EXHIBIT 10.19
REGISTRATION RIGHTS AGREEMENT
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THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as
of December 1, 2006 by and among Orion HealthCorp, Inc., a Delaware corporation
(the "Company"), Xxxxxxxx Partners IV, L.P., a Delaware limited partnership
("Xxxxxxxx"), and Phoenix Life Insurance Company, a New York corporation
("Phoenix," and sometimes together with Xxxxxxxx the "Investors").
R E C I T A L S :
WHEREAS, the Investors have agreed to purchase shares of Class D Common
Stock (as defined below) from the Company pursuant to a Stock Purchase Agreement
dated as of September 8, 2006 (the "Stock Purchase Agreement"), which shares of
Class D Common Stock are convertible into shares of Class A Common Stock (as
defined below);
WHEREAS, contemporaneously with the closing under the Stock Purchase
Agreement, Phoenix will purchase a $3,350,000 Senior Unsecured Subordinated Note
(the "Note") from the Company and will receive a Common Stock Warrant
Certificate dated December 1, 2006 (the "Warrants") to purchase shares of Class
A Common Stock; and
WHEREAS, the Company and the Investors wish to provide for certain
arrangements with respect to the registration under the Securities Act of the
shares of Class A Common Stock held by the Investors pursuant to the Stock
Purchase Agreement and by Phoenix on exercise of the Warrants.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and obligations
contained herein, the parties agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
will have the following respective meanings:
"Agreement" is defined in the Preamble.
"Best Efforts" means the commercially reasonable efforts that a prudent
Person desirous of achieving a result would use in similar circumstances to
ensure that such result is achieved as expeditiously as reasonably possible.
"Xxxxxxxx" is defined in the Preamble.
"Business Day" means any day that is not a Saturday, a Sunday or a day
on which banks in the State of New York are generally closed for business.
"Class A Common Stock" means the Class A Common Stock, $0.001 par
value, of the Company.
"Class D Common Stock" means the Class D Common Stock, $0.001 par
value, of the Company.
"Commission" means the U.S. Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act or the
Exchange Act.
"Company" is defined in the Preamble.
"Covered Person" is defined in Section 6.1 of this Agreement.
"Effectiveness Period" means the period beginning on the date on which
a Registration Statement is declared effective and ending on the date on which
the Selling Holders shall have sold or otherwise disposed of all the Registrable
Shares included in the Registration Statement.
"Exchange Act" means the Securities Exchange Act of 1934, and any
successor to such statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be amended and in
effect.
"First Year Registration" is defined in Section 2.3.
"Holder" means any Person owning Registrable Shares or any Permitted
Transferee thereof in accordance with Section 7.2 hereof.
"Investors" is defined in the Preamble.
"Majority in Interest of the Registrable Shares" means the Holders of
greater than 50% of all Registrable Shares (or, where reference is made to a
Majority in Interest of Registrable Shares proposed to be included in a
Registration Statement, the Holders of greater than 50% of the Registrable
Shares so proposed to be included), deeming for such purposes all shares of
Class D Common Stock to have been converted into Class A Common Stock, at the
applicable conversion ratios immediately prior to the applicable time of
determination.
"Note" is defined in the Recitals.
"Permitted Transferee" is defined in Section 7.2.
"Person" means any individual, partnership, corporation, company,
association, trust, joint venture, limited liability company, unincorporated
organization, entity or division, or any government, governmental department or
agency or political subdivision thereof.
"Phoenix" is defined in the Preamble.
"Public Offering" means a public offering and sale of Class A Common
Stock for cash pursuant to an effective Registration Statement.
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing one or more Registration Statements or similar
documents in compliance with the Securities Act and any applicable rules and
regulations promulgated thereunder (including, in the case of a Registration
Statement on Form S-3, Rule 415) and the automatic effectiveness or the
declaration or ordering of effectiveness of such Registration Statement or
similar document by the Commission.
