EXHIBIT 2.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated the 24th of January,
2003, between COLORADO MEDTECH, INC., a Colorado corporation (the "Holder") and
HEI, INC., a Minnesota corporation (the "Company").
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the Holder is receiving from the Company, pursuant to a Purchase
Agreement dated the __ of January, 2003 (the "Purchase Agreement"), shares of
Common Stock of the Company (the "Shares"); and
WHEREAS, the Company desires to grant to the Holder the
registration rights set forth herein with respect to the Shares;
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term "Registrable
Security" means the Shares; provided, however, that with respect to any
particular Registrable Security, such security shall cease to be a Registrable
Security when (i) it has been effectively registered under the Securities Act,
and disposed of pursuant thereto, (ii) registration under the Securities Act is
no longer required for the immediate public distribution of such security as a
result of the provisions of Rule 144 promulgated under the Securities Act, or
(iii) it has ceased to be outstanding. In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock of the Company, such adjustment shall be
made in the definition of "Registrable Security" as is appropriate in order to
prevent any reduction, dilution or enlargement of the rights granted pursuant to
this Agreement.
Section 2. Registration Rights.
(a) Notice of Company Registration; Piggyback Rights.
(i) Notice of Company Registration. If at any time
the Company shall determine to register any of its Common
Stock, either for its own account or the account of a holder
or holders of its Common Stock, other than (i) a registration
relating solely to employee benefit plans, or (ii) a
registration relating solely to a Commission to Rule 145
transaction, the Company will promptly give to each Holder
written notice thereof.
(ii) Piggyback Registration Rights. In the event of a
registration requiring notice under Section 2(a)(i) (Notice of
Company Registration), the Company shall include in such
registration (and any related qualification under blue sky
laws or other compliance), and in any underwriting involved
therewith, all the Registrable Securities specified in a
written request or requests, made within 20 days after receipt
of such written notice from the Company, by the Holder. If, at
any time after giving written notice of its intention to
register any shares of Common Stock and prior to
(iii) the effective date of the registration
statement filed in connection with such registration, the
Company shall determine for any reason not to register or to
delay registration of such Common Stock, the Company shall
give written notice of such determination to the Holder and
(i) in the case of a determination not to register, shall be
relieved of its obligation to register any Registrable
Securities in connection with such abandoned registration and
(ii) in the case of a determination to delay such registration
of such shares of Common Stock, shall be permitted to delay
the registration of such Registrable Securities for the same
period as the delay in registering such other shares of Common
Stock.
(b) Company Obligation to Register the Shares. The Company shall use
its reasonable best efforts to file a registration statement registering the
Shares as soon as possible following the date hereof. The Company shall use its
reasonable best efforts to cause that the registration becomes effective 120
days following the date hereof. For every full month such effectiveness is
delayed, except if such delay is because of causes outside the control of the
Company, the Company shall pay the Holder a penalty of $30,000. Furthermore, in
the event of any such delay, and if on the 270th day after the closing of the
transactions contemplated by the Purchase Agreement of even date herewith
between the parties, the Holder owns ten percent (10%) of the Company's
outstanding Common Stock, the Holder shall be entitled to designate one member
of the Board of Directors of the Company, and the Company shall use its best
efforts to effect such appointment as quickly as possible, provided that such
designee of the Holder agrees to offer his/her resignation from the Company's
Board of Directors within five (5) days of the date that the Holder ceases to
own at least five percent (5%) of the Company's outstanding Common Stock.
Notwithstanding the foregoing, this Section 2(b) shall not apply if at any time
the Holder owns less than three percent (3%) of the issued and outstanding
Common Stock of the Company. Notwithstanding anything herein to the contrary,
this right to designate a member of the Company's Board of Directors shall be
non-assignable.
