REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of June 4, 1998,
by and among Laboratory Specialists of America, Inc., a corporation organized
under the laws of the State of Oklahoma, with offices located at 000 Xxxx
Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000 (the "Company"), Jesup & Xxxxxx Securities
Corporation, a corporation organized under the laws of the State of Delaware
having offices at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 (the "Placement Agent"),
and the undersigned investors (together with affiliates, the "Initial
Investors").
WHEREAS, in connection with an offering (the "Offering") pursuant to a
Confidential Private Placement Offering Circular dated April 24, 1998, and any
supplements or amendments thereto, and various Subscription Agreements between
the Company and the Initial Investors (the "Subscription Agreements"), the
Company has agreed, upon the terms and subject to the conditions contained
therein, to issue and sell to the Initial Investors shares of its common stock,
par value $.001 per share (the "Common Stock");
WHEREAS, in order to induce the Initial Investors to execute and deliver
the Subscription Agreements and to purchase shares of the Common Stock pursuant
to the Offering, the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "Securities
Act"), and applicable state securities laws; and
WHEREAS, in connection with the Offering, the Company has issued to the
Placement Agent warrants (the "Warrants") to purchase Common Stock and has
agreed to provide the Placement Agent the rights set forth herein with respect
to the shares of Common Stock issuable upon exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the Placement Agent
and the Initial Investors hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Register", "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, including a registration statement pursuant to Rule 415 and Rule
416 under such Act (or any successor rules), and the declaration or ordering of
effectiveness of such registration statement by the Securities and Exchange
Commission ("SEC").
(b) "Registrable Securities" means all shares of Common Stock issued
pursuant to the Offering or upon the exercise of the Warrants or any warrants
described in Section 8 hereof, and any shares of Common Stock issued or
issuable, from time to time (with any adjustments), as a
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distribution on, in exchange for or otherwise with respect to any such shares.
(c) "Holder" means any person owning of record Registrable Securities or
any assignee of record of such Registrable Securities to whom rights under this
Agreement have been assigned in accordance with this Agreement.
2. SHELF REGISTRATION.
(a) The Company, within 30 days from the date hereof, shall file a
registration statement under the Securities Act on Form S-3 (or, if not
available, on such Form as is then available to effect a registration of all
Registrable Securities) for, and shall obtain all such qualifications and
compliances as may be required and as would permit the sale and distribution of,
all Registrable Securities, and shall use its best efforts to secure the
effectiveness of such registration statement no later than 90 days following the
date hereof or, if earlier, within 5 days after the date on which the Company
shall receive clearance from the SEC to request acceleration of the
effectiveness of such registration statement.
(b) The Company shall pay all expenses incurred in connection with any
registration, qualification and compliance (excluding underwriters' and brokers'
discounts and commissions), including, without limitation, all filing,
registration and qualification fees, printer and accounting fees.
(c) The Company shall use its best efforts to cause the registration
statement filed pursuant to this Section 2 to remain effective until the earlier
of (i) the date on which all Registrable Securities shall have been sold or (ii)
the sixth anniversary of the date hereof.
3. Intentionally omitted.
4. OBLIGATIONS OF THE COMPANY. The Company shall, as expeditiously as
possible:
(a) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such registration
statement to become effective in accordance with the terms and provisions of
Section 2 hereof.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus included therein as may be necessary
to keep the registration statement effective and comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition as set forth in such registration statement, or,
if applicable, until such earlier time as provided in Section 2(c) hereof.
(c) Furnish to each Holder and its legal counsel (i) promptly after filing
with the SEC,
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one copy of such registration statement and any amendments thereto, including
each prospectus contained therein, and each letter written by or on behalf of
the Company to the SEC or the staff of the SEC and each correspondence
therefrom, (ii) on the date of effectiveness of such registration statement
or amendment, a notice that such registration statement or amendment has been
declared effective and (iii) such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the Securities Act, and all amendments thereto, and such other documents as
any Holder may reasonably request, in order to facilitate the disposition of
the Registrable Securities owned by such Holder which shall have been
included in such registration statement.
