Exhibit 10.50
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as of the
31st day of July, 2000, by and among MEDTOX Scientific, Inc., a Delaware
corporation (the "Company"), the Investors listed on Schedule A attached hereto
(individually, an "Investor" and collectively, the "Investors"), and Xxxxxx,
Xxxxxxx & Xxxxx, Inc. ("MJK").
RECITALS
A. The Investors and the Company have entered into that certain Stock
Purchase Agreement, dated July 31, 2000 (the "Purchase Agreement").
B. MJK has been retained to act as the exclusive agent for the Company in
connection with the offering of the Units.
C. It is a condition to the transactions contemplated in the Purchase
Agreement that the Company provide the registration and other rights provided
herein and the parties hereto desire to provide for such rights on the terms and
conditions contained herein.
NOW, THEREFORE, in consideration of the premises and covenants
contained herein, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise noted, all capitalized terms used herein
shall have the meanings afforded them in the Stock Purchase Agreement and the
Exhibits attached thereto.
2. Required Registration. Within 30 days of the Closing (the "File Date"), the
Company shall file a Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act"), on Form S-3 with the Securities and Exchange
Commission (the "Commission") covering the resale of the (i) Shares and (ii)
shares of Common Stock issuable upon exercise of the Warrants issued by the
Company to the Investors and MJK on the date hereof (collectively, the
"Registrable Stock"); provided, however, that the Company will not be obligated
to file such a registration under the Securities Act:
(a) if Form S-3 or a successor form thereto is not available to it for such
registration, provided that the Company has used good faith efforts to remain
qualified to use Form S-3; or
(b) if the Company furnishes to the holders of the Registrable Stock (as defined
below) a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Company's Board of Directors, (i)
the offering would interfere in any material respect with any financing,
acquisition, corporate reorganization or other material transaction under
consideration by the Company or (ii) there is some other material development
relating to the condition (financial or other) of the Company that has not been
disclosed to the general public and as to which it is in the Company's best
interests not to disclose such development; provided that the aggregate period
of delay under this paragraph may not extend, in any twelve-month period, for
more than 120 days unless the holders of a majority of the Registrable Stock
consent in writing to a longer delay of up to an additional 60 days.
3. Registration - General Provisions. In connection with the registration of the
Registrable Stock under the Securities Act, the Company will:
(a) subject to Section 2 above, prepare and file with the Commission a
registration statement with respect to the Registrable Stock, within 30 days of
the Closing date of the Purchase Agreement, and use its commercially reasonable
efforts to cause such registration statement to be declared effective by the
Commission subject to Section 4 below, use its commercially reasonable efforts
keep any such Registration Statement continuously effective, supplemented,
amended and current until such time as may be reasonably necessary to effect the
sale of such securities, but not to exceed the earlier of the date on which: (i)
all Registrable Stock has been sold, or (ii) three years after the date it is
declared effective by the Commission;
(b) subject to Section 4 below, prepare and file with the Commission such
amendments to such Registration Statement and supplements to the
prospectus contained therein as may be necessary to keep such
Registration Statement effective for the period required by Section
3(a) above;
(c) provide one counsel, selected by and acting on behalf of the Investors,
with reasonable opportunities to review and comment on, and otherwise
participate in, the preparation of such Registration Statement;
(d) furnish to the Investors and MJK participating in such registration and
to the underwriters of the securities being registered, if any, such
reasonable number of copies of the Registration Statement, preliminary
prospectus, final prospectus and such other documents as the Investors
and underwriters may reasonably request in order to facilitate the
