AMENDMENT AGREEMENT
AGREEMENT dated as of January 2, 1996 between EDITEK, Inc.
("Purchaser") and MedTox Laboratories, Inc. ("Seller").
WITNESSETH:
WHEREAS, Seller and Purchaser are parties to a certain Asset Purchase
Agreement dated July 1, 1995 (the "Purchase Agreement"), and desire to delay the
closing of the transactions contemplated by the Purchase Agreement until 1996
and to change the nature of the consideration to be paid to Seller by Purchaser.
NOW, THEREFORE, in consideration of the premises and the mutual
promises of the parties set forth below, the parties hereby agree as follows:
(1) The Purchase Agreement is hereby amended so that (i) the Seller
Termination Date referred to in Section 10.1 (b), the Purchaser
Termination Date referred to in Section 10.1 (c) and the date
contemplated by Section 10.1 (d) of the Purchase Agreement are all
changed to January 15, 1996, and (ii) Section 4.1 is changed to allow
Purchaser to set a Closing Date to be not earlier than January 1, 1996
and not later than the new Seller Termination Date.
(2) The Escrow Agent is hereby authorized pursuant to the Escrow Agreement
attached to the Purchase Agreement as Exhibit A executed
contemporaneously with the Purchase Agreement between Seller, Purchaser
and Xxxxxx & Efron, P. A., as Escrow Agent (the "Escrow Agreement") to
deliver to Seller the funds deposited into escrow by Purchaser and all
interest thereon. The amount delivered shall constitute a nonrefundable
deposit to be credited against the purchase price in the transactions
contemplated by the Purchase Agreement. If the Purchase Agreement is
terminated by either party for any reason, Seller shall be entitled to
retain the funds delivered to Seller and being held by Seller as a
nonrefundable deposit. All obligations and
rights of the parties to the Escrow Agreement are hereby terminated.
(3) Article III of the Purchase Agreement is hereby amended to read in its
entirety as follows:
ARTICLE III
CONSIDERATION PAYABLE BY PURCHASER
Section 3.1 Cash Purchase Price. In addition to assumption of
the Assumed Liabilities, Purchaser shall pay Seller an aggregate cash purchase
price of Nineteen Million ($19,000,000) Dollars for the Assets as follows:
(a) Upon execution of this Amendment Agreement, $509,569.90
nonrefundable deposit delivered to Seller by legal counsel to Seller, formerly
held pursuant to the terms of the Escrow Agreement attached to the Purchase
Agreement as Exhibit A;
(b) At Closing, the remainder of the cash Purchase Price shall
be paid by wire transfer to Seller's bank account in Minneapolis, Minnesota.
Section 3.2 Definitions. The following terms shall have the
definitions set forth below:
(a) "Additional Shares" shall mean shares of Common Stock of
Purchaser issued pursuant to Section 3.4 of this Agreement.
(b) "Closing Date Market Price" shall mean the average for the
five Trading Days immediately preceding the Closing Date of the mean of the
daily high and low sales prices of the Common Stock on the American Stock
Exchange, Inc.
(c) "Closing Shares" shall mean shares of Common Stock of
Purchaser issued to Seller at the Closing of the transactions contemplated by
the Purchase Agreement.
(d) "Common Stock" shall mean shares of the Common Stock, par
value $0.15 per share, of Purchaser
(e) "Holder" shall mean Seller or the shareholder of Seller to
whom Seller distributes the Closing Shares.
(f) "Price Protection Price" shall mean the lower of (i) the
Purchase Price or (ii) the lowest Repricing Date Market Price for any previous
Repricing Date.
(g) "Purchase Price" shall mean Seventy (70%) Percent of the
Closing Date Market Price of a share of Common Stock of Purchaser.
(h) "Release Date(s)" shall mean the calendar date(s) on which
Purchaser issues a press release announcing its financial performance for (i)
the fiscal quarter that ends on March 31, 1996, but not later than May 14, 1996,
(ii) the fiscal
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quarter that ends on September 30, 1996, but not later than November 14, 1996,
(iii) the fiscal year that ends on December 31, 1996, but not later than March
31, 1997 and (iv) the fiscal quarter that ends on September 30, 1997, but not
later than November 14, 1997.
(i) "Repricing Date" shall mean the fifth Trading Day
following each Release Date, with the Trading Day immediately following the
Release Date constituting the first Trading Day.
(j) "Repricing Date Market Price" shall mean the average on
the Repricing Date and four Trading Days preceding the Repricing Date of the
mean between the daily high and low sales prices of the Common Stock of
Purchaser on the national securities exchange or NASDAQ on which the Common
Stock of Purchaser is listed or quoted.
(j) "Trading Day" shall mean any day on which at least 1,000
shares of Common Stock of Purchaser are sold on any national securities exchange
or NASDAQ; provided, however, if for any applicable period there are more than
two consecutive trading days when there are fewer than 1,000 shares of Common
Stock sold, then each trading day thereafter shall be deemed to be a Trading Day
regardless of the number of shares of Common
Stock sold.
Section 3.3 (a) Equity Purchase Price. At Closing the
Purchaser shall issue to Seller a number of shares of Common Stock ("Common
Stock") of Purchaser equal to the quotient obtained by dividing (i) Five Million
(5,000,000), by (ii) Seventy (70%) Percent of the Closing Date Market Price of a
share of Common Stock of Purchaser. No fractional shares shall be issued.
Purchaser shall have the option to pay cash or to issue a whole share in lieu of
fractional shares.
(b) Escrowed Shares. At Closing, a number of the shares of
Common Stock issuable pursuant to Section 3.3 (a) having a Closing Date Market
Price equal to Two Hundred Fifty Thousand ($250,000) Dollars shall be deposited
in escrow (the "Escrowed Shares") with legal counsel to Purchaser with executed
stock powers acceptable to Purchaser to be held and delivered pursuant to the
terms of the escrow agreement attached to the Purchase Agreement as Exhibit B;
and
Section 3.4 Additional Shares of Common Stock. To encourage
retention of the Closing Shares, Purchaser hereby agrees to compensate the
Holders of Closing Shares for declines in the market price of the Common Stock
of Purchaser below the Purchase Price as follows. To the extent necessary to
compensate a Holder for declines in the market price of the Common Stock of
Purchaser below the Purchase Price, Purchaser shall issue to the Holder a number
of Additional Shares such that after issuance of any such Additional Shares, the
Closing Shares and the Additional
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Shares held by Holder on the Repricing Date are equal in value (valued at the
applicable Repricing Date Market Price) to the product determined by multiplying
(a) the number of Closing Shares and Additional Shares held by the Holder after
the close of trading on the day immediately preceding the Repricing Date, by (b)
the Price Protection Price.
Additional Shares shall be issued within ten (10) days after
the Repricing Date. No fractional shares shall be issued. Purchaser shall have
the option to pay cash or to issue a whole share in lieu of fractional shares.
Notwithstanding the foregoing, no Additional Shares shall be
issued to any Holder who at any time prior to the Repricing Date shall engage in
any short sales of the Common Stock of Purchaser, acquire any put option or sell
any call option on the Common Stock of Purchaser, loan any shares of Common
Stock to any other person or entity who Holder knows has a short position in the
Common Stock of Purchaser or who Holder knows has any put or call options on the
Common Stock of Purchaser, sell any shares of Common Stock of Purchaser during
the period between any Release Date and the following Repricing Date or
encourage or assist any other person or entity to engage in any such trading
activity.
Section 3.6 Tax Liability.
(a) In the event Seller distributes Closing Shares to any shareholder
and a Sales Window does not occur between the date Purchaser notifies Seller in
writing that the Closing Shares and Additional Shares are registered and are
sellable under securities laws and April 10,1997, Purchaser shall pay the Tax
Liability to each of Seller's shareholders who received Closing Shares.
