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EXHIBIT 10.18(B)
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
January __, 2001, is made and entered into by and between PracticeWorks, Inc., a
Delaware corporation (the "Company"), and Crescent International Ltd., an entity
organized and existing under the laws of Bermuda (the "Investor").
WHEREAS, the Company and the Investor have entered into that certain
Stock Purchase Agreement, dated as of January __, 2001 (the "Stock Purchase
Agreement"), pursuant to which the Company will issue, from time to time, to the
Investor and the Investor shall purchase up to $35,000,000 worth of shares of
common stock, par value $0.01 per share, of the Company (the "Common Stock");
WHEREAS, pursuant to the terms of and in partial consideration for the
Investor entering into the Stock Purchase Agreement, the Company may be required
to issue to the Investor an incentive warrant, exercisable from time to time
within five years following the date of issuance (the "Incentive Warrant") for
the purchase of a number of shares of Common Stock at a price to be determined
as described in such Incentive Warrant;
WHEREAS, pursuant to the terms of and in partial consideration for the
Investor entering into the Stock Purchase Agreement, the Company may be required
to issue protective warrants to the Investor, each of which may become
exercisable from time to time as described in such warrants and in the Stock
Purchase Agreement (collectively, the "Protective Warrants" and together with
the Incentive Warrant, the "Warrants") for the purchase of a number of shares of
Common Stock and at a price to be determined as described in each such
Protective Warrant;
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor's agreement to enter into the Stock Purchase Agreement, the Company
has agreed to provide the Investor with certain registration rights as described
herein;
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, in the Warrants, and in
the Stock Purchase Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, intending to be legally
bound hereby, the parties hereto agree as follows (capitalized terms used herein
and not defined herein shall have the respective meanings ascribed to them in
the Stock Purchase Agreement):
ARTICLE I
REGISTRATION RIGHTS
Section 1.1. REGISTRATION STATEMENTS.
a. Filing of Registration Statements. The Company shall
register for resale all Commitment Shares issued or issuable to the Investor
pursuant to the Stock Purchase Agreement
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and all Warrant Shares issued or issuable upon full exercise of the Warrants.
Subject to the terms and conditions of this Agreement, the Company shall effect
such registration in the manner provided below:
(i) First Registration Statement. On or before
the end of the 20 calendar day period immediately
following the First Sale, the Company shall file with
the SEC a registration statement (the "First
Registration Statement") on Form S-3 if such form is
then available to the Company and, if not, on such
form promulgated by the SEC for which the Company
qualifies, that counsel for the Company shall deem
appropriate and which form shall be available for the
sale of all First Sale Shares, the Incentive Warrant
Shares and any Protective Warrant Shares, in
accordance with the intended method of distribution
of such securities. The aggregate number of shares to
be registered under the First Registration Statement
shall be equal to two hundred percent (200%) of the
First Sale Shares plus the number of Incentive
Warrant Shares;
(ii) Subsequent Registration Statements.
(1) If the Company shall pursuant to
any Subsequent Sale require the Investor to
purchase shares of Common Stock not
previously registered and not covered by an
effective Registration Statement filed with
the SEC and which is not a Failed
Registration Statement (as hereinafter
defined) (an "Unregistered Sale"), then on
or before the end of a 20 calendar day
period immediately following each Closing
Date relating to each such Subsequent Sale,
the Company shall file with the SEC a
registration statement (each a "Subsequent
Registration Statement" and together with
the First Registration Statement and any
other registration statement covering
Registrable Securities or otherwise required
to be filed by the Company with the SEC as
provided in this Agreement, the
"Registration Statements" or each, a
"Registration Statement") on Form S-3 if
such form is then available to the Company
and, if not, on such form promulgated by the
SEC for which the Company qualifies, that
counsel for the Company shall deem
appropriate and which form shall be
available for the sale of the Subsequent
Sale Shares purchased by the Investor and
any Warrant Shares that have not been
previously registered, in accordance with
the intended method of distribution of such
securities. The aggregate number of shares
to be registered under each Subsequent
Registration Statement shall be equal to two
hundred percent (200%) of the number of
Subsequent Sale Shares purchased by the
Investor on the applicable Closing Date plus
any Warrant Shares not previously
registered;
(2) Prior to any Subsequent Sale which
is not an Unregistered Sale, the Company
shall file with the SEC a Subsequent
Registration Statement on Form S-3 if such
form is then available
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to the Company and, if not, on such form
promulgated by the SEC for which the Company
qualifies, that counsel for the Company
shall deem appropriate and which form shall
be available for the sale of the shares of
Common Stock to be purchased by the Investor
and any Warrant Shares which have not
previously been registered, in accordance
with the intended method of distribution of
such securities. The aggregate number of
shares to be registered under such
Subsequent Registration Statement shall be
determined by the Company.