(d) Use its best efforts to register and qualify the Registrable
Securities covered by such registration statement under any applicable
securities or "blue sky" laws of such states and jurisdictions as shall be
reasonably requested by any Holder or to obtain exemptions therefrom, and
maintain the effectiveness of such registrations, qualifications and exemptions,
PROVIDED, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) Use its best efforts promptly to secure the listing and quotation of
all Registrable Securities covered by the registration statement on the NASDAQ
SmallCap Market ("Nasdaq") or on any other market or exchange on which the
Common Stock shall then be traded.
(f) Notify each Holder of Registrable Securities included in such
registration statement, at any time when a prospectus relating thereto shall be
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement
shall 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 light of the circumstances then existing, and, upon such
notice, the Company shall promptly correct such misstatement or omission and
deliver to each Holder copies of the corrected prospectus.
(g) Take all reasonable actions required to prevent the entry of any stop
order issued or threatened by the SEC or any state regulatory authority with
respect to the registration statement covering the Registrable Securities, and
notify each Holder of any such stop order and take all reasonable actions to
remove it if entered.
(h) Permit one counsel designated by the Placement Agent to review such
registration statement and all amendments and supplements thereto on behalf of
the Holders in a reasonable period of time prior to their filing with the SEC,
and not file any document in a form to which such counsel shall reasonably
object.
5. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 2 that a
selling Holder shall furnish to the Company such information regarding such
Holder, the Registrable Securities held by such Holder and the intended method
of dispositions of such Registrable Securities as reasonably shall be required
to
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effect the registration of the Registrable Securities.
6. INDEMNIFICATION. In the event that any Registrable Securities shall
be included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless each Holder, the
partners, stockholders, officers and directors of each Holder, any underwriter
(as defined in the Securities Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Securities Act or
the Securities Exchange Act of 1934 (the "Exchange Act") (each, an "Indemnified
Person") against any joint or several losses, claims, damages, liabilities or
expenses (together with actions, proceedings or inquiries by any regulatory or
self-regulatory organization, whether commenced or threatened, in respect
thereof, "Claims") to which any of them may become subject insofar as such
Claims arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or 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, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
registration statement, or contained in the final prospectus (as amended or
supplemented, if the Company shall filed any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, 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 thereunder
relating to the offer or sale of the Registrable Securities (the matters in the
foregoing clauses (i) through (iii) being, collectively, called "Violations").
The Company shall reimburse each Indemnified Person for any reasonable legal or
other expenses (promptly as such expenses shall be incurred and shall be due and
payable) incurred by such Indemnified Person in connection with investigating or
defending any such Claim. The indemnification agreement contained in this
Section 6(a) (x) shall not apply to a Claim arising out of or based upon a
violation which shall occur in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person expressly for use
in such registration statement or any such amendment or supplement thereto; (y)
shall not apply to amounts paid in settlement of any Claim if such settlement
shall be effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld; and (z) shall not inure to the
benefit of any Indemnified Person, with respect to any prospectus, if the untrue
statement or omission of material fact in any prospectus shall have been
corrected on a timely basis and the Indemnified Person shall have failed to
utilize such corrected prospectus. This indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by the Initial Investors.
(b) In connection with any registration statement in which a Holder shall
participate, such Holder, severally and not jointly, shall indemnify and hold
harmless the Company, each of its directors, each of its officers who shall sign
the registration statement, its employees and agents and each person, if any,
who controls the Company within the meaning of the Securities Act or the
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Exchange Act, any underwriter and any other stockholder selling securities
pursuant to such registration statement or any of its partners, stockholders,
directors or officers or any person who controls such underwriter or stockholder
within the meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Party") against any Claim to which any of them may become subject,
under the Securities Act, the Exchange Act or otherwise, insofar as much Claim
shall arise out of or shall be based upon any Violation, in each case to the
extent (and only to the extent) that such Violation shall occur in reliance upon
and in conformity with written information furnished to the Company by such
Holder expressly for use in connection with such registration statement. Such
Holder shall reimburse the Indemnified party for any reasonable legal or other
reasonable expenses (promptly as such expenses shall be incurred and shall be
due and payable) incurred in connection with investigating or defending any such
Claim. The indemnity agreement contained in this Section 6(b) shall not apply
to amounts paid in settlement of any Claim if such settlement shall be effected
without the prior written consent of such Holder, which consent shall not be
unreasonably withheld; and, PROVIDED, FURTHER, that the total amounts payable by
a Holder under this Section 6(b) shall not exceed the aggregate proceeds (net
of discounts or commissions) actually received by such Holder upon the sale of
such Holder's Registrable Securities included in such registration statement.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) shall not inure to the benefit of any
person or entity if the untrue statement or omission of material fact in any
prospectus shall have been corrected on a timely basis and such person or entity
shall have failed to utilize such corrected prospectus.