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"Registrable Shares" means, subject to Section 2.3 hereof, any shares
of Class A Common Stock (including Class A Common Stock into which shares of
Class D Common Stock or other Company securities are convertible) currently
issued or issued at any future time to the Investors or a Permitted Transferee,
including by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation, other
reorganization or otherwise. Registrable Shares will cease to be Registrable
Shares pursuant to the provisions of Section 5.4 hereof.
"Registration Expenses" means all expenses incurred by the Company in
complying with Sections 2 and 3 hereof, including, without limitation, all
registration and filing fees, listing fees, all fees and expenses of complying
with securities or blue sky laws, all printing expenses, fees and disbursements
of counsel for the Company and its independent public accountants, including the
expenses of any special audits required by or incident to such performance and
compliance, and legal fees and disbursements of the Selling Holders, but
excluding underwriting discounts, selling commissions, applicable transfer
taxes, if any.
"Registration Statement" means a registration statement filed by the
Company with the Commission for a Public Offering under the Securities Act
(other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose).
"Rule 144" means Rule 144 promulgated under the Securities Act, and any
successor rule or regulation thereto, and in the case of any referenced section
of such rule, any successor section thereto, collectively and as from time to
time amended and in effect.
"Rule 415" means Rule 415 promulgated under the Securities Act, or any
successor rule or regulation providing for offering securities on a continuous
or delayed basis.
"Securities Act" means the Securities Act of 1933, and any successor to
such statute, and the rules and regulations of the Commission issued under such
Act, as they each may, from time to time, be amended and in effect.
"Selling Holder" means any Holder on whose behalf Registrable Shares
are registered pursuant to Section 2 or 3 hereof.
"Stock Purchase Agreement" is defined in the recitals.
2. REQUIRED REGISTRATIONS.
2.1 Demand Registrations. At any one (1) time after the date hereof,
a Holder or Holders holding in the aggregate at least 50 percent of the
Registrable Shares may, by written notice to the Company, request that the
Company effect the registration for a Public Offering on Form S-1 (or any other
form that includes substantially the same information as would be required to be
included in a Registration Statement on such form as currently constituted) of
Registrable Shares having an anticipated net aggregate offering price of at
least $10,000,000.
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2.2 Registration on Form S-3. At any time that the Company is
eligible to file a Registration Statement on Form S-3 (or any successor form
relating to secondary offerings), a Holder or Holders of the Registrable Shares
may, by written notice to the Company, request that the Company effect the
registration on Form S-3 (or any successor form) of Registrable Shares having an
anticipated net aggregate offering price of at least $1,000,000.
2.3 Notice to Other Holders of Registrable Shares. Promptly after
receipt of notice requesting registration pursuant to Section 2.1 or 2.2, the
Company will give written notice of such requested registration to all other
holders of Registrable Shares. Subject to the limitations set forth in Sections
2.4 and 5.2, as applicable, the Company will use its Best Efforts to effect the
registration under the Securities Act of the Registrable Shares which the
Company has been requested to register by the Holders requesting such
registration and all other Registrable Shares which the Company has been
requested to register by other holders of Registrable Shares by notice delivered
to the Company within 20 days after the giving of such notice by the Company.
2.4 Time Limitation. The Company will not be required to effect any
registration pursuant to Section 2.1 within six months after the effective date
of any Registration Statement that was requested pursuant to Section 2.1.
2.5 Selection of Underwriter. If a Majority in Interest of the
Registrable Shares intend to distribute the Registrable Shares in an
underwritten offering, they will so advise the Company in their request. A
Majority in Interest of the Registrable Shares making such request will have the
right to designate the managing underwriter, subject to the approval of the
Company, which approval may not be unreasonably withheld.