The term "Tax Liability" shall mean the amount determined by
multiplying (i) the amount by which the Purchase Price of a Closing Share
exceeds the Market Price of a share of Common Stock of Purchaser on April 10,
1997, by (ii) the quotient derived by dividing (x) the Federal and state income
tax liability associated with Seller's shareholder's receipt of the Closing
Shares (but not any penalties or interest), by (y) the Market Price of a share
of Common Stock of Purchaser on April 10, 1997, provided that in the event a
shareholder of Seller does not sell any Closing Shares or Additional Shares to
pay such taxes, clause (y) of the foregoing calculation
shall read as follows: "(y) the Purchase Price."
The term "Sales Window" shall mean a period of twenty (20) consecutive
Trading Days in which the aggregate Tax Liability Price of the Closing Shares
and Additional Shares issued by Purchaser equals or exceeds the Purchase Price
for the Closing Shares of such shareholder.
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The term "Tax Liability Price" for any shareholder of Seller shall mean
the sum of the following:
(i) the aggregate average Market Price during the
Trading Window of all Closing Shares and Additional Shares
held by such shareholder of Seller throughout the Trading
Window;
(ii) if during or prior to the Trading Window such
shareholder sells any Closing Shares or Additional Shares for
a price that is less than the average Market Price during the
Trading Window, the aggregate average Market Price during the
Trading Window of the Closing Shares and Additional Shares
sold by such shareholder; and
(iii)if during or prior to the Trading Window such
shareholder sells any Closing Shares or Additional Shares for
a price that is equal to or greater than the Market Price
during the Closing Window, the sales price of the Closing
Shares and Additional Shares sold by such shareholder.
The term "Market Price" shall mean the mean of the high and low sales
prices on the date in question of the Common Stock of Purchaser on any national
securities exchange or NASDAQ on which the Common Stock of
Purchaser is listed or quoted.
(b) The obligations of Purchaser to pay the Tax Liability to any
shareholder of Seller shall be subject to such shareholder providing Purchaser
with proof reasonably satisfactory to Purchaser of the amount of the Tax
Liability, including (i) the date and sales price of any Closing Shares or
Additional Shares and (ii) continued ownership of Closing Shares and Additional
Shares during the applicable period.
(c) Purchaser shall pay its Tax Liability hereunder on or before April
15, 1997, provided that Purchaser may delay payment of all or part of its Tax
Liability hereunder to the extent payment is not permissible under law or under
any covenant or agreement with the lender(s) providing financing for the
acquisition of the assets of Seller, including any covenant or agreement in any
line of credit extended in connection with the acquisition loans. If all or any
part of payment of the Tax Liability is delayed by reason of the foregoing, (i)
Purchaser shall notify Seller of the basis for the delay and (ii) Purchaser
shall pay the delayed the Tax Liability payment to the extent payment later
becomes permissible under such legal or contractual restriction on payment,
provided that in the event at any time prior to additional payment of Tax
Liability becoming permissible
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a Sales Window occurs, Purchaser shall cease to have any further obligation to
pay the tax liability that has not previously been paid. The ability to pay Tax
Liability shall be measured as of the last day of each fiscal quarter of
Purchaser.
(d) In the event of any partial payment of the Tax Liability by
Purchaser, all persons entitled to Tax Liability payments shall be paid their
pro rata share based on the number of Closing Shares distributed to them by
Seller.
Section 3.6 Stock Dividends, Splits, Combinations etc. In the event of
any stock, dividend, split, combination, reorganization or similar event with
respect to the shares of Common Stock of Purchaser, (i) shares issued on account
of or in exchange for Closing Shares shall be Closing Shares, (ii) shares issued
on account of or in exchange for Additional Shares shall be Additional Shares
and (iii) stock prices shall be proportionately adjusted to the extent
adjustment is required to fulfill the original intention of the parties.
Section 3.7 Transfer Restrictions.
(a) Holders of Closing Shares shall not sell or otherwise transfer any
Closing Shares until the sixtieth (60th) day after the Closing Date. In
determining a Holder's right to sell Closing Shares, the day immediately
following the Closing Date shall be Day One.
Notwithstanding the foregoing, nothing contained in this Section 3.7
(a) shall prohibit transfer by Seller of Closing Shares to any shareholder of
Seller who shall execute and deliver to Purchaser an agreement to comply with
the provisions of this Section 3.7.
(b) Because the Closing Shares and the Additional Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act")
or applicable state securities laws, Seller cannot dispose of any or all of the
Closing Shares or the Additional Shares unless such shares are subsequently
registered under the Securities Act, and/or applicable state securities laws, or
exemptions from such registration are available. Purchaser shall register the
Closing Shares and the Additional Shares as provided in the Registration Rights
Agreement attached as Exhibit A hereto. Seller further understands that
Purchaser, as a condition to the transfer of any of the Closing Shares or
Additional Shares, may require that the request for transfer be accompanied by
an opinion of counsel satisfactory to the Purchaser, in form and substance
satisfactory to the Purchaser and preceded by prior written notice, to the
effect that the proposed transfer does not result in violation of the Securities
Act or applicable state securities laws, unless such transfer is covered by an
effective registration statement
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under the Securities Act and all applicable state securities laws. Seller
understands that each certificate representing the Closing Shares and Additional
Shares and any securities issued on account of ownership thereof will bear the
following legend or one substantially similar thereto:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or
the securities laws of any state. These securities have been acquired
for investment and not with a view to distribution or resale, and may
not be sold, mortgaged, pledged, hypothecated or otherwise transferred
without an effective registration statement for such shares under the
Securities Act and applicable state securities laws, or an opinion of
counsel satisfactory to the corporation that registration is not
required under the Securities Act and applicable state securities laws.
Section 3.8 Representations and Agreements of Seller. Seller
hereby represents, warrants and agrees as follows:
(a) Seller has a total of thirty-five (35) shareholders. The
name and address of each shareholder are set forth on Schedule 3.8 hereto.
(b) Prior to the meeting of shareholders of Seller to approve
this Amendment Agreement, Seller shall distribute to all shareholders of Seller
a copy of the Private Placement Memorandum (and all exhibits thereto) and an
Investor Questionnaire furnished by Purchaser to Seller.
(c) Seller agrees to furnish to Purchaser any other
information about Seller reasonably requested by Purchaser to allow Purchaser to
comply with securities laws and that no shares of Common Stock of Purchaser
shall be distributed to any shareholder (i) who fails to deliver to Purchaser
and/or Seller prior to the Closing a completed Investor Questionnaire of
Purchaser, or (ii) who alone or together with their Purchaser Representative (as
defined in Rule 501 (h) of Regulation D), fails to furnish prior to the Closing
such information or assurances necessary for Purchaser to conclude that the
issuance and delivery of the Closing Shares to Seller as contemplated herein, is
exempt from registration under Federal and state securities laws. Determinations
of information required and whether the conditions to exemption have been
satisfied shall be made jointly in good faith by both Purchaser and Seller.
(4) All representations and warranties made by Seller and Purchaser
Sections in 5.2 and 6.2 of the Purchase Agreement are hereby extended
to this Amendment
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Agreement and the Registration Rights Agreement and the transactions
contemplated hereby and thereby.
