Exhibit 4.2
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UNIPHY HEALTHCARE, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
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TABLE OF CONTENTS
PAGE
1. General............................................................................. 2
1.1. Definitions................................................................ 2
2. Registration; Restrictions on Transfer.............................................. 3
2.1. Restrictions on Transfer................................................... 3
2.2. Demand Registration........................................................ 4
2.3. Piggyback Registrations.................................................... 6
2.4. Form S-3 Registration...................................................... 8
2.5. Expenses of Registration................................................... 9
2.6. Obligations of the Company................................................. 9
2.7. Termination of Registration Rights......................................... 10
2.8. Delay of Registration; Furnishing Information.............................. 11
2.9. Indemnification............................................................ 11
2.10. Assignment of Registration Rights.......................................... 14
2.11. Amendment of Registration Rights........................................... 14
2.12. Limitation on Subsequent Registration Rights............................... 14
2.13. Market Stand-Off Agreement................................................. 14
2.14. Rule 144 Reporting......................................................... 15
3. Covenants of the Company............................................................ 15
3.1. Basic Financial Information and Reporting.................................. 15
3.2. Inspection Rights.......................................................... 16
3.3. Stock Vesting.............................................................. 17
3.4. Real Property Holding Corporation.......................................... 17
3.5. Conduct of Business........................................................ 17
3.6. Independent Auditor........................................................ 17
3.7. Observer Rights............................................................ 17
3.8. ERISA Plan................................................................. 18
3.9. Merger, Consolidation or Reorganization.................................... 18
3.10. Termination of Covenants................................................... 18
4. Anti-Dilution Rights and Rights of First Refusal.................................... 18
4.1. Issuance of Additional Shares on Certain Dilutive Issues................... 18
4.1.1 Definitions....................................................... 18
4.1.2 Issuance of Options and Convertible Securities.................... 19
4.1.3 Issuance of Additional Shares of Common Stock to
Anti-Dilution Investors Upon Issuance of Additional
Shares of Common Stock............................................ 19
4.1.4 Determination of Consideration.................................... 20
4.1.5 Notice of and Certificates Representing Issuance of
Additional Shares................................................. 20
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4.1.6 No Fractional Shares.............................................. 21
4.2. Right of First Refusal..................................................... 21
4.2.1. Subsequent Offerings.............................................. 21
4.2.2 Exercise of Rights................................................ 21
4.2.3 Issuance of Equity Securities to Other Persons.................... 21
4.3. Termination of Anti-Dilution Rights and Rights of First Refusal............ 22
4.4. Transfer of Anti-Dilution Rights and Rights of First Refusal............... 22
4.5. Excluded Securities........................................................ 22
4.6. Excluded Transaction....................................................... 23
5. Termination of ARC Amended and Restated Shareholders Agreement...................... 23
6. Miscellaneous....................................................................... 23
6.1. Governing Law.............................................................. 23
6.2. Survival................................................................... 23
6.3. Successors and Assigns..................................................... 23
6.4. Severability............................................................... 24
6.5. Amendment and Waiver....................................................... 24
6.6. Delays or Omissions........................................................ 25
6.7. Notices.................................................................... 25
6.8. Attorneys' Fees............................................................ 25
6.9. Titles and Subtitles....................................................... 25
6.10. Pronouns................................................................... 26
6.11. Counterparts............................................................... 26
6.12. Entire Agreement........................................................... 26
EXHIBIT A SCHEDULE OF INVESTORS
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UNIPHY HEALTHCARE, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
This AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (the "Amended and
Restated Agreement") is entered into as of the ____ day of June 1999, by and
among UNIPHY HEALTHCARE, INC., a Tennessee corporation (the "Company"), those
Persons identified on Exhibit A attached hereto (collectively, the "Investors"
and each individually an "Investor") and AMBULATORY RESOURCE CENTRES, INC., a
Tennessee corporation ("ARC") (solely for the purpose Section 5 hereto).
RECITALS
WHEREAS, those Investors so identified on Exhibit A attached hereto are
common shareholders of the Company who either (1) formerly held shares of
preferred stock of the Company (the "UniPhy Preferred Shareholders") or (2) are
key employees of the Company who received founders common stock of the Company
(the "UniPhy Founders"), and who are parties to the Investors' Rights Agreement,
dated April 16, 1998 (the "Investors' Rights Agreement"); and
WHEREAS, those Investors so identified on Exhibit A attached hereto are
current key shareholders (the "ARC Key Shareholders") of Ambulatory Resource
Centres, Inc., a Tennessee corporation ("ARC"), who following the Merger (as
defined below) will become common shareholders of the Company; and
WHEREAS, the Company, UniPhy Acquisition Sub, Inc., a Tennessee
corporation and a wholly-owned subsidiary of the Company ("UniPhy Sub"), and ARC
are parties to an Agreement and Plan of Merger, dated June 8, 1999 (the "Merger
Agreement"), whereby UniPhy Sub shall merge with and into ARC, each outstanding
share of common stock of ARC shall be converted into the right to receive 6.54
shares of common stock of the Company and ARC shall become a wholly-owned
subsidiary of the Company (the "Merger"); and
WHEREAS, it is a condition to the closing of the Merger pursuant to the
Merger Agreement that each of the parties hereto enter into this Amended and
Restated Agreement; and
WHEREAS, each of the parties hereto shall receive a substantial benefit
from the closing of the Merger; and
WHEREAS, the UniPhy Preferred Shareholders and the UniPhy Founders
desire to amend and restate and to supersede in its entirety the Investors'
Rights Agreement in the manner set forth herein; and
WHEREAS, ARC and the ARC Key Shareholders desire to terminate the
Amended and Restated Shareholders Agreement of ARC, dated September 1998 (the
"ARC Amended and Restated Shareholders Agreement") and to join and be entitled
to the rights and subject to the obligations provided in the Investors' Rights
Agreement, as amended and restated in this Amended and Restated Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this Amended
and Restated Agreement and in the Merger Agreement, the parties mutually agree
as follows:
1. General.
1.1. Definitions. As used in this Amended and Restated Agreement
the following terms shall have the following respective meanings:
"Common Stock" means the common stock, no par value, of the
Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Initial Offering" means the closing of a firm commitment
underwritten public offering of the Common Stock pursuant to an effective
registration statement under the Securities Act (as defined below) at a price
per share of not less than $7.00 (as adjusted for any stock dividends,
combinations or splits with respect to such shares effected after the date of
this Amended and Restated Agreement) and gross proceeds of not less than
$20,000,000.
"Register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
"Registrable Securities" means (i) Common Stock of the Company
held by the Investors; and (ii) any Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, such above-described securities.
Notwithstanding the foregoing, Registrable Securities shall not include any
securities sold by a person to the public either pursuant to a registration
statement or Rule 144 or sold in a private transaction in which the transferor's
rights under Section 2 of this Amended and Restated Agreement are not assigned.
