is
less than the Series A1 Effective Per Share Price, the Ibex
Effective Per Share Price and/or the Series C Effective Per Share
Price in effect immediately prior to the time of such issue or
sale, then, with respect to such Effective Per Share Price, the
maximum number of shares of Common Stock issuable upon conversion
or exchange of such Convertible Security shall be deemed to be
outstanding and to have been issued and sold by
19
the Corporation at the time of the issuance or sale of such
Convertible Security for such price per share. For the purposes
of this subsection 9.2(c)(ii), the "lowest price per share for
which Common Stock is issuable" shall be determined by dividing
(A) the total amount received or receivable by the Corporation as
consideration for the issue or sale of such Convertible Security,
plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or exchange
thereof, by (B) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of such
Convertible Security. No further adjustment of such Effective Per
Share Price shall be made when Common Stock is actually issued
upon the conversion or exchange of such Convertible Security, and
if any such issue or sale of such Convertible Security is made
upon exercise of any Option for which adjustments to the
Effective Per Share Price, had been or are to be made pursuant to
other provisions of this subsection 9.2(c), no further adjustment
to such Effective Per Share Price shall be made by reason of such
issue or sale.
(d) For purposes of determining the adjusted Effective Per Share
Price under subsection 9.2(b), the following also shall be applicable:
(i) If any Common Stock, Option or Convertible Security
is issued or sold or deemed to have been issued or sold for cash,
the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor (before underwriting
discounts, commissions and related expenses). If any Common
Stock, Option or Convertible Security is issued or sold for a
consideration other than cash, the amount of the consideration
other than cash received by the Corporation shall be: (i) in the
case of any security listed on a national securities exchange, or
quoted in the NASDAQ System or the over-the-counter market, the
Market Price thereof; and (ii) in all other cases, the fair value
of such consideration. The fair value of any consideration other
than cash and securities listed on a national securities exchange
or quoted in the NASDAQ System or the over-the-counter market
shall be determined by the Board of Directors of the Corporation
and approved by a Majority Vote. If such parties are unable to
reach agreement within sixty (60) days of the receipt of such
consideration, the fair value of such consideration shall be
determined by an independent appraiser experienced in valuing
such type of consideration selected by the Board of Directors of
the Corporation and approved by a Majority Vote. In the event
that the Corporation fails to select an independent appraiser
within ninety (90) days of the receipt of such consideration, or
an independent appraiser so selected by the Corporation is not
approved by a Majority Vote within sixty (60) days of the date on
which the Corporation first submits the proposed candidate for
the independent appraiser to the Stockholders entitled
antidilution protection hereunder for approval, then at the
written request of the Corporation or any Stockholder holding
Shares entitled to antidilution protection hereunder, the
President of the American Arbitration Association shall designate
the independent appraiser. The determination of such appraiser
shall be final and binding upon the parties, and the fees and
expenses of such appraiser shall be borne by the Corporation.
20
(ii) If the purchase price provided for in any Option, the
additional consideration (if any) payable upon the issue,
conversion or exchange of any Convertible Security or the rate at
which any Convertible Security is convertible into or
exchangeable for Common Stock is reduced at any time, the Series
A1 Effective Per Share Price, the Ibex Effective Per Share Price
and the Series C Effective Per Share Price, in effect at the time
of such reduction shall be adjusted immediately to the Effective
Per Share Price, which would have been in effect at such time had
such Option or Convertible Security originally provided for such
reduced purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued
or sold. For purposes of Subsection 9.2, if the terms of any
Option or Convertible Security which is outstanding as of the
date hereof are reduced in the manner described in the
immediately preceding sentence, to the extent that any additional
shares of Common Stock are issuable thereunder as a result
thereof, such Option or Convertible Security and such additional
Common Stock deemed issuable upon exercise, conversion or
exchange thereof shall be deemed to have been issued as of the
date of such reduction.
(iii) In case any Option is issued in connection with the
issue or sale of other securities of the Corporation, together
comprising one integrated transaction in which no specific
consideration is allocated to such Option by the parties thereto,
the Option shall be deemed to have been issued for a
consideration of $.01.
(iv) The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for
the account of the Corporation or any subsidiary, and the
disposition of any shares so owned or held shall be considered an
issue or sale of Common Stock.