b. Effectiveness of the Registration Statements. The
following conditions for effectiveness shall apply to the Registration
Statements required to be filed by the Company with the SEC pursuant to
paragraph (a) above, without limiting the Company's obligation to file such
Registration Statements. The Company shall use its best efforts: (i) to have the
First Registration Statement declared effective by the SEC in no event later
than 120 calendar days after the Closing Date relating to the First Sale and
(ii) to have each Subsequent Registration Statement declared effective by the
SEC in no event later than 60 calendar days after the Closing Date relating to
each Unregistered Sale and in any event prior to any further Subsequent Sales.
The Company shall ensure that all Registration Statements and any amendments
thereto remain in effect for a period ending 180 days following the later of (1)
the date of expiration of the Incentive Warrant Exercise Period (as such term is
defined in the Incentive Warrant) if the Incentive Warrant has not been
exercised in full and (2) the date all Registrable Securities issued or issuable
to the Investor pursuant to the Stock Purchase Agreement may be sold by the
Investor without registration and without any time, volume or manner limitations
pursuant to Rule 144(k) (or any similar provision then in effect) under the
Securities Act; provided that such period shall be extended one day for each day
after the applicable Effective Date that any Registration Statement covering
Registrable Securities is not effective during the period such Registration
Statement is required to be effective pursuant to this Agreement; and provided
further that the Company shall not be required to ensure that any Registration
Statement covering Registrable Securities remain in effect for such period if
the shares registered thereunder shall have become freely tradable pursuant to
Rule 144(k) of the Securities Act as such Rule may be amended from time to time,
or have otherwise been sold.
c. Failure to Obtain or Maintain Effectiveness of
Registration Statements.
(i) In the event the Company fails for any
reason to obtain the effectiveness of any Registration Statement within the time
periods set forth in Section 1.1(b) (a "Tardy Registration Statement") or in the
event that the Company fails for any reason to maintain the effectiveness of any
Registration Statement (or the underlying prospectus) covering Registrable
Securities for the time period set forth in Section 1.1(b) (an "Ineffective
Registration Statement" together with a Tardy Registration Statement, a "Failed
Registration Statement") (unless the Registrable Securities covered by such
Registration Statement shall have become freely tradable pursuant to Rule 144(k)
of the Securities Act or have been otherwise sold), then, in either event an
amount equal to two percent (2.0%) of the aggregate Purchase Price of all of the
Registrable Securities covered by any such Failed Registration Statement then
held by the Investor for each calendar month and for each portion of a calendar
month, pro rata, (the "Failed Registration Statement Fee") during any period of
such ineffectiveness (an "Ineffective Period") shall become due and payable to
the Investor.
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(ii) If Failed Registration Statement Fees accrue with
respect to any Ineffective Registration Statement, payment of such Failed
Registration Statement Fees shall be made on the first Trading Day after the
earlier to occur of (1) the expiration of the applicable Ineffective Period and
(2) the last day of each calendar month during an Ineffective Period.
d. Failure to Register Sufficient Number of Shares. If
the number of Protective Warrant Shares, if any, included in the First
Registration Statement or each Subsequent Registration Statement is less than
the total number of Protective Warrant Shares issuable upon exercise at the
Exercise Price (as such term is defined in each Protective Warrant) (such
deficit in the number of shares is referred to herein as the "Deficit Shares"),
then (i) the Company shall immediately amend such Registration Statement (or
file a new Registration Statement) to cover the Deficit Shares (such amended or
new Registration Statement is referred to herein as a "Deficit Shares
Registration Statement") and (ii) the Company shall pay to the Investor in
immediately available funds into an account designated by the Investor an amount
equal to 2.0% of the product of (x) the number of Deficit Shares multiplied by
(y) the Bid Price of the Common Stock on the applicable Effective Date, for each
calendar month and for each portion of a calendar month, pro rata, during the
period from the Effective Date of the applicable Registration Statement to the
Effective Date of the applicable Deficit Shares Registration Statement.