public offering of such securities;
(e) use its diligent, good faith efforts to register or qualify the securities
covered by such Registration Statement under such state securities or blue sky
laws of such jurisdictions as the Investors may reasonably request, except that
the Company shall not for any purpose be required to execute a general consent
to service of process (which shall not include a "Uniform Consent to Service of
Process" or other similar consent to service of process which relates only to
actions or proceedings arising out of or in connection with the sale of
securities, or out of a violation of the laws of the jurisdiction requesting
such consent) or to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified;
(f) notify the Investors and MJK, promptly after it shall receive notice
thereof, of the time when such Registration Statement has been declared
effective by the Commission or a supplement to any prospectus forming a
part of such Registration Statement has been filed with the Commission;
(g) notify the Investors and MJK promptly of any request by the
Commission for the amending or supplementing of such Registration Statement
or prospectus or for additional information;
(h) prepare and file with the Commission, promptly upon the request of the
Investors, any amendments or supplements to such Registration Statement
or prospectus which, in the opinion of counsel for the Investors and
MJK (and concurred in by counsel for the Company), is required under
the Securities Act or the rules and regulations promulgated thereunder
in connection with the distribution of the Registrable Stock by the
Investors;
(i) subject to Section 4 below, prepare and promptly file with the
Commission and promptly notify the Investors of the filing of such
amendment or supplement to such Registration Statement or prospectus as
may be necessary to correct any statements or omissions if, at the time
when a prospectus relating to such securities is required to be
delivered under the Securities Act, any event shall have occurred as
the result of which any such prospectus or any other prospectus as then
in effect would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading;
(j) advise the Investors and MJK, and the Investors' and MJK's counsel, if
any, promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the Commission suspending
the effectiveness of such Registration Statement or the initiation or
threatening of any proceeding for that purpose and promptly use its
commercially reasonable efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such stop order should be issued;
(k) not file any amendment or supplement to such Registration Statement or
prospectus to which the Investors 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 and regulations promulgated thereunder, after having been
furnished with a copy thereof at least five business days prior to the
filing thereof, unless in the opinion of counsel for the Company the
filing of such amendment or supplement is reasonably necessary to
protect the Company from any material liabilities under any applicable
federal or state law and such filing will not violate applicable law;
and
(l) at the request of the Investors and/or MJK, furnish on the effective date of
the Registration Statement and, if such registration includes an underwritten
public offering, at the closing provided for in the underwriting agreement: (i)
opinions, dated such respective dates, of the counsel representing the Company
for the purposes of such registration, addressed to the underwriters, if any,
and to the Investors making such request, covering such matters as such
underwriters or Investors may reasonably request, and (ii) letters, dated such
respective dates, from the independent certified public accountants of the
Company, addressed to the underwriters, if any, and to the Investors, covering
such matters as such underwriters or Investors may reasonably request, in which
letter such accountants shall state (without limiting the generality of the
foregoing) that they are independent certified public accountants within the
meaning of the Securities Act and that in the opinion of such accountants the
financial statements and other financial data of the Company included in the
Registration Statement or the prospectus or any amendment or supplement thereto
comply in all material respects with the applicable accounting requirements of
the Securities Act.