"Registrable Securities then outstanding" shall be the number
of shares determined by calculating the total number of shares of the Common
Stock
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that are Registrable Securities and either (l) are then issued and outstanding
or (2) are issuable pursuant to then exercisable or convertible securities.
"Registration Expenses" shall mean all expenses incurred by
the Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company, reasonable fees and disbursements
of a single special counsel for the Investors, blue sky fees and expenses and
the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company).
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale.
"Form S-3" means such form under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"SEC" or "Commission" means the Securities and Exchange
Commission.
2. Registration; Restrictions on Transfer.
2.1. Restrictions on Transfer.
(a) Each Investor agrees not to make any disposition of
all or any portion of the Registrable Securities held by him unless and until:
(i) There is then in effect a registration
statement under the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement; or
(ii) Such Investor shall have notified the
Company of the proposed disposition, and, if reasonably requested by the
Company, such Investor shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company, that such disposition will not
require registration of such shares under the Securities Act. It is agreed that
the Company will not require opinions of counsel for transactions made pursuant
to Rule 144 except in unusual circumstances.
(b) Notwithstanding the provisions of paragraphs a(i) and
a(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer that would not commence a new holding period under Rule
144(d) where
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such transfer is made by an Investor which is (i) a partnership to its partners
or former partners in accordance with partnership interests, (ii) a corporation
either (A) to its shareholders in accordance with their interest in the
corporation if such corporation is closely-held or (B) to its affiliate (as
defined in Rule 405 promulgated under the Securities Act), (iii) a limited
liability company to its members or former members in accordance with their
interest in the limited liability company, or (iv) to the Investor's family
member or trust for the benefit of an individual Investor, provided the
transferee will be subject to the terms of this Section 2.1 to the same extent
as if he were an original Investor hereunder.
(c) Each certificate representing the Registrable
Securities shall (unless otherwise permitted by the provisions of this Amended
and Restated Agreement) be stamped or otherwise imprinted with a legend
substantially similar to the following (in addition to any legend required by
the Company's Bylaws under applicable state securities laws or as provided
elsewhere in this Amended and Restated Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER THE ACT OR
UNLESS THE COMPANY HAS RECEIVED AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY AND
ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
(d) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the holder shall
have obtained an opinion of counsel (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
(e) Any legend endorsed on an instrument pursuant to
applicable state securities laws and the stop-transfer instructions with respect
to such securities shall be removed upon receipt by the Company of an order of
the appropriate blue sky authority authorizing such removal.
2.2. Demand Registration.
(a) Subject to the conditions of this Section 2.2, if the
Company shall receive at any time a written request from any UniPhy Preferred
Shareholders or ARC Key Shareholders (for purposes of this Section 2.2, the
"Demand Registration Investors") holding ten percent (10%) or more of the
Registrable Securities then outstanding which are held by the Demand
Registration
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Investors (the "Initiating Investors") that the Company file a registration
statement under the Securities Act covering the registration of Registrable
Securities having an aggregate offering price to the public of not less than
$1,000,000, then the Company shall, within thirty (30) days of the receipt
thereof, give written notice of such request to all of the Demand Registration
Investors, and subject to the limitations of this Section 2.2, use its best
efforts to effect, as soon as practicable, the registration under the Securities
Act of all Registrable Securities that the Demand Registration Investors (for
purposes of this Section 2.2, the "Demand Registration Investors") request to be
registered.
(b) If the Initiating Investors intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 2.2 and the Company shall include such information in the written
notice referred to in Section 2.2(a). In such event, the right of any Demand
Registration Investor to include his Registrable Securities in such registration
shall be conditioned upon such Demand Registration Investor's participation in
such underwriting and the inclusion of such Demand Registration Investor's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Investors and such Demand Registration
Investor) to the extent provided herein. All Demand Registration Investors
proposing to distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Investors (which underwriter or underwriters shall be reasonably
acceptable to the Company). Notwithstanding any other provision of this Section
2.2, if the underwriter advises the Company that marketing factors require a
limitation of the number of securities to be underwritten (including Registrable
Securities) then the Company shall so advise all Demand Registration Investors
holding Registrable Securities which would otherwise be underwritten pursuant
hereto, and the number of shares that may be included in the underwriting shall
be allocated to the Demand Registration Investors on a pro rata basis based on
the number of Registrable Securities held by all such Demand Registration
Investors (including the Initiating Investors). Any Registrable Securities
excluded or withdrawn from such underwriting shall be withdrawn from the
registration.
(c) The Company shall not be required to effect a
registration pursuant to this Section 2.2 with respect to the Registrable
Securities:
(i) prior to an Initial Offering; or
(ii) after the Company has effected two (2)
registration pursuant to this Section 2.2.
(d) The Company shall not be required to effect a
registration pursuant to this Section 2.2 with respect to any Registrable
Securities:
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(i) if within thirty (30) days of receipt of a
written request from Initiating Investors pursuant to Section 2.2(a), the
Company gives notice to the Demand Registration Investors of the Company's
intention to make its Initial Offering within ninety (90) days; or
(ii) if the Company shall furnish to Demand
Registration Investors requesting a registration statement pursuant to this
Section 2.2, a certificate signed by the Chairman of the Board stating that in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such registration
statement to be effected at such time, in which event the Company shall have the
right to defer such filing for a period of not more than ninety (90) days after
receipt of the request of the Initiating Investors; provided that such right to
delay a request shall be exercised by the Company not more than once in any
twelve (12) month period.
2.3. Piggyback Registrations. The Company shall notify all
Investors in writing at least thirty (30) days prior to the filing of any
registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to primary and secondary offerings of
securities of the Company, but excluding registration statements relating to
employee benefit plans or with respect to corporate reorganizations or other
transactions under Rule 145 of the Securities Act) and will afford each such
Investors an opportunity to include in such registration statement all or part
of such Registrable Securities held by such Investor. Each Investor desiring to
include in any such registration statement all or any part of the Registrable
Securities held by it shall, within fifteen (15) days after the above-described
notice from the Company, so notify the Company in writing. If an Investor
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Investor shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein.
(a) Underwriting. If the registration statement under
which the Company gives notice under this Section 2.3 is for an underwritten
offering, the Company shall so advise the Investors. In such event, the right of
any such Investor to be included in a registration pursuant to this Section 2.3
shall be conditioned upon such Investor's participation in such underwriting and
the inclusion of such Investor's Registrable Securities in the underwriting to
the extent provided herein. All Investors proposing to distribute their
Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Amended and Restated Agreement, if the underwriter determines
in good faith that marketing factors require a limitation of the number of
shares to be underwritten,
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the number of shares that may be included in the underwriting shall be allocated
as follows:
(i) In the case of the Initial Offering, no such
reduction shall reduce the securities being offered by the Company for its own
account to be included in the registration and underwriting, and in no event
shall the amount of securities of the selling Investors included in the
registration be reduced below fifteen percent (15%) of the total amount of
securities included in such registration, unless such offering is the Initial
Offering and such registration does not include shares of any other selling
shareholders, in which event any or all of the Registrable Securities of the
Investors may be excluded and in no event will shares of any other selling
shareholder be included in such registration which would reduce the number of
shares which may be included by Investors without the written consent of
Investors holding not less than seventy-five percent (75%) of the Registrable
Securities held by the UniPhy Preferred Shareholders and the ARC Key
Shareholders and seventy-five percent (75%) of the Registrable Securities by the
UniPhy Founders proposed to be sold in the offering.