(5) Sections 5.4 and 5.5, which shall read in their entirety as set forth
below, are hereby added to the Purchase Agreement:
Section 5.4 Closing Shares and Additional Shares. The Closing
Shares and the Additional Shares will upon issuance in accordance with Article
III of the Purchase Agreement be duly and validly authorized, fully-paid and
nonassessable shares of Common Stock of Purchaser, except that the shareholders
of Purchaser are not required to approve this Amendment Agreement, the
Registration Rights Agreement or the transactions contemplated hereby or
thereby. Purchaser has obtained confirmation from the American Stock Exchange
("AMEX") that the vote of the shareholders of Purchaser at a meeting held on
October 26, 1995 is sufficient to satisfy AMEX rules with respect to the
transactions contemplated by this Amendment Agreement. No filing or registration
with, no notice to and no permit, authorization, consent or approval of any
public body or authority is necessary for the consummation by Purchaser of the
transactions contemplated by this Amendment Agreement or the Registration Rights
Agreement, except that (i) offers and/or sales of Closing Shares and Additional
Shares may require filings with, and approvals by, state securities regulators,
which filings and approvals will be made and obtained by Purchaser at its
expense prior to issuance of the Closing Shares and Additional Shares; (ii)
Purchaser will file a Form D at its expense with the Securities and Exchange
Commission following the Closing; and (iii) performance of the Registration
Rights Agreement will require filings with, and approvals by, the Securities and
Exchange Commission and various State securities regulators, with the expense of
such filings to be allocated as set forth in the Registration Rights Agreement.
Section 5.5 Securities Documents. The Private Placement
Memorandum delivered by Purchaser to Seller and the documents incorporated by
reference therein do not contain any untrue statements of material fact and do
not omit to state any material fact necessary to make the statements of material
fact therein, in light of the circumstances under which they were made, not
misleading. This representation shall not apply to any statements contained in,
or omitted from, such documents to the extent the statement is based on
information supplied to Purchaser by Seller.
(6) Article IV of the Purchase Agreement is hereby amended to add Section
4.2 (d), 4.3 (d), (e) and (f), and Section 4.4 (j), which shall read in
their entirety as follows:
4.2 (d) All shareholders of Seller shall have completed and delivered
to Purchaser and Seller the Investor Questionnaire in the form attached
as Exhibit A hereto, and
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together with their Purchaser Representative (as defined in Rule 501
(h) of Regulation D), shall satisfy the conditions for exempting the
offer and sale by Purchaser of shares of Common Stock to such person
under Federal or state securities laws.
4.3 (d) Purchaser shall have executed and delivered to Seller the
Registration Rights Agreement in the Form attached as Exhibit B to this
Amendment Agreement.
4.3 (e) Shareholders of Seller shall have approved the execution and
delivery of this Amendment Agreement and the consummation of the
transactions contemplated by the Purchase Agreement, as amended by this
Amendment Agreement.
4.3 (f) No holders of the outstanding shares of stock of Seller shall
have elected to exercise their dissenters rights under Minnesota
Statutes Sections 302A.471 and 302A.473.
4.4 (j) Seller shall have executed and delivered to Purchaser the
Registration Rights Agreement in the Form attached as Exhibit B to this
Amendment Agreement.
(7) The opinion letters to be delivered by attorneys for Purchaser and
attorneys for Seller pursuant to Sections 4.3 (b) and 4.4 (b) of the
Purchase Agreement shall be changed to read in their entirety as set
forth on Exhibit C and Exhibit D hereto.
(8) Section 8.4 of the Purchase Agreement is hereby amended to add the
following:
Purchaser shall pay at Closing all reasonable attorneys fees, costs and
expenses incurred by Seller on or after November 16, 1995 through the
Closing Date, and amounts reasonably estimated to be incurred after the
Closing Date up to a maximum of $25,000 in post-Closing fees, in
connection with the negotiation, preparation, documentation, execution,
delivery and performance of the Purchase Agreement, as amended by this
Amendment Agreement, and the Registration Rights Agreement, provided
that Purchaser shall not be liable for amounts related to work that
would have been performed had the Purchase Agreement closed without the
changed terms contained in the Amendment Agreement.
(9) Article VIII of the Purchase Agreement is hereby amended to add Section
8.8, which shall read in its entirety as follows:
Purchaser shall continue to have its Common Stock listed for trading on
a national securities exchange or quoted on the Automated Quotation
System of the
9
National Association of Securities Dealers, Inc. until the last
Repricing Date.
(10) Except as set forth above, the Purchase Agreement shall remain
unchanged and in full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Amendment Agreement to
be signed by their respective officers thereto duly authorized as of the date
first written above.
[CORPORATE SEAL] MEDTOX LABORATORIES, INC.
ATTEST: By:______________________________
Name:_________________________
Title:_______________________
By:_________________________
______________, Secretary
[CORPORATE SEAL] EDITEK, INC.
ATTEST: By:______________________________
Name:_______________________
Title:______________________
By:______________________
______________, Secretary
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of January __, 1996 (this
"Agreement"), is made between Editek, Inc., a corporation organized under the
laws of Delaware (the "Company"), and MedTox Laboratories, Inc., a corporation
organized under the laws of the State of Minnesota (the "Initial Investor").
W I T N E S S E T H:
WHEREAS, in connection with the Asset Purchase Agreement, dated as of
July 1, 1995, as amended by the Amendment Agreement dated as of December 1, 1995
between the Initial Investor and the Company (the "Purchase Agreement"), the
Company has agreed, upon the terms and subject to the conditions of the Purchase
Agreement, to issue and sell to the Initial Investor shares of Common Stock at
the closing of the transactions contemplated by the Purchase Agreement (the
"Closing Shares"), and, under certain conditions described in the Purchase
Agreement to issue without additional cost additional shares of Common Stock
(the "Additional Shares"); and
WHEREAS, the Company is agreeing 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 with respect to the Closing Shares
and the Additional Shares (the "Shares");
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 and the
Initial Investor hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall
have the following meanings:
(i) "Register," "registered," and "registration"
refer to a registration effected by preparing and filing a Registration
Statement or Statements in compliance with the Securities Act on such
appropriate registration form promulgated by the Commission as shall be selected
by the Company and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
("SEC") and applicable state laws.
(ii) "Registrable Securities" means the Closing
Shares and the Additional Shares.
(iii) "Registration Statement" means a
registration statement under the Securities Act registering securities of the
Company.
(b) As used in this Agreement, the term Investor includes (i) the
Initial Investor (as defined above) and (ii) each person who is a permitted
transferee or assignee of the Registrable Securities pursuant to Section 9 of
this Agreement.
2. Registration.
(a) Piggy-Back Registrations. Subject to the provisions of
Sections 3 and 4 hereof, if at any time the Company shall determine to prepare
and file with the SEC a Registration Statement relating to an offering under the
Securities Act of any of its equity securities for its own account or the
account of others, other than on Form S-4 or Form S-8 or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the Company shall
send to each Investor who owns Registrable Securities written notice of such
determination and, if within twenty (20) days after receipt of such notice, such
Investor shall so request in writing, the Company shall include in such
Registration Statement all or any part of the Investor's Registrable Securities
that such Investor requests to be registered, except that if, in connection with
any underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in
such underwriter(s)' judgment, such limitation is necessary to effect an orderly
public distribution, then the Company shall be obligated to include in such
Registration Statement only such limited portion, if any, of the Registrable
Securities with respect to which such Investor has requested inclusion
hereunder. Any exclusion of Registrable Securities and other securities having
registration rights shall be made pro rata among the Investors and other
shareholders seeking to include Registrable Securities and other securities have
registration rights and in proportion to the number of Registrable Securities
and other securities having registration rights sought to be included in such
registration; provided, however, that the Company shall not exclude any
Registrable Securities unless the Company has first excluded all outstanding
securities the holders of which are not entitled to inclusion of securities in
such Registration Statement. No right to registration of Registrable Securities
under this Section 2(a) shall be construed to limit any registration required
under Section 2(b) hereof. The obligations of the Company under this Section
2(a) may be waived by Investors holding Eighty (80%) Percent in interest of the
Registrable Securities and shall terminate (i) after the Company has afforded
the opportunity for the Investors to exercise registration rights under this
Section 2(a) for two registrations; provided, however, that any Investor who
shall
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have had any Registrable Securities excluded from any Registration
Statement in accordance with this Section 2(a) shall be entitled to include in
an additional Registration Statement filed by the Company the Registrable
Securities so excluded, or (ii) after the expiration of three years after the
Closing Date of the transactions contemplated by the Purchase Agreement.
