EXHIBIT E
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REGISTRATION RIGHTS AGREEMENT
among
COMMERCIAL ELECTRONICS CAPITAL PARTNERSHIP, L.P.,
COMMERCIAL ELECTRONICS, L.L.C.
and
WILTEK, INC.
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January 28, 1999
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Table of Contents
Page
1. Registration on Request...............................................1
2. Incidental Registration...............................................4
3. Registration Procedures...............................................5
4. Underwritten Offerings................................................8
5. Preparation; Reasonable Investigation................................10
6. Rights of Requesting Holders.........................................10
7. Registration Expenses................................................11
8. Indemnification and Contribution.....................................11
9. Registration Rights to Others........................................14
10. Nominees for Beneficial Owners.......................................14
11. Rule 144.............................................................14
12. Definitions..........................................................15
13. Miscellaneous........................................................17
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of January 28, 1999, by and
among COMMERCIAL ELECTRONICS CAPITAL PARTNERSHIP, L.P., a Delaware limited
partnership, COMMERCIAL ELECTRONICS, L.L.C., a Delaware limited liability
company, (collectively, the "Purchasers"), and WILTEK, INC., a Connecticut
corporation (the "Company").
This Agreement is made in connection with (a) the Securities Purchase
Agreement, dated as of the date hereof, by and between the Company and the
Purchasers (the "Securities Purchase Agreement"), pursuant to which the Company
has agreed to issue and sell to the Purchasers, and the Purchasers have agreed
to purchase from the Company, (i) an aggregate of 1,000,000 shares of the
Company's Series A Senior Convertible Preferred Stock, no par value (the
"Preferred Stock"), and (ii) Warrants ("Warrants") to purchase up to 1,500,000
shares of the Company's Common Stock, no par value (the "Common Stock"), and (b)
the Stock Purchase Agreement, dated the date hereof, by and between the
stockholders named therein (the "Selling Stockholders") and the Purchasers (the
"Stock Purchase Agreement"), pursuant to which the Selling Stockholders have
agreed to sell to the Purchasers and the Purchasers have agreed to purchase from
the Selling Stockholders, an aggregate of 732,160 shares of the Company's Common
Stock. The Preferred Stock is convertible into shares of the Company's Common
Stock. In order to induce the Purchasers to purchase the shares of Preferred
Stock and the Warrants, the Company has agreed to grant registration rights with
respect to the Registrable Securities as set forth in this Agreement.
Capitalized terms used herein and not otherwise defined shall have the
respective meanings given them in Section 12.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Registration on Request.
(a) Request. Except as otherwise provided in this Section 1,
at any time and from time to time, upon the written request of one or more
Initiating Holders requesting that the Company effect a registration under the
Securities Act of all or any part of such Initiating Holders' Registrable
Securities, and specifying the intended method or methods of disposition
thereof, the Company will promptly, but in any event within ten (10) days after
receipt of such written request, give written notice of such requested
registration to all holders of Registrable Securities, and thereupon will use
its best efforts to effect, as reasonably expeditiously as practicable, the
registration under the Securities Act, including by means of a shelf
registration pursuant to Rule 415 under the Securities Act if so requested in
such request (but in
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the case of a shelf registration only if the Company is then eligible to use
Form S-2 or S-3 (or any successor forms) for such a shelf registration), of:
(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holder or Holders, for
disposition in accordance with the intended method or methods of
disposition stated in such request,
(ii) all other Registrable Securities which the Company has
been requested to register by the holders thereof by written request
delivered to the Company within thirty (30) days after the giving of
such written notice by the Company (which request shall specify the
intended method or methods of disposition thereof), and
(iii) all other securities which the Company wishes to
register, whether for its own account or for the account of the holders
thereof,
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered; provided that any holder of Registrable Securities to be included in
any such registration, by written notice to the Company within ten (10) days
after its receipt of a copy of a notice from the managing underwriter delivered
pursuant to Section 1(e), may withdraw such request and, upon receipt of such
notice of the withdrawal of such request from holders comprising the Requisite
Holders, the Company may elect not to effect such registration.
(b) Number of Registrations. The Company shall not be required
to effect more than three (3) registrations pursuant to this Section 1.
