EXHIBIT 4.1
EXHIBIT B
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RESTRICTED STOCK PURCHASE AGREEMENT
This Restricted Stock Agreement is made as of June 1, 2001, by DAOU
Systems, Inc., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇
("▇▇▇▇▇").
Background Statement
In connection with ▇▇▇▇▇'▇ providing services to the Company pursuant
to an Employment Agreement of even date herewith (the "Employment Agreement"),
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the Company's Board of Directors has granted to ▇▇▇▇▇ the right to purchase
2,500,000 shares of Common Stock of the Company, which are subject to a limited
repurchase right (such shares, as adjusted for stock splits, recapitalizations,
combinations and the like, are hereinafter referred to as the "Restricted
Shares"), at a purchase price of $ 0.29 per share.
Agreement
The parties, intending to be legally bound, agree as follows:
1. Grant of Award Subject to Right of Repurchase.
1.1 Stock Award. The Company hereby agrees to issue to ▇▇▇▇▇ 2,500,000
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Shares of its Common Stock upon his payment to the Company of the purchase price
therefor of $0.29 per share, which shall be paid through his execution and
delivery of the promissory note attached hereto. The Shares shall be subject to
the limitations provided below in this Section 1.
1.2 Scope of Repurchase Right. All of the Restricted Shares shall be
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subject to a limited right (but not an obligation) of repurchase by the Company
(the "Right of Repurchase"). ▇▇▇▇▇ shall not transfer, assign, encumber or
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otherwise dispose of any unvested Restricted Shares, except as provided in the
following sentence. ▇▇▇▇▇ may transfer any Restricted Shares, subject to the
Right of Repurchase, (i) by beneficiary designation, will or intestate
succession or (ii) to ▇▇▇▇▇'▇ spouse, children or grandchildren or to a trust or
family limited partnership established by ▇▇▇▇▇ for the benefit of ▇▇▇▇▇ or
▇▇▇▇▇'▇ spouse, children or grandchildren, provided in either case that the
Transferee agrees in writing on a form prescribed by the Company to be bound by
all provisions of this Agreement. If ▇▇▇▇▇ transfers any Restricted Shares, then
this Section 1 shall apply to the Transferee to the same extent as to ▇▇▇▇▇.
1.3 Condition Precedent to Exercise. The Right of Repurchase may be
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exercised at any time during the term hereof and for up to sixty (60) days
following the termination of Employee's employment during the Employment Period
as that term is defined in the Employment Agreement; provided that the Right of
Repurchase shall expire with respect to all Restricted Shares in the event that
during the Employment Period (i) the Company terminates ▇▇▇▇▇'▇ employment
without Cause (as defined in the Employment Agreement); or (ii) ▇▇▇▇▇ terminates
his employment with Good Reason (as defined in the Employment Agreement); or
(iii) or ▇▇▇▇▇'▇ employment terminates as a result of his Disability (as defined
in the Employment Agreement).
1.4 Lapse of Repurchase Right. ▇▇▇▇▇ shall acquire a vested interest
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in and the Company's Right of Repurchase shall lapse with respect to 1/36th of
the Restricted Shares upon ▇▇▇▇▇'▇ completion of each of the next thirty-six
(36) months of continuous Service after the date hereof, such that ▇▇▇▇▇ would
be fully vested in the Restricted Shares at the expiration of thirty-six (36)
months from the date hereof. The Right of Repurchase shall lapse with respect to
all remaining Restricted Shares if the Company is subject to a Change in Control
during the Employment Period (as defined in the Employment Agreement) before
▇▇▇▇▇'▇ employment terminates.
1.5 Repurchase Cost. If the Company exercises the Right of Repurchase,
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it shall pay ▇▇▇▇▇ an amount in cash or Cash Equivalents equal to $.29 per share
(equal to the purchase price) for each of the Restricted Shares being
repurchased. "Cash Equivalents" for purposes of this Agreement includes a
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reduction of all or part of any unpaid interest and principal of the above
referenced promissory note.
1.6 Exercise of Repurchase Right. The Right of Repurchase shall be
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exercisable only by written notice delivered to ▇▇▇▇▇ prior to the expiration of
the sixty (60) day period specified in Section 1.3 above. The notice shall set
forth the date on which the repurchase is to be effected. Such date shall not be
more than thirty (30) days after the date of the notice. The certificate(s)
representing the Restricted Shares to be repurchased shall, prior to the close
of business on the date specified for the repurchase, be delivered to the
Company properly endorsed for transfer. The Company shall, concurrently with the
receipt of such certificate(s), pay to ▇▇▇▇▇ the purchase price determined
according to Subsection 1.5 above. Payment shall be made in cash (or, in the
Company's sole discretion, by a reduction of any accrued and unpaid interest or
unpaid principal outstanding pursuant to the promissory note). The Right of
Repurchase shall terminate with respect to any Restricted Shares for which it
has not been timely exercised pursuant to this Subsection 1.6.