(b) Immediate Registration. Subject to the provisions of
Sections 3 and 4 hereof, the Company shall prepare and file a Registration
Statement with the SEC within fifteen (15) business days after the Closing Date
of the transactions contemplated by the Purchase Agreement; provided, however,
that such registration statement need not be filed until five (5) business days
after all persons having the right to include shares therein have provided the
Company with all information reasonably requested by the Company in connection
with such registration. The Registration Statement required by this Section 2
(b) shall cover a number of Registrable Securities of Investor equal to the
number of Closing Shares issued at the Closing of the transactions contemplated
by the Purchase Agreement, plus an equal number of Additional Shares. In the
event the Company becomes obligated to issue a number of Additional Shares in
excess of the number covered by such Registration Statement, the Company shall
either amend the Registration Statement to cover the extra Additional Shares or
file a new Registration Statement to cover the extra Additional Shares. Such
amendment or new Registration Statement shall be filed a number of days after
the issuance of such Additional Shares as the first Registration Statement is
required to be filed after the Closing Date of the transactions contemplated by
the Purchase Agreement.
(c) If any registration is underwritten, the Investors who
hold the Registrable Securities to be included in such underwriting shall pay
all underwriting discounts and commissions with respect to their Registrable
Securities and the fees and expenses of legal counsel selected by the Investors.
(d) Nothing herein shall limit the right of the Company to
grant registration rights to any other person or entity and to include shares of
such person or entity on any Registration Statement.
3. Obligations of the Company. In connection with the
registration of the Registrable Securities under this Agreement, the Company
shall:
(a) prepare promptly and file with the SEC promptly (but in no
event later than 15 business days after the Closing Date of the transactions
contemplated by the Purchase Agreement) a Registration Statement or Statements
with respect to all Registrable Securities to be included therein, and
thereafter use its best efforts to cause the Registration Statement to become
effective as soon as reasonably possible after such filing. If such Registration
Statement is filed pursuant to Rule 415, the Company shall keep the Registration
Statement effective pursuant to Rule 415 at all times until such date as is two
years after the date such Registration Statement is first ordered effective by
the SEC. In any case, the Registration
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Statement (including any amendments or supplements thereto and prospectuses
contained therein) filed by the Company shall not contain any 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, in light of the
circumstances in which they were made, not misleading; provided, however, that,
subject to the conditions set forth in Section 4(a) below, each Investor may
notify the Company in writing that it wishes to exclude all or a portion of its
Registrable Securities from such Registration Statement.
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times until such
date as is two years after the date such Registration Statement is first ordered
effective by the SEC, and, during such period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by the Registration Statement until such time as all of such
Registrable Securities have been disposed of by the Investors in accordance with
the intended methods of disposition by the Investors as set forth in the
Registration Statement.
(c) furnish to each Investor whose Registrable Securities are
included in the Registration Statement, such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
promptly upon approval thereof by the SEC and such other documents as such
Investor may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor; The Company shall provide copies
of all such documents upon approval thereof by the SEC to counsel for the
Initial Investor at such address designated in writing by the Initial Investor;
(d) (i) register or qualify, or obtain exemption from
registration or qualification for, the Registrable Securities covered by the
Registration Statement under such other securities or blue sky laws of such
jurisdictions as required for sale of the Registrable Securities by the investor
as the Investors who hold a majority in interest of the Registrable Securities
being offered reasonably request, (ii) prepare and file in those jurisdictions
such amendments (including post-effective amendments) and supplements, (iii)
take such other actions as may be necessary to maintain such registrations or
qualifications in effect at all times until such date as is the earlier of two
years after the date such Registration Statement is first ordered effective by
the SEC or is two years after the Initial Investor acquired the Shares and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions or to otherwise permit the
Holders to dispose of the Registrable Securities; provided, however, that the
Company shall not be required in connection therewith or as a condition thereto
to (I) qualify to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(d), (II) subject itself to general
taxation in any such jurisdiction, (III) file a general consent to service of
process in any such jurisdiction, (IV) make any change in its charter or
by-laws, which in each case the
4
Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders or (V) subject any officer,
director or shareholder to any penalty or risk of forfeiture other than
those penalties and risks to which officers and directors are ordinarily liable
in a public offering of securities;
(e) in the event Investors who hold a majority in interest of
the Registrable Securities being offered pursuant to Section 2(b) hereof select
underwriters for the offering, or an underwritten public offering is conducted
pursuant to Section 2(a) hereof, enter into and perform its obligations under an
underwriting agreement in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering;
(f) as promptly as practicable after becoming aware of such
event, notify each Investor who holds Registrable Securities being sold pursuant
to such registration of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement to correct such untrue statement or
omission, and deliver a number of copies of such supplement or amendment to each
Investor as such Investor may reasonably request;
(g) as promptly as practicable after becoming aware of such
event, notify each Investor who holds Registrable Securities being sold pursuant
to such registration (or, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any stop order or other suspension
of effectiveness of the Registration Statement at the earliest possible time;
(h) permit a single firm of counsel designated as selling
Investors' counsel by the Investors who hold a majority in interest of the
Registrable Securities being sold pursuant to such registration to review the
Registration Statement and all amendments and supplements thereto a reasonable
period of time prior to their filing with the SEC, and not file any document in
a form to which such counsel reasonably objects, provided that any unreasonable
delay by such counsel shall automatically extend the period provided in this
Agreement for filing the Registration Statement;
(i) at the request of the Investors who hold a majority in
interest of the Registrable Securities being sold pursuant to an underwritten
registration, furnish on the date that Registrable Securities are delivered to
an underwriter for sale in connection with the Registration Statement (i) a
letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public
5
accountants to underwriters in an underwriter public offering, addressed to the
underwriters; and (ii) an opinion, dated such date, from counsel
representing the Company for purposes of such Registration Statement, in form
and substance as is customarily given in an underwritten public offering,
addressed to the underwriters and Investors;
(j) make available for inspection by any Investor whose
Registrable Securities are being sold pursuant to such registration, any
underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by any such
Investor or underwriter (collectively, the "Inspectors"), all pertinent
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably necessary to
enable each Inspector to exercise its due diligence responsibility, and cause
the Company's officers, directors and employees to supply all information which
any Inspector may reasonably request for purposes of such due diligence;
provided, however, that each Inspector shall hold in confidence and shall not
make any disclosure (except to an Investor) of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court or government body of competent
jurisdiction or (iii) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company shall not be required to disclose any confidential
information in such Records to any Inspector until and unless such Inspector
shall have entered into confidentiality agreements (in form and substance
satisfactory to the Company) with the Company with respect thereto. Each
Investor agrees that it shall, upon learning that disclosure of such Records is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the Company, at
its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, the Records deemed confidential. The Company
shall hold in confidence and shall not make any disclosure of information
concerning an Investor provided to the Company pursuant to Section 4(e) hereof
unless (i) disclosure of such information is necessary to comply with federal or
state securities laws, (ii) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement, (iii)
the release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction or (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company agrees that
it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor, and
allow such Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information;
6
(k) use its best efforts either to (i) cause all the
Registrable Securities covered by the Registration Statement to be listed on the
American Stock Exchange or another national securities exchange and on each
additional national securities exchange on which similar securities issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or (ii) secure
designation of all the Registrable Securities covered by the Registration
Statement as a National Association of Securities Dealers Automated Quotations
System ("NASDAQ") "national market system security" within the meaning of Rule
11Aa2-1 of the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the quotation of the Registrable Securities on the NASDAQ
National Market System or, if, despite the Company's best efforts to satisfy the
preceding clause (i) or (ii), the Company is unsuccessful in satisfying the
preceding clause (i) or (ii), to secure listing on a national securities
exchange or NASDAQ authorization and quotation for such Registrable Securities;
(l) provide a transfer agent and registrar, which may be
a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement;
(m) cooperate with the Investors who hold Registrable
Securities being sold pursuant to registration statements and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates to the transferees to whom such Registrable Securities
are being sold (not bearing any restrictive legends) pursuant to the
denominations or amounts as the case may be, and registered, in such names as
the managing underwriter or underwriters, if any, or the Investors may
reasonably request; and, within three business days after a Registration
Statement which includes Registrable Securities is ordered effective by the SEC,
the Company shall deliver, or shall cause legal counsel selected by the Company
to deliver, to the transfer agent for the Registrable Securities (with copies to
the Investors whose Registrable Securities are being sold) instructions to the
transfer agent to issue new stock certificates without a legend to such
transferees and an opinion of such counsel that the shares have been registered;
and
(n) take all other reasonable actions necessary to expedite
and facilitate disposition by the Investor of the Registrable Securities
pursuant to the Registration Statement.