(c) Registration Statement Form. Registrations under this
Section 1 shall be on such appropriate registration form of the Commission (i)
as shall be requested by the Requisite Holders (provided that the Company is
then eligible to use such form) and (ii) as shall permit the disposition of such
Registrable Securities in accordance with the intended method or methods of
disposition specified in the request for their registration.
(d) Effective Registration Statement. A registration requested
pursuant to this Section 1 shall not be deemed to have been effected (i) unless
a registration statement with respect thereto has become effective, (ii) if the
registration does not remain effective for a period of at least ninety (90) days
(or, with respect to any registration statement filed pursuant to Rule 415 under
the Securities Act, for a period of at least one (1) year) or, in either case if
earlier, until all the Registrable Securities requested to be registered in
connection therewith were sold or withdrawn by the participating Holders, (iii)
if, after it has become effective, such registration is subject to any stop
order, injunction or other order or requirement
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of the Commission or other governmental agency or court for any reason not
attributable to actions taken by the holders of Registrable Securities), or (iv)
if the conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with such registration are not satisfied
and no such closing occurs, other than by reason of some act or omission by the
holders of the Registrable Securities that were to have been registered.
(e) Registration of Other Securities. Whenever the Company
shall effect a registration pursuant to this Section 1, no securities other than
Registrable Securities shall be included among the securities covered by such
registration unless holders of Registrable Securities requesting registration
thereof pursuant to Section 1, representing not less than 50% of the Registrable
Securities with respect to which registration has been requested, shall have
consented in writing to the inclusion of such other securities.
(f) Postponement. The Company shall be entitled to postpone
for a reasonable period of time (but not exceeding sixty (60) days) the filing
of any registration statement otherwise required to be prepared and filed by it
pursuant to this Section 1 if the Company determines, in its reasonable
judgment, that such registration and offering would interfere with any material
financing, acquisition, corporate reorganization or other material transaction
involving the Company or any of its Affiliates and promptly gives the holders of
Registrable Securities requesting registration thereof pursuant to this Section
1 written notice of such determination, containing a general statement of the
reasons for such postponement and an approximation of the anticipated delay. The
Company may not postpone a filing pursuant to this Section 1(f) more than once
in any twelve-month period. If the Company shall so postpone the filing of a
registration statement, holders of Registrable Securities requesting
registration thereof pursuant to Section 1, representing not less than 15% of
the Registrable Securities with respect to which registration has been requested
and constituting not less than 50% of the Initiating Holders, shall have the
right to withdraw the request for registration by giving written notice to the
Company within thirty (30) days after receipt of the notice of postponement and,
in the event of such withdrawal, such request shall not be counted for purposes
of the requests for registration to which holders of Registrable Securities are
entitled pursuant to Section 1.
(g) Limitations on Registration on Request. Notwithstanding
anything in this Section 1 to the contrary, the Company shall not be required to
effect a registration pursuant to this Section 1 (i) prior to the first
anniversary of the date hereof or (ii) within the 12-month period occurring
immediately subsequent to the effectiveness (within the meaning of Section 1(d)
hereof) of a registration statement filed pursuant to this Section 1.
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2. Incidental Registration.
(a) Incidental Rights. If the Company at any time proposes to
register, on any form which may be used for the registration of Registrable
Securities other than Form S-4 or Form S-8 (or any successor or similar forms
then in effect), any of its securities under the Securities Act (other than
pursuant to Section 1), whether or not pursuant to registration rights granted
to other holders of its securities and whether or not for sale for its own
account, in a manner which would permit registration of Registrable Securities
for sale to the public under the Securities Act, it will each such time give
written notice to all holders of Registrable Securities of its intention to do
so and of such holders' rights under this Section 2; such notice to be given to
all such holders at least twenty (20) days prior to the filing of such proposed
registration statement. Upon the written request of any such holder (a
"Requesting Holder") made within fifteen (15) days after the giving of any such
notice (which request shall specify the Registrable Securities intended to be
disposed of by such holder and the intended method or methods of disposition
thereof), the Company will use its best efforts to effect the registration under
the Securities Act of all Registrable Securities which the Company has been so
requested to register by the Requesting Holders, to the extent necessary to
permit the disposition (in accordance with the intended methods thereof as
aforesaid) of the Registrable Securities so to be registered. With respect to an
underwritten offering, prior to the effective date of any registration statement
filed in connection with a registration described in this Section 2, promptly
upon notification to the Company from the managing underwriter of the price at
which the Registrable Securities requested to be registered pursuant to this
Section 2 are to be sold, the Company shall advise each Requesting Holder of
such price, and if such price is below the price which any Requesting Holder
shall have indicated to be acceptable to such Requesting Holder, such Requesting
Holder shall then have the right to withdraw its request to have its Registrable
Securities included in such registration statement.
