EXHIBIT 3
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AGREEMENT
This AGREEMENT (the "Agreement") shall be effective as of January 28,
2005 (the "Effective Date"), and is entered into by and among Cardiac Science,
Inc., a Delaware corporation ("DFIB"), Perseus Market Opportunity Fund, L.P.,
Winterset Master Fund, L.P., Mill River Master Fund, L.P., Massachusetts Mutual
Life Insurance Company and Xxxxxx Xxxxxxxx (collectively, the "Investors").
Collectively, DFIB and the Investors may be referred to as the "Parties" herein.
RECITALS
WHEREAS, pursuant to the Purchase Agreement, dated July 20, 2004, by
and among DFIB and the Investors (the "Purchase Agreement"), DFIB issued and
sold to the Investors an aggregate of 5,219,409 shares of DFIB common stock (the
"Shares") and warrants to purchase up to an additional aggregate of 2,087,763
shares of DFIB common stock (as set forth on Exhibit A, the "Warrants," and
collectively with the Shares, the "Securities");
WHEREAS, in order to induce each of the Investors to enter into the
Purchase Agreement and to consummate the transactions contemplated thereby, DFIB
agreed to provide such Investors with certain registration rights as set forth
in that certain Amended and Restated Registration Rights Agreement dated July
20, 2004, by and among DFIB and the investors signatory thereto (the "Rights
Agreement");
WHEREAS, Section 6.2 of the Rights Agreement obligates DFIB to file a
shelf registration statement with the Securities and Exchange Commission within
sixty (60) days after the date of the Rights Agreement to register the
Securities (the "Shelf Registration Statement");
WHEREAS, DFIB has not yet filed such Shelf Registration Statement as of
the date hereof; and
WHEREAS, the Parties wish to resolve all matters and claims between
them arising from or related to DFIB's delay in filing such Shelf Registration
Statement and the issuance of the Securities.
AGREEMENT
NOW, THEREFORE BE IT RESOLVED, in consideration of the foregoing
recitals, and the mutual promises, agreement and understandings contained
herein, the Parties hereby agree as follows:
1. Issuance of Additional Shares of DFIB Common Stock. On the
Effective Date, DFIB shall issue an aggregate of 476,637 additional shares of
DFIB common stock (the "Additional Shares") to certain of the Investors in the
amounts set forth on Exhibit B attached to this Agreement.
2. Cash Payment. On the Effective Date, DFIB shall pay Perseus
Market Opportunity Fund, L.P. an aggregate of $556,184 by wire transfer of
immediately available funds to an account designated by such entity (the "Cash
Payment").
3. Amendment to Warrants. Effective as of the date of the
Effective Date of this Agreement:
(a) The Warrant Price (as defined in the Warrants) shall
be amended so that the Warrant Price contained therein shall be equal to $2.50
per share, subject to further adjustments after the date hereof pursuant to
Section 4 of the Warrants.
(b) The last paragraph of Section 4(f)(i) of the Warrants
shall be amended and restated in its entirety to read as follows:
"Notwithstanding the foregoing, there shall be no
adjustment to the Warrant Price or the number of
shares of Common Stock obtainable upon the exercise of
this Warrant with respect to the issuance or the
granting of options to directors, officers or
employees of the Company or the exercise thereof
pursuant to stock option plans or agreements approved
by the Board of Directors of the Company, but only to
the extent that the aggregate number of shares of
Common Stock covered by such option plans and
agreements do not exceed 15,000,000 shares in the
aggregate (subject to adjustment to reflect any stock
split, stock dividend, reclassification,
recapitalization or other transaction having a similar
effect)."
Promptly following the surrender of the original Warrants for
cancellation, DFIB shall deliver to each Investor an amended and restated
Warrant reflecting the foregoing amendments.
4. Limited Waiver. Except as otherwise set forth in this
Agreement, the Investors hereby waive any additional anti-dilution adjustments
to the Warrant Shares or the Warrant Price contained in the Warrants arising on
or prior to the date of this Amendment.
5. Filing of Shelf Registration Statement. Concurrently with the
execution and delivery of this Agreement, DFIB shall file, in accordance with
Section 6.2 of the Rights Agreement, the Shelf Registration Statement. The
Parties acknowledge and agree that the definition of "Registrable Securities,"
"Common Stock" and all references to "Common Stock issued to the Investors
pursuant to the 2004 Purchase Agreement" in the Rights Agreement shall be deemed
to include the Additional Shares.
