EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT dated
as of September 15, 1997, among BMJ
MEDICAL MANAGEMENT, INC. (formerly
known as Bone, Muscle and Joint,
Inc.), a Delaware corporation (the
"Company"), and HEALTHCARE
FINANCIAL PARTNERS, INC., a
Delaware corporation (together with
any successors, or permitted
assigns or transferees, the
"Holders").
The Holders own or have the right to purchase or otherwise acquire shares
of the Common Stock, $.001 par value (the "Common Stock"), of the Company. The
Company and the Holders deem it to be in their respective best interests to set
forth the rights of the Holders in connection with public offerings and sales of
the Common Stock. The Secured Term Note was subject to the execution and
delivery of this Agreement.
In consideration of the premises and mutual covenants and obligations
hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Commission" shall mean the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934 or any
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Holders" shall have the meaning set forth in the caption hereof and shall
include the Holders that agree in writing to be treated as Holders pursuant to
this Agreement and to be bound by the terms and comply with all applicable
provisions hereof.
"Other Shares" shall mean at any time those shares of Common Stock that do
not constitute Primary Shares or Registrable Shares.
"Primary Shares" shall mean at any time the authorized but unissued shares
of Common Stock or shares of Common Stock held by the Company in its treasury.
"Registrable Shares" shall mean the shares of Common Stock held by the
Holders that constitute Restricted Shares.
"Registration Date" shall mean the date upon which the registration
statement pursuant to which the Company shall have initially registered shares
of Common Stock under the Securities Act for sale to the public shall have been
declared effective.
"Restricted Shares" shall mean the shares of Common Stock or any other
securities which by their terms are exercisable or exchangeable for or
convertible into Common Stock and any securities received in respect thereof,
which are held by an Holders and which have not theretofore been sold to the
public pursuant to a registration statement under the Securities Act or pursuant
to Rule 144.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act or any
successor rule thereto or any complementary rule thereto (such as Rule 144A).
"Secured Term Note" shall mean the Secured Term Note dated as of the date
hereof between HCFP Funding, Inc., a Delaware corporation, and the Company.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Transfer" shall mean any disposition of any Restricted Shares or of any
interest therein that would constitute a sale thereof within the meaning of the
Securities Act other than any such disposition pursuant to an effective
registration statement under the Securities Act and complying with all
applicable state securities and "blue sky" laws.
"Venture Capitalists" means Xxxxxx Xxxxxx and those venture capital firms
that have acquired, prior to the date hereof, and may acquire, at any time
hereafter, securities of the Company and in connection with such acquisition
have obtained or may obtain registration rights.
"Venture Capital Shares" means the shares of Common Stock or any other
securities which by their terms are exercisable or exchangeable for or
convertible into Common Stock and any securities received in respect thereof,
which are held by a Venture Capitalist and which have not theretofore been sold
to the public pursuant to a registration statement under the Securities Act or
pursuant to Rule 144.
SECTION 2. Piggyback Registration. If, at any time during the period
beginning on the date hereof and ending on the earlier to occur of (a) September
15, 2007, and (b) five (5)
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years after the effective date of the initial public offering of the Company's
Common Stock, the Company proposes for any reason to register Primary Shares or
Other Shares under the Securities Act (other than on Form S-4 or Form S-8
promulgated under the Securities Act or any successor forms thereto), it shall
promptly give written notice to all holders of outstanding Registrable Shares of
its intention so to register the Primary Shares or Other Shares and, upon the
written request, given within 30 days after delivery of any such notice by the
Company, of the holders of Registrable Shares to include in such registration
Registrable Shares held by such holders (which request shall specify the number
of Registrable Shares proposed to be included in such registration), the Company
shall use its best efforts to cause all such Registrable Shares to be included
in such registration on the same terms and conditions as the securities
otherwise being sold in such registration; provided, however, that if the
managing underwriter advises the Company that the inclusion of all such
Registrable Shares or Other Shares proposed to be included in such registration
would interfere with the successful marketing (including pricing) of Primary
Shares proposed to be registered by the Company, then the number of Primary
Shares, Registrable Shares and Other Shares proposed to be included in such
registration shall be included in the following order:
(i) first, the Primary Shares;
(ii) second, the Venture Capital Shares requested to be included in
such registration by the Venture Capitalists (pro rata based on
the number of Venture Capital Shares held by all Venture
Capitalists requesting inclusion of Venture Capital Shares in
such registration);
(iii) third, the Registrable Shares requested to be included in such
registration by the Holders (pro rata based on the number of
Restricted Shares held by all Holders requesting inclusion of
Registrable Shares in such registration); and
(iv) fourth, the Other Shares (other than already included herein) in
such proportion as shall be determined by the Company.