(b) Not Deemed a Demand Registration. No registration effected
pursuant to this Section 2 shall be deemed to have been effected pursuant to
Section 1.
(c) Holdback. If the Company previously shall have received a
request for registration pursuant to Section 1 or this Section 2, and if such
previous registration shall not have been withdrawn or abandoned, the Company
will not effect any registration of any of its securities under the Securities
Act, whether or not for sale for its own account, until a period of ninety (90)
days shall have elapsed from the effective date of such previous registration.
(d) Discontinuance. Notwithstanding anything to the contrary
in this Section 2, the Company shall have the right to discontinue any
registration under this Section 2 at any time prior to the effective date of
such registration, if the registration of other securities giving rise to such
registration under
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this Section 2 is discontinued; but no such discontinuation shall preclude an
immediate or subsequent request for registration pursuant to Section 1 or 2.
3. Registration Procedures. If and whenever the Company is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Section 1 or Section 2, the Company will
promptly:
(a) prepare and (in any event within ninety (90) days after
the end of the period within which requests for registration may be given to the
Company) file with the Commission the requisite registration statement to effect
such registration and thereafter use its best reasonable efforts promptly to
cause such registration statement to become effective; provided that the Company
may discontinue any registration of its securities which are not Registrable
Securities at any time prior to the effective date of the registration statement
relating thereto;
(b) prepare and file with the Commission such amendments,
post-effective amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement until the earlier of (i) such time as all
of such Registrable Securities have either been disposed of in accordance with
the intended methods of disposition by the sellers thereof set forth in such
registration statement or the sale thereof has been abandoned by such sellers
and (ii) ninety (90) days after the effective date of such registration
statement, except with respect to any such registration statement filed pursuant
to Rule 415 (or any successor Rule) under the Securities Act, in which case such
period shall be one year;
(c) furnish as soon as available to each seller of Registrable
Securities covered by such registration statement such number of copies of such
drafts and final versions of such registration statement and of each such
amendment, post-effective amendment and supplement thereto (in each case
including all exhibits), such number of copies of such drafts and final versions
of the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus), any other prospectus filed
under Rule 424 under the Securities Act, in conformity with the requirements of
the Securities Act, such documents, if any, incorporated by reference in such
registration statement or prospectus, and such other documents, as such seller
or such holder may reasonably request;
(d) use its commercially reasonably efforts to register or
qualify all Registrable Securities covered by such registration statement under
such other securities or blue sky laws of such jurisdictions as each seller
thereof shall reasonably request, to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and take
any other action which may be
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reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such seller, except
that the Company shall not for any such purpose be required to qualify generally
to do business as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this clause (d) be obligated to be so qualified or
to consent to general service of process in any such jurisdiction;
(e) cooperate with the sellers of such Registrable Securities
to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold, which securities shall not bear any
restrictive legends indicating that the securities have not been registered
under the Securities Act and shall be in a form eligible for deposit with The
Depository Trust Company; and enable such Registrable Securities to be in such
denominations and registered in such names as such sellers may request at least
two (2) business days prior to any sale of Registrable Securities;
(f) furnish to each seller of Registrable Securities upon
request a copy of (i) an opinion of counsel for the Company, dated the effective
date of such registration statement (or, if such registration involves an
underwritten public offering, dated the date of the closing under the
underwriting agreement), covering substantially the same matters with respect to
such registration statement (and the prospectus included therein) as are
customarily covered in opinions of issuer's counsel in underwritten public
offerings of securities and (ii) a "comfort" letter signed by the independent
public accountants who have certified the Company's financial statements
included or incorporated by reference in such registration statement, covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, with respect to events subsequent to the