6. Release. Except for the rights or obligations as have been
created under this Agreement, the Parties hereby fully, completely, finally and
forever release, relinquish and discharge each other and each of their
respective parent companies, predecessor companies, subsidiaries, affiliated
companies, related entities, agents, consultants, present and former employees,
present and former officers and directors, attorneys, insurers, successors and
assigns (which said aforementioned released parties shall hereinafter be
referred to collectively as "Releasees"), of and from any and all claims,
actions, causes of action, demands, rights, debts, agreements, promises,
liabilities, damages, accountings, costs and expenses, whether known or unknown,
suspected or unsuspected, fixed or contingent, of every nature whatsoever, which
relate to the delay in filing the Shelf Registration Statement prior to the date
hereof, and the
issuance of the Securities. Notwithstanding the foregoing, the matters released
hereunder shall exclude damages arising as a result of any remedy required by
Nasdaq in the event that Nasdaq determines that stockholder approval was
necessary for the consummation of the transactions contemplated by the Purchase
Agreement (such exclusion shall not include any damages arising out of any
alleged breaches of the Purchase Agreement to the extent that such breaches
would result in damages in excess of any remedy required by Nasdaq). All matters
released hereunder shall sometimes hereinafter be referred to as the "Released
Claims."
IT IS THE INTENTION OF THE PARTIES HERETO THAT THIS AGREEMENT, TOGETHER
WITH ITS EXHIBIT, SHALL BE EFFECTIVE AS A FULL AND FINAL ACCORD AND SATISFACTION
AND RELEASE OF EACH AND EVERY RELEASED CLAIM. IN FURTHERANCE OF THIS INTENTION,
THE PARTIES HERETO, AND EACH OF THEM, ACKNOWLEDGE THAT THEY HAVE BEEN ADVISED BY
LEGAL COUNSEL AND ARE FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE
SECTION 1542, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
THE PARTIES HERETO, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY
WAIVE ANY RIGHTS THEY MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES
OR COMMON LAW DOCTRINES OF SIMILAR EFFECT.
The Parties hereto, and each of them, acknowledge that they may
hereafter discover facts in addition to, or different from, those which they now
know or believe to be true with respect to the subject matter of this Agreement
and the Released Claims, but that notwithstanding the foregoing, it is their
intention that this release operate to fully, finally, completely and forever
settle and release each Releasee from each, every and all of the Released
Claims, and that in furtherance of such intention, the releases herein given
shall be and remain in effect as full and complete releases, notwithstanding the
discovery or existence of any such additional or different facts.
The Parties hereto warrant and represent to each other that as to any
Released Claim, the Party releasing same is the sole and absolute owner thereof,
free and clear of all other rights and interests therein and has the right,
ability and sole power to release such Released Claims, and the releasing Party
agrees to hold harmless and indemnify the released Parties from any liability or
claim asserted against a released Party which is based on a claim which the
releasing Party purported to release hereunder.
7. No Admission of Liability. The Parties hereby acknowledge and
agree that this Agreement is entered into as a compromise settlement which is
not in any respect or for any purpose to be deemed or construed as an admission
or concession of any liability whatsoever on the part of any of the Parties
hereto.
8. Representations, Warranties and Covenants.
(a) Representations, Warranties and Covenants of the
Investors. Each Investor, severally and not jointly, hereby makes the
representations, warranties and covenants with respect to the Additional Shares
and this Agreement as previously made with respect to the Securities and the
Purchase Agreement, respectively, in Section 5 of the Purchase Agreement.
(b) Representations, Warranties and Covenants of DFIB. DFIB
hereby makes the representations and warranties with respect to the Additional
Shares and this Agreement as previously made with respect to the Securities and
the Purchase Agreement, respectively, in Sections 4.3 and 4.4 of the Purchase
Agreement.
9. Confidentiality. The Parties agree to keep the terms of this
Agreement strictly and completely confidential, and that they will not
communicate or otherwise disclose to any past, present or future employee of the
Parties, or to a member of the general public, the terms, amount, or fact of
this Agreement, including drafts created in negotiating the same, or the events
and transactions which are the subject matter of the Agreement, except as may be
required to be disclosed pursuant to law or government regulation (including,
without limitation, the requirements of the Securities and Exchange Commission)
or compulsory process; provided, however, that the Parties may disclose this
Agreement to their officers, directors, legal counsel or financial advisors with
the instruction that this Agreement and its terms be kept confidential, or to
others who are bound by a confidentiality agreement.
10. Miscellaneous.
(a) Governing Law. This Agreement and its Exhibit shall be
governed by and construed in accordance with the laws of Delaware without regard
to conflict of laws provisions.
(b) Entire Agreement. This Agreement (to include its
Exhibit) contains the entire agreement and understanding between the Parties
hereto and supersedes any prior or contemporaneous written or oral agreements,
representations, discussions, proposals, understandings and the like respecting
the subject matter hereof.
(c) Headings and Interpretation. The headings and captions
of this Agreement are provided for convenience only and are intended to have no
effect in construing or interpreting this Agreement. In the event that any
language in this Agreement is held to be uncertain, any such language shall not
be interpreted against any Party to the Agreement based on who drafted such
language. Each of the Parties represents that it has executed this Agreement
voluntarily and with full advice of independent counsel of its choosing prior to
the execution of this Agreement and its Exhibit.