1.7 Additional Shares or Substituted Securities. In the event of the
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declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) that by reason of such transaction are
distributed with respect to any Restricted Shares or into which such Restricted
Shares thereby become convertible shall immediately be subject to the Right of
Repurchase. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the
Restricted Shares. After each such transaction, appropriate adjustments shall
also be made to the price per share to be paid upon the exercise of the Right of
Repurchase in order to reflect any change in the Company's outstanding
securities effected without receipt of consideration therefor; provided,
however, that the aggregate purchase price payable for the Restricted Shares
shall remain the same.
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1.8 Termination of Rights as Stockholder. If the Company makes
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available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Restricted Shares to be repurchased in
accordance with this Section 1, then after such time the person from whom such
Restricted Shares are to be repurchased shall no longer have any rights as a
holder of such Restricted Shares (other than the right to receive payment of
such consideration in accordance with this Agreement). Such Restricted Shares
shall be deemed to have been repurchased in accordance with the applicable
provisions hereof, whether or not the certificate(s) therefor have been
delivered as required by this Agreement.
1.9 Escrow. The certificate(s) for Restricted Shares shall be
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deposited in escrow with the Company to be held in accordance with the
provisions of this Agreement. Any new, substituted or additional securities or
other property described in Section 1.7 above shall immediately be delivered to
the Company to be held in escrow, but only to the extent the Shares are at the
time Restricted Shares. All regular cash dividends on Restricted Shares (or
other securities at the time held in escrow) shall be paid directly to ▇▇▇▇▇ and
shall not be held in escrow. Restricted Shares, together with any other assets
or securities held in escrow hereunder, shall be (i) surrendered to the Company
for repurchase and cancellation upon the Company's exercise of its Right of
Repurchase or (ii) released to ▇▇▇▇▇, within ten days of ▇▇▇▇▇'▇ request, to the
extent the Shares are vested, no longer subject to the repurchase right herein
and no longer pledged pursuant to that certain Stock Pledge Agreement, dated of
even date herewith by and between ▇▇▇▇▇ and the Company (the "Pledge Agreement")
(but not more frequently than once every six (6) months). In any event, all
Shares that have vested (and any other vested assets and securities attributable
thereto) and are no longer subject to the repurchase right and no longer pledged
pursuant to the Pledge Agreement, shall be released within sixty (60) days after
▇▇▇▇▇'▇ cessation of Service.
2. Representations of ▇▇▇▇▇. ▇▇▇▇▇ hereby represents, warrants,
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acknowledges, and agrees that ▇▇▇▇▇ has the power and authority to execute and
deliver this Agreement and to perform its obligations.
3. Representations of the Company. The Company hereby represents,
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warrants, acknowledges, and agrees that:
3.1 The Company has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Company, enforceable
in accordance with its terms and conditions. The Company need not give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
3.2 Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Company is subject.
3.3 When issued upon the terms and conditions of this Agreement (and
paid for as contemplated by this Agreement), the Shares will be validly issued
and fully paid and
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nonassessable, with no personal liability attached to the ownership thereof and
not subject to any preemptive rights, rights of first refusal or other similar
rights of the stockholders of the Company.
4. Miscellaneous.
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4.1 Market Stand-Off. In connection with any underwritten public
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offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act, ▇▇▇▇▇ shall not, without
the prior written consent of the Company's managing underwriter, (i) lend,
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock of the Company ("Stock") or any securities convertible
into or exercisable or exchangeable for Stock (whether such shares or any such
securities are then owned by ▇▇▇▇▇ or are thereafter acquired), or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Stock, whether any
such transaction described in clause (i) or (ii) above is to be settled by
delivery of Stock or such other securities, in cash or otherwise. Such
restriction (the "Market Stand-Off") shall be in effect for such period of time
following the date of the final prospectus for the offering as may be requested
by the Company or such underwriters. In no event, however, shall such period
exceed ninety (90) days. In the event of the declaration of a stock dividend, a
spin-off, a stock split, an adjustment in conversion ratio, a recapitalization
or a similar transaction affecting the Company's outstanding securities without
receipt of consideration, any new, substituted or additional securities that are
by reason of such transaction distributed with respect to any shares of Stock
subject to the Market Stand-Off, or into which such shares thereby become
convertible, shall immediately be subject to the Market Stand-Off. In order to
enforce the Market Stand-Off, the Company may impose stop-transfer instructions
with respect to the Stock until the end of the applicable stand-off period. The
Company's underwriters shall be beneficiaries of the Agreement set forth in this
Section 4.1. ▇▇▇▇▇ shall be subject to this Subsection 4.1 only if all of the
directors, officers and any five percent (5%) or greater shareholders of the
Company are subject to similar arrangements.
4.2 Rights of the Company. The Company shall not be required to (i)
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transfer on its books any Shares that have been sold or transferred in
contravention of this Agreement or (ii) treat as the owner of Shares, or
otherwise to accord voting, dividend or liquidation rights to, any transferee to
whom Shares have been transferred in contravention of this Agreement.
4.3 Successors and Assigns. Except as otherwise expressly provided to
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the contrary, the provisions of this Agreement shall inure to the benefit of,
and be binding upon, the Company and its successors and assigns and be binding
upon ▇▇▇▇▇ and ▇▇▇▇▇'▇ legal representatives, heirs, legatees, distributees,
assigns and transferees by operation of law, whether or not any such person has
become a party to this Agreement or has agreed in writing to join herein and to
be bound by the terms, conditions and restrictions hereof.