Section 3. Cooperation with Company. The Holder will cooperate with the
Company in all respects in connection with this Agreement, including timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
Section 4. Registration Procedures. If and whenever the Company is
required by the provisions of this Agreement to use reasonable best efforts to
effect the registration of any Registrable Securities under the Securities Act,
the Company shall (except as otherwise provided in this Agreement):
(a) prepare and file with the Commission such amendments and
supplements to the registration statement and the Prospectus as may be necessary
to keep the registration effective and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all securities
covered by the registration statement whenever the Holder of the Registrable
Securities shall desire to sell or otherwise dispose of the same (including
prospectus supplements with respect to the sales of securities from time to time
pursuant to Rule 415 promulgated under the Securities Act);
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(b) furnish to the Holder such numbers of copies of the Prospectus,
including any amendment or supplement thereto, in conformity with the
requirements of the Act, as the Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Securities
owned by the Holder;
(c) use its reasonable best efforts to register and qualify the
Registrable Securities covered by the registration statement under such other
securities or blue sky laws of such jurisdictions as the Holder shall reasonably
request (subject to the limitations set forth in Section 2(c) above), and do any
and all other acts and things which may be necessary or advisable to enable the
Holder to consummate the public sale or other disposition in such jurisdiction
of the Registrable Securities owned by the Holder, except that the Company shall
not for any such purpose be required to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified or to file
therein any general consent to service of process;
(d) use its reasonable best efforts to list the Registrable Securities
on the Nasdaq National Market or other national securities exchange on which any
securities of the Company are then listed, if the listing of such securities is
then permitted under the rules of Nasdaq or of such exchange;
(e) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering; and
(f) notify the Holder, at any time when a Prospectus relating thereto
covered by the registration statement is required to be delivered under the
Securities Act, of the happening of any event of which it has knowledge as a
result of which the Prospectus included in the 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 the light of the circumstances then existing.
Section 5. Underwriting. (a) If any registration pursuant to this
Agreement involves an underwriting, the Company shall so advise the Holder. In
such event, the right of the Holder to registration shall be conditioned upon
Holder's participation in such underwriting and the inclusion of Registrable
Securities in the underwriting to the extent provided herein. If the Holder
proposes to distribute its Registrable Securities through an underwriting, it
shall together with the Company and any other holders distributing their shares
of Common Stock through such underwriting enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by the Company. Notwithstanding any other provision of Section 2 (Registration
Rights), but subject to the Co-Sale rights of the Holder under the Purchase
Agreement of even date herewith between the parties, if the managing underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten, the managing underwriter may limit the Registrable
Securities and other securities to be included in such registration. The Company
shall so advise all holders distributing their securities through such
underwriting and the number of Registrable Securities and other securities that
may be included in the registration and underwriting shall be allocated (subject
to pre-existing obligations of the Company and provided that, notwithstanding
anything herein to the contrary,
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the rights and obligations in this sentence shall not be assignable) (i) first,
to the Holder to the maximum amount of Registrable Securities held by the Holder
at the time of filing of the registration statement, and (ii) thereafter among
the other holders of shares of Common Stock pro rata in the same fashion. If the
Holder disapproves of the terms of any such underwriting, it may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration, and shall not be transferred in a public
distribution prior to 90 days after the effective date of the registration
statement relating thereto, or such other shorter period of time as the
underwriters may require.
Section 6. Company Right to Postpone Registration. If the Board, in its
good faith judgment after consultation with outside counsel, determines that any
registration of Registrable Securities should not be made or continued because
it would materially interfere with any material financing, acquisition,
corporate reorganization or other similar material transaction involving the
Company or any of its subsidiaries or that such registration would require
disclosure of non-public information that the Board, in its good faith judgment
after consultation with outside counsel, deems not advisable to disclose (a
"Valid Business Reason"), the Company may (x) postpone for a reasonable period
of time (but not exceeding 90 days) filing and/or causing to become effective a
registration statement required to be filed and become effective under this
Section 2 and (y) in the case in which a registration statement has been filed
pursuant to Section 2, withdraw such registration statement or prior to its
effectiveness until the cessation of such Valid Business Reason (but in no event
exceeding 90 days). The Company shall give written notice to the Holder of its
determination to postpone such offering or withdraw such registration statement
and of the fact that the Valid Business Reason for such postponement or
withdrawal no longer exists, in each case, promptly after the occurrence
thereof. Notwithstanding anything to the contrary contained herein, the Company
may not postpone an offering or withdraw a registration statement more than once
in any twelve-month period.
