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"), Brantley Partners IV, L.P., a Delaware limited
partnership
("Brantley"), and Phoenix Life Insurance Company, a New York
corporation
("Phoenix," and sometimes together with Brantley 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.
"Brantley" 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.
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"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