3. INCIDENTAL REGISTRATION.
3.1 Company Registration. If at any time the Company proposes to
register any of its equity securities under the Securities Act, for its own
account (other than a Registration Statement on Form S-4 or S-8 or any successor
thereto) or for the account of any holder of its securities other than
Registrable Shares, then at least 20 days prior to the anticipated filing date
of the applicable Registration Statement the Company will give written notice to
all Holders (which notice will describe the proposed registration and state the
intended method of disposition and provide such Holders the opportunity to
register the number of Registrable Shares as each such Holder may request,
subject in each case to the terms of this Agreement) of such proposed filing,
and upon the written request of a Holder or Holders given within 20 days after
the Company provides such notice, the Company will use its Best Efforts to cause
all Registrable Shares that the Company has been requested to register to be
registered under the Securities Act to the extent necessary to permit their sale
or other disposition in accordance with the intended methods of distribution
specified in the request of such Holder(s); provided that, the Company will have
the right to postpone or withdraw any registration initiated by the Company
pursuant to this Section 3.1 without obligation to any Holder; provided,
further, that in the case of a proposed underwritten offering, the Company shall
use its Best Efforts to cause the managing underwriter or underwriters to permit
each of the Holders who have requested in writing to participate in the offering
to include such Holder's Registrable Shares in such offering on the same terms
and conditions as are applicable to the securities of the Company or other
stockholders, as the case may be, included therein.
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3.2 Excluded Transactions. The Company will not be obligated to
effect any registration of Registrable Shares under this Section 3 incidental to
the registration of any of its securities in connection with: (a) a registration
on Form S-8 relating to employee benefit plans or dividend reinvestment plans;
or (b) a registration on Form S-4 relating to the acquisition or merger after
the date hereof by the Company or any of its subsidiaries of or with any other
businesses.
4. REGISTRATION PROCEDURES. If and whenever the Company is required by the
provisions of this Agreement to use its Best Efforts to effect the registration
of any of the Registrable Shares under the Securities Act, the Company and the
Selling Holders will take the actions described below in this Section 4.
4.1 Registration Statement. The Company will prepare and (in the case
of a registration pursuant to Section 2 hereof, promptly and in any event within
60 days after the end of the period within which requests for registration may
be delivered to the Company) file with the Commission a Registration Statement
with respect to such Registrable Shares and use its Best Efforts to cause such
Registration Statement to become effective within 60 days after the filing of
such Registration Statement. Such Registration Statement shall be for an
offering to be made on a continuous or delayed basis (a so-called "shelf
registration statement") if (i) the Company is eligible for the use thereof and
(ii) the Holders requesting such registration have asked for a shelf
registration statement, and the Company shall keep such Registration Statement
effective pursuant to Rule 415 for the Effectiveness Period.
4.2 Amendments and Supplements. The Company will prepare and file
with the Commission such amendments (including post-effective amendments) and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective
during the Effectiveness Period, and during such period to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Shares and other securities, if any, covered by such Registration
Statement until the end of the Effectiveness Period.
4.3 Cooperation. The Company will use its Best Efforts to cooperate
with the Selling Holders in the disposition of the Registrable Shares covered by
such Registration Statement, including without limitation in the case of an
underwritten offering pursuant to Section 2.1 entering into and performing
customary agreements (including an underwriting agreement in customary form with
the managing underwriter) and causing key executives of the Company and its
subsidiaries to participate under the direction of the managing underwriter in a
"road show" scheduled by such managing underwriter in such locations and of such
duration as in the judgment of such managing underwriter are appropriate for
such underwritten offering.
4.4 Copies of Prospectus. The Company will furnish to each Selling
Holder, without charge, (i) promptly after such Registration Statement is filed
with the Commission, such reasonable numbers of copies of the prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and any amendments thereto, including financial statements and
schedules and all exhibits, (ii) upon the effectiveness of such Registration
Statement, such number of copies of the prospectus included in such Registration
Statement, including all amendments and supplements thereto, and (iii) such
other documents, in each case, as the Selling Holder may reasonably request in
order to facilitate the public sale or other disposition of the Registrable
Shares owned by the Selling Holder.