(ii) In the case of an underwritten primary
registration on behalf of the Company, the number of shares that may be included
in the underwriting shall be allocated, first, to the Company; second, to the
UniPhy Preferred Shareholders and the ARC Key Shareholders on a pro rata basis
based on the total number of Registrable Securities held by the UniPhy Preferred
Shareholders and the ARC Key Shareholders; third, to the UniPhy Founders on a
pro rata basis based on the total number of Registrable Securities held by the
UniPhy Founders; and fourth, to any shareholder of the Company (other than an
Investor) on a pro rata basis;
(iii) In the case of an underwritten secondary
registration demanded by the Initiating Investors in accordance with Section
2.2, the number of shares that may be included in the underwriting shall be
allocated, first, to all participating Demand Registration Investors on a pro
rata basis based on the total number of Registrable Securities held by the
participating Demand Registration Investors; second, to any shareholder of the
Company (other than a Demand Registration Investor) on a pro rata basis; and
(b) Right to Terminate Registration. Except as limited by
Section 2.2., the Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 2.3 prior to the effectiveness
of such registration whether or not any Investor has elected to include
securities in such registration. The Registration Expenses of such withdrawn
registration shall be borne by the Company in accordance with Section 2.5
hereof.
2.4. Form S-3 Registration. In case the Company shall receive from
any Investor or Investors a written request or requests that the Company effect
a registration on Form S-3 (or any successor to Form S-3) or any similar
short-form
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registration statement and any related qualification or compliance with respect
to all or a part of the Registrable Securities owned by such Investor or
Investors, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other
Investors; and
(b) as soon as practicable, effect such registration and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Investor's or Investors' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other Investor or Investors joining in such request as are specified in a
written request given within fifteen (15) days after receipt of such written
notice from the Company; provided, however, that the Company shall not be
obligated to effect any such registration, qualification or compliance pursuant
to this Section 2.4:
(i) if Form S-3 (or any successor or similar
form) is not available for such offering by the Investors, or
(ii) if the Investors, together with the holders
of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public of less than $ 1,000,000, or
(iii) if the Company shall furnish to the
Investors a certificate signed by the Chairman of the Board of Directors of the
Company stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such Form S-3 registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than ninety (90) days after receipt of the
request of the Investor or Investors under this Section 2.4; provided, that such
right to delay a request shall be exercised by the Company not more than once in
any twelve (12) month period, or
(iv) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a
Form S-3 registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Investors.
2.5. Expenses of Registration. Except as specifically provided
herein, all Registration Expenses incurred in connection with any registration,
qualification or
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compliance pursuant to Section 2.2 or any registration under Section 2.3 or
Section 2.4 herein shall be borne by the Company. All Selling Expenses incurred
in connection with any registrations hereunder, shall be borne by the holders of
the securities so registered pro rata on the basis of the number of shares so
registered. The Company shall not, however, be required to pay for expenses of
any registration proceeding begun pursuant to Section 2.2 or 2.4, the request of
which has been subsequently withdrawn by the Initiating Investors unless (a) the
withdrawal is based upon material adverse information concerning the Company of
which the Initiating Investors were not aware at the time of such request or (b)
with regard to a request under Section 2.2, the Investors holding a majority of
Registrable Securities agree to forfeit their right to one requested
registration pursuant to Section 2.2, in which event such right shall be
forfeited by all Investors. If the Investors are required to pay the
Registration Expenses, such expenses shall be borne by the holders of securities
(including Registrable Securities) requesting such registration in proportion to
the number of shares for which registration was requested. If the Company is
required to pay the Registration Expenses of a withdrawn offering pursuant to
clause (a) above, then the Investors shall not forfeit their rights pursuant to
Section 2.2 or Section 2.4 to a demand registration.
2.6. Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use all reasonable
efforts to cause such registration statement to become effective, and, upon the
request of the Investors of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to ninety (90)
days or, if earlier, until the Investor or Investors have completed the
distribution related thereto.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Investors such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities Stock owned by them.
(d) Use all reasonable efforts to register and qualify
the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Investors, provided that the Company shall not be required in
connection therewith or as a condition
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thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter(s) of such offering. Each
Investor holding Registrable Securities participating in such underwriting shall
also enter into and perform its obligations under such an agreement.
(f) Notify each Investor covered by such registration
statement at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of
which the prospectus included in such 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
not misleading in the light of the circumstances then existing.
(g) Furnish, at the request of a majority of the
Investors participating in the registration, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities are
being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated as of such date, of
the counsel representing the Company for the purposes of such registration, in
form and substance as is customarily given to underwriters in an underwritten
public offering and reasonably satisfactory to a majority in interest of the
Investors requesting registration, addressed to the underwriters, if any, and to
the Investors requesting registration of Registrable Securities and (ii) a
letter dated as of such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering
and reasonably satisfactory to a majority in interest of the Investors
requesting registration, addressed to the underwriters, if any, and if permitted
by applicable accounting standards, to the Investors requesting registration of
Registrable Securities.
2.7. Termination of Registration Rights. All registration rights
granted to an Investor under this Section 2 shall terminate and be of no further
force and effect upon the earlier of (i) seven (7) years following the closing
of the Initial Offering or (ii) such date as all shares of Registrable
Securities held or entitled to be held upon conversion by such Holder may
immediately be sold under Rule 144(k) during any ninety (90) day period.
2.8. Delay of Registration; Furnishing Information.
(a) No Investor shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any
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controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(b) It shall be a condition precedent to the obligations
of the Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the
selling Investors shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities.
(c) The Company shall have no obligation with respect to
any registration requested pursuant to Section 2.2 or Section 2.4 if, due to the
operation of subsection (b) of each such Section, the number of shares or the
anticipated aggregate offering price of the Registrable Securities to be
included in the registration does not equal or exceed the number of shares or
the anticipated aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified in Section 2.2
or Section 2.4, whichever is applicable.
2.9. Indemnification. In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Investor, the partners, officers, directors and
legal counsel of each Investor, any underwriter (as defined in the Securities
Act) for such Investor and each person, if any, who controls such Investor or
underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation") by the Company
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto,
(ii) 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, or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law in connection with the offering covered by such registration
statement; and the Company will reimburse each such Investor, partner, officer
or director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided however, that the
indemnity agreement contained in this Section 2.9(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is
11
effected without the consent of the Company, which consent shall not be
unreasonably withheld, nor shall the Company be liable in any such case for any
such loss, claim, damage, liability or action to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with such
registration by such Investor, partner, officer, director, underwriter or
controlling person of such Investor.