4.4 No Retention of Rights. Nothing in this Agreement shall confer
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upon ▇▇▇▇▇ any right to continue his employment for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Company (or any Parent or Subsidiary employing or retaining ▇▇▇▇▇) to terminate
▇▇▇▇▇'▇ employment at any time and for any reason, with or
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without cause, or of ▇▇▇▇▇ under any other Agreement between ▇▇▇▇▇ and the
Company, which rights are hereby expressly reserved by each.
4.5 Tax Election. Subjecting the Shares to a Right of Repurchase may
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result in adverse tax consequences that may be avoided or mitigated by filing an
election under Code Section 83(b) of the Internal Revenue Code of 1986, as
amended (the "Code"). Such election may be filed only within thirty (30) days
after the date of purchase. ▇▇▇▇▇ should consult with ▇▇▇▇▇'▇ tax advisor to
determine the tax consequences of subjecting the Shares to a Right of Repurchase
and the advantages and disadvantages of filing the Code Section 83(b) election.
▇▇▇▇▇ acknowledges that it is ▇▇▇▇▇'▇ sole responsibility, and not the
Company's, to file a timely election under Code Section 83(b), even if ▇▇▇▇▇
requests the Company or its representatives to make this filing ▇▇▇▇▇'▇ behalf.
4.6 Legend. All certificates evidencing Restricted Shares shall bear
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the following legends:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT
IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN
COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE
PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS
TO COMPANY CERTAIN REPURCHASE RIGHTS UPON TERMINATION OF
SERVICE WITH COMPANY. THE SECRETARY OF COMPANY WILL UPON
WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER
HEREOF WITHOUT CHARGE."
4.7 Notice. Any notice required by the terms of this Agreement shall
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be given in writing and shall be deemed effective upon personal delivery or upon
deposit with the United States Postal Service, by registered or certified mail,
with postage and fees prepaid. Notice shall be addressed to the Company at its
principal executive office and to ▇▇▇▇▇ at the address that ▇▇▇▇▇ most recently
provided to the Company.
4.8 Entire Agreement. This Agreement constitutes the entire contract
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between the parties hereto with regard to the subject matter hereof. It
supersedes any other agreements, representations or understandings (whether oral
or written and whether express or implied) relating to the subject matter
hereof.
4.9 Governing Law. This Agreement shall be governed by, and construed
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in accordance with, the laws of the State of California, as such laws are
applied to contracts entered into and to be performed entirely within such
State.
4.10 Amendments and Waivers. Any term of this Agreement may be amended
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and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company
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and the holders of a majority of the then outstanding shares of the Company's
capital stock that is not owned by ▇▇▇▇▇.
4.11 Severability. If one or more provisions of this Agreement are
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held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
4.12 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
COMPANY:
DAOU SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its: Chief Executive Officer
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▇▇▇▇▇:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇
Signature Page to Restricted Stock Agreement,
Executed August 1, 2001,
to be Effective as of the Date First Written Above
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EXHIBIT 1 to RESTRICTED STOCK AGREEMENT
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SPOUSE'S AGREEMENT
The undersigned, being the spouse ("Spouse") of _________________________ (the
"Investor"), agrees to be bound by the provisions of this Agreement to the
extent applicable to the undersigned.
Name:_______________________________________
IF THE INVESTOR IS AN INDIVIDUAL WHO IS LEGALLY DOMICILED OR A RESIDENT IN THE
STATE OF CALIFORNIA, OR ANY OTHER "COMMUNITY PROPERTY" STATE, THE SPOUSE OF THE
INVESTOR MUST CHECK ONE OF THE FOLLOWING:
_____ The Investor is acquiring the ____ The Investor is acquiring the
Shares as community property Shares as separate property
in one or both names (both (the Investor should consult
spouses must sign) independentcounsel in making a
determination as to whether he
is using separate property to
purchase the Shares)
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Signature of the Investor
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Type or print name of the Investor
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Signature of Spouse
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Type or print name of Spouse
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IF SEPARATE PROPERTY IS BEING USED TO PURCHASE THE SHARES, THE SPOUSE OF THE
INVESTOR MUST SIGN THE FOLLOWING ACKNOWLEDGEMENT:
I hereby acknowledge that my Spouse is making this investment in the Shares with
his separate property and funds.
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Signature of the Investor's Spouse
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Type or print name of the Investor's Spouse
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EXHIBIT 2 to RESTRICTED STOCK AGREEMENT
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Secured Promissory Note
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US$725,000.00 San Diego, California June 1, 2001
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Maker"), hereby
promises to pay to the order of DAOU Systems, Inc., a Delaware corporation (the
"Company"), the principal sum of Seven Hundred Twenty Five Thousand Dollars
($725,000) with interest on the unpaid balance thereof from the date that such
principal amount was advanced until maturity at the rate per annum equal to
6.75% (the "Applicable Rate") computed on the basis of a 365-day year and actual
days elapsed, both principal and interest payable as hereinafter provided in
lawful money of the United States of America at the offices of the Company in
San Diego, California, or at such other place as from time to time may be
designated by the holder of this Note.