(d) Authority. Each Party represents and warrants that it
has taken all actions and obtained all authorizations, consents and approvals as
are conditions precedent to its authority to execute this Agreement and its
Exhibits as applicable, and that this Agreement, to include its Exhibit, is a
binding agreement, enforceable against it in accordance with its terms.
(e) Successors and Assigns. This Agreement (to include any
Exhibit) binds the successors and permitted assigns of the respective Parties.
DFIB may not sell, assign or
transfer ("Transfer") this Agreement without the consent of the Investors
holding a majority of the Additional Shares then-outstanding; provided, however,
that no consent shall be required in connection with a merger, consolidation or
sale of substantially all of the Company's assets so long as the successor or
transferee agrees in writing to be bound by the provisions of this Agreement.
The Investors may not Transfer this Agreement without the consent of DFIB,
except that the Investors may Transfer this Agreement to any Affiliate (as
defined in the Purchase Agreement) of any Investor (including affiliated funds
or partners thereof) provided that the transferee agrees in writing to be bound
by the provisions of this Agreement.
(f) Further Assurances. The Parties will cooperate with
each other as reasonably requested to effectuate the purposes and provisions of
this Agreement and its Exhibit, including but not limited to preparing,
executing and delivering other documents.
(g) Waiver and Amendment. No breach hereof can be waived
unless done in writing and signed by the Party to be charged. Waiver of any one
breach shall not be deemed to be a waiver of any other breach of the same or any
other provision hereof. This Agreement may be amended only by a writing signed
by the Parties.
(h) Notices. All notices, requests, demands or other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the Party to
whom notice is to be given, on the first business day after sending any such
notice, request, demand or other communication by facsimile, or on the fifth
business day after mailing if mailed to the Party to whom notice is to be given
by first-class mail, registered or certified, postage prepaid and properly
addressed as set forth on the signature page hereto (or to such different
address as provided by a Party to the other Parties by written notice).
(i) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Signatures obtained and
exchanged by facsimile will be binding to the same extent as original
signatures.
(j) Severability. The Parties agree that the enforceability
or invalidity of any provision or provisions of this Agreement or its Exhibit
shall not render any other provision or provisions herein or therein contained
unenforceable or invalid.
[Signature Page Follows]
In WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first written above.
DFIB:
CARDIAC SCIENCE, INC.
By: /s/ Xxxxxxxx xx Xxxxx
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Name: Xxxxxxxx xx Xxxxx
Title: Chief Financial Officer
00000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Telecopier No.: 000-000-0000
Attention: Chief Financial Officer
INVESTORS:
PERSEUS MARKET OPPORTUNITY FUND, L.P.
By: /s/ Xxx X. Xxxxxx, III
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Name: Xxx X. Xxxxxx, III
Title:
c/o Perseus, L.L.C.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
Attention: Xxx X. Xxxxxx, III
WINTERSET MASTER FUND, L.P.
By: Babson Capital Management LLC,
as Investment Manager
By: /s/ Xxxxxx Xxxxx Xxxxxxx
--------------------------------
c/o Babson Capital Management LLC
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Telecopier No.:
Attention: Xxxxxx Xxxxx Xxxxxxx
Managing Director
MILL RIVER MASTER FUND, L.P.
By: Babson Capital Management LLC,
as Investment Manager
By: /s/ Xxxxxx Xxxxx Xxxxxxx
--------------------------------
c/o Babson Capital Management LLC
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Telecopier No.:
Attention: Xxxxxx Xxxxx Xxxxxxx
Managing Director
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: Babson Capital Management LLC,
as Investment Manager
By: /s/ Xxxxxx Xxxxx Xxxxxxx
--------------------------------
c/o Babson Capital Management LLC
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Telecopier No.:
Attention: Xxxxxx Xxxxx Xxxxxxx
Managing Director
/s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx
____________________________________
____________________________________
____________________________________
Telecopier No.:_____________________
EXHIBIT A
WARRANTS
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NAME WARRANT NO. WARRANT SHARES
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Perseus Market Opportunity Fund, L.P. W-10 843,882
Winterset Master Fund, L.P. W-11 80,000
Mill River Master Fund, L.P. W-12 60,000
Massachusetts Mutual Life Insurance Company W-13 703,881
Xxxxxx Xxxxxxxx W-14 400,000
Total: 2,087,763
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EXHIBIT B
COMMON STOCK ISSUANCE
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Investor Name Number of Shares of DFIB Common Stock
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Winterset Master Fund, L.P. 30,655
Mill River Master Fund, L.P. 22,991
Massachusetts Mutual Life Insurance Company 269,717
Xxxxxx Xxxxxxxx 153,274
Total: 476,637
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