e. Liquidated Damages. The Company and the Investor
hereby acknowledge and agree that the sums payable under subsections 1.1(c) and
1.1(d) hereof shall constitute liquidated damages and not penalties. The parties
further acknowledge that (i) the amount of loss or damages likely to be incurred
is incapable or is difficult to estimate precisely, (ii) the amounts specified
in such subsections bear a reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred in connection with
any failure by the Company to obtain or maintain the effectiveness of a
Registration Statement, (iii) one of the reasons for the Company and the
Investor reaching an agreement as to such amounts was the uncertainty and cost
of litigation regarding the question of actual damages, and (iv) the Company and
the Investor are sophisticated business parties and have been represented by
sophisticated and able legal and financial counsel and negotiated this Agreement
at arm's length.
ARTICLE II
REGISTRATION PROCEDURES
Section 2.1. FILINGS; INFORMATION. The Company will effect the
registration of the Registrable Securities in accordance with the intended
methods of disposition thereof as furnished to the Company by any proposed
seller of such Registrable Securities. Without limiting the foregoing, the
Company in each such case will do the following as expeditiously as possible,
but in no event later than the deadline, if any, prescribed therefor in this
Agreement:
a. The Company shall (i) prepare and file with the SEC
the Registration Statement(s) covering the shares as described in subsection
1.1(a) above; (ii) use its best efforts to cause such filed Registration
Statement(s) to become and remain effective (pursuant to Rule 415 under the
Securities Act or otherwise) for the period prescribed by Section 1.1(b); (iii)
prepare and file with the SEC such amendments and supplements to each
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep each Registration Statement effective for the time period
prescribed by Section 1.1(b); and (iv) comply with the
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provisions of the Securities Act with respect to the disposition of all
securities covered by each Registration Statement during such period in
accordance with the intended methods of disposition by the Investor set forth in
each Registration Statement.
b. The Company shall file all necessary amendments to
each Registration Statement in order to effectuate the purpose of this
Agreement, the Stock Purchase Agreement, and the Warrants.
c. Five Trading Days prior to filing each Registration
Statement or prospectus, or any amendment or supplement thereto (excluding
amendments deemed to result from the filing of documents incorporated by
reference therein), the Company shall deliver to the Investor and one firm of
counsel representing the Investor, in accordance with the notice provisions of
Section 4.8, copies of such Registration Statement as proposed to be filed,
together with exhibits thereto, which documents will be subject to review and
comment by the Investor and such counsel, and thereafter deliver to the Investor
and such counsel, in accordance with the notice provisions of Section 4.8, such
number of copies of such Registration Statement, each amendment and supplement
thereto (in each case including all exhibits thereto), the prospectus included
in such Registration Statement (including each preliminary prospectus) and such
other documents or information as the Investor or counsel reasonably may request
in order to facilitate the disposition of the Registrable Securities.
d. The Company shall deliver, in accordance with the
notice provisions of Section 4.8, to each broker as directed by the Investor
such number of conformed copies of such Registration Statement and of each
amendment and supplement thereto (in each case including all exhibits and
documents incorporated by reference), such number of copies of the prospectus
contained in such Registration Statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424
promulgated under the Securities Act relating to the Registrable Securities, and
such other documents, as may be reasonably requested to facilitate the
disposition of the Registrable Securities.
e. After the filing of each Registration Statement, the
Company shall promptly notify the Investor of any stop order issued or
threatened by the SEC in connection therewith and take all commercially
reasonable actions required to prevent the entry of such stop order or to remove
it if entered.
f. The Company shall use its best efforts to (i)
register or qualify the Registrable Securities under such other securities or
blue sky laws of such jurisdictions in the United States as the Investor
reasonably (in light of its intended plan of distribution) may request, and (ii)
cause the Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable the
Investor to consummate the disposition of the Registrable Securities; provided,
however, that the Company will not be required to qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this paragraph (f), subject itself to taxation in any such jurisdiction,
or consent or subject itself to general service of process in any such
jurisdiction.