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4.5 Blue Sky Qualification. The Company will use its Best Efforts to
register or qualify the Registrable Shares covered by the Registration Statement
under the securities or "blue sky" laws of such states or jurisdictions in the
United States as the Selling Holders reasonably request, and do any and all
other acts and things that may be necessary or desirable to enable the Selling
Holders to consummate the public sale or other disposition in such jurisdictions
of the Registrable Shares covered by the Registration Statement, including
preparing and filing in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Effectiveness Period (in the case of a shelf registration statement);
provided, however, that the Company will not be obligated to file any general
consent to service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it would not otherwise be
so subject. The Company shall promptly notify each Selling Holder of the receipt
by the Company of any notification with respect to the suspension of the
registration or qualification of any Registrable Shares for sale under the
securities or "blue sky" laws of any jurisdiction in the United States or its
receipt of actual notice of the initiation or threat of any proceeding for such
purpose.
4.6 Opinion of Counsel; Comfort Letter. In the case of an
underwritten offering, the Company will use its Best Efforts to obtain all legal
opinions, auditors' consents and comfort letters and experts' cooperation as may
be required, including furnishing to each Selling Holder of such Registrable
Shares a signed counterpart, addressed or confirmed to such Selling Holder, of
(a) an opinion of counsel for the Company and (b) a "cold comfort" letter signed
by the independent public accountants who have certified the Company's financial
statements included in such Registration Statement, covering substantially the
same matters as are customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in underwritten public offerings
of securities.
4.7 Listing and Transfer Agent. The Company will cause all
Registrable Shares covered by the Registration Statement to be listed on each
securities exchange or automated quotation system on which the Class A Common
Stock is then listed. The Company will provide and cause to be maintained a
transfer agent and registrar for all Registrable Shares covered by the
Registration Statement not later than the effective date of such Registration
Statement. The Company will pay all fees and expenses in connection with
satisfying its obligations under this Section 4.7.
4.8 General Compliance with Federal Securities Laws; Section 11(a)
Earning Statement. The Company will use its Best Efforts to comply with the
Securities Act, the Exchange Act and any other applicable rules and regulations
of the Commission, and make available to its securities holders, as soon as
reasonably practicable, an earning statement covering the period of at least 12
months after the effective date of such Registration Statement, which earnings
statement shall be in a form complying with and satisfying Section 11(a) of the
Securities Act and any applicable regulations thereunder, including the
provisions of Rule 158.
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4.9 Notice of Prospectus Defects. The Company will immediately notify
the Selling Holders of the happening of any event, as a result of which the
prospectus included or to be included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing (provided
that such notice shall not contain any material, non-public information). The
Company will promptly revise such prospectus as may be necessary so that such
prospectus shall not include an untrue statement of a material fact or omit to
state such 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. The Company will promptly deliver copies of such revised prospectus to
the Selling Holders. Following receipt of the revised prospectus, the Selling
Holders will be free to resume making offers of the Registrable Shares. The
Company will extend the period during which the Registration Statement must be
kept effective pursuant to this Agreement by the number of days during the
period from and including the date of giving such notice to and including the
date when the Selling Holders shall have received copies of the revised
prospectus.
4.10 Company Lock-Up. In the case of an underwritten offering
requested to be effected by the Holders hereunder, the Company will refrain,
without the consent of the managing underwriter, for a period from 15 days
before the effective date of the registration sale until 90 days after such
effective date, from directly or indirectly selling, offering to sell, granting
any option for the sale of, or otherwise disposing of any common equity or
securities convertible into common equity other than pursuant to Company
employee equity plans.
4.11 Delay of Registration and Suspension of Offering. If at any time
(a) after a request to effect a registration pursuant to Section 2 of this
Agreement or (b) after a Registration Statement has become effective, the
Company is engaged in any plan, proposal or agreement with respect to any
financing, acquisition, recapitalization, reorganization or other material
transaction or development the public disclosure of which would be detrimental
to the Company, then the Company may direct that such request be delayed or that
use of the prospectus contained in the Registration Statement be suspended, as
applicable, for a period of up to 30 days. The Company will notify all Holders
requesting the registration or all Selling Holders, as the case may be, of the
delay or suspension. In the case of notice suspending an effective Registration
Statement, each Selling Holder will immediately discontinue any sales of
Registrable Shares pursuant to such Registration Statement until such Selling
Holder has received copies of a supplemented or amended prospectus or until such
Selling Holder is advised in writing by the Company that the then-current
prospectus may be used and has received copies of any additional or supplemental
filings that are incorporated or deemed incorporated by reference in such
prospectus. The Company may exercise the rights provided by this Section 4.11 on
only one occasion within any 365-day period.