(o) Notwithstanding the foregoing, the Company's
obligations in connection with the registration of Registrable Securities shall
be limited as follows:
(i) The Company shall not be obligated under
this Agreement to register or include in any registration Registrable Securities
that any Investor has requested to be registered if the Company shall furnish
such Investor with a written opinion of counsel reasonably satisfactory to
such Investor, that all Registrable Securities that such Investor holds may
be publicly offered, sold or distributed without registration under the Act
pursuant to Rule 144 without restriction as to the amount of securities that
can be sold.
7
(ii) The Company's obligation to amend,
supplement and cause to continue to be effective any registration statement may
be suspended, for a reasonable period of time, not to exceed 45 days, if the
Company has been advised in writing by independent legal counsel that such
filing would require the disclosure of a material transaction or other facts
and the Board of Directors of the Company determines reasonably and in good
faith that such disclosure would have a material, adverse effect on the
Company; provided, however, that the Company shall not under any
circumstances be permitted to exercise such rights more than two (2) times in
any twelve (12) month period. The Company shall immediately notify in
writing all Investors who hold Registrable Securities covered by such
registration statement of such determination, and such Investors shall maintain
the confidentiality of such notice and shall cease all trading in the securities
of the Company until the Company notifies such Investors in writing that the
circumstances that caused such suspension or postponement are no longer present
and that the Registration Statement is currently effective. The Company shall
use its best efforts to promptly take all such actions necessary to eliminate
any such suspension or postponement as soon as reasonably possible.
(iii) The Company may in its discretion grant to
any owner of securities of the Company registration rights of any kind or
nature.
(p) If the Company shall fail to file the Registration
Statement required to be filed by the Company pursuant to Section 2 (b) hereof
within the time provided therefor, or if the Company shall fail to actively
attempt to obtain effectiveness of the Registration Statement, the Investors
shall be entitled, at the Company's expense, to prepare a Registration Statement
and/or to attempt to obtain effectiveness of the Registration Statement. In such
event, the Company shall cause its directors and officers to provide all
required information and to execute all documents as reasonably requested by
such Investors to file such Registration Statement and/or cause such
Registration Statement to become effective.
4. Obligations of the Investors. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
(a) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Agreement with respect to each
Investor that such Investor furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of the Registrable Securities and execute
such documents in connection with such registration as the Company may
reasonably request. At least fifteen (15) days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify each
Investor of the information the Company requires from each such investor (the
"Requested Information") if such Investor elects to have any of such Investor's
Registrable Securities included in the Registration Statement. If within five
(5) business days
8
prior to the filing date the Company has not received a signed writing
containing the Requested Information from an Investor (a "Non-Responsive
Investor"), then the Company may file the Registration Statement without
including Registrable Securities of such Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement;
(c) In the event the Company or Investors holding a majority
in interest of the Registrable Securities being registered determine to engage
the services of an underwriter in accordance with Section 2(b) hereof, or in
connection with any underwritten public offering pursuant to Section 2(a)
hereof, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement, and the Company shall
have no obligation to register the Registrable Securities of any Investor who
fails to comply with this paragraph;
(d) Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(f)
and 3(g), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or 3(g) and, if so directed by
the Company, such Investor shall, at the option of the Investor, either (i)
deliver to the Company or (ii) destroy (and deliver to the Company a certificate
of destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice; and
(e) No Investor may participate and the Company shall have no
obligation to register the Registrable Securities of any Investor in any
underwritten registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Investors entitled hereunder to approve such
arrangements, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and (iii) agrees to
pay its pro rata share of all underwriting discounts and commissions applicable
with respect to its Registrable Securities,
9
in each case to the extent not payable by the Company pursuant to the terms of
this Agreement.
5. Expenses of Registration. All expenses (other than underwriting
discounts and commissions or brokerage commissions) incurred in connection with
registrations, filings or qualifications pursuant to Section 3, including,
without limitation, all registration, listing and qualifications fees, printers'
and accounting fees and the fees and disbursements of counsel for the Company,
shall be borne by the Company; provided, however, that the Investors shall bear
the fees and out-of-pocket expenses of the one legal counsel selected by the
Investors pursuant to Section 3(h) hereof.
6. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act, any underwriter (as defined in the
Securities Act) for the Investors, the directors, if any, of such underwriter
and the officers, if any, of such underwriter, and each person, if any, who
controls any such underwriter within the meaning of the Securities Act or the
Exchange Act (each, an "Indemnified Person"), against any losses, claims,
damages, expenses or liabilities (joint or several) (collectively "Claims") to
which any of them become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof 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 files 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 or any state securities law or any rule or regulation (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to the restrictions set forth in Section 6(d) with
respect to the number of legal counsel, the Company shall reimburse the
Investors and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such
10
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a) (I) shall not apply to
a Claim arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company
by any Indemnified Person or underwriter for such Indemnified Person expressly
for use in connection with the preparation of the Registration Statement,
preliminary prospectus, final prospectus or any amendments thereof or
supplements thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (II) with respect to any preliminary prospectus
shall not inure to the benefit of any such person from whom the person asserting
any such Claim purchased the Registrable Securities that are the subject thereof
(or to the benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof; and (III) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Persons and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify and hold
harmless, to the same extent and in the same manner set forth in Section 6(a),
the Company, each of its directors, each of its officers who signs the
Registration Statement, each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act, any underwriter and any other
stockholder selling securities pursuant to the Registration Statement of any of
its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified person, an "Indemnified Party"),
against any Claims to which any of them may become subject, under the Securities
Act, the Exchange Act or otherwise, insofar as such Claims(s) arises out of or
is based upon any Violation(s), in each case to the extent (and only to the
extent) that such Violation(s) occurs in reliance upon and in conformity with
written information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement; and such Investor will promptly
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors
11
pursuant to Section 9. Notwithstanding anything to the contrary herein, the
indemnification agreement contained in this Section 6(b) with respect to
any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented.
(c) The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing by such
persons expressly for inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, 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
control of the defense thereof with counsel mutually satisfactory to the
indemnifying parties; provided, however, that an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if, in the reasonable opinion
of counsel retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and indemnifying party in
such proceeding. The Company shall pay for only one separate legal counsel for
such of the Investors as may become Indemnified Parties or Indemnified Persons;
such legal counsel shall be selected by the Investors holding a majority in
interest of the Registrable Securities. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.