The outstanding principal balance of this Note and accrued interest
thereon shall be due and payable in full on or before May 31, 2006.
Maker shall have the right to prepay, without penalty, upon ten (10)
business days' notice to the holder, at any time and from time to time prior to
maturity, all or any part of the unpaid principal balance of this Note.
All payments or prepayments received hereunder, shall first be applied
to any costs or expenses of enforcing this Note, next to accrued, but unpaid
interest, and then to unpaid principal.
It is the intent of the payee of this Note and the undersigned in the
execution of this Note to contract in strict compliance with applicable usury
law. In furtherance thereof, the said payee and the undersigned stipulate and
agree that none of the terms and provisions contained in this Note, or in any
other instrument executed in connection herewith, shall ever be construed to
create a contract to pay for the use, forbearance or detention of money,
interest at a rate in excess of the maximum interest rate permitted to be
charged by applicable law; that neither the undersigned nor any other parties
now or hereafter becoming liable for payment of this Note shall ever be
obligated or required to pay interest on this Note at a rate in excess of the
maximum interest that may be lawfully charged under applicable law; and that the
provisions of this paragraph shall control over all other provisions of this
Note and any other instruments now or hereafter executed in connection herewith
which may be in apparent conflict herewith. The term "applicable law" as used in
this Note shall mean the laws of the State of California or the laws of the
United States, whichever laws allow the greater rate of interest, as such laws
now exist or may be changed or amended or come into effect in the future.
This Note is secured pursuant to the terms of that certain Stock Pledge
Agreement, dated of even date herewith, by and between the Company and Maker,
pursuant to which Maker pledges to the Company, and grants the Company a
security interest in 2.5 million shares of the
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Company's common stock, par value $.001 per share (the "Pledged Shares"), issued
pursuant to that certain Stock Purchase Agreement of even date herewith, by and
between the Company and Maker, and any dividends or distribution received with
respect to, on account of, or in substitution for, the Pledged Shares.
Should the indebtedness represented by this Note or any part thereof be
collected at law or in equity or through any bankruptcy, receivership, probate
or other court proceedings or if this Note is placed in the hands of attorneys
for collection after default, the undersigned and all endorsers, guarantors and
sureties of this Note jointly and severally agree to pay to the holder of this
Note in addition to the principal and interest due and payable hereon all the
costs and expenses of said holder in enforcing this Note including, without
limitation, reasonable attorneys' fees and legal expenses.
All notices, consents, waivers, and other communications under this
Note must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by facsimile
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested or (c) when received by the addressee,
if sent by a nationally recognized overnight delivery service (receipt
requested), in each case to the appropriate addresses and facsimile numbers set
forth below (or to such other addresses and facsimile numbers as a party may
designate by notice to the other parties):
If to the Company: DAOU Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Maker: ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇-▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If any provision of this Note is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Note will remain
in full force and effect. Any provision of this Note held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
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This Note shall bind and inure to the benefit of the successors and
assigns of the holder of this Note.
This Note may not be amended except by means of a written agreement
signed by the holder of this Note and the Maker. No waiver of a right in any
instance shall constitute a continuing waiver of successive rights, and any one
waiver shall govern only the particular matters waived.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER SHALL BE
GOVERNED FOR ALL PURPOSES BY THE LAW OF THE STATE OF CALIFORNIA AND THE LAW OF
THE UNITED STATES APPLICABLE TO TRANSACTIONS WITHIN SUCH STATE.
"Maker"
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▇▇▇▇▇▇▇ ▇▇▇▇▇
Signature Page to Promissory Note
Executed August __, 2001,
to be Effective as of the Date First Written Above
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EXHIBIT 3 to RESTRICTED STOCK AGREEMENT
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STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement is entered into as of June 1, 2001 (the
"Effective Date"), by and among DAOU Systems, Inc., a Delaware corporation (the
"Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Pledgor"), with reference to the following
facts:
Background Statement
The Company has agreed to sell to Pledgor 2.5 million shares of the
Company's common stock, par value $.001 per share (the "Shares"), pursuant to
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that certain Stock Purchase Agreement, by and between the Company and Pledgor,
dated June 1, 2001 (the "Purchase Agreement").
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In addition the Company has agreed to loan to Pledgor $725,000 as
evidenced by that certain Secured Promissory Note (the "Note") dated June 1,
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2001.
As a material inducement for the Company to make the loan to Pledgor
and to enter into the Purchase Agreement, Pledgor has agreed to secure his
obligations under the Note by granting the Company a first priority security
interest in the Shares.
Agreement
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions contained herein, the parties hereby agree as follows:
1. Security. The term "Pledged Stock" shall mean the 2.5 million
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Shares registered in the name of Pledgor, together with all certificates,
options, rights or other distributions issued as an addition to, in substitution
or in exchange for, or on account of, any such Shares, and all proceeds of the
foregoing, as further described in and subject to the provisions of Section 4
below, now or hereafter owned or acquired by Pledgor.
2. Grant of Security Interest. As security for full and timely
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payment, performance and satisfaction of the Obligations (as defined in
Section 3), Pledgor hereby grant to the Company a first priority security
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interest in the Pledged Stock. Upon the execution hereof, the Pledged Stock and
any related stock powers will be deposited in escrow with the Company pursuant
to Section 1.9 of the Purchase Agreement.