SECTION 3. Condition to Registration Obligations. The Corporation shall not
be obligated to effect the registration of the Registrable Shares pursuant to
Section 2 unless each of the Holders electing to participate in such
registration executes a power of attorney, custody arrangement and other
documents customary in such transactions and reasonably required by the managing
underwriter thereof prior to the filing of the registration statement.
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SECTION 4. Holdback Agreement. If the Company at any time shall register
shares of Common Stock under the Securities Act (including any registration
pursuant to Section 2) for sale to the public, the Holders shall not sell
publicly, make any short sale of, grant any option for the purchase of, or
otherwise dispose publicly of, any Restricted Shares (other than those shares of
Common Stock included in such registration pursuant to Section 2) without the
prior written consent of the Company for a period designated by the Company in
writing to the holders of Registrable Shares, which period shall not begin more
than 10 days prior to the effectiveness of the registration statement pursuant
to which such public offering shall be made and shall not last more than 180
days after the effective date of such registration statement. Notwithstanding
anything contained in this Section 4, in the event that any Holder requests to
be included in such registration and is not so included as a result of the
priority of inclusion set forth in Section 2 hereof, the provisions of this
Section 4 shall not, with respect to such registration, be applicable to such
Holder.
SECTION 5. Preparation and Filing. If and whenever the Company is under an
obligation pursuant to the provisions of this Agreement to use its best efforts
to effect the registration of any Registrable Shares, the Company shall, as
expeditiously as practicable:
(a) use its best efforts to cause a registration statement that
registers such Registrable Shares to become and remain effective for a
period of 90 days (or 12 months for registrations on Form S-3 or successor
form) or until all of such Registrable Shares have been disposed of (if
earlier);
(b) furnish, at least five business days before filing a registration
statement that registers such Registrable Shares, a prospectus relating
thereto or any amendments or supplements relating to such a registration
statement or prospectus, to one counsel selected by the holders of a
majority in interest of Registrable Shares (the Holders' Counsel"), copies
for review and comment during such five days of all such documents proposed
to be filed (it being understood that such five-business-day period need
not apply to successive drafts of the same document proposed to be filed so
long as such successive drafts are supplied to the Holders' Counsel in
advance of the proposed filing by a period of time that is customary and
reasonable under the circumstances);
(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for at least a period of 90 days (or 12 months for
registrations
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on Form S-3 or successor form) or until all of such Registrable Shares have
been disposed of (if earlier) and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of such
Registrable Shares and furnish copies of all such amendments and
supplements to Holders' Counsel;
(d) notify in writing the Holders' Counsel promptly (i) of the receipt
by the Company of any notification with respect to any comments by the
Commission relating to such registration statement or prospectus or any
amendment or supplement thereto or any request by the Commission for the
amendment or supplement thereof or for additional information with respect
thereto, (ii) of the receipt by the Company of any notification with
respect to the issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or prospectus or any amendment
or supplement thereto or the initiation or threatening of any proceeding
for that purpose and (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification of such
Registrable Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purposes and furnish copies of all
such notices to Holders' Counsel;
(e) use its best efforts to register or qualify such Registrable
Shares under such other securities or "blue sky" laws of such jurisdictions
as the Holders reasonably request and do any and all other acts and things
which may be reasonably necessary or advisable to enable the holders of
Registrable Shares to consummate the disposition in such jurisdictions of
such Registrable Shares; provided, however, that the Company will not be
required to qualify generally to do business, subject itself to general
taxation or consent to general service of process in any jurisdiction where
it would not otherwise be required to do so but for this paragraph (e);
(f) furnish to the holders of Registrable Shares such number of copies
of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and
such other documents as the holders of Registrable Shares may reasonably
request in order to facilitate the public sale or other disposition of such
Registrable Shares;
(g) use its best efforts to cause such Registrable Shares to be
registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of
the Company to enable the holders of Registrable Shares to consummate the
disposition of such Registrable Shares;
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(h) notify the holders of Registrable Shares on a timely basis at any
time when a prospectus relating to such Registrable Shares is required to
be delivered under the Securities Act within the appropriate period
mentioned in subparagraph (a) of this Section 5, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing and, at the request of the holders of
Registrable Shares, prepare and furnish to the holders of Registrable
Shares a reasonable number of copies of a supplement to or amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
offerees of such shares, such prospectus shall not include 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 not
misleading in light of the circumstances then existing;
(i) make available for inspection by the holders of Registrable
Shares, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained
by the holders of Registrable Shares or any underwriter (collectively, the
"Inspectors"), all pertinent 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,
directors and employees to supply all information (together with the
Records, the "Information") reasonably requested by any such holders of
Registrable Shares in connection with such registration statement. Any of
the Information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified,
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Information is necessary to avoid or correct a misstatement or omission in
the registration statement, (ii) the release of such Information is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction or (iii) such Information has been made generally available to
the public. The holders of Registrable Shares agree that they will, upon