Section 7. Potential Material Event. If, at any time or from time to
time after the effective date of a registration statement, the Company notifies
the Holder in writing of the existence of a Potential Material Event (as
hereinafter defined), the Holder shall not offer or sell any Registrable
Securities or engage in any other transaction involving or relating to
Registrable Securities, from the time of the giving of notice with respect to a
Potential Material Event until the Holder receives written notice from the
Company that such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event; provided, however,
that the Company may not so suspend the rights of the Holder for more than one
(1) ninety (90) day period and one (1) thirty (30) day period in the aggregate
during any twelve month period, with at least a ten (10) business day interval
between such periods, during the period the registration is required to be in
effect.
"Potential Material Event" means any of the following: (a) the possession by the
Company of material information not ripe for disclosure in a registration
statement (including disclosure to be made in a document filed pursuant to the
Securities Exchange Act of 1934, as amended, and incorporated by reference into
such registration statement (an "Incorporated Document")), which shall be
evidenced by determination in good faith by the Chief Executive Officer or the
Board of Directors of the Company that disclosure of such information in a
registration statement (or in an Incorporated Document) would be unadvisable; or
(b) any material engagement or activity by the
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Company which would, in the good faith determination of the Chief Executive
Officer or the Board of Directors of the Company, be adversely affected by
disclosure in a registration statement (including disclosure to be made in an
Incorporated Document) at such time, which determination shall be accompanied by
a good faith determination by the Chief Executive Officer or the Board of
Directors of the Company that the registration statement (including any
Incorporated Documents) would be materially misleading absent the inclusion of
such information.
Section 8. Expenses. Except as otherwise provided in Section 14
(Assignment), all Registration Expenses shall be borne by the Company. The
Holder shall bear the Selling Expenses, if any, applicable to the Registrable
Securities being registered and the fees and expenses of its counsel. The
Company shall use its best efforts to qualify any of the Registrable Securities
for sale in such states as the Holder reasonably designates and shall furnish
indemnification in the manner provided in Section 11 (Indemnification) hereof.
However, the Company shall not be required to qualify in any state which will
require an escrow or other restriction relating to the Company and/or the
sellers. The Company at its expense will supply the Holder with copies of the
registration statement and the prospectus included therein (the "Prospectus")
and other related documents in such quantities as may be reasonably requested by
the Holder.
Section 9. Continuous Effect. The Company will keep any registration
or post-effective amendment filed under Section 2 (Registration Rights) current
under the Act until the earliest of (i) the date that all of the Registrable
Securities have been sold pursuant to the registration, (ii) the date that the
Registrable Securities may be sold under the provisions of Rule 144(k) or (iii)
the date that is one year following of the effective date of the registration.
Section 10. Limitations on Subsequent Registration Rights. From and
after the Closing Date, the Company shall not enter into any agreement granting
any holder or prospective holder of any securities of the Company registration
rights with respect to such securities of the Company unless such new
registration rights are subordinate to the registration rights granted the
Holder hereunder.
Section 11. Indemnification.