4.12 Participation by Selling Security Holders. In connection with the
preparation and filing of each Registration Statement, and before filing any
such Registration Statement or any other document in connection therewith, the
Company must give the participating Holders and their underwriters, if any, and
their respective counsel and accountants, the opportunity to participate in the
preparation of such Registration Statement, each prospectus included therein or
filed with the Commission, each amendment thereof or supplement thereto and any
related underwriting agreement or other document to be filed, and give each of
the aforementioned Persons such access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such Holders, underwriters, counsel or
accountants, to conduct a reasonable investigation within the meaning of the
Securities Act.
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4.13 Requests by Selling Holders. If requested by a Selling Holder,
the Company shall (i) as soon as practicable incorporate in a prospectus
supplement or post-effective amendment such information as a Selling Holder
reasonably requests to be included therein relating to the sale and distribution
of Registrable Shares, including, without limitation, information with respect
to the number of Registrable Shares being offered or sold, the purchase price
being paid therefor and any other terms of the offering of the Registrable
Shares to be sold in such other offering provided that such information is
required to be included in the Registration Statement by the Securities Act;
(ii) as soon as practicable make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) as soon as practicable, supplement or make amendments to any Registration
Statement if reasonably requested by a Selling Holder of such Registrable
Shares.
4.14 Stop Orders. The Company shall use its Best Efforts to prevent
the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Shares for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify each Selling Holder of the issuance
of such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.
4.15 Certificates. The Company shall reasonably cooperate with the
Selling Holders and, to the extent applicable, facilitate the timely preparation
and delivery of certificates representing the Registrable Shares to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the Selling Holders may
reasonably request and registered in such names as the Selling Holders may
request.
4.16 Notice of Effectiveness. Within two business days after a
Registration Statement that includes the Registrable Shares is declared
effective by the Commission, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable
Shares (with copies to the Selling Holders) written confirmation that such
Registration Statement has been declared effective by the Commission.
4.17 Governmental Approvals. The Company shall use its Best Efforts to
cause the Registrable Shares covered by the Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable Shares.
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5. CERTAIN OTHER PROVISIONS.
5.1 Additional Procedures. Selling Holders will take all such actions
and execute all such documents and instruments that are reasonably requested by
the Company to effect the sale of their shares in such Public Offering,
including, without limitation, being parties to the underwriting agreement
entered into by the Company and any other Selling Holders in connection
therewith; provided, however, that the aggregate amount of any liability of any
Selling Holder pursuant to such underwriting or other agreement will not exceed
such Selling Holder's net proceeds from such offering. In addition, each Selling
Holder will furnish to the Company such information regarding such Selling
Holder and the distribution proposed by such Selling Holder as the Company may
reasonably request in writing and as will be required in connection with any
registration, qualification or compliance referred to in Section 4.