(e) Any Holder required to indemnify the Company as provided
in this Section 6 shall cease to have the right to participate in any other
registration pursuant to this Agreement.
7. Contribution. To the extent any indemnification provided for herein
is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution
12
with respect to any amounts for which it would otherwise be liable under
Section 6 to the fullest extent permitted by law; provided, however, that
(a) no contribution shall be made under circumstances where the maker would
not have been liable for indemnification under the fault standards set forth
in Section 6, (b) no Holder of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Holder of Registrable Securities
who was not guilty of such fraudulent misrepresentation and (c)
contribution by any Holder of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such Holder from the sale of such
Registrable Securities.
8. Reports under Exchange Act. With a view to making available to the
Investors the benefits of Rule 144 or any other similar rule or regulation of
the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration, until such time as the Investors
have sold all the Registrable Securities held by them pursuant to a Registration
Statement or Rule 144 or otherwise, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) 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) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. Assignment of the Registration Rights. The rights to have the
Company register Registrable Securities pursuant to this Agreement may be
assigned by the Initial Investor to any shareholder of the Initial Investor to
whom the Initial Investor transfers any Closing Shares or Additional Shares if:
(a) the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (i) the name and address of such transferee or
assignee and (ii) the securities with respect to which such registration rights
are being transferred or assigned, (b) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and applicable state securities
laws, and (c) at or before the time the Company receives the written notice
contemplated by clause (a) of this sentence the transferee or assignee agrees in
writing with the Company to be bound by all of the provisions contained
13
herein. Except for transfers to shareholders of the Initial Investor that
comply with the requirements of this Section, registration rights are not
transferable.
10. Amendment of Registration Rights. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold a majority in interest of
the Registrable Securities. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company.
11. Miscellaneous.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives 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 instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall
be in writing (including facsimile) and shall be deemed to be sufficiently given
and delivered when personally delivered, faxed (with a copy sent by first class
mail) or when sent by registered mail, return receipt requested, addressed (i)
if to the Company, at EDITEK, Inc., 0000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxx
Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxx, Chief Financial Officer, (ii) if to
the Initial Investor, at the address set forth in the Purchase Agreement, with a
copy to Xxxxxx & Efron, P. A., 1200 Title Insurance Building, Xxxxxxxxxxx,
Xxxxxxxxx 00000, Attention Xxxx X. Xxxxxxxx, Esq. and (iii) if to any other
Investor, at such address as such Investor shall have provided in writing to the
Company, or at such other address as each such party furnishes by notice given
in accordance with this Section 11(b), with a copy to Xxxxxx & Efron, P. A.,
1200 Title Insurance Building, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention Xxxx X.
Xxxxxxxx, Esq., and shall be effective, when personally delivered, upon receipt,
when faxed, the day after transmission, and when so sent by certified mail, four
business days after deposit with the United States Postal Service.
(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 enforced, governed by and
construed in accordance with the laws of the State of New York applicable to the
agreements made and to be performed entirely within such state. In the event
that any provision of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall
14
be deemed inoperative to the extent that it may conflict therewith and shall
be deemed modified to conform with such statute or rule of law. Any provision
hereof which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision hereof.
(e) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
(f) Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may required.
(h) The headings in the Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) 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 delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of day and
year first above written.
EDITEK, INC. MEDTOX LABORATORIES, INC.
By: _______________________ By:_______________________
Title:_____________________ Title:____________________
15
EDITEK, INC. QUESTIONNAIRE
As partial consideration for the acquisition of substantially all of
the assets of MedTox Laboratories, Inc. ("MedTox") by EDITEK, Inc. (the
"Company"), shares (the "Shares") of the common stock, par value $.15 per share
("Common Stock"), of the Company are being offered to MedTox, at a purchase
price and on the terms described in the Company's Private Placement Memorandum
(the "Offering").
The Shares are being offered without registration under the Securities
Act of 1933, as amended (the "Securities Act"), or the securities laws of
certain states, in reliance on the exemption contained in Section 4(2) of the
Securities Act and on Regulation D promulgated by the Securities and Exchange
Commission pursuant to the Securities Act ("Regulation D"), and in reliance on
applicable exemptions claimed under certain applicable state laws. The Company
has agreed to file a registration statement on Form S-3 (the "Registration
Statement") with the Securities and Exchange Commission to registering for
resale the Shares.
PURPOSES OF THIS QUESTIONNAIRE
PART I: Suitability Requirements and General Solicitation
Restrictions.
Under the Securities Act, Regulation D and certain state laws, the
Company must determine that an individual meets certain suitability requirements
before selling (or, in some states, offering) the Shares to such individual and
must ensure that no general solicitation occurs in connection with the Offering.
This Questionnaire does not constitute an offer to sell or a solicitation of an
offer to sell or a solicitation of an offer to buy the Shares or any other
security.
THE COMPANY WILL NOT OFFER OR SELL SHARES TO ANY INDIVIDUAL WHO HAS NOT
COMPLETED AND EXECUTED THIS QUESTIONNAIRE.
PART II: Stock Ownership.
Certain information regarding ownership of the Company's securities and
the intended plan of distribution of the Shares is necessary to prepare the
Registration Statement and other securities documents which may be required in
connection with the Registration Statement to be filed by the Company with the
Securities and Exchange Commission to register for resale the Shares, in
accordance with the rights granted to you pursuant to the Registration Rights
Agreement between the Company and MedTox (the "Registration Rights Agreement").
Because the information provided herein will be used in connection with
the preparation of documents to be filed with state or federal agencies, it
should be accurate, complete and true, and not omit any material or important
information.
One copy of this questionnaire should be completed and delivered to
Editek, Inc., 0000 Xxxxxxx Xxxx, Xxxxxxxxxx, XX 00000, Attn: Xxxxx X. Xxxxx.
SHARES WILL NOT BE INCLUDED IN THE REGISTRATION UNLESS YOU COMPLETE
THIS QUESTIONNAIRE.
PART I
INSTRUCTIONS TO PART I:
PLEASE ANSWER ALL QUESTIONS. If the appropriate answer is "None" or
"Not Applicable," so state. Please print or type your answers to all questions.
Attach additional sheets if necessary to complete your answers to
any item.
Your answers to Part I will be kept strictly confidential at all times;
however, the Company may present this Questionnaire to such parties (including
lenders or governmental entities) as it deems appropriate in order to assure
itself and such entities that the offer and sale of the Units will not result in
a violation of the registration provisions of the Securities Act or a violation
of Regulation D or the securities laws of any state.
NOTE: Individuals responding to this questionnaire should answer
questions 1 through 3.2 of Part I. Partnerships, corporations, trusts or other
entities responding to this questionnaire should answer questions 4 through 7.2
of Part I.
A. INDIVIDUALS
1. Name and Address.
Name:_____________________________________ Date of Birth:__________________
Residence Address (include Zip Code):__________________________________________
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Business Address (include Zip Code)____________________________________________
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2
Telephone Nos. Res.:_______________________ Bus.:_____________________
Preferred Mailing Address: [ ] Residence [ ] Business
Citizenship: [ ] U.S. [ ] Other (specify)_____________________________
State of Residence:____________________________________________________________
Social Security No.:___________________________________________________________
Marital Status:________________________________________________________________
2. Financial Condition. Please answer the following questions
concerning your financial condition by marking the appropriate response box.
2.1 Did your individual annual gross income (net of expenses
directly related to the production of such income) during each
of 1993 and 1994 exceed $200,000, and do you reasonably expect
your individual annual income during 1995 to exceed $200,000?