(b) To the extent permitted by law, each Investor will,
if Registrable Securities held by such Investor are included in the securities
as to which such registration qualifications or compliance is being effected,
indemnify and hold harmless the Company, each of its directors, its officers,
and legal counsel and each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter and any other Investor selling
securities under such registration statement or any of such other Investor's
partners, directors or officers or any person who controls such Investor,
against any losses, claims, damages or liabilities (joint or several) to which
the Company or any such director, officer, controlling person, underwriter or
other such Investor, or partner, director, officer or controlling person of such
other Investor may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are 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 by such Investor under an instrument duly executed by such Investor
and stated to be specifically for use in connection with such registration; and
each such Investor will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter or other Investor, or partner, officer, director or controlling
person of such other Investor in connection with investigating or defending any
such loss, claim, damage, liability or action if it is judicially determined
that there was such a Violation; provided, however, that the indemnity agreement
contained in this Section 2.9(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Investor, which consent shall not be
unreasonably withheld; provided further, that in no event shall any indemnity
under this Section 2.9 exceed the proceeds from the offering received by such
Investor.
(c) Promptly after receipt by an indemnified party under
this Section 2.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
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 the defense thereof with counsel mutually
satisfactory to the
12
parties; provided, however, that an indemnified party shall have the right to
retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if materially prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified party
under this Section 2.9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 2.9.
(d) If the indemnification provided for in this Section
2.9 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or liabilities
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the Violation(s) that resulted
in such loss, claim, damage or liability, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by a court of law by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied by
the indemnifying party or by the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission; provided, that in no event shall any contribution by
an Investor hereunder exceed the proceeds from the offering received by such
Investor.
(e) The obligations of the Company and Investor under
this Section 2.9 shall survive completion of any offering of Registrable
Securities in a registration statement. No indemnifying party, in the defense of
any such claim or litigation, shall, except with the consent of each indemnified
party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
2.10. Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be
assigned by an Investor to a transferee or assignee of Registrable Securities
which (i) is a subsidiary, affiliate, parent, general partner, limited partner
or retired partner of an Investor, (ii) is an Investor's family member or trust
for the benefit of an individual Investor, or (iii) acquires at least fifty
thousand (50,000) shares of
13
Registrable Securities (as adjusted for stock splits and combinations);
provided, however, (A) the transferor shall, within ten (l0) days after such
transfer, furnish to the Company written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned and (B) such transferee shall agree to be
subject to all restrictions set forth in this Amended and Restated Agreement.
2.11. Amendment of Registration Rights. Any provision of this
Section 2 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 the Investors
holding at least two-thirds of the Registrable Securities then outstanding and,
to the extent that any such amendment would adversely affect the UniPhy
Founders, the written consent of the Investor's holding at least two-thirds of
the Registrable Securities held by the UniPhy Founders. Any amendment or waiver
effected in accordance with this Section 2.11 shall be binding upon each
Investor and the Company. By acceptance of any benefits under this Section 2,
Investors of Registrable Securities hereby agree to be bound by the provisions
hereunder.
2.12. Limitation on Subsequent Registration Rights. After the date
of this Amended and Restated Agreement, the Company shall not, without the prior
written consent of the Investors holding a majority of the Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company that would grant such holder registration rights
senior to those granted to the Investors hereunder; provided, however, only the
prior written consent of the Investors holding a majority of the Registrable
Securities is required for the Company to enter into any agreement with any
holder or prospective holder of any securities of the Company that would grant
such holder registration rights senior to those granted to the Investors in
Section 2.2 of this Amended and Restated Agreement.
2.13. "Market Stand-Off" Agreement. If requested by the Company or
the representative of the underwriters of Common Stock (or other securities) of
the Company, each Investor shall not sell or otherwise transfer or dispose of
any Common Stock (or other securities) of the Company held by such Investor
(other than those included in the registration) for a period specified by the
representative of the underwriters not to exceed one hundred eighty (180) days
following the effective date of a registration statement of the Company filed
under the Securities Act, provided that:
(a) such agreement shall apply only to the Company's
Initial Offering; and
(b) all other holders of the Company's securities enter
into similar agreements.
14
The obligations described in this Section 2.13 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares of Common Stock (or other
securities) subject to the foregoing restriction until the end of said one
hundred eighty (180) day period.
2.14. Rule 144 Reporting. With a view to making available to the
Investors the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities and Founders' Stock to the public
without registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in SEC Rule 144 or any similar or analogous
rule promulgated under the Securities Act, at all times after the effective date
of the first registration filed by the Company for an offering of its securities
to the general public;
(b) File with the SEC, in a timely manner, all reports
and other documents required of the Company under the Exchange Act;
(c) So long as an Investor owns any Registrable
Securities, furnish to such Investor forthwith upon request: a written statement
by the Company as to its compliance with the reporting requirements of said Rule
144 of the Securities Act, and of the Exchange Act (at any time after it has
become subject to such reporting requirements); a copy of the most recent annual
or quarterly report of the Company; and such other reports and documents as an
Investor may reasonably request in availing itself of any rule or regulation of
the SEC allowing it to sell any such securities without registration.
3. Covenants of the Company.
3.1. Basic Financial Information and Reporting.
(a) The Company will maintain true books and records of
account in which full and correct entries will be made of all its business
transactions pursuant to a system of accounting established and administered in
accordance with generally accepted accounting principles consistently applied,
and will set aside on its books all such proper accruals and reserves as shall
be required under generally accepted accounting principles consistently applied.
(b) As soon as practicable after the end of each fiscal
year of the Company, and in any event within ninety (90) days thereafter, the
Company will furnish each Investor a consolidated balance sheet of the Company,
as at the end of such fiscal year, and a consolidated statement of income and a
consolidated
15
statement of cash flows of the Company, for such year, all prepared in
accordance with generally accepted accounting principles consistently applied
and setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail. Such financial statements shall be
accompanied by a report and opinion thereon by independent public accountants of
national standing selected by the Company's Board of Directors.
(c) So long as a UniPhy Preferred Shareholder or ARC Key
Shareholder (with its affiliates) shall own not fewer than 110,000 shares of
Registrable Securities (as adjusted for splits and combinations) (a "Major
Investor") the Company will furnish each such Major Investor, as soon as
practicable after the end of the first, second and third quarterly accounting
periods in each fiscal year of the Company, and in any event within forty-five
(45) days thereafter, a consolidated balance sheet of the Company as of the end
of each such quarterly period, and a consolidated statement of income and a
consolidated statement of cash flows of the Company for such period and for the
current fiscal year to date, prepared in accordance with generally accepted
accounting principles, with the exception that no notes need be attached to such
statements and year-end audit adjustments may not have been made.