5.2 Underwriter's Cutback. Notwithstanding any other provision of
this Agreement, if the managing underwriter determines that the inclusion of all
shares requested to be registered in an underwritten offering would adversely
affect the offering, the Company may limit the number of Registrable Shares to
be included in the Registration Statement for such offering. If the registration
has been requested by the Holders pursuant to Section 2 hereof, the number of
shares that are entitled to be included in the registration and underwriting
will be reduced in the following manner: (a) first, shares of Company equity
securities, other than Registrable Shares, requested to be included in such
registration by stockholders will be excluded, (b) second, shares of Company
equity securities that the Company desires to include in such registration will
be excluded and (c) third, Registrable Shares requested to be included in such
registration by the Holders will be excluded. If the registration has been
initiated other than pursuant to Section 2 hereof, the number of shares that are
entitled to be included in the Registration Statement for such offering will be
reduced in the following manner: (x) first, shares of Company equity securities,
other than Registrable Shares, requested to be included in such registration by
stockholders will be excluded, (y) second, Registrable Shares requested to be
included in such registration by Holders will be excluded and (z) third, shares
of Company equity securities that the Company desires to include in such
registration will be excluded. If any other stockholders of the Company exercise
a contractual demand right for registration of equity securities of the Company
concurrent with a demand request by the Holders pursuant to Section 2 hereof,
then all such demanding holders shall be aggregated with the Holders for
purposes of determining the category of stockholders to be cutback pursuant to
this Section 5.2 provided that such other stockholders agree in writing to
provide the Holders with reciprocal rights with respect to any demand request by
such other stockholders. To the extent that the underwriters do not deem it
necessary to exclude all of the shares requested to be registered by any
category of stockholders contemplated above, the number of shares that may be
included in the registration will be allocated to the members of such category
requesting registration in proportion, as nearly as practicable, to the
respective number of shares of Class A Common Stock (assuming conversion of any
convertible securities held by such stockholders) that they held at the time the
Company gives the notice specified in Section 2 or 3.
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5.3 Registration Expenses. The Company hereby agrees to pay all
Registration Expenses in connection with all registrations effected pursuant to
this Agreement. The Company, however, shall not be required to pay for any
expenses of a registration requested pursuant to Sections 2.1 or 2.2 hereof if
the registration request is withdrawn at any time at the request of Holders of a
majority of the Registrable Shares to be included in such registration (in which
case all Holders requesting such withdrawal shall bear such expenses). However,
if the requesting Holders have learned of information (other than information
known to them at the time they made their request) that, in the good faith
judgment of the requesting Holders, is reasonably likely to have a material
adverse effect on the business or prospects of the Company, then the Holders
shall not be required to pay any of such expenses in the case of a registration
requested pursuant to Section 2.1 or 2.2.
5.4 Termination of Status as Registrable Shares. Registrable Shares
will cease to be Registrable Shares and cease to have the rights accorded to
such shares under this Agreement upon the earliest to occur of the following
events: (x) such shares shall have been sold pursuant to an effective
Registration Statement under the Securities Act or (y) such shares shall have
been sold pursuant to a transaction under Rule 144.
6. INDEMNIFICATION.
6.1 Company Indemnification. In the event of any registration of any
of the Registrable Shares under the Securities Act pursuant to this Agreement,
then to the extent permitted by law, the Company will indemnify and hold
harmless each Selling Holder, its partners, directors and officers and each
other Person, if any, who controls such Selling Holder within the meaning of the
Securities Act or the Exchange Act (each such Person being a "Covered Person")
against any losses, claims, damages or liabilities, joint or several, to which
such Covered Person may become subject under the Securities Act, the Exchange
Act, state securities laws or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(a) any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement under which such Registrable Shares were
registered under the Securities Act, any preliminary or final prospectus
contained in the Registration Statement, or any amendment or supplement to such
Registration Statement or (b) the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse such Covered Person for
any legal or any other expenses reasonably incurred by such Covered Person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable to
any Covered Person in any such case (x) to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
omission made in such Registration Statement or prospectus, or any such
amendment or supplement, in reliance upon and in conformity with information
furnished to the Company, in writing, by or on behalf of such Covered Person
specifically for use in the preparation thereof or (y) in the case of a sale
directly by a Selling Holder (including a sale of such Registrable Shares
through any underwriter retained by such Selling Holder engaging in a
distribution solely on behalf of such Selling Holder), such untrue statement or
omission was contained in a preliminary prospectus and corrected in a final or
amended prospectus, and such Selling Holder failed to deliver a copy of the
final or amended prospectus at or prior to the confirmation of the sale of the
Registrable Shares to the person asserting any such loss, claim, damage or
liability in any case in which such delivery is required by the Securities Act.