learning that disclosure of such Information is sought in a court of
competent jurisdiction, give notice to the Company and allow the Company,
at the Company's expense, to undertake appropriate action to prevent
disclosure of the Information deemed confidential;
(j) use its best efforts to obtain from its independent certified
public accountants "cold comfort"
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letters in customary form and at customary times and covering matters of
the type customarily covered by cold comfort letters;
(k) use its best efforts to obtain from its counsel an opinion or
opinions in customary form;
(l) provide a transfer agent and registrar (which may be the same
entity and which may be the Company) for such Registrable Shares;
(m) issue to any underwriter to which the holders of Registrable
Shares may sell shares in such offering certificates evidencing such
Registrable Shares;
(n) list such Registrable Shares on any national securities exchange
on which any shares of the Common Stock are listed or, if the Common Stock
is not listed on a national securities exchange, use its best efforts to
qualify such Registrable Shares for inclusion on the automated quotation
system of the National Association of Securities Dealers, Inc. (the
"NASD"), or such other national securities exchange as the holders of a
majority of the Registrable Shares shall request;
(o) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission and make available to its
securityholders, as soon as reasonably practicable, earnings statements
(which need not be audited) covering a period of 12 months beginning within
three months after the effective date of the registration statement, which
earnings statements shall satisfy the provisions of Section 11(a) of the
Securities Act; and
(p) use its best efforts to take all other steps necessary to effect
the registration of such Registrable Shares contemplated hereby.
SECTION 6. Expenses. All expenses incurred by the Company in complying with
Section 5, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the NASD), fees and expenses of
complying with securities and "blue sky" laws, printing expenses, and fees and
expenses of the Company's counsel, shall be paid by the Company; provided,
however, that all underwriting discounts and selling commissions applicable to
the Registrable Shares shall not be borne by the Company but shall be borne by
the holders of Registrable Shares in proportion to the number of Registrable
Shares sold by each of them.
SECTION 7. Indemnification. In connection with any registration of any
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company shall indemnify and hold
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harmless the holders of Registrable Shares, each underwriter, broker or any
other person acting on behalf of the holders of Registrable Shares and each
other person, if any, who controls any of the foregoing persons within the
meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several (or actions in respect thereof), to which any of
the foregoing persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the registration statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein or otherwise filed
with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, with respect to any prospectus, necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, or any violation by the Company of the Securities Act or state
securities or "blue sky" laws applicable to the Company and relating to action
or inaction required of the Company in connection with such registration or
qualification under such state securities or blue sky laws; and shall reimburse
the holders of Registrable Shares, such underwriter, such broker or such other
person acting on behalf of the holders of Registrable Shares and each such
controlling person for any legal or other expenses reasonably incurred by any of
them in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
preliminary prospectus, final prospectus, amendment, supplement or document
incident to registration or qualification of any Registrable Shares in reliance
upon and in conformity with written information furnished to the Company through
an instrument duly executed by the holders of Registrable Shares or underwriter
specifically for use in the preparation thereof.
In connection with any registration of Registrable Shares under the
Securities Act pursuant to this Agreement, each holder of Registrable Shares
shall indemnify and hold harmless (in the same manner and to the same extent as
set forth in the preceding paragraph of this Section 7) the Company, each
director of the Company, each officer of the Company who shall sign such
registration statement, each underwriter, broker or other person acting on
behalf of the holders of Registrable Shares and each person who controls any of
the foregoing persons within the meaning of the Securities Act with respect to
any statement or
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omission from such registration statement, any preliminary prospectus or final
prospectus contained therein or otherwise filed with the Commission, any
amendment or supplement thereto or any document incident to registration or
qualification of any Registrable Shares, if such statement or omission was made
in reliance upon and in conformity with written information furnished to the
Company or such underwriter through an instrument duly executed by such holder
of Registrable Shares specifically for use in connection with the preparation of
such registration statement, preliminary prospectus, final prospectus,
amendment, supplement or document; provided, however, that the maximum amount of
liability in respect of such indemnification shall be limited, in the case of
each seller of Registrable Shares, to an amount equal to the net proceeds
actually received by such seller from the sale of Registrable Shares effected
pursuant to such registration.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 7, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice to the latter
of the commencement of such action. In case any such action is brought against
an indemnified party, the 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 after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof; provided, however, that if any indemnified party shall have
reasonably concluded that there may be one or more legal or equitable defenses
available to such indemnified party which are additional to or conflict with
those available to the indemnifying party, or that such claim or litigation
involves or could have an effect upon matters beyond the scope of the indemnity
agreement provided in this Section 7, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party
and such indemnifying party shall reimburse such indemnified party and any
person controlling such indemnified party for that portion of the fees and
expenses of any counsel retained by the indemnified party which is reasonably
related to the matters covered by the indemnity agreement provided in this
Section 7.