(d) The Company will furnish each Major Investor (i) at
least thirty (30) days prior to the beginning of each fiscal year an annual
budget and operating plans for such fiscal year (and as soon as available, any
subsequent revisions thereto); and (ii) as soon as practicable after the end of
each calendar quarter, and in any event within thirty (30) days thereafter, a
consolidated balance sheet of the Company as of the end of each such quarter,
and a consolidated statement of income and a consolidated statement of cash
flows of the Company for such month and for the current fiscal year to date,
including a comparison to plan figures for such period, prepared in accordance
with such generally accepted accounting principles consistently applied, with
the exception that no notes need to be attached to such statements and year-end
audit adjustments may not have been made.
3.2. Inspection Rights. Each Major Investor shall have the right to
visit and inspect any of the properties of the Company or any of its
subsidiaries, and to discuss the affairs, finances and accounts of the Company
or any of its subsidiaries with its officers, and to review such information as
is reasonably requested all at such reasonable times and as often as may be
reasonably requested; provided, however, that the Company shall not be obligated
under this Section 3.2 with respect to a competitor of the Company or with
respect to information which the Board of Directors determines in good faith is
confidential and should not, therefore, be disclosed.
3.3. Stock Vesting. The Company hereby agrees that all future
issuances of shares of capital stock and stock option grants to directors,
employees or consultants shall be subject to the approval of the Compensation
Committee of the Board of Directors of the Company.
16
3.4. Real Property Holding Corporation. The Company covenants that
it will operate in a manner such that it will not become a "United States real
property holding corporation" as that term is defined in Section 897(c)(2) of
the Internal Revenue Code of 1986, as amended, and the regulations thereunder
("FIRPTA"). The Company agrees to make determinations as to its status as a
USRPHC, and will file statements concerning those determinations with the
Internal Revenue Service, in the manner and at the times required under Reg. ss.
1.897-2(h), or any supplementary or successor provision thereto. Within 30 days
of a request from an Investor or any of its partners, the Company will inform
the requesting party, in the manner set forth in Reg. ss. 1.897- 2(h)(1)(iv) or
any supplementary or successor provision thereto, whether that party's interest
in the Company constitutes a United States real property interest (within the
meaning of Internal Revenue Code Section 897(c)(1) and the regulations
thereunder) and whether the Company has provided to the Internal Revenue Service
all required notices as to its USRPHC status.
3.5. Conduct of Business. Unless a majority of the non-management
members of the Company's Board of Directors otherwise approve, which approval
shall not be withheld except in good faith and upon reasonable grounds, the
Company shall not acquire all or any significant portion of the assets of any
other person or dispose of any assets of the Company (including without
limitation the assets of any subsidiary of the Company) in excess of $1,000,000.
3.6. Independent Auditor. Prior to the Initial Offering, the
Company shall not change its independent auditors from Ernst & Young, LLP,
except to a "Big Five Firm," without the consent of at least two-thirds (2/3) of
the members of the Board of Directors of the Company.
3.7. Observer Rights. Prior to the Initial Offering, any person who
owns at least five percent (5%) of the outstanding shares of Registrable
Securities and does not have a representative on the Board of Directors of the
Company shall have the right to attend, or send a representative to attend, any
meeting of the Board of Directors or a committee thereof.
3.8. ERISA Plan. Throughout the existence of any ERISA plan of the
Company, the Company shall meet the minimum funding standards required by ERISA
and, prior to an Initial Offering, the Company shall send to each Major Investor
a copy of any notice of a "reportable event," as defined in ERISA.
3.9. Merger, Consolidation or Reorganization. The Company shall
not, directly or indirectly, enter into any merger, consolidation or
reorganization in which the Company shall not be the surviving corporation
unless the proposed surviving corporation shall, prior to such merger,
consolidation or reorganization, agree to assume the registration rights
obligations of the Company provided in Section 2 of this Amended and Restated
Agreement.
17
3.10. Termination of Covenants. All covenants of the Company
contained in Section 3 of this Amended and Restated Agreement shall expire and
terminate upon the closing of the Initial Offering.
4. Anti-Dilution Rights and Rights of First Refusal.
4.1. Issuance of Additional Shares on Certain Dilutive Issues. In
the event that, at any time prior to the closing of the Initial Offering, the
consideration per share (determined pursuant to Section 4.1.4 below) for any
Additional Share of Common Stock (as defined below) issued or deemed to be
issued by the Company (the "Anti-Dilution Price") is less than the average price
per share of the shares of Common Stock (or Preferred Stock that was converted
to Common Stock) owned by each Investor identified on Exhibit A hereto as an
anti-dilution Investor (the "Anti-Dilution Investors") at the time of the
issuance giving rise to the issuance of additional shares pursuant to this
Section 4.1 (the "Average Original Price"), then the Company shall issue to the
Anti-Dilution Investors additional shares of Common Stock subject to the
following provisions;
4.1.1 Definitions. For purposes of this Section 4.1, the
following definitions apply:
(i) "Options" shall mean rights, options, or
warrants to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities (as defined below); except for (a) options to purchase
shares of Common Stock granted under any stock option plans of the Company in
effect prior to the date of this Amended and Restated Agreement or approved by
two-thirds of the Board of Directors and by the shareholders of the Company
("Plan Options"), provided that the aggregate number of shares reserved for
issuance under all such option plans does not exceed 10% of the then outstanding
Common Stock;
(ii) "Convertible Securities" shall mean any
evidences of indebtedness, shares of stock or other securities convertible into
or exchangeable for Common Stock;
(iii) "Additional Shares of Common Stock" shall
mean all shares of Common Stock issued (or deemed to be issued pursuant to
Section 4.1.2 below) by the Company after the date of this Agreement, other than
shares of Common Stock issued or issuable (a) upon the exercise of any Plan
Options; (b) in connection with the acquisition of assets or equity interests in
another corporation, partnership, or other type of legal entity by the Company
which is approved by the Company's Board of Directors and a majority of the
Directors elected by the Investors; or (c) in the next equity financing of the
Company subsequent to the date hereof (the "Subsequent Financing").
4.1.2 Issuance of Options and Convertible Securities. In
the event the Company at any time or from time to time after the date hereof
shall issue any
18
Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities then entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options and/or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to Subsection 4.1.4 below) of such Additional
Shares of Common Stock would be less than the Average Original Price in effect
on the date of and immediately prior to such issue or record date.
4.1.3 Issuance of Additional Shares of Common Stock to
Anti-Dilution Investors Upon Issuance of Additional Shares of Common Stock. In
the event that the Company at any time after the date hereof shall issue
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Subsection 4.1.2 above), without consideration
or for a consideration per share less than the Average Original Price, the
Company shall issue to each Anti-Dilution Investor without further
consideration, that number of Additional Shares of Common Stock equal to the
result obtained by (a) dividing (i) the number of shares of Common Stock held by
such Anti-Dilution Investor immediately prior to the issuance giving rise to the
issuance of additional shares pursuant to this Section 4.1 multiplied by its
Average Original Price by (ii) the Anti-Dilution Price per share consideration
received (or deemed to have been received pursuant to Section 4.1.2 above) by
the Company for the Additional Shares of Common Stock and (b) subtracting from
the quotient the number of shares of Common Stock held by each Anti-Dilution
Investor immediately prior to the issuance giving rise to the issuance of
additional shares pursuant to this Section 4.1.