[ ] [ ]
Yes No
2.2 Did your joint annual gross income (together with your spouse)
(net of expenses directly related to the production of such
income) during each of 1993 and 1994 exceed $300,000, and do
you reasonably expect your joint annual income during 1995 to
exceed $300,000?
[ ] [ ]
Yes No
2.3 Does your individual or joint (together with your spouse)
net worth 1 exceed $1,000,000?
[ ] [ ]
Yes No
1 For this purpose, a person's net worth is the excess of all of the person's
assets over all of the person's liabilities, based upon current fair market
value.
3
3. Sophistication:
3.1 (a) Do you consider yourself to have sufficient
knowledge and experience in financial and business
matters to enable you to evaluate the merits and
risks of an investment in the Shares?
[ ] [ ]
Yes No
(b) If the answer to 3.1(a) is "No," you will be required
to have an attorney, accountant or other investment
adviser serve as your purchaser representative(s) to
evaluate and advise you with respect to your
prospective investment in the Shares. Each such
person must complete, and you must review and
acknowledge, a separate Purchaser Representative
Questionnaire and Disclosure Statement and
Acknowledgement which must be returned to the Company
prior to the sale of any Shares to you.
3.2 In connection with your proposed investment in the Shares,
will you seek advice from any attorney, accountant, investment
adviser or other person or persons?
[ ] [ ]
Yes No
If yes, please set forth the name, profession or occupation,
business address and telephone number of each such prospective
adviser and, if more than one, explain briefly the division of
responsibilities between them:
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4
B. PARTNERSHIPS, CORPORATIONS, TRUSTS OR OTHER ENTITIES
4. Name and Address.
Name of entity: ________________________________________________________________
Indicate type of entity:
[ ] General Partnership
[ ] Limited Partnership
[ ] Corporation
[ ] Trust
[ ] Other ____________________________________
(Specify)
Taxpayer identification number:___________________
Business address:______________________________________________________________
(Street)
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(City) (State) (Zip Code)
Business telephone number:_______________________________________
(Area Code) (Number)
State in which organized or incorporated:
------------------------------------------------------------------------------
Date of organization or incorporation:
------------------------------------------------------------------------------
Was this partnership, corporation, trust or other entity formed for the specific
purpose of investing in the Shares?
[ ] Yes [ ] No
5. Business
Please describe the nature of the business the entity conducts.
----------------------------------------------------------------------
5
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6. Financial Condition:
6.1 Please answer Questions 6.1.1 through 6.1.6 by checking the
appropriate box or boxes below:
6.1.1 The undersigned entity is (a) a bank, as defined in
Section 3(a)(2) of the Securities Act os 1933, as amended (the
"Act"), or a savings and loan association or other institution
as defined in Section 3(a)(5)(A) of the Act, whether acting in
its individual or fiduciary capacity; (b) a broker or dealer
registered pursuant to Section 15 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"); (c) an insurance
company, as defined in Section 2(13) of the Act; (d) an
investment company registered under the Investment Partnership
Act of 1940 (the "1940 Act") or a business development company
as defined in Section 310(c) or (d) of the Small Business
Investment Act of 1958; (e) a plan established and maintained
by a state, it political subdivision, or any agency or
instrumentality of a state or its political subdivisions, for
the benefit of its employees if such plan has total assets in
excess of $5,000,000; or an employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974
("ERISA"), if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of ERISA, that is
either a bank, savings and loan association, insurance company
or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by
persons that are accredited investors.
[ ] [ ]
Yes No
6.1.2 The undersigned entity is a "private business
development company" as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940.
[ ] [ ]
Yes No
6.1.3 The undersigned entity is an organization described in
Section 501(c)(3) of the Internal Revenue Code, a corporation,
a Massachusetts or similar business trust, or a partnership,
not formed for the specific purpose of making the investment,
with total assets in excess of $5,000,000.
[ ] [ ]
Yes No
7
6.1.4 The undersigned entity is a trust, with total assets in
excess of $5,000,000, not formed for the purpose of investing
in the Shares.
[ ] [ ]
Yes No
6.1.5 The undersigned is an entity and each partner (including
general and limited partners), shareholder, grantor of a
revocable trust or other equity owner of the undersigned
entity (a) has a net worth, individually or jointly with his
or her spouse, of at least $1,000,000; (b) had an individual
income in excess of $200,000 in each of 1993 and 1994 and
reasonably expects such individual income to exceed $200,000
in 1995 (or with his or her spouse, had and expects to have an
income of $300,000 for such periods; (c) is an officer or
director of the Company; or (d) meets the requirements of any
of categories 6.1.1, 6.1.2, 6.1.3, 6.1.4 above.
[ ] [ ]
Yes No
6.1.6 The undersigned entity does not meet any of the
standards set forth in the categories listed in 6.1.1 through
6.1.5 above.
[ ] [ ]
Yes No
7. Sophistication
7.1 (a) Does the entity have sufficient knowledge and
experience in financial and business matters to
enable it to evaluate the merits and risks of an
investment in the Shares?
[ ] [ ]
Yes No
(b) If the answer to 7.1(a) is "No," the entity will be
required to have an attorney, accountant or other
investment adviser serve as its purchaser
representative(s) to evaluate and advise it with
respect to the prospective investment in the Shares.
Each such person must complete, and the entity must
review and acknowledge, a separate Purchaser
Representative Questionnaire and Disclosure Statement
and Acknowledgement which must be returned to the
Company prior to the sale of any Shares to the
entity.
8
7.2 In connection with the proposed investment in the Shares, will
the entity seek advice from any attorney, accountant,
investment adviser or other person or persons?
[ ] [ ]
Yes No
If yes, please set forth the name, profession or occupation,
business address and telephone number of each such prospective
adviser and, if more than one, explain briefly the division of
responsibilities between them:
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9
PART II
INSTRUCTIONS TO PART II:
Please answer each question fully, giving the most exact and accurate
answers possible and provide information as of December 1, 1995. Certain terms
used in Part II are defined in Appendix A hereto, which should be referred to in
completing this part of the questionnaire.
For purposes of the questions in Part II, references to "you" or "your"
refer equally to individuals and entities responding to this questionnaire.
1. General.
State your name as it should appear in any securities
registration filings made.
NAME:________________________________________________________
If an entity, indicate principal contact for questions:
NAME:________________________________________________________
TELEPHONE:___________________________________________________
2. Business.
Please describe the nature of the business your organization
conducts.
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------------------------------------------------------------------------------
10
3. Relationship with the Company.
Please state your (or the undersigned entity's) current
position or relationship with the Company (or its affiliates) and any
relationship with the Company (or its affiliates) during the past three years:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
4. Security Holdings.
(a) Please state below the respective numbers of shares of the
Company's Common Stock (or any other class of equity securities), excluding the
shares of the Company's Common Stock offered by the Company as partial
consideration for the acquisition of the assets of MedTox, owned of record or
beneficially*, directly or indirectly, by you or members of your family, or by a
group* of which you are a member, or by an associate* of yours, as indicated, as
of __________________ (the "Non-MedTox Shares"). For purposes of this question,
your family members include your spouse, your minor children and any relative of
you or your spouse who lives with you.
Class & Number of Name and Amount and
Non-MedTox Shares Address of Nature of
Currently Owned Beneficial Owner* Beneficial Ownership2
Non-MedTox Shares owned
by you, both of record
and beneficially*
Non-MedTox Shares owned
by you, of record only
Non-MedTox Shares owned
by you, beneficially* only
Non-MedTox Shares owned
of record or beneficially*
by your spouse, your
minor children and
relatives of yours or
of your spouse
(including adult children)
living in your home
2 State whether this is by (1) sole voting power, (2) shared voting power, (3)
sole investment power, (4) shared investment power, or any combination of the
foregoing.