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6.2 Seller Indemnification. In the event of any registration of any
of the Registrable Shares under the Securities Act pursuant to this Agreement,
then to the extent permitted by law, each Selling Holder will indemnify and hold
harmless the Company, each of its directors and officers and each Person (other
than such Selling Holder), if any, who controls the Company within the meaning
of the Securities Act or the Exchange Act, against any losses, claims, damages
or liabilities to which the Company, such directors and officers, or controlling
person may become subject under the Securities Act, Exchange Act, state
securities laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (a)
any untrue statement of a material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary or final prospectus contained in the Registration Statement, or
any amendment or supplement to the Registration Statement or (b) the omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, if the statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of such Selling Holder, specifically for use in
connection with the preparation of such Registration Statement, prospectus,
amendment or supplement; provided, however, that the obligations of such Selling
Holder hereunder will be limited to an amount equal to the net proceeds to such
Selling Holder (after deducting all underwriter's discounts and commissions and
all other expenses paid by such Holder in connection with the registration in
question) from the disposition of Registrable Shares pursuant to such
registration.
6.3 Notice of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim of the type referred to in the foregoing provisions of this Section 6,
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party, give written notice to each such indemnifying party of
the commencement of such action; provided, however, that the failure of any
indemnified party to give such notice will not relieve such indemnifying party
of its obligations under this Section 6, except to the extent that such
indemnifying party is materially prejudiced by such failure. In case any such
action is brought against an indemnified party, each indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified, to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party, and (subject to
the following sentence) after notice from an indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
Indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof. The indemnified party may participate in such defense at such
party's expense; provided, however, that the indemnifying party will pay such
expense if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
conflict of interests between the indemnified party and any other party
represented by such counsel in such proceeding; provided, further, that in no
event will the indemnifying party be required to pay the expenses of more than
one law firm as counsel for all indemnified parties pursuant to this sentence.
If, within 30 days after receipt of the notice, such indemnifying party has not
elected to assume the defense of the action, such indemnifying party will be
responsible for any legal or other expenses reasonably incurred by such
indemnified party in connection with the defense of the action, suit,
investigation, inquiry or proceeding. An indemnifying party may, in the defense
of any such claim or litigation, consent to the entry of a judgment or enter
into a settlement without the consent of the indemnified party only if such
judgment or settlement contains a general release of the indemnified party in
respect of such claims or litigation.
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6.4 Contribution. If the indemnification provided for in Sections 6.1
or 6.2 hereof is unavailable to a party that would have been an indemnified
party under any such Section in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each party that would have been an indemnifying party thereunder will, in
lieu of indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative fault of such indemnifying party on the
one hand and such indemnified party on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof). The relative fault
will be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such indemnifying
party or such indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The parties agree that it would not be just and equitable if
contribution pursuant to this Section 6.4 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the preceding sentence. The amount paid or payable
by a contributing party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to in this
Section 6.4 will include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) will be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
7. MISCELLANEOUS.
7.1 Reports under the Exchange Act. With a view to making available
to the Holders the benefits of Rule 144 and any other rule or regulation of the
Commission that may at any time permit such Holder to sell securities of the
Company to the public without registration and with a view to making it possible
for Holders to register the Registrable Shares pursuant to a registration
statement on Form S-3, the Company agrees from the date hereof to use its best
efforts to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act, so long as the Company remains subject to such requirements and
the filing of such reports and other documents are required for the applicable
provisions of Rule 144 to apply;
(c) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act and take such other actions as will permit Holders to use Form S-3
for the resale of their Registrable Shares; and
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(d) furnish to any Holder forthwith upon request (i) a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, or as to its qualification as
a registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company and (iii) such information as may be reasonably requested in availing
any Holder of any rule or regulation of the Commission that permits the selling
of any such securities without registration or pursuant to such form.