4.1.4 Determination of Consideration. The consideration
received by the Company for the issue of any Additional Shares of Common Stock
shall be computed as follows:
(i) Cash, Property, and Other Consideration.
Such consideration shall:
(A) insofar as it consists of cash, be computed
as the aggregate amount of cash received by the Company excluding
amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property,
services, or other consideration other than cash, be computed at the
fair market value thereof
19
at the time of such issue, as determined in good faith by the Board of
Directors; and
(C) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other
assets of the Company for consideration which covers both, be the
proportion of the consideration so received in respect of the issuance
of such Additional Shares of Common Stock, as is determined in good
faith by the Board of Directors, computed as provided in clauses (A)
and (B) above.
(ii) Options and Convertible Securities. The
consideration per share received by the Company for Additional Shares of Common
Stock deemed to have been issued pursuant to Options and Convertible Securities,
shall be deemed to be the sum of the consideration paid for such Option or
Convertible Security, if any, plus the lowest consideration per share then
payable upon the exercise of Options, as set forth in the instruments relating
to such Options or Convertible Securities, without regard to any provision
contained therein designed to protect against dilution. If Options or
Convertible Securities are issued together with other securities or instruments
of the Company, the Board of Directors shall determine in good faith the amount
of consideration paid for such Option or Convertible Securities.
4.1.5 Notice of and Certificates Representing Issuance of
Additional Shares. In each case of any adjustment or readjustment pursuant to
the provisions hereof, the Company shall forthwith notify the Anti-Dilution
Investors of each such adjustment, setting forth in reasonable detail the event
requiring the adjustment and the method by which such adjustment was calculated
and shall, together with such notice, deliver to the Anti-Dilution Investors
certificates representing the additional shares of Common Stock issued to each
such Anti-Dilution Investor.
4.1.6 No Fractional Shares. If any adjustment pursuant
hereto would create a fractional share of Common Stock or a right to acquire a
fractional share of Common Stock, such fractional share shall be disregarded and
the number of additional shares issuable hereunder shall be the next higher
number of shares, rounding all fractions upward.
4.2. Right of First Refusal.
4.2.1 Subsequent Offerings. Each UniPhy Preferred
Shareholder and ARC Key Shareholder (for purposes of this Section 4.2, the
"First Refusal Investors") shall have a right of first refusal to purchase its
pro rata share of all Equity Securities, as defined below, that the Company may,
from time to time, propose to sell and issue after the date of this Amended and
Restated Agreement, other than the Equity Securities excluded by Section 4.5
hereof. Each First Refusal Investor's pro rata share is equal to the ratio of
(A) the number of shares of the Company's Common Stock of which such First
Refusal Investor is deemed to be a
20
holder immediately prior to the issuance of such Equity Securities to (B) the
total number of shares of the Company's outstanding Common Stock immediately
prior to the issuance of the Equity Securities. The term "Equity Securities"
shall mean (i) any Common Stock, preferred stock or other security of the
Company, (ii) any security convertible, with or without consideration, into any
Common Stock, preferred stock or other security (including any option to
purchase such a convertible security), (iii) any security carrying any warrant
or right to subscribe to or purchase any Common Stock, preferred stock or other
security or (iv) any such warrant or right.
4.2.2 Exercise of Rights. If the Company proposes to issue
any Equity Securities, it shall give each First Refusal Investor written notice
of its intention, describing the Equity Securities, the price and the terms and
conditions upon which the Company proposes to issue the same. Each First Refusal
Investor shall have twenty (20) days from the giving of such notice to agree to
purchase its pro rata share of the Equity Securities for the price and upon the
terms and conditions specified in the notice by giving written notice to the
Company and stating therein the quantity of Equity Securities to be purchased.
Notwithstanding the foregoing, the Company shall not be required to offer or
sell such Equity Securities to any First Refusal Investor who would cause the
Company to be in violation of applicable federal securities laws by virtue of
such offer or sale.
4.2.3 Issuance of Equity Securities to Other Persons. If
not all of the First Refusal Investors elect to purchase their pro rata share of
the Equity Securities, then the Company shall promptly notify in writing the
Investors who do so elect and shall offer such First Refusal Investors the right
to acquire such unsubscribed shares. Each such First Refusal Investor shall have
ten (10) days after receipt of such notice to notify the Company of its election
to purchase all or a portion thereof of the unsubscribed shares. If the First
Refusal Investors fail to exercise in full the rights of first refusal, the
Company shall have ninety (90) days thereafter to sell the Equity Securities in
respect of which the First Refusal Investors' rights were not exercised, at a
price and upon general terms and conditions materially no more favorable to the
purchasers thereof than specified in the Company's notice to the First Refusal
Investors pursuant to Section 4.2 hereof. If the Company has not sold such
Equity Securities within 90 days of the notice provided pursuant to Section 4.2,
the Company shall not thereafter issue or sell any Equity Securities, without
first offering such securities to the First Refusal Investors in the manner
provided above.
4.3. Termination of Anti-Dilution Rights and Rights of First
Refusal. The anti-dilution rights and rights of first refusal established by
this Section 4 shall not apply to, and shall terminate upon the closing of, an
Initial Offering.
4.4. Transfer of Anti-Dilution Rights and Rights of First Refusal.
The anti-dilution rights and rights of first refusal of each Anti-Dilution
Investor or First Refusal Investor under this Section 4 may be transferred to
the same parties,
21
subject to the same restrictions as any transfer of registration rights pursuant
to Section 2.10.
4.5. Excluded Securities. The anti-dilution rights and rights of
first refusal established by this Section 4 shall have no application to the
issuance of any of the following Equity Securities:
(a) up to an aggregate amount of 14,000,000 shares of
Common Stock (and/or options, warrants or other Common Stock purchase rights
issued pursuant to such options, warrants or other rights) (as adjusted for any
stock dividends, combinations or splits with respect to such shares) issued or
to be issued to employees, officers or directors of, or consultants or advisors
to the Company or any subsidiary, pursuant to stock purchase or stock option
plans or other arrangements that are approved by the Board of Directors;
(b) stock issued pursuant to any rights or agreements
outstanding as of the date of this Amended and Restated Agreement, options and
warrants outstanding as of the date of this Amended and Restated Agreement; and
stock issued pursuant to any such rights or agreements granted after the date of
this Amended and Restated Agreement, provided that the rights of first refusal
established by this Section 4 applied with respect to the initial sale or grant
by the Company of such rights or agreements;
(c) any Equity Securities issued for consideration other
than cash pursuant to a merger, consolidation, acquisition or similar business
combination;
(d) shares of Common Stock issued in connection with any
stock split, stock dividend or recapitalization by the Company;
(e) shares of Common Stock issued in the Subsequent
Financing; or
(f) with regard to the rights of first refusal, shares of
Common Stock issued in connection with the anti-dilution right provided in
Section 4.1 hereof.
4.6. Excluded Transaction. The rights of first refusal established
by this Section 4 shall have no application to First Refusal Investors who do
not qualify as "accredited investors" as such term is defined in Regulation D
under the Securities Act if the Board of Directors has determined that the
offering which would give rise to such right of first refusal shall be made only
to accredited investors for purposes of meeting the requirement of an exemption
to registration under the Securities Act.
5. Termination of ARC Amended and Restated Shareholders
Agreement. Pursuant to Section 14.1 of the ARC Amended and Restated Shareholders
Agreement, ARC and the ARC Key Shareholders hereby terminate the ARC Amended and
Restated Shareholders Agreement and waive and relinquish any
22
rights they have thereunder to consent to the Merger; to exercise a right of
first refusal or co-sale; to demand registration of securities; or otherwise.
6. Miscellaneous.
6.1. Governing Law. This Amended and Restated Agreement shall be
governed by and construed under the laws of the State of California.
6.2. Survival. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Investor and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
6.3. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
6.4. Severability. In case any provision of this Amended and
Restated Agreement shall be invalid, illegal, or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
6.5. Amendment and Waiver.
(a) Except as otherwise expressly provided, this Amended
and Restated Agreement may be amended or modified only upon the written consent
of the Company and the Investors holding at least seventy-five percent (75%) of
the Registrable Securities held by the UniPhy Preferred Shareholders and the ARC
Key Shareholders and the Investors holding at least seventy-five percent (75%)
of the Registrable Securities held by the UniPhy Founders; provided, however,
(i) with respect to provisions of this Amended and Restated Agreement applicable
only to the UniPhy Preferred Shareholders and the ARC Key Shareholders, such
provisions may be amended and modified solely upon the written consent of the
Company and the holders of at least seventy-five percent (75%) of the
Registrable Securities held by the UniPhy Preferred Shareholders and the ARC Key
Shareholders and (ii) with respect to provisions of this Amended and Restated
Agreement applicable only to
23
UniPhy Founders, such provisions may be amended and modified solely upon the
written consent of the Company and the holders of at least seventy-five percent
(75%) of the Registrable Securities held by the UniPhy Founders.
(b) Except as otherwise expressly provided, the
obligations of the Company and the rights of the Investors under this Amended
and Restated Agreement may be waived only with the written consent of the
Company's Investors holding at least seventy-five percent (75%) of the
Registrable Securities held by the UniPhy Preferred Shareholders and the ARC Key
Shareholders and the Investors holding at least seventy-five percent (75%) of
the Registrable Securities held by the UniPhy Founders provided, however, (i)
with respect to the rights held only by the UniPhy Preferred Shareholders and
the ARC Key Shareholders, such rights may be waived solely upon the written
consent of the holders of at least seventy-five percent (75%) of the holders of
Registrable Securities held by the UniPhy Preferred Shareholders and the ARC Key
Shareholders and, (ii) with respect to the rights held only by the UniPhy
Founders, such rights may be waived solely upon the written consent of the
holders of at least seventy-five percent (75%) of the Registrable Securities
held by the UniPhy Founders.
(c) Notwithstanding the foregoing, this Amended and
Restated Agreement may be amended with only the written consent of the Company
to include additional purchasers of Common Stock of the Company as "Investors"
and parties hereto.
6.6. Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Investor, upon any breach,
default or noncompliance of the Company under this Amended and Restated
Agreement shall impair any such right, power, or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of any similar breach, default or noncompliance
thereafter occurring. It is further agreed that any waiver, permit, consent, or
approval of any kind or character on any Investor's part of any breach, default
or noncompliance under this Amended and Restated Agreement or any waiver on such
Investor's part of any provisions or conditions of this Amended and Restated
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this Amended
and Restated Agreement, by law, or otherwise afforded to Investors, shall be
cumulative and not alternative.
6.7. Notices. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (i) upon personal delivery to
the party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
party to be notified at the address as set
24
forth on the signature pages hereof or Exhibit A hereto or at such other address
as such party may designate by ten (10) days advance written notice to the other
parties hereto.
6.8. Attorneys' Fees. In the event that any dispute among the
parties to this Amended and Restated Agreement should result in litigation, the
prevailing party in such dispute shall be entitled to recover from the losing
party all fees, costs and expenses of enforcing any right of such prevailing
party under or with respect to this Amended and Restated Agreement, including
without limitation, such reasonable fees and expenses of attorneys and
accountants, which shall include, without limitation, all fees, costs and
expenses of appeals.
6.9. Titles and Subtitles. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Amended and Restated Agreement.
6.10. Pronouns. All pronouns contained herein and any variations
thereof shall be deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity of the parties hereto may require.
6.11. Counterparts. This Amended and Restated Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which together shall constitute one instrument.
6.12. Entire Agreement. This Amended and Restated Agreement
constitutes the entire agreement among the parties hereto with respect to the
matters set forth herein, and it supersedes all prior oral or written
agreements, commitments or understandings with respect to the matters provided
for herein, including, without limitation, the Investor Rights Agreement among
the Company and the persons named therein dated April 16, 1998.
25
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Agreement as of the date set forth in the first paragraph hereof.
COMPANY:
UNIPHY HEALTHCARE, INC.
/s/ Xxxxxxx X. Xxxxxxx, Xx.
--------------------------------------------
By: Xxxxxxx X. Xxxxxxx, Xx.
---------------------------------------
Its: President and Chief Executive Officer
---------------------------------------
INVESTORS:
UNIPHY PREFERRED SHAREHOLDERS:
ABS Capital Partners, L.P.
/s/ ABS Partners, LP
--------------------------------------------
By: Xxxxxxxxx X. Xxxxxx
----------------------------------------
Title: General Partner
-------------------------------------
/s/ Xxxxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxx
--------------------------------------------
Xxxxx X. Xxxx
/s/ Xxxx Xxxxx
--------------------------------------------
Xxxx Xxxxx
/s/ Xxxxxxx X. Xxxxxxx, Xx.
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
/s/ R. Xxxx Xxxxxxx
--------------------------------------------
R. Xxxx Xxxxxxx
/s/ Xxx Xxxxxxx
--------------------------------------------
Xxx Xxxxxxx
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTOR'S RIGHT AGREEMENT
XXXXXX INVESTMENT PARTNERSHIP II
/s/ Xxxxxxx X. Xxxxxx, Xx
--------------------------------------------
By: Xxxxxxx X. Xxxxxx
----------------------------------------
Title:
-------------------------------------
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxxx
PACIFIC VENTURE GROUP, L.P.
By: PVG Equity Partner, L.L.C.,
its General Partner
/s/ Xxx X. Xxxxxx
--------------------------------------------
By: Xxx X. Xxxxxx
Title: Member
PVG ASSOCIATES, L.P.