(a) In the event of the filing of any registration statement with
respect to Registrable Securities pursuant to Section 2 (Registration Rights)
hereof, the Company agrees to indemnify and hold harmless the Holder and each
person, if any, who controls the Holder within the meaning of the Act (the
"Distributing Holder") against any losses, claims, damages or liabilities, joint
or several (which shall, for all purposes of this Agreement, include, but not be
limited to, all costs of defense and investigation and all attorneys' fees), to
which the Distributing Holder may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, or any
related preliminary prospectus, Prospectus or amendment or supplement thereto,
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; provided, however, that the Company will not
be liable in any such case to the extent
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that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration statement, preliminary prospectus, Prospectus or
amendment or supplement thereto in reliance upon, and in conformity with,
written information furnished to the Company by the Distributing Holder
specifically for use in the preparation thereof. This Section 11(a)
(Indemnification) shall not inure to the benefit of any Distributing Holder with
respect to any person asserting such loss, claim, damage or liability who
purchased the Registrable Securities which are the subject thereof if the
Distributing Holder failed to send or give (in violation of the Act or the rules
and regulations promulgated thereunder) a copy of the Prospectus contained in
the Registration statement to such person at or prior to the written
confirmation to such person of the sale of such Registrable Securities, where
the Distributing Holder was obligated to do so under the Act or the rules and
regulations promulgated thereunder. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) Each Distributing Holder agrees that it will indemnify and hold
harmless the Company, and each officer and director of the Company or person, if
any, who controls the Company within the meaning of the Act, against any losses,
claims, damages or liabilities (which shall, for all purposes of this Agreement,
include, but not be limited to, all costs of defense and investigation and all
attorneys' fees) to which the Company or any such officer, director or
controlling person may become subject under the Act or otherwise, insofar as
such losses claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement, or any related
preliminary prospectus, Prospectus or amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in such registration statement, preliminary prospectus, Prospectus or amendment
or supplement thereto in reliance upon, and in conformity with, written
information furnished to the Company by such Distributing Holder specifically
for use in the preparation thereof. The indemnity obligation of the Distributing
Holder set forth in this Section 11(b) (Indemnification) shall not exceed the
proceeds received by the Distributing Holder upon a sale of Registrable
Securities pursuant to the registration statement. This indemnity agreement will
be in addition to any liability which the Distributing Holder may otherwise
have.
(c) Promptly after receipt by an indemnified party under this Section
11 (Indemnification) of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 11 (Indemnification), notify the
indemnifying party of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve the indemnifying party from any
liability which it may have to any indemnified party except to the extent the
indemnified party's failure to so notify in breach of this Section 11(c)
(Indemnification) materially prejudices the indemnifying party's ability to
defend such action or claim. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such indemnified party
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of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section 11 (Indemnification)
for any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation, unless the indemnifying party shall not pursue the action to its
final conclusion. The indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of the
action with counsel reasonably satisfactory to the indemnified party; provided
that if the indemnified party is the Distributing Holder, the fees and expenses
of such counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing by the
indemnifying party, or (ii) the named parties to any such action (including any
impleaded parties) include both the Distributing Holder and the indemnifying
party and the Distributing Holder shall have been advised by such counsel that
there may be one or more legal defenses available to the indemnifying party
different from or in conflict with any legal defenses which may be available to
the Distributing Holder (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the Distributing Holder,
it being understood, however, that the indemnifying party shall, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable only for the reasonable fees and expenses of one
separate firm of attorneys for the Distributing Holder, which firm shall be
designated in writing by the Distributing Holder). No indemnifying party shall,
without the written consent of the indemnified party, effect the settlement or
compromise of any action in respect of which indemnification may be sought
hereunder unless such settlement or compromise includes an unconditional release
of the indemnified party from all liability arising out of such action or claim.