3. Obligations of Pledgor. As used herein, the term "Obligations"
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shall mean all of Pledgor's obligations, covenants and agreements under the
Note.
4. Pledged Stock. In the event Pledgor will become entitled to
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receive or will receive, in connection with any of the Pledged Stock, (a) any
stock certificate, including any certificate representing a stock dividend or
any certificate in connection with any increase or
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reduction of capital, reclassification, merger, consolidation, sale of assets,
combination of shares, stock split or spin-off, (b) any option, warrant or
right, whether as an addition to or in substitution of any of the Pledged Stock,
or otherwise, (c) any dividend or distribution payable in property, including
securities issued as a dividend on the Pledged Stock, or (d) any other
distributions of any kind whatsoever, Pledgor will accept the same as encumbered
by the security interest created hereby, and will deliver the same forthwith to
the Company as the escrow agent (the "Escrow Agent"), in the exact form
received, including as appropriate, Pledgor's endorsement or appropriate stock
power duly executed in blank, as appropriate, to be held by the Escrow Agent, as
a part of the Pledged Stock, subject to the terms hereof; provided, however,
that as long as no Default (as defined in Section 7) is in existence, Pledgor
---------
will have sole voting rights with respect to the Pledged Stock.
5. Representations and Warranties of Pledgor. Pledgor warrants and
-----------------------------------------
represents to the Company that: (a) he has the power and authority to enter into
this Agreement and has the power and authority to pledge the Pledged Stock for
the purposes described herein, (b) Pledgor is the legal and beneficial owner of
all of the Pledged Stock, (c) all of the shares of the Pledged Stock are owned
by Pledgor free of any pledge, mortgage, lien or security interest of any kind,
except as created hereby, (d) the execution and delivery by Pledgor of this
Agreement, and the performance of its terms, will not result in any violation or
default under the terms of any agreement or instrument, or any law or
governmental rule or regulation applicable to Pledgor or the Pledged Stock, and
(e) upon execution and delivery by Pledgor of this Agreement and upon delivery
of the Pledged Stock to Escrow Agent, this Agreement will create a valid and
perfected first priority security interest in the Pledged Stock, and the
proceeds thereof, subject to no prior security interest.
6. Transfer of Interests. Pledgor hereby covenants that, until such
---------------------
time as the Obligations have been fully paid, performed and satisfied, except as
set forth in Section 1.2 of the Purchase Agreement, Pledgor will not sell,
convey or otherwise dispose of any of the Pledged Stock or any interest therein,
or create, incur or permit to exist any pledge, mortgage, lien, charge,
encumbrance or any security interest whatsoever in or with respect to any of the
Pledged Stock, or the proceeds thereof, other than the security interest created
hereby. No transfer shall be valid unless and until the transferee agrees that
such transfer is subject to the preexisting security interest created hereby and
such transferee executes a pledge agreement reasonably satisfactory to the
Company.
7. Default. As used herein, the term "Default" will mean the failure
------- -------
of full and timely payment or performance and satisfaction of any of the
Obligations.
8. Rights of the Company. Upon the occurrence of a Default, the
---------------------
Company may, at its option, do any one or more of the following: (a) declare all
indebtedness of Pledgor to Company to be immediately due and payable, whereupon
all unpaid principal and interest under the Note will become and be immediately
due and payable; (b) exercise any and all of the rights and remedies of a
secured party as provided for by law; (c) proceed by an action or actions at law
or in equity to recover the obligations secured hereby or to foreclose under the
terms of this Agreement and the Note and sell the collateral, or any portion
thereof, pursuant to a judgment or decree of a court or courts of competent
jurisdiction; (d) proceed immediately to have any or all of the Pledged Stock
registered in the Company's name or in the name of a nominee; (e) enforce
13
one or more remedies hereunder, successively or concurrently; and (f) proceed
immediately to dispose of and realize upon the Pledged Stock, or any part
thereof, and in connection therewith, sell or otherwise dispose of and deliver
the Pledged Stock, or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange, broker's board or at any of the
Company's offices or elsewhere, at such prices and on such terms as the Company
may deem best, for cash or on credit, or for future delivery without assumption
of any credit risk, with the right of the Company or any purchaser to purchase
at any such sale either the whole or any part of the Pledged Stock (in
connection with any such sale or disposition, the Company need not give more
than thirty (30) calendar days notice of the time and place of any public sale
or of the time after which a private sale may take place, which notice to
Pledgor hereby acknowledges to be reasonable).
9. Proceeds. The proceeds of any disposition of all or any part of
--------
the Pledged Stock, as provided in Section 8, will be applied as follows: (a)
---------
first, to the costs and expenses incurred in connection therewith or incidental
thereto, including the Company's attorneys' fees and legal expenses; (b) second,
to the satisfaction of the Obligations; (c) third, to the payment of any other
amounts required by applicable law; and (d) fourth, to Pledgor to the extent of
any surplus remaining. In the event that there is any deficiency due to the fact
that the proceeds from the aforesaid disposition of the Pledged Stock were
inadequate to satisfy the Obligations, Pledgor will not be liable to the Company
for such deficiency.