date of such financial statements, as are customarily covered in accountants'
comfort letters delivered to the underwriters in underwritten public offerings
of securities and such other financial matters as the Requisite Holders or the
underwriters, as the case may be, may reasonably request, subject to the
delivery by such seller to such independent public accountants of such documents
as are reasonable and customary in transactions of this nature;
(g) promptly notify each seller of such Registrable
Securities, and (if requested by any such seller) confirm such advice in
writing, (i) when the prospectus or any prospectus supplement or post-effective
amendment has been filed and, with respect to the registration statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the Commission for amendments or supplements to the registration
statement or the prospectus or for additional information, (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that purpose and
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the
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Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(h) promptly notify each seller of Registrable Securities
covered by such registration statement, 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 under which they were made, and at the request of any
such seller or holder promptly prepare and furnish to such seller or 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 or prospective purchasers of such 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 under which they were made;
(i) use its reasonable commercial efforts to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement at the earliest possible time;
(j) otherwise comply with all applicable rules and regulations
of the Commission, and make available to its securities holders, as soon as
reasonably practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen (18) months, beginning with the first
full calendar month after the effective date of such registration statement,
which earning statement shall satisfy the provisions of Section 11(a) of the
Securities Act, and furnish to each such seller at least ten (10) days prior to
the filing thereof a copy of any amendment or supplement to such registration
statement or prospectus and shall not file any thereof to which any such seller
shall have reasonably objected on the grounds that such amendment or supplement
does not comply in all material respects with the requirements of the Securities
Act or the rules or regulations thereunder;
(k) provide and cause to be maintained a transfer agent and a
registrar for all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement;
(l) cause all Registrable Securities covered by such
registration statement to be listed on each securities exchange or approved for
quotation on any inter-dealer quotation system on which similar securities
issued by the Company are then listed or quoted;
(m) makes its officers and employees available to participate
in presentations to potential purchasers of Registrable Securities;
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(n) cause its subsidiaries and affiliates to take all action
necessary or advisable to effect the registration of the Registrable Securities
contemplated hereby, including preparing and filing any required financial
information;
(o) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the applicable registration statement; and
(p) enter into such agreements and take such other actions as
the Requisite Holders shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities.
The Company may require each holder of Registrable Securities which will be
included in such registration (i) to furnish the Company such information
relating to such holder as the Company may reasonably request and as is required
by applicable laws or regulations, and (ii) to provide the Company with written
confirmation that such holder will comply with applicable laws and regulations,
and provide the Company with such further information necessary for the Company
to abide by applicable laws and regulations, in such form as the Company may
reasonably request.
4. Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering of Registrable Securities pursuant to
a registration requested under Section 1, the Company will use its commercially
reasonable efforts to enter into a firm commitment underwriting agreement with
such underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to the underwriters and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in such agreements, including, without limitation,
indemnities to the effect and to the extent provided in Section 8. The holders
of Registrable Securities to be distributed by such underwriters shall be
parties to such underwriting agreement and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such holders of Registrable Securities. Except
as set forth in this Agreement, no holder of Registrable Securities shall be
required (i) to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such holder, such holder's Registrable Securities and such holder's
intended method of distribution and any other representation required by law or
(ii) to indemnify (or contribute with respect to an indemnifiable claim) the
Company or any underwriters of the Registrable Securities, except as set forth
in Section 8.