If the indemnification provided for in this Section 7 is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to
any loss, claim, damage, liability or action referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amounts paid or payable by such
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indemnified party as a result of such loss, claim, damage, liability or action
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions which resulted in such loss, claim,
damage, liability or action as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party 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 the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
SECTION 8. Underwriting Agreement. Notwithstanding the provisions of
Sections 4, 5, 6, and 7, to the extent that the holders of Registrable Shares
shall enter into an underwriting or similar agreement, which agreement contains
provisions covering one or more issues addressed in such Sections, the
provisions contained in such Sections addressing such issue or issues shall be
of no force or effect with respect to such registration.
SECTION 9. Information by Holders. Each of the holders of Registrable
Shares proposing to sell the same pursuant to a registration to which this
Agreement relates shall furnish to the Company such written information
regarding the holders of Registrable Shares and the distribution proposed by
such holders of Registrable Shares as the Company may reasonably request in
writing and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement.
SECTION 10. Exchange Act Compliance. From the Registration Date or such
earlier date as a registration statement filed by the Company pursuant to the
Exchange Act relating to any class of the Company's securities shall have become
effective, the Company shall comply with all of the reporting requirements of
the Exchange Act (whether or not it shall be required to do so) and shall comply
with all other public information reporting requirements of the Commission which
are conditions to the availability of Rule 144 for the sale of the Common Stock.
The Company shall cooperate with the holders of Registrable Shares in supplying
such information as may be necessary for such holders to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the availability of Rule 144.
SECTION 11. No Conflict of Rights. The Company represents and warrants to
the holders of Registrable Shares that the registration rights granted
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to the holders of Registrable Shares hereby do not conflict with any other
registration rights granted by the Company. The Company shall not, after the
date hereof, grant any registration rights which conflict with or impair the
registration rights granted hereby.
SECTION 12. Termination. This Agreement shall terminate and be of no
further force or effect when there shall not be any Restricted Shares.
SECTION 13. Successors and Assigns. This Agreement shall bind and inure to
the benefit of the Company and the holders of Registrable Shares and, subject to
Section 14, the respective successors and assigns of the Company and holders of
Registrable Shares.
SECTION 14. Assignment. Each holder of Registrable Shares may assign its
rights hereunder to any purchaser or transferee acquiring all of such holder's
Restricted Shares; provided, however, that such purchaser or transferee shall,
as a condition to the effectiveness of such assignment, be required to execute a
counterpart to this Agreement agreeing to be treated as the seller or transferor
hereunder whereupon such purchaser or transferee shall have the benefits of, and
shall be subject to the restrictions contained in, this Agreement.
SECTION 15. Entire Agreement. This Agreement, the Secured Term Note, the
Common Stock Purchase Warrant, and the other writings referred to therein or
delivered pursuant thereto, contain the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior and contemporaneous
arrangements or understandings with respect thereto.
SECTION 16. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
(a) if to the Company, to:
BMJ Medical Management, Inc.
0000 X. Xxxxxxx Xxxxxxx
Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: President
Telecopier: (000) 000-0000;
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with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.;
Telecopier: (000) 000-0000; and
(b) if to any Holders, to the address of such Holders set forth on
Schedule I hereto.
All such notices, requests, consents and other communications shall be deemed to
have been delivered and received (a) in the case of personal delivery or
delivery by telecopier, on the date of such delivery, (b) in the case of
dispatch by nationally-recognized overnight courier, on the next business day
following such dispatch and (c) in the case of mailing, on the third business
day after the posting thereof.
SECTION 17. Modifications; Amendments; Waivers. The terms and provisions of
this Agreement may not be modified or amended, nor may any provision be waived,
except pursuant to a writing signed by the Company and the Holders; provided,
however, that the Company may amend Schedule I hereto to reflect any changes to
the Holders and the Registrable Shares owned by each such Holder.
SECTION 18. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
SECTION 19. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
SECTION 20. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether in the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first written above.
BMJ MEDICAL MANAGEMENT, INC.
(formerly known as Bone, Muscle and
Joint, Inc.)
By:_______________________________
Xxxxx X. Xxxxx
Executive Vice President
and Chief Financial Officer
HEALTHCARE FINANCIAL PARTNERS, INC.
By:_______________________________
Name:
Title:
SCHEDULE I
Holders
Health Care Financial Partners, Inc.
0 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
President
Telecopier: (000) 000-0000