By: PVG Equity Partner, L.L.C.,
its General Partner
/s/ Xxx X. Xxxxxx
--------------------------------------------
By: Xxx X. Xxxxxx
Title: Member
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxx Xxxxxxx
--------------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxxx Xxxxxx
--------------------------------------------
Xxxxxxx Xxxxxx
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTOR'S RIGHT AGREEMENT
ARC KEY SHAREHOLDERS:
XXXXXX X. XXXXXX FOUNDATION
/s/ Xxxxxx X. XxXxxx
--------------------------------------------
By: Xxxxxx X. XxXxxx
----------------------------------------
Title: President
-------------------------------------
/s/ Xxxxx X. Xxxxx
--------------------------------------------
Xxxxx X. Xxxxx
FIRST AVENUE PARTNERS, L.P.
/s/ Front Street, LLC, General Partner
--------------------------------------------
By: Xxxxx X. Xxxxx
----------------------------------------
Title: Managing Member
-------------------------------------
/s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx
J. Xxxxxxx Xxxxx
--------------------------------------------
J. Xxxxxxx Xxxxx
HEALTH TECH AFFILIATES, INC.
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
By: Xxxxxx X. Xxxxxx
----------------------------------------
Title: Vice President
-------------------------------------
HLM/CB FUND, L.P.
--------------------------------------------
By:
----------------------------------------
Title:
-------------------------------------
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTOR'S RIGHT AGREEMENT
HLM PARTNERS VII, L.P.
--------------------------------------------
By:
----------------------------------------
Title:
-------------------------------------
/s/ W. Xxxxxxxx Xxxxx
--------------------------------------------
W. Xxxxxxxx Xxxxx
XXXXX XXXXXXX, INC.
By:
----------------------------------------
Title:
-------------------------------------
/s/ B. Max Lauderdale
--------------------------------------------
B. Max Lauderdale
/s/ Xxxxxxx X. Xxxxxx, Xx.
--------------------------------------------
Xxxxxxx X. Xxxxxx, Xx.
/s/ Xxxxxxx X. Xxxx
--------------------------------------------
Xxxxxxx X. Xxxx
--------------------------------------------
Xxxxxxx Xxxxx
/s/ Xxxxxx Xxxxxx
--------------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxx X. Xxxxx
--------------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxx X. Xxxxxxxxxx
--------------------------------------------
Xxxx X. Xxxxxxxxxx
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTOR'S RIGHT AGREEMENT
RICHLAND VENTURES II, L.P.
/s/ Xxxx Xxxxxxx
--------------------------------------------
By: Xxxx Xxxxxxx
----------------------------------------
Title: Managing Partner
-------------------------------------
/s/ Xxx X. Xxxxxx
--------------------------------------------
Xxx X. Xxxxxx
SOUTH ATLANTIC PRIVATE EQUITY FUND IV (QP), LIMITED PARTNERSHIP
By: South Atlantic Private Equity Partners IV, Limited Partnership,
its General Partner
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
By: Xxxxxx X. Xxxxxx
----------------------------------------
Title: Partner
-------------------------------------
SOUTH ATLANTIC PRIVATE EQUITY FUND IV, L.P.
By: South Atlantic Private Equity Partners IV, Limited Partnership,
its General Partner
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
By: Xxxxxx X. Xxxxxx
----------------------------------------
Title: Partner
-------------------------------------
/s/ Xxx Xxxxxx, Xx.
--------------------------------------------
Xxx Xxxxxx, Xx.
/w/ Xxxxxxx X.X. Xxxx
--------------------------------------------
Xxxxxxx V.B. Xxxx
XX TWO, L.P.
--------------------------------------------
By:
----------------------------------------
Title:
-------------------------------------
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTOR'S RIGHT AGREEMENT
/s/ Xxxxx X. Xxxx, III
--------------------------------------------
Xxxxx X. Xxxx, III
UNIPHY FOUNDERS:
/s/ Xxxxx Xxxxxxxx
--------------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Xxxxxxx X. Xxxxx
THE XXXXXXX IRREVOCABLE TRUST, XXX XXXXXXX, TRUSTEE
/s/ Xxxxxxx X. Xxxxxxx, Xx.
--------------------------------------------
By: Xxxxxxx X. Xxxxxxx, Xx.
----------------------------------------
Title:
-------------------------------------
/s/ Xxxxxx Xxxxxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxxxxx
/s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ H. Xxxxxx Xxxxxx III
--------------------------------------------
H. Xxxxxx Xxxxxx III
/s/ Xxxxxxx Xxxxx
--------------------------------------------
Xxxxxxx Xxxxx
/s/ Xxxxxxx Xxxxx
--------------------------------------------
Xxxxxxx Xxxxx
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTOR'S RIGHT AGREEMENT
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxx
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTOR'S RIGHT AGREEMENT
EXHIBIT A
SCHEDULE OF INVESTORS
UNIPHY PREFERRED SHAREHOLDERS
ABS Capital Partners, L.P.*
Xxxxxxxx X. Xxxxxx*
Xxxxx X. Xxxx*
Xxxx Xxxxx*
Xxxxxxx X. Xxxxxxx, Xx.*
R. Xxxx Xxxxxxx*
Xxx Xxxxxxx
Xxxxxx Investment Partnership II*
Xxxxxxx X. Xxxxxxxx*
Pacific Venture Group, L.P.*
PVG Associates, L.P.*
Xxxxxxx X. Xxxxxx*
Xxxxxx X. Xxxxxx*
Xxxxx Xxxxxxx*
Xxxxxxx Xxxxxx*
ARC KEY SHAREHOLDERS
Xxxxxx X. Xxxxxx Foundation*
Xxxxx X. Xxxxx*
First Avenue Partners, L.P.*
Xxxxxxx X. Xxxxxxx
J. Xxxxxxx Xxxxx
Health Tech Affiliates, Inc.
HLM/CB Fund, L.P.*
HLM Partners VII, L.P.*
W. Xxxxxxxx Xxxxx
Xxxxx Xxxxxxx, Inc.*
B. Max Lauderdale
Xxxxxxx X. Xxxxxx, Xx.*
Xxxxxxx X. Xxxx*
Xxxxxx Xxxxxx
Xxxxx X. Xxxxx
Xxxx X. Xxxxxxxxxx
Richland Ventures II, L.P.*
Xxx X. Xxxxxx
South Atlantic Private Equity Fund IV (QP)*
* Anti-Dilution Investor
South Atlantic Private Equity Fund
IV, L.P.*
Xxx Xxxxxx, Xx.*
Xxxxxxx X.X. Xxxx*
WW Two, L.P.*
Xxxxx X. Xxxx, III
UNIPHY FOUNDERS
Xxxxx Xxxxxxxx
Xxxxxxx X. Xxxxx
The Xxxxxxx Irrevocable Trust, Xxx Xxxxxxx, Trustee*
Xxxxxx Xxxxxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
H. Xxxxxx Xxxxxx III
Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxxx X. Xxxxxx