g. The Company shall immediately notify the Investor,
but in no event later than two (2) business days by facsimile and by overnight
courier, upon the occurrence of any of the
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following events in respect of a Registration Statement or related prospectus in
respect of an offering of Registrable Securities: (i) receipt of any request for
additional information by the SEC or any other federal or state governmental
authority during the period of effectiveness of the Registration Statement for
amendments or supplements to the Registration Statement or related prospectus;
(ii) the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose; (iii) receipt
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in such
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of a Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related prospectus, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; (v) the declaration by the SEC of the effectiveness of a
Registration Statement; and (vi) the Company's reasonable determination that a
post-effective amendment to the Registration Statement would be appropriate, and
the Company promptly shall make available to the Investor any such supplement or
amendment to the related prospectus.
h. The Company shall enter into customary agreements and
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities (whereupon the
Investor, at its option, may require that any or all of the representations,
warranties and covenants of the Company also be made to and for the benefit of
the Investor).
i. The Company shall make available to the Investor (and
will deliver to Investor's counsel), subject to restrictions imposed by the
United States government or any agency or instrumentality thereof, copies of all
correspondence between the SEC and the Company, concerning any Registration
Statement, and also will make available for inspection by the Investor and any
attorney, accountant or other professional retained by the Investor
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers and employees to supply all
information reasonably requested by any Inspectors in connection with any
Registration Statement. Records that the Company determines, in good faith, to
be confidential and that it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or (ii) the disclosure or release of such Records is requested or
required pursuant to oral questions, interrogatories, requests for information
or documents or a subpoena or other order from a court of competent jurisdiction
or other process; provided, however, that prior to any disclosure or release
pursuant to clause (ii), the Inspectors shall provide the Company with prompt
notice of any such request or requirement so that the Company may seek an
appropriate protective order or waive such Inspectors'
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obligation not to disclose such Records; and, provided, further, that if failing
the entry of a protective order or the waiver by the Company permitting the
disclosure or release of such Records, the Inspectors, upon advice of counsel,
are compelled to disclose such Records, the Inspectors may disclose that portion
of the Records that counsel has advised the Inspectors that the Inspectors are
compelled to disclose. The Investor agrees that information obtained by it
solely as a result of such inspections (not including any information obtained
from a third party who, insofar as is known to the Investor after reasonable
inquiry, is not prohibited from providing such information by a contractual,
legal or fiduciary obligation to the Company) shall be deemed confidential and,
if material non-public information, the Investor shall not while in possession
of such information engage in market transactions in the securities of the
Company or its Affiliates unless and until such information is made generally
available to the public. The Investor further agrees that, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, it
will give notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential.
j. To the extent required by law or reasonably necessary
to effect a sale of Registrable Securities in accordance with prevailing
business practices at the time of any sale of Registrable Securities pursuant to
a Registration Statement, the Company shall deliver to the Investor a signed
counterpart, addressed to the Investor, of (1) an opinion or opinions of counsel
to the Company and (2) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering such matters
of the type customarily covered by opinions of comfort letters, as the case may
be, as the Investor therefor reasonably requests.
k. The Company otherwise shall comply with all
applicable rules and regulations of the SEC, including, without limitation,
compliance with applicable reporting requirements under the Exchange Act.
l. The Company shall appoint a transfer agent and
registrar for all of the class that includes the Registrable Securities covered
by a Registration Statement not later than the applicable Effective Date of a
Registration Statement.
m. The Company may require the Investor to furnish
promptly in writing to the Company such information as may be legally required
in connection with any registration including, without limitation, all such
information as may be requested by the SEC or the National Association of
Securities Dealers, Inc. (the "NASD"). The Investor agrees to provide such
information requested in connection with any registration within ten Trading
Days after receiving such written request and the Company shall not be
responsible for any delays in obtaining or maintaining the effectiveness of a
Registration Statement caused by the Investor's failure to timely provide such
information. Each seller of Registrable Securities shall notify the Company as
promptly as practicable of any inaccuracy or change in information previously
furnished by such seller to the Company or of the occurrence of any event, in
either case as a result of which any prospectus relating to the Registrable
Securities contains or would contain an untrue statement of a material fact
regarding such seller or its intended method of disposition of such Registrable
Securities or omits to state any material fact regarding such seller or such
seller's intended method of disposition of such Registrable Securities required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which
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they were made, not misleading, and promptly furnish to the Company any
additional information required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with respect
to such seller or the disposition of such Registrable Securities, an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Section 2.2. REGISTRATION EXPENSES.