ARTICLE X
CONFIDENTIALITY
Each Stockholder hereby acknowledges that all Confidential Information (as
defined below) and all rights therein are and shall be the sole and exclusive
property of the Corporation. Each Stockholder hereby agrees, for so long as such
Stockholder is a stockholder of the Corporation and for a period of five (5)
years thereafter, except as otherwise reasonably necessary to conduct the
business of the Corporation in the ordinary course: (i) that it shall disclose
the Confidential Information only to those of its Representatives (as defined
below) who have a need to know such Confidential Information in connection with
the conduct of the Corporation's business in the ordinary course; (ii) that
neither it nor its Representatives shall divulge, disclose or communicate to any
third party in any manner, directly or indirectly, any Confidential Information;
and (iii) that it shall take all other necessary and appropriate actions to
preserve the confidentiality or the Confidential Information. Each Stockholder
hereby agrees, for so long as such Stockholder is a stockholder of the
Corporation and for a period of five (5) years thereafter, that it and its
Representatives shall use the Confidential Information only to the extent
reasonably necessary to monitor or conduct the business of the Corporation in
the ordinary
21
course. For purposes hereof, "Confidential Information" shall include: (i)
information regarding the design, architecture and content of the Corporation's
software products; (ii) information concerning products under development by or
being tested by the Corporation; (iii) pricing and customer information
concerning the Corporation's customers; (iv) information concerning the
Corporation's marketing programs and strategies; (v) personnel information; and
(vi) all information concerning the Corporation's finances. The foregoing
notwithstanding, "Confidential Information" does not include in the case of any
Stockholder: (i) information which was known to such Stockholder as shown by
written evidence before its disclosure to such Stockholder by the Corporation;
(ii) is or becomes publicly known or available without any disclosure by such
Stockholder (or its Representatives); or (iii) is acquired by such Stockholder
from a third party who in providing such information to such Stockholder is not,
to the knowledge of such Stockholder, violating any agreement or duty owed to
the Corporation. In addition, each Stockholder and/or any Representative thereof
may disclose Confidential Information if such Stockholder or Representative
becomes, legally compelled to disclose such Confidential Information, whether
pursuant to discovery, subpoena, investigative demand or similar process
provided: (i) such Stockholder or Representative, as the case may be, shall
provide the Corporation with prompt notice so that the Corporation may seek a
protective order or other appropriate remedy; and (ii) such Stockholder or
Representative, as the case may be, shall furnish only that portion of the
Confidential Information as is legally required and will exercise its
commercially reasonable efforts to allow the Corporation to obtain reliable
assurances that the Confidential Information so disclosed will be protected on a
basis consistent with the requirements set forth herein. For purposes hereof,
the "Representatives" of a Stockholder shall mean the directors, officers,
employees, agents and/or advisers of such Stockholder and/or its Affiliates who,
in each case, need Confidential Information to monitor the Corporation or to
participate in its business. Nothing in this Article X shall preclude or in any
way restrict the Stockholders or their Affiliates from investing or
participating in any particular enterprise, or trading in the securities
thereof, whether or not such enterprise has products or services that compete
with those of the Corporation.
ARTICLE XI
ENDORSEMENT ON CERTIFICATES
The Stockholders acknowledge and agree that certificates evidencing
ownership of the Shares shall bear the following legend:
THE SECURITIES EVIDENCED BY THIS STOCK CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER APPLICABLE
SECURITIES LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE U.S. SECURITIES ACT OF
1933 OR ANY OTHER APPLICABLE SECURITIES LAW.
22
THE SECURITIES EVIDENCED BY THIS STOCK CERTIFICATE, AND THE SALE, PLEDGE OR
OTHER DISPOSITION THEREOF, ARE SUBJECT TO THE TERMS OF AN AGREEMENT ENTERED
INTO BETWEEN THE CORPORATION AND CERTAIN OF ITS STOCKHOLDERS. A COPY OF
SUCH AGREEMENT IS ON FILE AT THE CORPORATION'S PRINCIPAL OFFICES IN
WAKEFIELD, MASSACHUSETTS, AND MAY BE INSPECTED BY ANY PERSON UPON REQUEST
DURING NORMAL BUSINESS HOURS.
Likewise, the Corporation shall place, and the Stockholders shall take all
actions within their power to cause the Corporation to place, the above
endorsement upon any stock certificate which it may hereafter issue in the name
of the Stockholders or in the name of any person to whom Shares subject to this
Agreement are transferred.