Section 12. Contribution. In order to provide for just and equitable
contribution under the Act in any case in which (i) the indemnified party makes
a claim for indemnification pursuant to Section 11 (Indemnification) hereof but
is judicially determined (by the entry of a final judgment or decree by a court
of competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that the express provisions of Section 11
(Indemnification) hereof provide for indemnification in such case, or (ii)
contribution under the Act may be required on the part of any indemnified party,
then the Company and the applicable Distributing Holder shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(which shall, for all purposes of this Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys' fees), in either
such case (after contribution from others) on the basis of relative fault as
well as any other relevant equitable considerations. The relative fault 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 Company on the one hand
or the applicable Distributing Holder on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Distributing Holder
agree that it would not be just and equitable if contribution pursuant to this
Section 12 (Contribution) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in this Section 12 (Contribution). The amount paid or payable by an
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indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this Section 11
(Indemnification) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 13. Notices. Any notice pursuant to this Agreement by the
Company or by the Holder shall be in writing and shall be deemed to have been
duly given if delivered by (i) hand, (ii) by facsimile and followed by mail
delivery, (iii) if mailed by certified mail, return receipt requested, postage
prepaid, or (iv) if sent by overnight courier, addressed as follows:
(a) If to the Holder, to Colorado MEDtech, Inc, 0000 Xxxxx 00xx Xxxxxx,
Xxxxxxx, XX 00000, Attn: Chief Executive Officer, (tele) (000) 000-0000, (fax)
(000) 000-000-0000; with a copy to Colorado MEDtech, Inc, 0000 Xxxxx 00xx
Xxxxxx, Xxxxxxx, XX 00000, Attn: General Counsel, (tele) (000) 000-0000, (fax)
(000) 000-000-0000,
(b) If to the Company, at HEI, Inc., 0000 Xxx Xxxxx Xxx Xxxx, Xxxxx
000, Xxxx Xxxxxxx, XX 00000, Attn: Chief Executive Officer, (tele) (952)
000-0000, (fax) (000) 000-0000,
or to such other address as any such party may designate by notice to the other
party. Notices shall be deemed given at the time they are delivered personally
or five (5) days after they are mailed in the manner set forth above or two (2)
days after they are sent by overnight courier in the manner set forth above. If
notice is delivered by facsimile to the Company and followed by mail, delivery
shall be deemed given two (2) days after such facsimile is sent.
Section 14. Assignment. This Agreement is binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns. Holder may assign the benefits of this Agreement to up to five (5)
parties without the written agreement of the Company, provided, that if such
assignment would be reasonably anticipated to increase the Company's
Registration Expenses by more than $10,000, then the assignees of such benefits
shall bear the increased Registration Expenses resulting from such assignment in
excess of the $10,000 increased Registration Expenses. Notwithstanding the
foregoing, to the extent that any assignment hereunder shall cause a delay in
the effectiveness of a registration of the Shares, the 120 day period specified
in Section 2(b) shall be extended to accommodate such delay.
Section 15. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 16. Remedies. Each party acknowledges and agrees that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached. Therefore, each party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court having
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jurisdiction, such remedy being in addition to any other remedy to which such
party may be entitled at law or in equity.
Section 17. Headings. The headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 18. Governing Law, Venue. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.
Section 19. Severability. If any provision of this Agreement shall for
any reason be held invalid or unenforceable, such invalidity or unenforceablity
shall not affect any other provision hereof and this Agreement shall be
construed as if such invalid or unenforceable provision had never been contained
herein.
Section 20. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" mean all fees, disbursements, expenses and
costs incurred by the Company in complying with this Agreement and in complying
with applicable securities and blue sky laws (including, without limitation, all
attorneys' fees), including, without limitation, all registration, qualification
and filing fees, printing expenses, escrow fees, fees and disbursements of
counsel for the Company, the expense of the special audits incident to or
required by any such registration, and the compensation of regular employees of
the Company which shall be paid in any event by the Company.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holder.
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Purchase Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, on the day and year first above written.
HEI, INC.
By /s/ Xxxxxxx X. Xxxx
----------------------------------
Its: Chairman, Chief Executive
Officer and President
COLORADO MEDTECH, INC.
By /s/ Xxxxxxx X. Xxxxx
----------------------------------
Its: Chief Executive Officer and
President
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