a. In connection with each Registration Statement, the
Company shall pay all registration expenses incurred in connection with the
registration thereunder (the "Registration Expenses"), including, without
limitation: (i) all registration, filing, securities exchange listing and fees
required by NASD, (ii) all registration, filing, qualification and other fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities required hereby), (iii) all of the
Company's word processing, duplicating, printing, messenger and delivery
expenses, (iv) the Company's internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), (v) the fees and expenses incurred by the Company in
connection with the listing of the Registrable Securities, (vi) reasonable fees
and disbursements of counsel for the Company and, subject to paragraph (b)
below, the Investor and customary fees and expenses for independent certified
public accountants retained by the Company (including the expenses of any
special audits or comfort letters or costs associated with the delivery by
independent certified public accountants of such special audit(s) or comfort
letter(s) requested pursuant to Section 2.1(j) hereof), (vii) the fees and
expenses of any special experts retained by the Company in connection with such
registration, (viii) premiums and other costs of policies of insurance purchased
at the discretion of the Company against liabilities arising out of any public
offering of the Registrable Securities being registered, and (ix) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting fees, discounts, transfer taxes or
commissions, if any, attributable to the sale of Registrable Securities, which
shall be payable by each holder of Registrable Securities pro rata on the basis
of the number of Registrable Securities of each such holder that are included in
a registration under this Agreement.
b. In addition, the Company shall pay all reasonable
fees and expenses of counsel for the Investor incurred in connection with the
review, and assistance in preparation, of the Registration Statement, unless a
greater amount is required due to the nature of the review performed by
Investor's counsel or the extent of assistance provided by Investor's counsel
(an estimate of such greater fees and expenses of such firm of counsel to the
Investor shall be provided to the Company prior to the undertaking of such
counsel's additional review or assistance), provided that such fees shall be
applied toward the $50,000 maximum set forth in Section 10.1(b) of the Stock
Purchase Agreement.
Section 2.3. BLACKOUT PERIOD. Upon receipt of a written notice
from the Company stating that an event of the kind described in Section
2.1(g)(iv) has occurred and the number of calendar days following the date of
the notice on or before which the Company shall deliver a supplemented or
amended prospectus contemplated by Section 2.1(g)(iv) (such number of days set
forth in such notice, the "Delivery Period"), the Investor shall discontinue the
Investor's offer of the Registrable Securities pursuant to each Registration
Statement relating to
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such Registrable Securities until the Investor shall have received copies of the
supplemented or amended prospectus contemplated by Section 2.1(g)(iv) (the
number of calendar days from and including the date of delivery of such notice
until delivery of such prospectuses, the "Blackout Period") and, if so directed
by the Company, will deliver to the Company (at the Company's expense) all
copies other than permanent file copies then in the Investor's possession of the
prospectus relating to such Registrable Securities at the time of receipt of
such notice. The Company may not deliver more than two such notices during any
twelve calendar month period. The Company shall set the length of each Delivery
Period such that the following sum shall not exceed 120 calendar days: (x) the
number of days in all prior Blackout Periods in the twelve calendar month period
ending on the last day of such proposed Delivery Period, plus (y) the number of
days in such proposed Delivery Period. If the Company shall fail to deliver a
supplemented or amended prospectus contemplated by Section 2.1(g)(iv) before the
expiration of the applicable Delivery Period, the Company shall pay to the
Investor an amount equal to two percent (2.0%) per calendar month (pro rated for
portions thereof) of the aggregate purchase price of all Registrable Securities
beginning on the first day following expiration of the applicable Delivery
Period and ending on the expiration date of the applicable Blackout Period (the
"Blackout Fee"). The Company shall pay Blackout Fees on the first Trading Day
after the earlier to occur of (1) the expiration of the applicable Blackout
Period and (2) the last day of each calendar month during a Blackout Period. In
the event that the Investor uses a prospectus in connection with the offering
and sale of any of the Registrable Securities covered by such prospectus, the
Investor will use only the latest version of such prospectus provided by the
Company to the Investor.
ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
Section 3.1. INDEMNIFICATION
a. The Company agrees to indemnify and hold harmless the
Investor, its partners, Affiliates, officers, directors, employees and duly
authorized agents, and each Person or entity, if any, who controls the Investor
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, together with the partners, Affiliates, officers, directors,
employees and duly authorized agents of such controlling Person or entity
(collectively, the "Investor Controlling Persons"), from and against any and all
losses, claims, damages, liabilities, costs and expenses (including, without
limitation, any and all reasonable attorneys' fees and disbursements and costs
and expenses of investigating and defending any such claim and any and all
amounts paid in settlement of, any action, suit or proceeding between any of the
indemnified parties and any indemnifying parties or between any indemnified
party and any third party, or otherwise, or any claim asserted) (collectively,
"Damages"), joint or several, and any action or proceeding in respect thereof to
which the Investor, its partners, Affiliates, officers, directors, employees and
duly authorized agents, and any Investor Controlling Person, becomes subject to
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, as and when incurred, insofar as
such Damages (or actions or proceedings in respect thereof) (i) arise out of, or
are based upon, any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement, or in any preliminary prospectus,
final prospectus, summary prospectus, documents filed under the Exchange Act and
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deemed to be incorporated by reference into any Registration Statement,
application or other document executed by or on behalf of the Company or based
on written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Registrable Securities under the securities
or blue sky laws thereof or filed with the SEC, amendment or supplement relating
to the Registrable Securities or (ii) arise out of, or are based upon, any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
shall reimburse the Investor, its partners, Affiliates, officers, directors,
employees and duly authorized agents, and each such Investor Controlling Person,
for any legal and other expenses reasonably incurred by the Investor, its
partners, Affiliates, officers, directors, employees and duly authorized agents,
or any such Investor Controlling Person, as incurred, in investigating or
defending or preparing to defend against any such Damages or actions or
proceedings; provided, however, that the Company shall not be liable to the
extent that any such Damages arise out of the Investor's failure to send or give
a copy of the final prospectus or supplement at or prior to the written
confirmation of the sale of Registrable Securities to the persons asserting an
untrue statement or alleged untrue statement or omission or alleged omission at
or prior to the written confirmation of the sale of Registrable Securities to
such person if such statement or omission was corrected in such final prospectus
or supplement, and provided that the Investor had been obligated under
applicable law to deliver such final prospectus or supplement to such person;
provided, further, that the Company shall not be liable to the extent that any
such Damages arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such Registration
Statement, or any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by the Investor or any other person
who participates as a seller or as an underwriter in the offering or sale of
such securities, in either case, in any questionnaire or other request by the
Company, or otherwise specifically stating that it is for use in the preparation
thereof, and provided that such written information furnished to the Company by
the Investor, or any other person who participates as a seller or as an
underwriter in the offering or sale of such securities, is not materially
altered by the Company.
b. The Investor agrees to indemnify and hold harmless
the Company, its Affiliates, officers, directors, employees, and duly authorized
agents, and each Person or entity, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
together with the Affiliates, officers, directors, employees and duly authorized
agents of such controlling Person or entity (collectively, the "Company
Controlling Persons") from and against any Damages, joint or several, and any
action in respect thereof to which the Company, its Affiliates, officers,
directors, employees, and duly authorized agents, and any Company Controlling
Person becomes subject to under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise, as and
when incurred, insofar as such Damages (or actions or proceedings in respect
thereof) arise out of an untrue statement or alleged untrue statement or
omission or alleged omission made in a Registration Statement, or any
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by the Investor in any questionnaire or other request by the
Company, or otherwise specifically stating that it is for use in the preparation
thereof; provided, however, that such written information furnished to the
Company by the Investor is not materially altered by the Company.