10. Private Sale. Pledgor recognize and acknowledge that the company
------------
may be unable to effect a public sale of all or a part of the Pledged Stock and
may elect to resort to one or more private sales to purchasers who will be
obligated to agree, among other things, to acquire the Pledged Stock for their
own account, for investment, and not with a view to the distribution or resale
thereof. Pledgor acknowledges that any such private sales may be at prices and
on terms less favorable than those of public sales, and agrees that such private
sales will be deemed to have been made in a commercially reasonable manner and
that the Company has no obligation to delay sale of any Pledged Stock to permit
Pledgor to register it for public sale under the Securities Act of 1933, as
amended.
11. Release of Pledged Stock. Upon the execution hereof, Pledgor will
------------------------
deliver to Escrow Agent the stock certificates representing the Pledged Stock,
including Pledgor's endorsement thereon or appropriate stock powers duly
executed in blank, as appropriate, to be held by the Escrow Agent in accordance
with the terms of this Agreement and Section 1.9 of the Purchase Agreement.
12. Performance by Pledgor. Upon full payment and performance of all
----------------------
of the Obligations by Pledgor and upon payment of all additional costs and
expenses provided herein, this Agreement will terminate, and the Company will
deliver or caused to be delivered to Pledgor, such of the Pledged Stock that has
not been sold or otherwise disposed of pursuant to this Agreement.
13. Remedies. The rights and remedies provided herein are cumulative
--------
and are in addition to, and not exclusive of, any rights or remedies provided in
other instruments and agreements between the Company and Pledgor, or as provided
by law.
14
14. Legend. As long as the shares are subject to this Agreement, such
------
shares shall bear the following legend:
THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THAT CERTAIN
STOCK PLEDGE AGREEMENT, DATED JUNE 1, 2001 BY AND BETWEEN DAOU
SYSTEMS, INC. AND ▇▇▇▇▇▇▇ ▇▇▇▇▇ AND MAY NOT BE ASSIGNED, SOLD
OR TRANSFERRED EXCEPT AS PROVIDED THEREIN.
15. Successors and Assigns. This Agreement is binding upon and will
----------------------
inure to the benefit of the parties hereto, and their successors and assigns.
16. Governing Law. This Agreement will be governed by and construed
-------------
in accordance with California law, without regards to the principles of the
conflict of laws.
17. Notices. All notices, consents, waivers, and other communications
-------
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by facsimile (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
If to Company: DAOU Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Pledgor: ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇-▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
15
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
18. Entire Agreement. This Agreement and any other agreement expressly
----------------
referred to herein supersedes any and all other agreements, either oral or in
writing, among the parties hereto, with respect to the subject matter hereof and
contains all of the covenants and agreements among the parties with respect to
the subject matter hereof.
19. Waiver; Modification. No term or condition of this Agreement will
--------------------
be deemed to have been waived nor will there by any estoppel to enforce any
provision of this Agreement except by written instrument of the party charged
with such waiver or estoppel. No amendment or modification of this Agreement
will be deemed effective unless and until executed in writing by all of the
parties hereto.
20. Severability. All agreements and covenants contained herein are
------------
severable and in the event that any of them will be held to be invalid by any
court of competent jurisdiction, this Agreement will be interpreted as if such
invalid agreements or covenants were not contained herein.
21. Delay; Time of Essence. No failure or delay by a party in
----------------------
exercising any right, power, or privilege hereunder will operate as a waiver
thereof, and no single or partial exercise thereof will preclude any other or
further exercise or the exercise of any other right, power, or privilege. Time
is of the essence of each and every provision of this Agreement of which time is
an element.
22. Attorneys' Fees. In any action or proceeding brought to enforce
---------------
or interpret any provision of this Agreement, the prevailing party will be
entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
16
IN WITNESS WHEREOF, the parties have executed this Stock Pledge
Agreement effective as of the date first written above.
Pledgor:
By:
--------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
The Company
DAOU Systems, Inc.
By:
--------------------------------------
Name:
------------------------------------
Its:
-------------------------------------
Signature Page to Stock Pledge Agreement,
Executed August __, 2001,
to be Effective as of the Date First Written Above
17
EXHIBIT 4 to RESTRICTED STOCK AGREEMENT
---------------------------------------
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of June 1, 2001, is among
DAOU Systems, Inc., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Investor")."
RECITALS
WHEREAS, the Company and the Investor are parties to that certain
Restricted Stock Agreement, dated June 1, 2001 (the "Purchase Agreement"); and
WHEREAS, the Parties desire to enter into an agreement concerning the
registration of the shares of common stock, par value $.001 per share (the
"Common Stock"), to be issued pursuant to the Purchase Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
REGISTRATION RIGHTS
1.1 Definitions. For purposes of this Agreement:
(a) the term "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a registration
statement or similar document in compliance with the
Securities Act of 1933, as amended (the "Act"), and the
declaration or ordering of effectiveness of such registration
statement or document;
(b) the term "Registrable Securities" means the Common Stock
issued pursuant to the Purchase Agreement, excluding in all
cases, however, any Registrable Securities sold by a person in
a transaction in which such person's rights under this Article
I are not assigned;
(c) the number of shares of "Registrable Securities then outstanding"
will be the number of shares of Common Stock outstanding which are
Registrable Securities;
(d) the term "Holder" means any person owning or having the right to
acquire Registrable Securities or any permitted assignee
thereof; and
(e) the term "Form S-1" means such form under the Act as in effect
on the date of this Agreement or any registration form under
the Act subsequently adopted by the Securities and Exchange
Commission ("SEC") which permits inclusion or incorporation of
substantial information by reference to other documents filed
by the Company with the SEC.
18
1.2 Form S-1 Registration.
As soon as reasonably practicable after the written request of the
Holders of a majority of the Registrable Securities, the Company shall file with
the SEC one or more Registration Statements on Form S-1 (or other similar form)
covering the continuous sale of the Registrable Securities pursuant to Rule 415
under the Securities Act or any successor thereto (each, a "Shelf Registration
Statement"), in the manner specified therein. The Company shall use all
reasonable efforts to cause each Shelf Registration Statement to be declared
effective by the SEC as soon as reasonably practicable after its filing with the
SEC, and upon reasonable notice from a Holder (and in any event no less than ten
(10) days) that the Holder intends to sell pursuant to a Shelf Registration
Statement, the Company will file such amendments and supplements as necessary to
update the Shelf Registration Statement so that it will be effective for any
such sale of Registrable Securities until the earlier of (x) such time as all of
the Registrable Securities are sold pursuant to such Shelf Registration
Statement or (y) each Holder is able to sell within any ninety (90) day period
all Registrable Securities owned by such Holder pursuant to SEC Rules as then in
effect, including Rule 144 under the Securities Act, or any successor thereto
("SEC Rule 144") (the "Effective Period"); provided that in the event that
Company determines in good faith that, because it has under consideration a
significant (as defined under Regulation S-X of the SEC) acquisition or
disposition or other material transaction or corporate event that has not been
publicly disclosed or that it is in the process of preparing for filing with the
SEC an Annual Report on Form 10-K, a Quarterly Report on Form 10-Q or a Current
Report on Form 8-K or other form, a Shelf Registration Statement may contain a
material misstatement or omission, the Company may cause such Shelf Registration
Statement to not be used during the period in question. The Company agrees it
will use its best efforts to ensure that such deferral will be for the shortest
period of time reasonably required not exceeding, in the aggregate, ninety (90)
days in any twelve (12) month period.
1.3 Company Registration.
In the event that (i) the Company fails to satisfy its obligations
pursuant to Section 1.2 or (ii) for any period of not less than thirty (30)
consecutive days a Shelf Registration Statement may not be used for any reason,
and if (but without any obligation to do so) the Company proposes to register
(including for this purpose a registration effected by the Company for
shareholders other than the Holders) any of its stock or other securities under
the Act in connection with the public offering of such securities solely for
cash (other than a registration relating solely to the sale of securities to
participants in a Company stock plan, or a registration on any form which does
not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Registrable
Securities), the Company will, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company in
accordance with Section 2.5, the Company will cause to be registered under the
Act all of the Registrable Securities that each such Holder has requested to be
registered.
19
1.4 Obligations of the Company.
Except as otherwise expressly specified in this Agreement, whenever
required under this Article I to effect the registration of any Registrable
Securities, the Company will, as expeditiously as reasonably practicable:
(a) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in
connection with such registration statement as may be
necessary to comply with the provisions of the Act with
respect to the disposition of all securities covered by such
registration statement.
(b) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may
reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.
(c) Use its best efforts to register and qualify the securities
covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as will be
reasonably requested by the Holders, provided that the Company
will not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
1.5 Furnish Information.
It will be a condition precedent to the obligations of the Company to
take any action pursuant to this Article I with respect to the Registrable
Securities of any selling Holder that such Holder will furnish to the Company
such information regarding itself, the Registrable Securities held by it, the
intended method of disposition of such securities and all of the other pertinent
information as will be required to effect the registration of such Holder's
Registrable Securities.
1.6 Expenses of Registration.
Subject to restrictions under applicable state securities laws, all
expenses other than underwriting discounts and commissions incurred in
connection with registrations, filings or qualifications pursuant to Sections
1.2 and 1.3, including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees, and fees and disbursements of
counsel for the Company and the reasonable fees and disbursements of one counsel
representing the Holders will be borne by the Company.
1.7 Indemnification. If any Registrable Securities are included in a
registration statement under this Article I:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, each of its directors and each of its
officers, any underwriter (as defined in the Act) for such Holder
and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), against any losses,
claims,
20
damages, or liabilities (joint or several) to which they may
become subject under the Act, or the Exchange Act, insofar as
such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration
statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements
thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make
the statements therein not misleading, or (iii) any violation or
alleged violation by the Company of the Act, the Exchange Act, or
any rule or regulation promulgated under the Act, or the Exchange
Act; and the Company will pay to each such Holder, director,
officer, underwriter or controlling person, any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity
agreement contained in this Subsection 1.7(a) will not apply to
amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the
consent of the Company (which consent will not be unreasonably
withheld), nor will the Company be liable in any such case for
any such loss, claim, damage, liability, or action to the extent
that it arises out of or is based upon a Violation which occurs
in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration
by any such Holder, director, officer, underwriter or controlling
person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement,
each person, if any, who controls the Company within the meaning
of the Act, any other Holder selling securities in such
registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages,
or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Act or the Exchange Act
insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity
with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder
will pay any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this Subsection
1.7(b), in connection with investigating or defending any such
loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Subsection 1.7(b)
will not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent will not be
unreasonably withheld; provided, that, in no event will any
indemnity under this Subsection 1.7(b) exceed the proceeds from
the offering net of sales commission, if any, received by such
Holder.