(c) Promptly after receipt by an Indemnified Person or Indemnified Party
(the "Indemnitee") under this Section 6 of notice of the commencement of any
action (including, without limitation, any governmental action), such
Indemnitee, if a claim in respect thereof shall be made against any indemnifying
party under this Section 6, shall deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party shall be entitled
to participate therein, and, to the extent it shall desire, to assume the
defense thereof, with counsel mutually satisfactory to the Indemnitee, after
which the indemnifying person shall not be liable to such Indemnitee for any
legal expenses subsequently incurred by such Indemnitee in connection with the
defense thereof; PROVIDED, HOWEVER, that an Indemnitee shall have the right to
retain its own counsel, with fees and expenses to be paid by the indemnifying
party, if the indemnifying party shall have failed to assume the defense of any
such action or if, in the reasonable opinion of counsel retained by the
indemnifying party, representation of such Indemnitee by the counsel retained
would be inappropriate due to actual or potential differing interests between
such Indemnitee and any other party represented by such counsel in such action.
No indemnifying person shall be responsible for paying the fees and expenses of
more than one separate counsel for all Indemnitees. Failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any action, if the indemnifying party shall be materially prejudiced thereby,
shall relieve such indemnifying party of liability, but only to the extent that
such indemnifying party shall be prejudiced with respect to a specific claim.
An indemnifying party shall not, without the prior written consent of the
Indemnitee, settle or compromise or consent to the entry of a judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder unless such settlement, compromise or
consent shall include an unconditional
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release of such Indemnitee from all liability arising out of such claim,
action, suit or proceeding.
(d) If the indemnification provided for in Sections 6(a) or 6(b) hereof
shall be held by a court of competent jurisdiction to be unavailable to an
Indemnitee in respect of any liability under the Securities Act, then, and in
each such case, the indemnifying party, in lieu of indemnifying such Indemnitee
hereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such Indemnitee as a result of such loss, liability,
claim, damage or expense in such proportion as shall be appropriate to reflect
the relative fault of the indemnifying party on the one hand and of the
Indemnitee on the other in connection with the Violation that resulted in such
loss, liability, claim, damage or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the Indemnitee shall be determined by a court of law 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 shall have related
to information supplied by the indemnifying party or by the Indemnitee and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement, alleged statement, omission or alleged
omission; PROVIDED, that in no event, shall any contribution under this Section
6(d) by any Holder exceed the proceeds from the offering received by such
Holder. 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.
7. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the SEC which may at any time permit the sale
of the Registrable Securities to the public without registration, the Company
shall:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144, at all times while the Company shall be
reporting under the Exchange Act;
(b) Use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange act; and
(c) So long as a Holder shall own any Registrable Securities, furnish to
the Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, the Securities Act and
the Exchange Act, a copy of the most recent annual or quarterly report of the
Company and such other reports and documents of the Company as a Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing a Holder to sell any such Securities without registration.
8. DEFAULT WARRANTS. In the event that the registration statement
required to be filed pursuant to Section 2 hereof shall either (a) not be filed
within 30 days from the date hereof (the "Filing Default date"), or (b) not be
declared effective by the SEC within 90 days from the date hereof or, if
earlier, within 5 days after the date on which the Company shall receive
clearance from the SEC to request acceleration of the effectiveness of such
registration statement (the "Registration
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Default Date"), the Company shall issue and deliver, free of charge and
without cost, to each of the Holders (i) within 10 days of the Filing Default
Date and/or the Registration Default Date, as applicable, warrants, in the
form annexed hereto as Exhibit A, to purchase a number of shares of Common
Stock equal to 5% of the number of shares of Common stock purchased by each
such Holder (or such Holder's predecessor in interest) in the Offering and
(ii) within 10 days of the last date of each additional 30-day period in
which such registration statement shall not have been filed and/or declared
effective by the SEC, additional warrants, in the form annexed hereto as
Exhibit A, to purchase a number of shares of Common Stock equal to 5% of the
number of shares of Common Stock purchased by each such Holder (or such
Holder's predecessor in interest) in the Offering. The exercise price of
such warrants, as well as the number of shares of Common Stock for which each
of such warrants shall initially be exercisable, shall be appropriately
adjusted, in the same manner as set forth in Section 6 of such warrants, to
reflect dilutive events which shall occur after the date hereof and prior to
the issuance of such warrants. Any and all shares of Common Stock issued by
the Company upon the exercise of any warrants delivered pursuant to this
Section 8 shall constitute "Registrable Securities," and the Company shall be
required to register them under the Securities Act in accordance with the
provisions of this Agreement.