Notwithstanding the foregoing, the Investor shall in no event
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be required to indemnify the Company for any amount in excess of the amount by
which the total price at which the Registrable Securities of the Investor were
sold to the public (less underwriting discounts and commissions) exceeds the
amount actually paid by the Investor under the Stock Purchase Agreement for such
Registrable Securities sold to the public.
c. All claims for indemnification shall be asserted and
resolved as set forth in Section 9.2 of the Stock Purchase Agreement, except
that for the purposes of claims for indemnification pursuant to this Agreement
the last sentence of Section 9.2(a)(i) of the Stock Purchase Agreement shall
read as follows: "Notwithstanding the foregoing, the Indemnified Party may take
over the control of the defense or settlement of a Third Party Claim at any time
if it irrevocably waives its right to indemnity under Section 9.1 of this
Agreement and contribution under Section 3.4 of the Registration Rights
Agreement with respect to such Third Party Claim."
Section 3.2. ARBITRATION. Any controversy, claim or dispute
arising out of or in connection with this Agreement, including any question
regarding its existence, validity, interpretation, breach, or termination, shall
be referred to and finally resolved in accordance with Section 9.3 of the Stock
Purchase Agreement.
Section 3.3. OTHER INDEMNIFICATION. Indemnification similar to
that specified in the preceding paragraphs of this Article III (with appropriate
modifications) shall be given by the Company with respect to any required
registration or other qualification of securities under any federal or state law
or regulation of any governmental authority other than the Securities Act. The
provisions of this Article III shall be in addition to any other rights to
indemnification, contribution or other remedies which an Indemnified Party may
have pursuant to law, equity, contract or otherwise.
Section 3.4. CONTRIBUTION. If the indemnification and
reimbursement obligations provided for in any section of this Article III is
unavailable or insufficient to hold harmless the Indemnified Parties in respect
of any Damages referred to herein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Damages as between the
Company on the one hand and the Investor or seller on the other, in such
proportion as is appropriate to reflect the relative fault of the Company and of
the Investor or seller in connection with such statements or omissions, as well
as other equitable considerations. The relative fault of the Company on the one
hand and of the Investor or seller on the other shall 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 party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Investor agree that it would not be just and
equitable if contribution pursuant to this Section 3.4 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 immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
Damages referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 3.4, the Investor or seller shall in no event be required to contribute
any amount in excess of the amount by which the total price at
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which the Registrable Securities of the Investor were sold to the public (less
underwriting discounts and commissions) and less the amount actually paid by the
Investor under the Stock Purchase Agreement for such Registrable Securities sold
to the public exceeds the amount of any damages which the Investor has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
ARTICLE IV
MISCELLANEOUS
Section 4.1. OUTSTANDING REGISTRATION RIGHTS. The Company
represents and warrants to the Investor that, except as set forth on Schedule
4.1 included in the Company Disclosure Letter attached hereto, there is not in
effect on the date hereof any agreement by the Company pursuant to which any
holders of securities of the Company have a right to cause the Company to
register or qualify such securities under the Securities Act or any securities
or blue sky laws of any jurisdiction. The Company hereby covenants and agrees
that until 60 calendar days after the Registration Statement has been declared
effective by the SEC it will not, without the prior written consent of the
Investor, enter into or amend any agreement by the Company pursuant to which any
holders of securities of the Company have a right to cause the Company to
register or qualify securities under the Securities Act or any securities or
blue sky laws of any jurisdiction; provided, however, that the foregoing shall
not apply to (i) to a Third Party Sale (as such term is defined in the Stock
Purchase Agreement) for which the Investor has elected not to exercise its right
of first refusal pursuant to Section 6.12 of the Stock Purchase Agreement or
(ii) in connection with an acquisition of another entity or assets related to
the Company's current or future business.
Section 4.2. TERM. The registration rights provided to the holders
of Registrable Securities hereunder shall terminate at such time as all
Registrable Securities have been issued and have ceased to be Registrable
Securities. Notwithstanding the foregoing, paragraph (c) of Section 1.1, Article
III, Section 4.8, and Section 4.9 shall survive the termination of this
Agreement.