21
(c) Promptly after receipt by an indemnified party under this
Section 1.7 of notice of the commencement of any action
(including any governmental action), such indemnified party will,
if a claim in respect thereof is to be made against any
indemnifying party under this Section 1.7, deliver to the
indemnifying party a written notice of the commencement thereof
and the indemnifying party will have the right to participate in,
and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel satisfactory to the indemnified
party (which shall not unreasonably withhold its approval);
provided, however, that an indemnified party (together with all
other indemnified parties which may be represented without
conflict by one counsel) will have the right to retain one
separate counsel, with the reasonable fees and expenses to be
paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party is inappropriate due to actual or potential differing
interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, will relieve
such indemnifying party of any liability to the indemnified party
under this Section 1.7, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise
than under this Section 1.7.
(d) If the indemnification provided for in this Section 1.7 is held
by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim,
damage, or expense referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party to this
Agreement, will contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim,
damage, or expense 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 that resulted in such loss,
liability, claim, damage, or expense as well as any other
relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party will be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied
by the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) The obligations of the Company and Holders under this Section
1.7 will survive the completion of any offering of Registrable
Securities in a registration statement under this Article I,
and otherwise.
1.8 Reports Under 1934 Act.
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Act and any other rule or regulation of the SEC that may
at any time permit a Holder to
22
sell securities of the Company to the public without registration or pursuant to
a registration on Form S-1, the Company will:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the Exchange
Act; and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of
SEC Rule 144, the Act and the Exchange Act, or that it qualifies
as a registrant whose securities may be resold pursuant to Form
S-3 (at any time after it so qualifies), (ii) a copy of the most
recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested in availing any
Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant
to such form.
1.9 Rule 144 Availability.
Notwithstanding anything to the contrary above in this Article I, prior
to exercising any right provided for in this Article I each Holder will (i)
evaluate in good faith whether such Holder is otherwise permitted to sell the
entire amount of Registrable Securities it is then seeking to register within
the time period it desires to sell pursuant to Rule 144 of the Exchange Act, or
any successor regulation thereto and (ii) exercise such rights only in the case
that it determines in good faith that such rights are necessary to sell such
Registrable Securities in a timely manner.
ARTICLE II
MISCELLANEOUS
2.1 Successors and Assigns.
Except as otherwise provided in this Agreement, the terms and
conditions of this Agreement will inure to the benefit of and be binding upon
the respective successors and assigns of the parties (including transferees of
any shares of Registrable Securities). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties to this
Agreement or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
2.2 Governing Law.
This Agreement will be governed by and construed under the laws of the
State of Delaware.
23
2.3 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.
2.4 Titles and Subtitles.
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
2.5 Notices.
Unless otherwise provided, any notice required or permitted under this
Agreement will be given in writing and will be deemed effectively given upon
personal delivery to the party to be notified, by telecopy upon the appropriate
answer-back, or upon deposit with the United States Post Office, by registered
or certified mail, postage prepaid and addressed to the party to be notified at
the address indicated for such party on Schedule 1 or at such other address as
such party may designate by ten (10) days' advance written notice to the other
parties.
2.6 Expenses.
If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the prevailing party will be entitled to reasonable
attorneys' fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
2.7 Amendments and Waivers.
Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Holders of a majority of the Registrable
Securities then outstanding. Any amendment or waiver effected in accordance with
this paragraph will be binding upon each Holder of any Registrable Securities
then outstanding, each future Holder of all such Registrable Securities, and the
Company.
2.8 Severability.
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision will be excluded from this
Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
2.9 Aggregation of Stock.
All shares of Registrable Securities held or acquired by affiliated
entities or persons will be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
24
2.10 Entire Agreement, Amendment, Waiver.
This Agreement (including the Schedules to this Agreement, if any)
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects of this Agreement and thereof.
2.11 Adjustments for Stock Splits.
Wherever in this Agreement there is a reference to a specific number of
shares of Common Stock of the Company of any class or series, or a reference to
any amount of dollars per any such share, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or series of stock, the
specific number of shares or the specific dollar amount so referenced in this
Agreement will automatically be proportionately adjusted to reflect the effect
on the outstanding shares of such class of series of stock by such subdivision,
combination or stock dividend.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY:
DAOU SYSTEMS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
THE INVESTOR:
--------------------------------------------
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Signature Page to Registration Rights Agreement,
Executed August __, 2001,
to be Effective as of the Date First Written Above
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EXHIBIT 4.1
SCHEDULE 1
INVESTOR
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NAME AND ADDRESS
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▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇-▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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