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(b) Incidental Underwritten Offerings. If the Company at any
time proposes to register any of its securities under the Securities Act as
contemplated by Section 2, whether or not pursuant to registration rights
granted to other holders of its securities and whether or not for sale for its
own account, and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by any holder of Registrable
Securities as provided in Section 2 and subject to the provisions of this
Section 4(b), use its best efforts to arrange for such underwriters to include
all the Registrable Securities to be offered and sold by such holder among the
securities to be distributed by such underwriters; provided that if the managing
underwriter of such underwritten offering shall advise the Company in writing
(with a copy to the holders of Registrable Securities requesting such
registration) that, in its opinion the total number of shares which the Company,
the holders of Registrable Securities and any other holders of securities of the
Company propose to be included in such registration is sufficiently large to
materially and adversely affect the success of such offering (such writing to
state the basis of such opinion and the approximate number of such securities
which may be included in such offering without such effect), then after
inclusion of the number of securities to be sold by the Company for its own
account in such registration, the amount of securities to be offered for the
accounts of holders of Registrable Securities shall be reduced pro rata (in
accordance with the number of Registrable Securities requested to be included in
such registration) to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended by such
managing underwriter; provided that if securities are being offered for the
account of other Persons as well as the Company, such reduction shall not
represent a greater fraction of the number of securities intended to be offered
by holders of Registrable Securities than the fraction of similar reductions
imposed on such other Persons over the amount of securities they intended to
offer. Any holder of Registrable Securities to be included in such registration
may withdraw its request to have its securities so included by notice to the
Company promptly after receipt of a copy of a notice from the managing
underwriter pursuant to this Section 4(b). The holders of Registrable Securities
to be distributed by such underwriters shall be parties to the underwriting
agreement between the Company and such underwriters and may, at their option,
require that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities. Except as set forth in this Agreement, no holder of
Registrable Securities shall be required (i) to make any representations or
warranties to or agreements with the Company or the underwriters other than
customary representations, warranties or agreements regarding such holder, such
holder's Registrable Securities and such holder's intended method of
distribution and any other representation required by law or (ii) to indemnify
(or contribute with respect to an indemnifiable claim) the Company or any
underwriters of the Registrable Securities, except as set forth in Section 8,
except to the extent that the other holders of securities included in such
registration statement (other than holders of Registrable
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Securities) have agreed to make such representations and warranties or to
indemnify the Company in connection with such registration.
(c) Holdback Agreements. Each holder of Registrable Securities
agrees, if so required by the managing underwriter, not to effect any public
sale or distribution of securities of the Company of the same class as the
securities included in such registration statement, during the seven (7) days
prior to the date on which any underwritten registration pursuant to Section 1
or 2 has become effective and the ninety (90) days (or such longer period as
shall have been agreed to by all of the holders of securities included in such
registration statement other than the holders of Registrable Securities)
thereafter, except as part of such underwritten registration or to the extent
that such holder is prohibited by applicable law from agreeing to withhold
Registrable Securities from sale or is acting in its capacity as a fiduciary or
an investment adviser. The Company agrees not to effect any public sale or
distribution of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during the seven (7) days
prior to and the ninety (90) days after any underwritten registration pursuant
to Section 1 or 2 has become effective, except as part of such underwritten
registration.
(d) Selection of Underwriters. If a requested registration
pursuant to Section 1 involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by the Company, which selection shall be
subject to the approval of the Requisite Holders. If an incidental registration
pursuant to Section 2 involves one or more underwriters, the underwriter or
underwriters shall be selected by the Company.
5. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, the Company will give the holders of
Registrable Securities on whose behalf such Registrable Securities are to be so
registered, and their underwriters, if any, and their respective counsel the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of such
holders and such underwriters or their respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
6. Rights of Requesting Holders. If any registration statement refers
to any Requesting Holder by name or otherwise as the holder of any securities of
the Company, such holder shall have the right to require (a) the insertion
therein of language, in form and substance reasonably satisfactory to such
holder, to the effect that, if true, the holding by such holder of such
securities does not necessarily make such holder a "controlling person" of the
Company within the meaning of the
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Securities Act or (b) in the event that such reference to such holder by name or
otherwise is not required by the Securities Act or any rules and regulations
promulgated thereunder, the deletion of the reference to such holder.
7. Registration Expenses. The Company will, whether or not any
registration pursuant to this Agreement shall become effective, pay all
Registration Expenses incident to its performance under or compliance with this
Agreement promptly as such Registration Expenses are incurred.