Section 4.3. RULE 144. If the Company is required to file reports
under the Exchange Act, the Company will file in a timely manner, information,
documents and reports in compliance with the Securities Act and the Exchange Act
and, at its expense, promptly will take such further action as holders of
Registrable Securities reasonably may request to enable such holders of
Registrable Securities to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities Act ("Rule 144"), as such Rule may be amended from time
to time, or (b) any similar rule or regulation hereafter adopted by the SEC. If
at any time the Company is not required to file such reports, it will, at its
expense, forthwith upon the written request of any holder of Registrable
Securities who intends to make a sale under Rule 144, make available adequate
current public information with respect to the Company within the meaning of
paragraph (c)(2) of Rule 144 or such other information as necessary to permit
sales pursuant to Rule 144. Upon the request of the Investor, the Company will
deliver to the Investor a written statement, signed by the Company's principal
financial officer, as to whether it has complied with such
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requirements. This Section 4.3 shall terminate at the same time as the
registration rights as provided in Section 4.2.
Section 4.4. CERTIFICATE. The Company will, at its expense,
promptly upon the request of any holder of Registrable Securities, deliver to
such holder a certificate, signed by the Company's principal financial officer,
stating (a) the Company's name, address and telephone number (including area
code), (b) the Company's Internal Revenue Service identification number, (c) the
Company's SEC file number, (d) the number of shares of each class of stock
outstanding as shown by the most recent report or statement published by the
Company, and (e) whether the Company has filed the reports required to be filed
under the Exchange Act for a period of at least ninety (90) days prior to the
date of such certificate and in addition has filed the most recent annual report
required to be filed thereunder.
Section 4.5. AMENDMENT AND MODIFICATION. Any provision of this
Agreement may be waived, provided that such waiver is set forth in a writing
executed by both parties to this Agreement. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
holders of a majority of the then outstanding Registrable Securities.
Notwithstanding the foregoing, the waiver of any provision hereof with respect
to a matter that relates exclusively to the rights of holders of Registrable
Securities whose securities are being sold pursuant to a Registration Statement
and does not directly or indirectly affect the rights of other holders of
Registrable Securities may be given by holders of at least a majority of the
Registrable Securities being sold by such holders; provided that the provisions
of this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence. No course
of dealing between or among any Person having any interest in this Agreement
will be deemed effective to modify, amend or discharge any part of this
Agreement or any rights or obligations of any person under or by reason of this
Agreement.
Section 4.6. SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
The Investor may assign its rights under this Agreement to any subsequent holder
the Registrable Securities, provided that the Company shall have the right to
require any holder of Registrable Securities to execute a counterpart of this
Agreement and agree to be bound by the provisions of this Agreement as a
condition to such holder's claim to any rights hereunder. This Agreement,
together with the Stock Purchase Agreement, the Warrants and the exhibits and
schedules to such agreements together set forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.
Section 4.7. SEVERABILITY. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
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Section 4.8. NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and shall be (i) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (ii) delivered by reputable air courier
service with charges prepaid, or (iii) transmitted by hand delivery, telegram or
facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the third business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses and facsimile numbers for such communications
shall be:
If to the Company:
PracticeWorks, Inc.
0000 Xxx Xxxxxxxx, Xxxxx 000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx III
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to the Investor:
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
00, xx Xxxxx-Xxxxx
0000 Xxxxxx, Xxxxxxxx
Xxxxxxxxxxx
Attention: Xxx Xxxx/Maxi Brezzi
Telephone: x00 00 000 00 00
Facsimile: x00 00 000 00 00
with a copy (which shall not constitute notice) to:
Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
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Attention: Xxxx X. Xxxxx, Esq./Xxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either party hereto may from time to time change its address or
facsimile number for notices under this Section 4.8 by giving at least
10 days' prior written notice of such changed address or facsimile
number to the other party hereto.
Section 4.9. GOVERNING LAW. This Agreement shall be construed
under the laws of the State of New York.
Section 4.10. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.
Section 4.11. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed to be an original
instrument and all of which together shall constitute one and the same
instrument.
Section 4.12. FURTHER ASSURANCES. Each party shall cooperate and
take such action as may be reasonably requested by another party in order to
carry out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
Section 4.13. ABSENCE OF PRESUMPTION. This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
Section 4.14. REMEDIES. In the event of a breach or a threatened
breach by any party to this Agreement of its obligations under this Agreement,
any party injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
including monetary damages, for breach of any such provision may be inadequate
compensation for any loss.
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IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date first set forth above.
CRESCENT INTERNATIONAL LTD.
By:
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GreenLight (Switzerland) S.A. as Investor's manager
Name:
Title:
PRACTICEWORKS, INC.
By:
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Name:
Title:
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