ARTICLE XII
SPECIFIC PERFORMANCE
The parties declare that it may be impossible to measure in money the
damages which will accrue to any party hereto by reason of a failure to perform
any of the obligations under this Agreement, and agree that this Agreement shall
be specifically enforceable. Therefore, if any party hereto, any Stockholder, or
any transferee of a Stockholder shall institute any action or proceeding to
enforce the provisions hereof, any person, including the Corporation, against
whom such action or proceeding is brought hereby, waives the claim or defense
that such party or such personal representative has or may have an adequate
remedy at law, and such person shall not urge in any such action or proceeding
the claim or defense that such remedy at law exists.
ARTICLE XIII
TERMINATION OF AGREEMENT
13.1. TERMINATION. This Agreement shall terminate upon the first to
occur of any of the following events:
(a) The completion of a Qualified IPO;
(b) Liquidation, dissolution or sale of all or substantially all
of the assets of the Corporation;
(c) Mutual agreement of 1818, Camden and Stockholders owning at
least fifty percent (50%) of the Common Shares subject to this Agreement
not owned by 1818, Camden and/or their Affiliates;
(d) In the event that all of the Corporation's outstanding
capital stock is owned at any time by a single Stockholder; or
(e) As otherwise provided herein.
23
13.2. EFFECT OF TERMINATION. Upon termination of this Agreement, all
rights, privileges and obligations of the parties shall cease except that if
this Agreement shall terminate upon the completion of a Qualified IPO, all
provisions of this Agreement shall immediately terminate, except for Article
VIII and Article XIV, which shall survive such termination and shall terminate
in accordance with their terms.
ARTICLE XIV
MISCELLANEOUS
14.1. ADDITIONAL SHARES OF STOCK. The provisions of this Agreement
shall apply with respect to any additional shares of the Corporation's capital
stock which a Stockholder shall acquire, whether by purchase, gift, stock
dividend, stock split, recapitalization, reorganization or by any other means.
14.2. MANNER OF GIVING NOTICE. Any notice, offer, acceptance or demand
required or permitted to be given under this Agreement shall be sufficient if in
writing and if hand delivered (including by courier) or sent by registered or
certified mail to the address of the Stockholder or transferee of a Stockholder
as it shall appear on the records of the Corporation, or, in the case of the
Corporation, the Corporation's registered office, and shall be deemed to be
dated and given for all purposes hereof when hand delivered or ten (10) business
days after being deposited in the United States mail, postage prepaid, as
aforesaid.
14.3. USE OF WORDS. Use of words of the masculine gender is intended to
include, wherever appropriate, the feminine and neuter genders, and vice versa.
The use of words of the singular is intended to include, wherever appropriate,
the plural and vice versa.
14.4. ENTIRE AGREEMENT. This Agreement, including its Exhibits,
embodies the entire agreement and understanding among the Corporation and the
Stockholders, and supercedes all prior agreements and understandings related to
the subject matter hereof. There are no representations, warranties, covenants,
promises or agreements on the part of any party hereto which are not explicitly
set forth herein. All Exhibits hereto are hereby incorporated herein by this
reference.
14.5. BENEFITS; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Corporation, the Stockholders and their permitted
assigns. No Stockholder may assign its rights, nor delegate its obligations
hereunder except as permitted hereby. This Agreement shall not be deemed to
confer any rights or remedies upon any person other than the parties hereto and
their respective successors and permitted assigns.
14.6. EXECUTION; COUNTERPARTS. This Agreement may be executed by
facsimile and/or in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute but one and the same
agreement.
14.7. GOVERNING LAW. The parties hereto agree that all terms and
conditions of this Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York in the United States, without
giving effect to any choice of law or conflict
24
provision or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York.
14.8. HEADINGS. The headings to the Articles, Sections and Paragraphs
of this Agreement are for reference only and shall not be used in construing the
provisions hereof or otherwise affect the meaning hereof.