11
Class & Number of Name and Amount and
Non-MedTox Share Address of Nature of
Currently Owned Beneficial Owner* Beneficial Ownership3
Non-MedTox Shares owned
by a group* of which you
are a member, both of
record and beneficially*
Non-MedTox Shares owned
by a group* of which
you are a member,
of record only
Non-MedTox Shares owned
by a group* of which
you are a member,
beneficially* only
Non-MedTox Shares
which you have a
right to acquire
pursuant to options,
warrants or otherwise
within 60 days of
_____________, 1995
(please describe
arrangements on reverse
side of this page)
(b) Are any of the shares of stock or notes of the Company owned by you
subject to any pledge or other contractual arrangement*?
No _____ Yes _____
If yes, please explain such pledge or other contractual
arrangement*:
3 State whether this is by (1) sole voting power, (2) shared voting power,
(3) sole investment power, (4) shared investment power, or any combination
of the foregoing.
12
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(c) Please describe any other rights to purchase securities of the
Company that you have:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
5. Plan of Distribution. Attached as Appendix B hereto is a description
of a plan of distribution that is intended to be used in the Registration
Statement. Please indicate whether anything stated in Appendix B is inaccurate
or misleading with respect to any plan you may have to distribute the securities
owned by you or whether Appendix B omits to state any information about such
plan of distribution.
No _____ Yes _____
If yes, describe below specifically in what manner Appendix B
is inaccurate or misleading. Please also describe below any additional
information about any plan you may have to distribute the securities that you
own.
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13
CERTIFICATION
The undersigned hereby affirms that the preceding information is
correct as of the date hereof. The undersigned will promptly notify the Company
or its legal counsel of any changes in such information. The undersigned
understands and agrees that this Questionnaire, as completed, and any further
communications by the undersigned regarding the matters contemplated herein,
will be relied upon, in connection with the offering by the Company of the
Shares and the filings related to the Registration Statement, by the Company,
its legal counsel, and the representatives of the underwriters (if any) and
their counsel.
-----------------------------------------------
Signature of Investor 4
----------------------------------------------
Please type or print name and title, if any
---------------------------------------------
Date
4 If this Questionnaire is being completed by or on behalf of a person* other
than an individual, the entity on whose behalf the Questionnaire is being
completed should be stated.
14
APPENDIX A
1. Affiliate, Affiliated Company. The term "affiliate" or "affiliated
company" means any person* that directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common
control with a specific entity, by means of possession of the power to
direct or cause the direction of its management and policies, whether
through ownership or otherwise. Persons who have acted or are acting on
behalf or for the benefit of any entity include, but are not
necessarily limited to, directors, officers, employees, agents,
consultants and sales representatives.
2. Associate. The term "associate" means:
(a) Any corporation or organization, except the Company and its
subsidiaries, of which you are an executive officer or partner
or of which you, together with other officers or directors of
the Company, are, directly or indirectly, the beneficial owner
of 10% or more of any class of equity securities.
(b) Any trust or other estate in which you have a substantial
beneficial interest or as to which you serve as trustee or in
a similar fiduciary capacity.
(c) Any relative, your spouse or any relative of your spouse who
resides with your or who is a director of officer of the
Company or its subsidiaries.
3. Beneficial Owner. A "beneficial owner" of securities is any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise has or shares:
(i) Voting power, which includes the power to vote, or to direct
the voting of, such security; and/or,
(ii) Investment power, which includes the power to dispose or
direct the disposition of, such security.
Furthermore, a "beneficial owner" of a security includes any person who
has the right to acquire beneficial ownership of such security at any
time within sixty (60) days. The right to acquire beneficial ownership
could (but need not necessarily) be through (i) the exercise of any
option, warrant or right, (ii) the conversion of a security, (iii) a
power to revoke or automatic termination of a trust, discretionary
account, or similar arrangement, or otherwise.
15
A "beneficial owner" also includes any person who, directly or
indirectly, creates or uses a trust, proxy, power of attorney, pooling
arrangement or any other contract, arrangement, or device with the
purpose or effect of divesting such person or beneficial ownership of a
security or preventing the vesting of such beneficial ownership as part
of a plan to evade the reporting requirements of any federal or state
securities act.
Securities owned beneficially would include not only securities held by
you for your own benefit, whether in bearer form or registered in your
own name or otherwise, but would also include securities held by others
for your benefit (regardless of whether or how they are registered),
such as, for example, securities held for you by banks or other
custodians, brokers (whether in your name, their name or in "street
name"), executors, administrators, or trustees (including trusts in
which you have only a remainder interest) and securities held for your
account by pledges, and securities owned by a partnership in which you
are a member, and securities owned by any corporation in which you and
your associates* own 10% or more of the stock. A person is deemed to be
the beneficial owner of securities beneficially owned by his spouse,
his minor children, or any relative sharing his home.
"Indirectly", when used to refer to beneficial ownership of securities,
means ownership through another such as a controlled corporation,
member of the family, estate, trust, partnership or other entity.
4. Family Member. The term "family member" means your spouse, parents,
children, siblings, mothers and fathers-in-law, sons and
daughters-in-law, and brothers and sisters-in-law.
5. Family Relationship. The term "family relationship" means any
relationship by blood, marriage or adoption, not more remote than first
cousin.
6. Group. The term "group" means any two or more persons acting as a
partnership, limited partnership, syndicate or otherwise.
7. Person. The term "person" means a natural person, company, partnership,
joint venture, limited partnership, trust, estate, government, or other
entity, or a political subdivision, agency, or instrumentality of a
government.
8. Public Company. The term "public company" means a company with a class
of securities registered pursuant to section 12 of the Securities
Exchange Act of 1934 or subject to the requirements of section 15(d) of
that Act or any company registered as an investment company under the
Investment Company Act of 1940.
16
9. Arrangement. Any plan,* contract, authorization or understanding,
whether or not set forth in a formal document.
10. Immediate Family. Any relationship by blood, marriage or adoption,
including the person's spouse, parents, children, brothers and sisters,
mothers and fathers-in-law, sons and daughters-in-law and brothers and
sisters-in law, but not more remote than first cousin.
17
APPENDIX B
PLAN OF DISTRIBUTION
The MedTox Shareholders may from time to time effect the sale of their
Shares in one or more transactions in the public market, at prices and at terms
then prevailing or at prices related to the then-current market price, or in
negotiated transactions or otherwise. The Shares may be sold pursuant to the
Registration Statement, another registration statement or pursuant to an
exemption from registration, including Rule 144. If all or a portion of the
Shares are sold in such transactions, they may be sold by means of: (a) a block
trade in which the broker or dealer so engaged will attempt to sell the Shares
as agent but may position and resell a portion of the block as principal to
facilitate the transactions; (b) purchases by a broker as principal and resale
by such broker for its account pursuant to the Prospectus that is a part of the
Registration Statement; (c) an exchange distribution in accordance with the
rules of such exchange; (d) ordinary brokerage transactions and transactions in
which the broker solicits purchasers; or (e) a combination of the foregoing
methods. In effecting sales, brokers or dealers engaged by the MedTox
Shareholders may arrange for other brokers or dealers to participate. The
brokers or dealers engaged by the MedTox Shareholders will receive commissions
or discounts from the MedTox Shareholders in amounts to be negotiated prior to
the sale. Such brokers or dealers and any other participating brokers or
dealers, as well as the MedTox Shareholders, may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with such sales. There
are currently no plans, arrangements or understandings between any of the MedTox
Shareholders and any broker or dealer regarding the sale of stock by the MedTox
Shareholders.
18