7.2 Transfer of Rights. The rights to cause the Company to register
Registrable Shares pursuant to Sections 2 and 3 may be assigned by any Holder to
a Permitted Transferee (as defined below), and by such Permitted Transferee to a
subsequent Permitted Transferee, but only if such rights are transferred (a) to
an affiliate or partner of such Holder or Permitted Transferee or a trustee or
an account managed or advised by a manager or adviser of such Holder or
Permitted Transferee or (b) in connection with the sale or other transfer of not
less than an aggregate of 100,000 Registrable Shares or some lesser number, if
such lesser number represents all the Registrable Shares then held by such
Holder. Any transferee to whom rights under this Agreement are transferred will
(x) as a condition to such transfer, deliver to the Company a written instrument
by which such transferee agrees to be bound by the obligations imposed upon
Holders under this Agreement to the same extent as if such transferee were a
Holder under this Agreement and (y) be deemed to be a Holder hereunder. Any
Person to whom rights under this Agreement are transferred in accordance with
this Section 7.2 shall be a "Permitted Transferee."
7.3 Governing Law. This Agreement, the rights of the parties and all
claims, actions, causes of action, suits, litigation, controversies, hearings,
charges, complaints or proceedings arising in whole or in part under or in
connection herewith, will be governed by and construed in accordance with the
domestic substantive laws of the State of New York, without giving effect to any
choice or conflict of law provision or rule that would cause the application of
the laws of any other jurisdiction.
7.4 Entire Agreement; Amendment and Waiver. This Agreement, together
with any documents, instruments and certificates explicitly referred to herein,
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes any and all prior discussions,
negotiations, proposals, undertakings, understandings and agreements, whether
written or oral, with respect thereto. Any term of this Agreement may be amended
or terminated and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) with the written consent of the Company and a Majority in
Interest of the Registrable Shares; provided, however, that any such amendment
or waiver treats all holders the same (without regard to any differences in
effect that such amendment or waiver may have on the Holders due to the
differing amounts of Registrable Shares held by such Holders). Any such
amendment, termination or waiver will be binding on all Holders.
13
7.5 Notices. All notices, requests, demands, claims and other
communications required or permitted to be delivered, given or otherwise
provided under this Agreement must be in writing and must be delivered, given or
otherwise provided:
(a) by hand (in which case, it will be effective upon
delivery);
(b) by facsimile (in which case, it will be effective upon
receipt of confirmation of good transmission); or
(c) by overnight delivery by a nationally recognized courier
service (in which case, it will be effective on the Business Day after being
deposited with such courier service;
in each case, to the address (or facsimile number) listed below:
If to the Company, to it at: 0000 Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Facsimile number: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx
with a copy to: Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Facsimile number: (000) 000-0000
Attention: Xxx X. Xxxxxx., Esq.
If to either Investor, to it at: Phoenix Life Insurance Company
c/o Phoenix Investment Management, LLC
00 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile number: (000) 000-0000
Attention: Xxxx Xxxxx, Managing Director
Xxxxxxxx Partners IV, L.P.
Lakepoint
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Facsimile number: (000) 000-0000
Attention: Xxxx X. Xxxxxx
in either case, with a copy to: Xxxx Xxxxx Xxxxxx & Xxxxxxx, P.C.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.
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Each of the parties to this Agreement may specify a different address or
facsimile number by giving notice in accordance with this Section 7.5 to each of
the other parties hereto.
7.6 Binding Effect; Assignment. This Agreement will be binding upon
and inure to the benefit of the personal representatives, successors and assigns
of the respective parties hereto.
7.7 Severability. If any provision of this Agreement is found by any
court of competent jurisdiction to be invalid or unenforceable, the parties
hereby waive such provision to the extent that it is found to be invalid or
unenforceable. Such provision will, to the maximum extent allowable by law, be
modified by such court so that it becomes enforceable, and, as modified, will be
enforced as any other provision hereof, all the other provisions hereof
continuing in full force and effect.
7.8 Headings. The headings contained in this Agreement are for
convenience purposes only and will not in any way affect the meaning or
interpretation hereof.
7.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute but one and the same instrument.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first above written.
ORION HEALTHCORP, INC.
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President and Chief
Executive Officer
XXXXXXXX PARTNERS IV, L.P.
By: Xxxxxxxx Venture Management IV,
L.P., its general partner
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: General Partner
PHOENIX LIFE INSURANCE COMPANY
By: /s/ Xxxx X. Xxxxx
--------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
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