14.9. MODIFICATIONS; WAIVERS. This Agreement may be amended and/or the
provisions hereof waived only as provided in this Section 14.9. Except as
otherwise provided herein, this Agreement may be amended (or its provisions may
be waived) by a written instrument signed by Stockholders owning at least sixty
percent (60%) of the Common Shares subject hereto. Articles IV and V hereof (and
this sentence) may be amended (or their respective provisions may be waived)
only by a written instrument signed by 1818, Camden and Stockholders owning at
least fifty percent (50%) of the Common Shares subject hereto not owned by 1818,
Camden and/or their Affiliates. Articles VIII and IX hereof (and this sentence)
may be amended (or their respective provisions may be waived) only by a written
instrument signed by the Corporation and Stockholders owning at least sixty
percent (60%) of the Common Shares subject hereto. Any amendment or waiver of
any provision of Article IX hereof that, by its terms, applies to the Series A1
Shares, the Ibex Shares or the Series C Shares, but by its terms does not apply
to all such shares on the same basis without regard to impact, shall only be
effective if signed by Stockholders owning a majority of the Series A1 Shares if
such amendment or waiver by its terms applies to such shares, by Stockholders
owning a majority of the Ibex Shares if such amendment or waiver by its terms
applies to such shares and/or by Stockholders owning a majority of the Series C
Shares if such amendment or waiver by its terms applies to such shares. Any
amendment or waiver of the foregoing sentence shall only be effective if signed
by Stockholders owning a majority of each of the Series A1 Shares, the Ibex
Shares and the Series C Shares, each considered as a separate class. Any
amendment or waiver effected pursuant to this Section 14.9 shall be binding on
all of the Stockholders.
14.10. SEVERABILITY. It is the desire and intent of the parties hereto
that the provisions hereof shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. If any particular provision or portion thereof shall be
adjudicated to be invalid or unenforceable, such provision or portion thereof
shall be deemed to be amended to delete therefrom such provision or portion,
such amendment to apply only with respect to the operation of such provision or
portion thereof in the particular jurisdiction in which such adjudication is
made.
14.11. AGGREGATION OF SHARES. If any right hereunder is available to a
Stockholder if, but only if, such Stockholder holds at least a certain number of
Shares, and if any Stockholder holds fewer Shares than the number of Shares
specified with respect to such right, such Stockholder and its Affiliates, if
any, that also hold Shares may aggregate their Shares for purposes of
determining whether they are entitled to such right, and if together such
Stockholder and its Affiliates hold at least the number of Shares specified with
respect to such right, such Stockholder and its Affiliates may exercise such
right together.
SIGNATURES ON FOLLOWING PAGE
25
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
this 14th day of July, 2005.
PICIS, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
THE 1818 FUND III, L.P.
By: Xxxxx Brothers Xxxxxxxx & Co.
By: /s/ T. Xxxxxxx Xxxx
--------------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
CAMDEN PARTNERS STRATEGIC FUND III, L.P.
By: Camden Partners Strategic III, LLC, its General
Partner
By: Camden Partners Strategic Manager, LLC, its
Managing Member
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------------------
Title: Member
--------------------------------------------
SIGNATURES CONTINUE ON FOLLOWING PAGE
26
CAMDEN PARTNERS STRATEGIC FUND III-A,
L.P.
By: Camden Partners Strategic III, LLC, its General
Partner
By: Camden Partners Strategic Manager, LLC, its
Managing Member
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------------------
Title: Member
--------------------------------------------
XXXXXX XXXXXXX STRATEGIC PARTNERS
FUND, L.P.
By: Xxxxxx Xxxxxxx Strategic Partners, L.P., its General
Partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------------------
Title: Member
--------------------------------------------
STRATEGIC PARTNERS, L.P.
By: Xxxxxx Xxxxxxx & Company, LLC, its General
Partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------------------
Title: Member
--------------------------------------------
27
EXHIBIT A
RESTATED CHARTER
See attached.
EXHIBIT B
JOINDER AGREEMENT
This is a Joinder Agreement to the Stockholders Agreement of PICIS, Inc., a
Delaware corporation, dated July 14, 2005 (the "Stockholders Agreement").
INTENDING TO BE LEGALLY BOUND, the undersigned hereby joins in the
Stockholders Agreement as a "Stockholder" thereunder and agrees to be bound by
all of the terms and conditions of the Stockholders Agreement as if the
undersigned were an original signatory thereto as of the date hereof as a
"Stockholder" thereunder.
Delivery of the facsimile signature of the undersigned shall be effective
to bind the undersigned to this Joinder.
IN WITNESS WHERE OF, the undersigned has executed this Joinder as of the
______ day of ________________, ____.
--------------------------------------
Print Name:
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