9. MISCELLANEOUS.
(a) a person or entitiy shall be deemed to be a Holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company shall receive conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of any
instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) Any notices required or permitted to be given under the terms of this
Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy , and
shall be effective five (5) days after being placed in the mail, if mailed, or
upon receipt or refusal of receipt, if delivered personally or by courier or
confirmed telecopy, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Laboratory Specialists of America, Inc.
000 Xxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
If to the Placement Agent:
Jesup & Xxxxxx Securities Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
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and if to any Holder, at such address as such Holder shall have provided in
writing to the Company, or at such other address as each such party shall
furnish by notice given in accordance with this Section 9(b).
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed in the State of New York. The Company irrevocably consents to the
exclusive jurisdiction of the United States federal and state courts located in
New York County, New York in any suit or proceeding based on or arising under
this Agreement and irrevocably agrees 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.
The Company further agrees that service of process upon 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
any Holder's right to serve process in any other manner permitted by law. The
Company agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
(e) This Agreement, and the Subscription Agreements constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. This Agreement and the Subscription Agreements supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
(f) This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The rights of any Holder
hereunder may be transferred in connection with a transfer of all or any portion
of such Holder's Registrable Securities. Any transferee of any such Registrable
Securities shall be required, as a condition precedent to such transfer, to
agree to be bound by all the terms and conditions of this Agreement.
(g) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(h) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be deliverable to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
(ii) Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and
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documents, as the other party may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.
(j) All consents and other determinations to be made by the Holders
pursuant to this Agreement shall be made by Holders holding a majority of the
Registrable Securities (determined as if all warrants described in Section 8
hereof then outstanding had been converted into or exercised for Registrable
Securities).
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
LABORATORY SPECIALISTS OF AMERICA, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
JESUP & XXXXXX SECURITIES CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
INITIAL INVESTORS
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
By: MG Advisers, L.L.P.
By:
-----------------------------------------
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------------------------------------------
Xxxxx Xxxxxx
0 Xxxxxxx Xxxx
Xxxxxx, XX 00000
------------------------------------------
Xxxxxx Xxxxxx
0 Xxxxxxx Xxxx
Xxxxxx, XX 00000
------------------------------------------
Xxxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
------------------------------------------
Xxxxx Xxxxxx
c/o X. Xxxxxxxxxxx
0000 00xx Xxxxxx
Xxxxxxxx, XX 00000
KDP ENTERPRISES INC.
00 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
By:
--------------------------------------
Xxxx Xxxxxx
------------------------------------------
Xxxxxx Xxxxxx
c/o Reuters
000 Xx. Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xx Xxxxxxx, XX 00000
------------------------------------------
Xxxxxx Xxxx
c/o Xxxxxx X. Xxxx
000 Xx. Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
10
XXXXXX X. XXXX Rev. Living Trust
000 Xx. Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
By:
--------------------------------------
Xxxxxx X. Xxxx
------------------------------------------
Xxxxxx Luck
00 Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
------------------------------------------
Xxxxx Xxxxxxxxx
00 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
XXXX Trust
000 Xx. Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
By:
--------------------------------------
Xxxxxx X. Xxxx
METROPOLIS EQUITY FUND, L.P.
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
By:
--------------------------------------
Xxxxx Xxxxx
QT FINANCE S.A
000 Xx. Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
By:
--------------------------------------
By: Xxxxxx X. Xxxx
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PEQUOT SCOUT FUND, LP
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
By:
--------------------------------------
Xxxxx Xxxxxx
------------------------------------------
Xxxxxxx, Xxxxxxx
c/o Xxxxxx X. Xxxx
000 Xx. Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
------------------------------------------
Xxxx X. And Xxx Xxxxxx Xxxxxxxxxx
00000 X. 00xx Xxx
Xxxxxxxxxx, XX 00000
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