8. Indemnification and Contribution.
(a) The Company will, and hereby does, indemnify and hold
harmless, in the case of any registration statement filed pursuant to Section 1
or 2, each seller of any Registrable Securities covered by such registration
statement and each other Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who controls
such seller or any such underwriter within the meaning of the Securities Act,
and their respective directors, officers, partners, agents and Affiliates,
against any losses, claims, damages or liabilities, joint or several, to which
such seller or underwriter or any such director, officer, partner, agent,
Affiliate or controlling person may become subject under the Securities Act or
otherwise, including, without limitation, the reasonable fees and expenses of
legal counsel, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, 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 in light of the circumstances in which they were made not misleading,
and the Company will reimburse such seller or underwriter and each such
director, officer, partner, agent, Affiliate and controlling Person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such seller or underwriter, as the case may be, specifically stating that it is
for use in the preparation thereof; and provided, further, that the Company
shall not be liable to any Person who participates as an underwriter in the
offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in
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respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended,
to the Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus and such final prospectus was required to be
delivered to such Person. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any such
director, officer, partner, agent, Affiliate or controlling person and shall
survive the transfer of such securities by such seller.
(b) As a condition to including any Registrable Securities in
any registration statement, the Company shall have received an undertaking
satisfactory to it from the prospective seller of such Registrable Securities,
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 8(a)) the Company, and each director of the Company, each
officer of the Company and each other Person, if any, who participates as an
underwriter in the offering or sale of such securities and each other Person who
controls the Company or any such underwriter within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus, contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that the liability of such indemnifying party
under this Section 8(b) shall be limited to the amount of proceeds received by
such indemnifying party in the offering giving rise to such liability. Such
indemnity shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Company or any such director, officer or controlling
person and shall survive the transfer of such securities by such seller.
(c) Promptly after receipt by an indemnified party of notice
of the commencement of any action or proceeding involving a claim referred to in
Section 8(a) or (b), such indemnified party will, if a claim in respect thereof
is to be made against an indemnifying party, give written notice to the latter
of the commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 8, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party the indemnifying party shall be entitled to
participate in and, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, to assume the defense thereof, jointly with any
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other indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. In the event a bona fide conflict of interest between the
indemnified and indemnifying parties exists, the indemnifying party hereunder
shall only be responsible for the payment of reasonable fees and expenses of a
single counsel for the indemnified parties hereunder. No indemnifying party
shall be liable for any settlement of any action or proceeding effected without
its written consent, which consent shall not be unreasonably withheld. No
indemnifying party shall, without the consent of the indemnified party, which
consent shall not be unreasonably withheld, consent to entry of any judgment or
enter into any settlement which 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 or which
requires action other than the payment of money by the indemnifying party.
(d) Contribution. If the indemnification provided for in this
Section 8 shall for any reason be held by a court to be unavailable to an
indemnified party under Section 8(a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Section 8(a) or (b), the indemnified party and
the indemnifying party under Section 8(a) or (b) shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to reflect the relative fault of the Company
and the prospective sellers of Registrable Securities covered by the
registration statement which resulted in such loss, claim, damage or liability,
or action or proceeding in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and such prospective
sellers from the offering of the securities covered by such registration
statement, provided, that for purposes of clause (i) or (ii), the relative
benefits received by the prospective sellers shall be deemed not to exceed the
amount of proceeds received by such prospective sellers and no holder of
Registrable Securities shall be required to contribute any amount in excess of
the amount such holder would have been required to pay to an indemnified party
if the indemnity under clause (a) of this Section 8 was available. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. As among sellers who are guilty
of such fraudulent misrepresentation, such sellers' obligations to contribute as
provided in this Section 8(d) are several in proportion to the relative value of
their respective
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Registrable Securities covered by such registration statement and not joint. In
addition, no Person shall be obligated to contribute hereunder any amounts in
payment for any settlement of any action or claim effected without such Person's
consent, which consent shall not be unreasonably withheld.
(e) Indemnification and contribution similar to that specified
in the preceding subdivisions of this Section 8 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation of any governmental authority other than
the Securities Act.
(f) An indemnifying party shall make payments of all amounts
required to be made pursuant to the foregoing provisions of this Section 8 to or
for the account of the indemnified party from time to time promptly upon receipt
of bills or invoices relating thereto or when otherwise due or payable; provided
that the indemnified party shall reimburse the indemnifying party for any
payments made with the stated purpose of satisfying the requirements of this
clause (f) which were not required to be made by this Section 8.
9. Registration Rights to Others. The Company hereby represents to the
holders of Registrable Securities that the rights granted herein do not conflict
with the rights, if any, granted to any other holder of securities of the
Company. If the Company shall at any time provide to any holder of any
securities of the Company rights with respect to the registration of such
securities under the Securities Act, such rights shall not be in conflict with
any of the rights provided in this Agreement to the holders of Registrable
Securities. The Company shall provide to the holders of Registrable Securities
copies of any agreements which purport to grant rights with respect to the
registration of any of the Company's securities to any holder or prospective
holder thereof promptly upon executing the same.
10. Nominees for Beneficial Owners. For purposes of this Agreement, in
the event that any Registrable Securities are held by a nominee for the
beneficial owner thereof, the beneficial owner thereof may, at its election, be
treated as the holder of such Registrable Securities for purposes of any request
or other action by any holder or holders of Registrable Securities pursuant to
this Agreement or any determination of any number or percentage of shares of
Registrable Securities held by any holder or holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably satisfactory
to it of such owner's beneficial ownership of such Registrable Securities.
11. Rule 144. So long as the Company shall be required to file reports
under the Exchange Act, the Company shall take all actions reasonably necessary
to enable holders of Registrable Securities to sell such securities without
registration under the Securities Act within the limitation of the provisions of
Rule
15
144 under the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission, including,
without limitation, filing on a timely basis all reports required to be filed
pursuant to the Exchange Act. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
12. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
"Affiliate" means any Person controlling, controlled by or under common
control with the Person in question. As used herein, "control" means the
beneficial ownership of at least a majority of the equity interests of a Person
entitling the owner of such interests to direct the policies and operations of
such Person.
"Commission" means the Securities and Exchange Commission and any
successor federal agency having similar powers.
"Common Stock" means the Common Stock, no par value, of the Company,
together with any stock into which such Common Stock shall have been changed or
any stock resulting from any reclassification of such Common Stock, and all
other stock of any class or classes (however designated) of the Company the
holders of which have the right, without limitation as to amount, either to all
or to a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled to
preference, but shall not mean the Preferred Stock.
"Company" shall have the meaning assigned such term in the introductory
paragraph of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Initiating Holders" means, as of any date of determination, any holder
or holders of Registrable Securities holding individually or in the aggregate
more than 50% of the shares of Registrable Securities then outstanding.
"Person" means an individual, a partnership, a limited liability
company, a joint venture, a corporation, a trust, an association, an
organization, a business, an unincorporated organization or a government or
political subdivision thereof or agency thereof or other entity of any kind.
"Preferred Stock" shall have the meaning assigned to that term in the
recitals of this Agreement.
16
"Purchasers" shall have the meaning assigned such term in the
introductory paragraph of this Agreement.
"Registrable Securities" means any shares of Common Stock (i) sold to
the Purchasers pursuant to the Stock Purchase Agreement, (ii) issued or issuable
upon conversion of shares of Preferred Stock sold to the Purchasers pursuant to
the Securities Purchase Agreement or upon exercise of the Warrants or (iii)
issued or issuable with respect to any of the securities referred to in clauses
(i) or (ii) by way of a dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or antidilution protection or otherwise. As to any particular
Registrable Security, such security shall cease to be a Registrable Security
when (x) a registration statement with respect to the sale of such security
shall have become effective under the Securities Act and the holder thereof
shall have had the opportunity to dispose of such security in accordance with
such registration statement, (y) such security shall have been sold as permitted
by Rule 144 (or any successor provision) under the Securities Act, or (z) such
security, once issued, shall have ceased to be outstanding.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Sections 1 and 2, including, without
limitation, all registration and filing fees, all fees of national securities
exchanges or the National Association of Securities Dealers, Inc., all fees and
expenses of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of "cold comfort" letters required by or
incident to such performance and compliance, any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities (excluding any
underwriting discounts or commissions with respect to the Registrable
Securities, which shall not be paid by the Company) and all of the first
$10,000, and 50% of the amount in excess of $10,000, of the reasonable fees and
expenses of one counsel to the selling holders of Registrable Securities
(selected by selling holders of Registrable Securities representing a majority
of the Registrable Securities covered by such registration); provided, however,
that in the event the Company shall, in accordance with Section 2(d), not
register any securities with respect to which it had given written notice of its
intention to so register to holders of Registrable Securities, all of the costs
of the type (and subject to any limitation to the extent) set forth in this
definition and incurred by Requesting Holders in connection with such
registration shall be deemed Registration Expenses.
"Requesting Holders" shall have the meaning assigned to such term in
Section 2 hereof.
"Requisite Holders" means with respect to any registration of
Registrable Securities by the Company pursuant to this Agreement, any holder or
holders of a majority of the Registrable Securities requested to be registered.
17
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Stockholders" shall have the meaning assigned such term in the
recitals of this Agreement.
"Securities Purchase Agreement" shall have the meaning assigned such
term in the recitals of this Agreement.
"Stock Purchase Agreement" shall have the meaning assigned such term in
the recitals of this Agreement.
"Warrants" shall have the meaning assigned such term in the recitals of
this Agreement.
13. Miscellaneous.
(a) Remedies. Each holder of Registrable Securities, in
addition to the rights provided herein and at law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by the Company of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b) Adjustments Affecting Registrable Securities. The Company
will not take any action, or permit any change to occur, with respect to the
Registrable Securities which would adversely affect the ability of the holders
of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to the terms of this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of holders
of a majority of the Registrable Securities.
(d) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, or air courier guaranteeing overnight delivery:
(i) if to a holder of Registrable Securities, at the
most current address given by such holder to the Company in accordance
with the provisions of this Section 13(d); and
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(ii) if to the Company, at Wiltek, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President; or at such
other address, notice of which is given in accordance with the
provisions of this Section 13(d).
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; five (5) business
days after being deposited in the mail, postage prepaid, if mailed; and on the
next business day if timely delivered to an air courier guaranteeing overnight
delivery.
(e) Assignment. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and, with respect to
the Company, its respective successors and permitted assigns and, with respect
to the Purchasers, any subsequent holder of any Registrable Securities, subject
to the provisions respecting the minimum numbers of percentages of shares of
Registrable Securities required in order to be entitled to certain rights, or
take certain actions, contained herein. This Agreement may not be assigned by
the Company without the prior written consent of the holders of a majority of
the Registrable Securities at the time such consent is requested. The Purchasers
(and not any other holder of Registrable Securities or any other Person) shall
be permitted, in connection with the transfer or disposition of Registrable
Securities, to impose conditions or constraints on the ability of the
transferee, as a holder of Registrable Securities, to request a registration
pursuant to Section 1 and shall provide the Company with copies of such
conditions or constraints and the identity of such transferees.
(f) Calculation of Percentage Interests in Registrable
Securities. For purposes of this Agreement, all references to a percentage of
the Registrable Securities shall be calculated based upon the number of shares
of Registrable Securities outstanding at the time such calculation is made,
assuming, if applicable, the exercise, conversion or exchange of the Company's
securities into Registrable Securities in accordance with the terms of such
securities.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same Agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
19
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Certain Distributions. The Company shall not at any time
make a distribution on or with respect to the Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the resulting or surviving corporation and such Registrable
Securities are not changed or exchanged) of securities of another issuer if
holders of Registrable Securities are entitled to receive such securities in
such distribution as holders of Registrable Securities and any of the securities
so distributed are registered under the Securities Act, unless the securities to
be distributed to the holders of Registrable Securities are also registered
under the Securities Act.
(l) 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 and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
20
IN WITNESS WHEREOF, each of the undersigned has executed this
Registration Rights Agreement as of the date first above written.
COMMERCIAL ELECTRONICS CAPITAL
PARTNERSHIP, L.P.
By Electronics Investments, L.L.C.
Its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Its: Member
COMMERCIAL ELECTRONICS, L.L.C.
By Electronics Investments, L.L.C.
Its Member
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Its: Member
WILTEK, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its: President and CEO