4. Suspension of Resales. The holders of the Registrable Stock acknowledge that
there may occasionally be times when the Company must suspend the use of the
prospectus forming a part of the Registration Statement, in the event that Form
S-3 becomes unavailable to the Company, if the offering of the Registrable Stock
would interfere with certain material corporate transactions or if there exists
certain material non-public information concerning the Company. Accordingly, the
Company may suspend sales pursuant to such Registration Statement: (a) if the
holders of the Registrable Stock are notified in writing by the Company that
Form S-3 is not available for the sale of securities by such holders, for such
period of unavailability; and (b) for a period of up to 120 days (unless the
holders of at least a majority of the Registrable Stock consent in writing to a
longer delay of up to an additional 60 days) if the Company furnishes to the
holders of the Registrable Stock a certificate signed by the Chief Executive
Officer of the Company stating that in the good faith judgment of the Company's
Board of Directors, (i) the offering would interfere in any material respect
with any financing, acquisition, corporate reorganization or other material
transaction under consideration by the Company or (ii) there is some other
material development relating to the condition (financial or other) of the
Company that has not been disclosed to the general public and as to which it is
in the Company's best interests not to disclose such development; provided that
the aggregate period of delay under this subparagraph (b) may not extend, in any
twelve-month period, for more than 120 days unless the holders of a majority of
the Registrable Stock consent in writing to a longer delay of up to an
additional 60 days. The Company will notify the holders of Registrable Stock in
any of such events (in each case, a "Black Out Notice"). Each such holder agrees
that upon its receipt of a Black Out Notice such holder shall immediately
discontinue the sale of any Registrable Stock pursuant to the Registration
Statement until such holder has received copies of the supplemented or amended
prospectus referred to in Section 3(i) or until such holder is advised in
writing that the use of the prospectus may be resumed, and has received copies
of any additional or supplemental filings that are incorporated by reference in
the prospectus. In addition, the holder agrees that it will either (x) destroy
any prospectuses, other than permanent file copies, then in such holder's
possession which have been replaced by the Company with more recently dated
prospectuses or (y) deliver to the Company all copies, other than permanent file
copies, then in such holder's possession of the prospectus covering such
Registrable Stock that was current at the time of receipt of the Black Out
Notice. The period during which the Company is required to continue the
effectiveness of a registration statement under Section 3(a) will be tolled for
all periods of time during which resales are suspended under this Section 4.
5. Provision by Investors of Certain Information in Connection with Registration
Statement. No Investor or MJK may include any of its Registrable Stock in the
Registration Statement pursuant to this Agreement unless and until such Investor
and MJK furnishes to the Company in writing, within 20 days after receipt of a
request therefor, the information specified in Item 507 or 508 of Regulation
S-K, as applicable, of the Securities Act for use in connection with the
Registration Statement or prospectus or preliminary prospectus included therein.
Each selling Investor and MJK agrees to promptly furnish additional information
required to be disclosed in order to make the information previously furnished
to the Company by such Investor and MJK not materially misleading.
6. Registration Expense. The Company shall pay all Registration Expenses (as
defined below) in connection with the inclusion of the Registrable Stock in any
Registration Statement, or application to register or qualify such shares under
state securities laws, filed by the Company hereunder, other than as set forth
herein. For purposes of this Agreement, the term "Registration Expenses" means
the filing fees payable to the Commission, any state agency and the NASD; the
fees and expenses of the Company's legal counsel and independent certified
public accountants in connection with the preparation and filing of the
Registration Statement (and all amendments and supplements thereto) with the
Commission; and all expenses relating to the printing of the Registration
Statement, prospectuses and various agreements executed in connection with the
Registration Statement. The Company will pay the fees and expenses, not to
exceed $3,000, of one counsel selected by MJK to represent the Investors in
connection with preparation of the Registration Statement. Notwithstanding the
foregoing, the Investors will pay the fees and expenses of any other legal
counsel the Investors may engage, as well as the Investors' proportionate share
of any custodian fees or commission or discounts which may be payable to any
underwriter.
7. Penalty Payments. In the event that the Company is determined not to have
exercised its commercially reasonable efforts to file a Registration Statement
relating to the Registrable Stock with the Commission on or before the File
Date, then, the Company shall pay the Investors and MJK the following amounts
("Penalty Payments"): (i) 1% of the purchase price of the Stock (the "Purchase
Price") paid by the Investors to the Company if (A) the Company is determined
not to have exercised its commercially reasonable efforts to file the
Registration Statement with the Commission by the File Date, (ii) an additional
1% of the Purchase Price if the Company is determined not to have exercised its
commercially reasonable efforts to cause the Registration Statement to be filed
with the Commission within 150 days of the Closing date, and (iii) an additional
3% of the Purchase Price for each 30-day period thereafter in which the Company
is determined not to have exercised its commercially reasonable efforts to cause
the Registration Statement not to be filed with the Commission. Penalties for
failure to file and/or to obtain effectiveness shall be cumulative. The Company
shall be liable to the Investor for a full 30-day period, determined in
accordance with the above schedule, regardless of by how many days it misses one
of the targeted filing or effective dates set forth above. All such Penalty
Payments shall be immediately payable by the Company to the Investors and MJK
(on a pro rata basis based on the number of shares of Stock purchased by each
under the Stock Purchase Agreement) via wire transfer of immediately available
funds in the event that it is determined that the Company did not use its
commercially reasonable efforts as set forth above. The Company shall be deemed
not to have used its commercially reasonable efforts if the Registration
Statement is not filed within 150 days of the Closing.
8. Indemnification. With respect to the registration of the resale of the shares
of Registrable Stock:
(a) to the fullest extent permitted by law, the Company will indemnify and hold
harmless each Investor, MJK, the trustees, partners, officers, directors and
agents of each Investor, MJK, any underwriter (as defined in the Securities Act)
for such Investor, MJK and each person, if any, who controls such Investor, MJK
or underwriter within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by the Registration Statement; and the
Company will reimburse each such Investor, trustee, partner, officer, director,
agent, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 8 shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished to it expressly for use in
connection with such registration by an Investor, trustee, partner, officer,
director, agent, underwriter or controlling person of an Investor.
(b) to the extent permitted by law, each Investor and MJK will indemnify and
hold harmless the Company, each of its directors, each of its officers, each
person, if any, who controls the Company within the meaning of the Securities
Act, any underwriter and any other Investor selling securities under the
Registration Statement or any of such other Investor's, trustees, partners,
directors or officers or any person who controls such Investor, against any
losses, claims, damages or liabilities (joint or several) to which the Company
or any such director, officer, controlling person, underwriter or other such
Investor, or trustee, partner, director, officer or controlling person of such
other Investor may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Investor and stated to be specifically for use in connection
with such registration; and each such Investor will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Investor, or trustee, partner, officer,
director or controlling person of such other Investor in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 8 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Investor and MJK,
which consent shall not be unreasonably withheld; provided further, that in no
event shall any indemnity under this Section 8 exceed the gross proceeds from
the offering received by such Investor or MJK unless the Violation is the result
of fraud on the part of such Investor or MJK.
(c) promptly after receipt by an indemnified party under this Section of notice
of the commencement of any action (including any governmental action), such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party; and
provided further, that if there is more than one indemnified party, the
indemnifying party shall pay for the fees and expenses of one counsel for any
and all indemnified parties to be mutually agreed upon by such indemnified
parties, unless representation of an indemnified party by the counsel retained
by the other indemnified parties would be inappropriate due to actual or
potential differing interests between such indemnified parties. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section.
(d) if the indemnification provided for in this Section is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to
any losses, claims, damages or liabilities referred to herein, the indemnifying
party, in lieu of indemnifying such indemnified party thereunder, shall to the
extent permitted by applicable law, contribute to the amount paid or payable by
such 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
indemnifying party on the one hand and of the indemnified party on the other in
connection with the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. No
person or entity guilty of fraudulent misrepresentation (within the meaning of
Section 11 of the Securities Act) shall be entitled to contribution from any
person or entity who shall not have been guilty of such fraudulent
misrepresentation.
(e) the obligation of the Company, the Investors and MJK under this Section
shall survive the completion of any offering for resale of shares of
the Registrable Stock in the Registration Statement, and otherwise.
9. Limitation on Subsequent Registration Rights. From and after the date of this
Agreement, the Company shall not, without the prior written consent of Investors
holding a majority of the Registrable Stock, enter into any agreement, which
might cause a reduction in the number of shares includable by the Investors in
any registration pursuant to Section 2 above.
10. Successors and Assigns. The terms and conditions of this Agreement will
inure to the benefit of and be binding upon and be enforceable by the respective
heirs, successors and assigns of the parties hereto; provided, however, that the
rights of an Investor hereunder may be assigned only (a) to a partner or retired
partner of the assigning Investor, if such assigning Investor is a partnership,
(b) to any Affiliate of the assigning Investor, (c) to any family member of, or
any trust for the benefit of a family member of the assigning Investor or (d)
concurrent with the sale or transfer to such assignee of at least 50,000 shares
of Registrable Stock (subject to adjustment for any stock dividend, stock split,
subdivision, combination or other recapitalization of the Company) then held by
the assigning Investor; provided, however, that the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of the assignee and the securities with respect to which such
registration rights are being assigned and such transferee agrees in writing to
be bound by and subject to the terms and conditions of this Agreement. Any
Investor or MJK making an assignment in connection with the sale or transfer of
only a portion of its shares will retain its rights under this Agreement for the
shares not sold or transferred. Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto or their
permitted successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. Notwithstanding any provision contained elsewhere in this
Agreement, upon the transfer of shares by any of the parties hereto, no claims
or causes of action arising out of or related to this Agreement existing as of
the transfer date will be transferred by such party to any heir, successor,
assign or permitted transferee, provided that the transfer of shares will not be
deemed a waiver by the transferring party of any such claim or cause of action.
11. Miscellaneous.
(a) The Company shall not hereafter enter into any agreement with respect
to its securities that is inconsistent with the rights granted to the
Investors in this Agreement.
(b) Except as otherwise provided herein, the provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents
to or departures from the provisions hereof may not be given or made
unless the Company has obtained the written consent of the Investors
and MJK holding at least a majority of the Registrable Stock.
(c) All notices and other communications provided for or permitted
hereunder shall be made by hand delivery, telex, facsimile, overnight
courier or registered first-class mail:
(i) if to an Investor, at the address set forth on Schedule A
attached hereto;
(ii) if to MJK, at the address set forth in the Stock Purchase
Agreement.
(iii) if to the Company, at the address set forth in the Purchase
Agreement.
All such notices and communications shall be deemed to have been duly
given: when delivered, if by hand, overnight courier or mail; when the
appropriate answer back is received, if by telex; when transmission is
confirmed by the sending unit, if by facsimile.
(d) 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 an the same agreement.
(e) The headings to this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(f) This Agreement shall be governed by and construed in accordance with the
laws of the State of Minnesota without giving effect to the principles of choice
or conflict of law thereof. Each of the Company and the Investors irrevocably
consent to the exclusive jurisdiction of the United States Federal courts and
state courts, located in Hennepin County, Minnesota, in any suit or proceeding
relating to, based on or arising under this Agreement and irrevocably agree that
all claims in respect of such suit or proceeding may be determined in such
courts. The Company irrevocably waives the defense of an inconvenient forum to
the maintenance of such suit or proceeding. Service of process on the Company
mailed by first class mail shall be deemed in every respect effective service of
process upon the Company in any such suit or proceeding. Nothing herein shall
affect the right of any Investor to serve process in any manner permitted by
law.
(g) In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of such provision in every other respect
and of the remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that all of the rights and
privileges of the Investors and the Company shall be enforceable to the
fullest extent permitted by law.
(h) The remedies provided for in this Agreement shall be cumulative and in
addition to all other remedies available, at law or in equity, and
nothing herein shall limit a holder's right to pursue actual damages
for any failure by the Company to comply with the terms of this
Agreement.
(i) This Agreement, the documents referenced herein and the exhibits
thereto, constitute the entire understanding and agreement of the
parties hereto with respect to the subject matter hereof and thereof
and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written
or oral, between the parties with respect hereto and thereto. The
express terms hereof control and supersede any course of performance or
usage of the trade inconsistent with any of the terms hereof.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
COMPANY:
MEDTOX SCIENTIFIC, INC.
By:
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Name:
Title:
XXXXXX, XXXXXXX & XXXXX, INC.
By:
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Name:
Title:
