EXHIBIT B
MEDICAL DYNAMICS, INC.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered as
of this 17th day of March, 1999 by and between MEDICAL DYNAMICS, INC., a
Colorado corporation (the "Company") and RESONANCE LIMITED (the "Investor")
pursuant to Section 7(b) of the Purchase Agreement dated March 17, 1999 by and
between the Company and the Investor (the "Purchase Agreement"). Unless the
context otherwise requires capitalized terms shall have the meanings ascribed to
them in the Purchase Agreement.
The parties hereby agree as follows:
1. Certain Definitions
As used in this Agreement, the following terms shall have the following
meanings:
"Common Stock" shall mean the Common Stock, par value $.001 per share, of
the Company.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including, post-effective amendments and all
material incorporated by reference in such prospectus.
"Register," "registered" and "registration" refer to a registration made by
preparing and filing a registration statement or similar document in compliance
with the 1933 Act (as defined below), and the declaration or ordering of
effectiveness of such registration statement or document.
"Registrable Securities" shall mean the Common Stock issued or issuable
under the Purchase Agreement or under the Warrants issuable under the Purchase
Agreement.
"Registration Statement" shall mean any registration statement of the
Company that covers any of' the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
"SEC" means the U.S. Securities and Exchange Commission.
"1933 Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"Warrant" means the Warrant to purchase shares of Common Stock issued to
the Investor pursuant to the Purchase Agreement.
2. Registration
(a) Registration Statement. Promptly following the closing of the
transactions contemplated by the Purchase Agreement (the "Closing Date") (but no
later than thirty days after the Effective Date), the Company shall prepare and
file with the SEC a registration statement on Form S-3 (or, if Form S-3 is not
then available to the Company, on such form of registration statement as is then
available to effect such a registration of the Registrable Securities, subject
to the Investor's consent) covering the resale of the Registrable Securities.
Such Registration Statement, to the extent allowable under the 1933 Act and the
Rules promulgated thereunder (including rule 416), shall state that such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the Warrants to
prevent dilution resulting from stock splits, stock dividends or similar
transactions or by reason of changes in the Exercise Price of the Warrants in
accordance with the terms thereof. The Registration Statement (and each
amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to (and subject to the approval of) the
Investor and its counsel prior to its filing or other submission. In the event
that Additional Shares or Warrant Shares are not able to be included in the
Registration Statement to be filed as provided above, they shall be included in
a second Registration Statement covering such shares which the Company shall
file and cause to become effective as soon as possible after the number of
Additional Shares and Warrant Shares has been determined.
(b) Expenses. The Company will pay all expenses associated with the
registration, excluding discounts, commissions, fees of underwriters, selling
brokers, dealer managers or similar securities industry professionals relating
to the distribution of the Registrable Securities.
(c) Effectiveness.
The Company shall use its best efforts to obtain the effectiveness of
the Registration Statement as soon as practicable. If (A) the Registration
Statement is not declared effective by the SEC within 135 days following the
date hereof (the "Registration Date"), (B) after the Registration Statement has
been declared effective by the SEC, sales cannot be made pursuant to the
Registration Statement (by reason of a stop order, or the Company's failure to
update the Registration Statement), or (C) the Common Stock is not listed or
included for quotation on the Nasdaq SmallCap Market System, The Nasdaq National
Market System, the New York Stock Exchange, or the American Stock Exchange, then
the Company will make payments to the Investor, as liquidated damages and not as
a penalty, in an amount equal to $15,000 for each month or portion thereof
following the Registration Date during which the registration is not effective
(referred to herein as the "Blackout Period") (which remedy shall not be
exclusive of any other remedies available at law or in equity). The Company
shall bear all reasonable fees or costs incurred by the Investor for legal
counsel as a result of the filing of any post-effective amendments to the
Registration Statement. The amounts payable as liquidated damages pursuant to
this paragraph shall be payable in lawful money of the United States on the last
day of each month during the Blackout Period. In addition to the foregoing, the
Company shall pay as additional liquidated damages an amount equal to 2% or a
pro rata portion thereof of the Purchase Price for each 30 days or portion
thereof subsequent to the expiration of 30 days from the Closing and prior to
the Blackout Period that the Registration Statement has not been unfiled with
the SEC.
3. Company Obligations. The Company will use its best efforts to effect the
registration and the resale of the Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will,
as expeditiously as possible:
(a) use its reasonable best efforts to cause such Registration Statement to
become effective and to remain continuously effective for a period which will
terminate when all Registrable Securities covered by such Registration
Statement, as amended from time to time, have been sold;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement effective for the period specified in Section
3(a) and to comply with the provisions of the 1933 Act and the 1934 Act with
respect to the distribution of all Registrable Securities; provided that, at a
time reasonably prior to the filing of a Registration Statement or Prospectus,
or any amendments or supplements thereto, the Company will furnish to the
Investor copies of all documents proposed to be filed, which documents will be
subject to the comments of the Investor and its counsel;
(c) permit a single firm of counsel designated by the Investor to review at
Investor's expense the Registration Statement and all amendments and supplements
thereto a reasonable period of time prior to their filing with the SEC, and not
file any document in a form to which such counsel reasonably objects;
(d) furnish to the Investor and its legal counsel (i) promptly after the
same is prepared and publicly distributed, filed with the SEC, or received by
the Company, one copy of the Registration Statement and any amendment thereto,
each preliminary prospectus and Prospectus and each amendment or supplement
thereto, and each letter written by or on behalf of the Company to the SEC or
the staff of the SEC, and each item of correspondence from the SEC or the staff
of the SEC, in each case relating to such Registration Statement (other than any
portion of any thereof which contains information for which the Company has
sought confidential treatment), and (ii) such number of copies of a Prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Investor;
(e) in the event the Investor selects underwriters for the offering which
underwriters shall be reasonably acceptable to the Company, the Company shall
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, including, without limitation, customary indemnification and
contribution obligations, with the underwriters of such offering;
(f) at the request of the Investor, the Company shall furnish, on the date
that Registrable Securities are delivered to an underwriter, if any, for sale in
connection with the Registration Statement or, if such securities are not being
sold by an underwriter, on the date of effectiveness thereof (i) an opinion,
dated as of such date, from counsel representing the Company for purposes of
such Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the underwriter, if any,
and the Investor and (ii) a letter, dated such date, from the Company's
independent certified public accountants in form and substance as is customarily
given by independent: certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters, if any, and the
Investors;
(g) make reasonable effort to prevent the issuance of any stop order or
other suspension of effectiveness and, if such order is issued, obtain the
withdrawal of any such order at the earliest possible moment;
(h) furnish to the Investor at least five copies of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits (including those incorporated by reference);
(i) deliver to the Investor as many copies of the Prospectus (including
each preliminary prospectus)and any amendment or supplement thereto as the
Investor may reasonably request in order to facilitate the disposition of the
Registrable Securities;
(j) prior to any public offering of Registrable Securities, use its
reasonable best efforts to register or qualify or cooperate with the Investor
and its counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as the Investor reasonably requests in writing and do any
and all other reasonable acts or things necessary or advisable to enable the
distribution in such jurisdictions of the Registrable Securities covered by the
Registration Statement; provided that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject;
(k) cause all Registrable Securities covered by the Registration Statement
to be listed on each securities exchange, interdealer quotation system or other
market on which similar securities issued by the Company are then listed;
(1) immediately notify the Investor at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the Prospectus
included in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and at the request of any such holder,
promptly prepare and furnish to such holder a reasonable number of copies of a
supplement to or an amendment of such Prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
Prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; and
(m) otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC under the 1933 Act and the 1934 Act, take such other
actions as may be reasonably necessary to facilitate the registration or the
disposition of the Registrable Securities hereunder; and make available to its
security holders, as soon as reasonably practicable, but not later than the
Availability Date (as defined below), an earnings statement covering a period of
at least twelve months, beginning after the effective date of the applicable
Registration Statement, which earnings statement shall satisfy the provisions of
subsection 1 l(a) of the 1933 Act (for the purpose of this subsection 3(m),
"Availability Date" means the 45th day following the end of the fourth fiscal
quarter that includes the effective date of such Registration Statement, except
that, if such fourth fiscal quarter is the last quarter of the Company's fiscal
year, "Availability Date" means the 90th day after the end of such fourth fiscal
quarter).
4. Obligations of the Investor
(a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities that the Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request. At least three (3) business days prior to the
first anticipated filing date of the Registration Statement, the Company shall
notify the Investor of the information the Company requires from the Investor if
the Investor elects to have any of the Registrable Securities included in the
Registration Statement.
(b) The Investor, by its acceptance of the Registrable Securities, agrees
to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of the Registration Statement
hereunder, unless the Investor has notified the Company in writing of its
election to exclude all of the Registrable Securities from the Registration
Statement.
(c) In the event the Investor determines to engage the services of an
underwriter, the Investor agrees to enter into and perform its obligations under
an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the dispositions of the
Registrable Securities.
(d) The Investor agrees that, upon receipt of any notice from the Company
of the happening of any event rendering the Registration Statement no longer
effective, the Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until the Investor's receipt of the copies of the supplemented or
amended prospectus filed with the SEC are declared effective and, if so directed
by the Company, the Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in the Investor's possession of the prospectus covering the
Registrable Securities current at the time of receipt of such notice.
(e) The Investor may not participate in any underwritten registration
hereunder unless it (i) agrees to sell the Registrable Securities on the basis
provided in any underwriting arrangements in usual and customary form entered
into by the Company, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements, and (iii) agrees to
pay its pro rata share of all underwriting discounts and commissions and any
expenses in excess of those payable by the Company pursuant to the terms of this
Agreement.
(f) The Investor agrees that it will treat all confidential non-public
information which it receives hereunder in confidence and will not use such
information only for the purposes contemplated hereunder.
5. Indemnification
(a) Indemnification by Company. The Company agrees to indemnify and hold
harmless, to the fullest extent permitted by law the Investor, its officers,
directors, partners and employees and each person who controls the Investor
(within the meaning of the 0000 Xxx) against all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable attorney's fees)
and expenses caused by (i) any untrue or alleged untrue statement of a material
fact contained in any Registration Statement, Prospectus or any preliminary
prospectus or any amendment or supplement thereto or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are based upon any information furnished in writing to the Company by the
Investor, expressly for use therein, or (ii) any violation by the Company of any
federal, state or common law, rule or regulation applicable to the Company in
connection with any Registration Statement, Prospectus or any preliminary
prospectus, or any amendment or supplement thereto, and shall reimburse, as
incurred, each of the foregoing persons for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claims. The foregoing is subject to the condition that, insofar as the foregoing
indemnities relate to any untrue statement, alleged untrue statement, omission
or alleged omission made in any preliminary prospectus or Prospectus which is
eliminated or remedied in any Prospectus or amendment or supplement thereto, the
above indemnity obligations of the Company shall not inure to the benefit of any
indemnified party if a copy of such final Prospectus or amendment or supplement
thereto had been made available to such indemnified party and was not sent or
given by such indemnified party at or prior to the time such action is required
of such indemnified party by the 1933 Act and if delivery of such Prospectus or
amendment or supplement thereto would have eliminated (or been a sufficient
defense to) any liability of such indemnified party with respect to such
statement or omission. Indemnity under this Section 5(a) shall remain in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the permitted transfer of the Registrable
Securities.
(b) Indemnification by Holder of Registrable Securities. In connection with
any registration pursuant to the terms of this Agreement, the Investor will
furnish to the Company in writing such information as the Company reasonably
requests concerning the Investor or the proposed manner of distribution for use
in connection with any Registration Statement or Prospectus and agrees to
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors and officers and each person who controls the Company
(within the meaning of the 0000 Xxx) against any losses, claims, damages,
liabilities and expense resulting from any untrue statement of a material fact
or any omission of a material fact required to be stated in the Registration
Statement or Prospectus or preliminary prospectus or necessary to make the
statements therein not misleading, to the extent, but only to the extent, that
such untrue statement or omission is contained in any information furnished in
writing by the holder of Registrable Securities to the Company specifically for
inclusion in such Registration Statement or Prospectus and that such information
was substantially relied upon by the Company in preparation of the Registration
Statement or Prospectus or any amendment or supplement thereto.
(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying party
has agreed to pay such fees or expenses, or (b) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest may
exist between such person and the indemnifying party with respect to such claims
(in which case, if the person notifies the indemnifying party in writing that
such person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); and provided, further, that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys (in addition to local counsel) at any time for all such indemnified
parties. No indemnifying party will, except with the consent of the indemnified
party, consent to entry of any judgment or enter into any settlement that does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for in the
preceding clauses (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent misrepresentation. In
no event shall the contribution obligation of a holder of Registrable Securities
be greater in amount than the dollar amount of the proceeds (net of all expenses
paid by such holder and the amount of any damages such holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission) received by it upon the sale of the Registrable Securities
giving rise to such contribution obligation.
6. Miscellaneous
(a) Amendments and Waivers. This Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Investor.
Notwithstanding the foregoing, this Agreement. shall automatically be amended in
accordance with the provisions of this Section 6.
(b) Notices. All notices and other communications provided for or permitted
hereunder shall be made as set forth in the Purchase Agreement.
(c) Assignments and Transfers by Investor. This Agreement and all the
rights and obligations of the Investor hereunder may not be assigned or
transferred to any transferee or assignee except as set forth herein. The
Investor may make such assignment or transfer to any transferee or assignee of
any Registrable Securities, provided, that (i) such transfer is made expressly
subject to this Agreement and the transferee agrees in writing to be bound by
the terms and conditions hereof, and (ii) the Company is provided with written
notice of such assignment.
(d) Assignments and Transfers by the Company. This Agreement may not be
assigned by the Company without the prior written consent of Investor, except
that without the prior written consent of the Investor, but after notice duly
given, the Company shall assign its rights and delegate its duties hereunder to
any successor-in-interest corporation, and such successor-in-interest shall
assume such rights and duties, in the event of a merger or consolidation of the
Company with or into another corporation, or any merger or consolidation of
another corporation with or into the Company which results directly or
indirectly in an aggregate change in the ownership or control of more than 50%
of the voting rights of the equity securities of the Company, or the sale of all
or substantially all of the Company's assets.
(e) Benefits of the Agreement. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective permitted
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto 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.
(f) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(g) 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.
(h) Expenses. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
(i) Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
(j) Further Assurances. The Parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
(k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(1) Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Colorado without regard to principles
of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
The Company: MEDICAL DYNAMICS, INC.
By:_________________________________
Name:
Title:
The Investor: RESONANCE LIMITED
By:_________________________________
Name:
Title:
