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REGISTRATION AGREEMENT
REGISTRATION AGREEMENT, dated as of January 7, 1997 (the "Agreement"),
by and among APACHE Medical Systems, Inc., a Delaware corporation (the
"Company"), Iowa Health Centers, P.C., an Iowa professional corporation d/b/a
Iowa Heart Center, P.C., an Iowa professional corporation ("IHC"), Mercy
Hospital Medical Center, an Iowa not-for-profit corporation ("Mercy"), and Xxxx
X. Xxxxxxxxxx, M.D. ("Xx. Xxxxxxxxxx" and, together with IHC and Mercy, the
"CardioMac Principals").
RECITALS
A. In connection with the issuance of Series E and Series F
Preferred Stock in December 1995, the Company, the holders of all of the
outstanding Series of Preferred Stock of the Company and Key Employees (as
defined herein) entered into a Registration Agreement, dated as of December 28,
1995 (the "Preferred Registration Agreement"), which amended, restated and
superseded the terms of all prior registration agreements and combined all
registration provisions applicable to the capital stock of the Company.
B. In connection with the grant to American Healthcare Systems
Purchasing Partners, L.P. ("Purchasing Partners") of options to purchase Common
Stock of the Company in consideration of Purchasing Partners' entering into
that certain Marketing Agreement, dated as of June 3, 1996, the Company and
Purchasing Partners entered into a Registration Agreement, dated as of July 3,
1996 (the "Purchasing Partners Registration Agreement" and, together with the
Preferred Registration Agreement, the "Other Registration Agreements").
C. The Company now wishes to grant registration rights to the
CardioMac Principals as permitted by Section 12 of the Preferred Registration
Agreement and Section 13 of the Purchasing Partners Registration Agreement in
connection with the issuance to the CardioMac Principals of options to purchase
up to 150,000 shares of Common Stock of the Company pursuant to the exercise of
certain options (the "Options") granted in consideration of the CardioMac
Principals' entering into that certain Asset Purchase Agreement, dated as of
January 7, 1997, (or such greater or lesser number of shares as to which the
150,000 shares are adjusted pursuant to the terms of the Options).
1. Definitions. As used in this Agreement, the following terms
have the following meanings:
Common Stock: The common stock, $.01 par value, of the Company.
Holder: A holder of Registrable Stock as defined in the Preferred
Registration Agreement.
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Investors: Collectively, the holders of the Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock, the Series
D Preferred Stock, the Series E Preferred Stock and the Series F
Preferred Stock.
Key Employees: Xxxxxxx X. Xxxxx, Xxxxxxxxx X. Xxxxxx, Xxxxxxx X.
Xxxxxx, Xxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxxx, Xx.
"Register", "registered" and "registration" refer to a registration
effected by filing a registration statement in compliance with the
Securities Act and the declaration or ordering by the Commission of
effectiveness of such registration statement.
Registrable Stock: All shares of Common Stock included in the
definition of Registrable Stock in the Other Registration Agreements
and all shares of Common Stock issued to the CardioMac Principals or
issuable upon exercise of the Options.
Subject Stock: All Registrable Stock held (or to be held after giving
effect to exercise of options or warrants) by the CardioMac
Principals, Purchasing Partners, the Investors and the Key Employees,
other than shares acquired in a distribution pursuant to a
registration statement filed by the Company under the Securities Act.
2. Incidental Registration. If the Company at any time proposes
to register any of its securities under the Securities Act (other than a
registration effected solely to implement an employee benefit plan or a
transaction to which Rule 145 of the Commission is applicable), including
registrations made at the request of Purchasing Partners or one or more Holders
under the Other Registration Agreements, the Company will each such time give
written notice to the CardioMac Principals, Purchasing Partners, all Holders
and all Key Employees of its intention so to do. Upon the written request of
the CardioMac Principals, Purchasing Partners, a Holder or Holders or a Key
Employee or Key Employees (stating the number of shares of Subject Stock to be
disposed of thereby and the intended method of disposition) given within 20
days after receipt of any such notice, the Company will use its best efforts to
cause all such shares of Subject Stock intended to be disposed of, the
CardioMac Principals, Purchasing Partners, the Holders or the Key Employees of
which shall have requested registration thereof, to be registered under the
Securities Act so as to permit the disposition (in accordance with the methods
in said request) by the CardioMac Principals, Purchasing Partners, such Holder
or Holders or Key Employee or Key Employees of the shares so registered,
subject, however, to the limitations set forth in Section 3.
3. Limitations on Incidental Registration. If the registration
of which the Company gives notice pursuant to Section 2 is for an underwritten
offering, only securities which are to be included in the underwriting may be
included in the registration. Notwithstanding any provision of Section 2, if
the underwriter determines that marketing factors require a limitation of the
number of shares to be underwritten, the underwriter may exclude or otherwise
limit the number of shares of Subject Stock to be included in the registration
and underwriting. In the case of a registration initiated by the Company, the
Company shall advise the CardioMac Principals, Purchasing Partners, all Holders
and Key Employees (except those Holders and Key Employees who have not
indicated to the Company their decision to distribute any of their Subject
Stock
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through such underwriting) of the limitations imposed by the underwriter, and
the number of shares of Subject Stock that may be included in the registration
and underwriting shall be allocated among the CardioMac Principals, Purchasing
Partners, such Holders and Key Employees in proportion, as nearly as
practicable, to the respective amounts of Subject Stock owned by (or as to
which there is a current vested right to acquire) the CardioMac Principals,
Purchasing Partners, such Holders and Key Employees at the time of filing the
registration statement. In the case of a registration initiated by Purchasing
Partners or one or more Holders under either of the Other Registration
Agreements, the Company shall comply with the terms of the Other Registration
Statements with respect to allocation of shares of Subject Stock to be included
in the underwriting first among Purchasing Partner, the Holders and Key
Employees and shall advise the CardioMac Principals of the limitations imposed
by the underwriter, and the number of shares of Subject Stock that may be
included in the registration and underwriting by the CardioMac Principals shall
be limited to such number of shares as is remaining after inclusion of the
Subject Stock of Purchasing Partners, all Holders and all Key Employees who
wish to distribute their Subject Stock through such registration and
underwriting. No Subject Stock excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration. If
the CardioMac Principals, Purchasing Partners or any Holder or Key Employee
disapproves of any such underwriting, such person may elect to withdraw
therefrom by written notice to the Company and the underwriter. The securities
so withdrawn from such underwriting shall also be withdrawn from such
registration.
4. Termination of Agreement. The registration rights granted
under Section 2 shall terminate as to the CardioMac Principals or any successor
of such rights at such time as such person (i) no longer holds or has the right
to acquire an aggregate number of shares of Common Stock equal to one percent
(1%) or more of the outstanding shares of Common Stock of the Company, and (ii)
would then be permitted to sell all of such shares within one three-month
period pursuant to Rule 144.
5. Designation of Underwriter.
(a) In the case of any registration effected pursuant to
Section 2 of the Purchasing Partners Registration Agreement,
Purchasing Partners shall have the right to designate the managing
underwriter in any underwritten offering.
(b) In the case of any registration initiated by Holders
pursuant to Section 2 of the Preferred Registration Agreement, such
Holders shall have the right to designate the managing underwriter in
any underwritten offering.
(c) In the case of any registration initiated by the
Company, the Company shall have the right to designate the managing
underwriter in any underwritten offering.
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6. Cooperation by the CardioMac Principals.
(a) The CardioMac Principals will furnish to the Company
such information as the Company may reasonably require from the
CardioMac Principals in connection with the registration statement
(and the prospectus included therein).
(b) Failure of the CardioMac Principals to furnish the
information and agreements described in this Agreement shall not
affect the obligations of the Company under the Other Registration
Agreements to remaining sellers who furnish such information and
agreements, unless in the reasonable opinion of counsel to the Company
or the underwriters, such failure impairs or may impair the viability
of the offering or the legality of the registration statement or the
underlying offering.
(c) The CardioMac Principals, to the extent that they
have shares included in the registration statement, will suspend
(until further notice) further sales of such shares after receipt of
telegraphic or written notice from the Company to suspend sales to
permit the Company to correct or update a registration statement or
prospectus; but the obligations of the Company with respect to
maintaining any registration statement current and effective shall be
extended by a period of days equal to the period such suspension is in
effect.
At the end of the period during which the Company is obligated to keep
the registration statement current and effective as described in the Other
Registration Agreements (and any extensions thereof required by the preceding
sentence), the CardioMac Principals, to the extent that they have shares
included in the registration statement, shall discontinue sales of shares
pursuant to such registration statement upon receipt of notice from the Company
of its intention to remove from registration the shares covered by such
registration statement which remain unsold, and the CardioMac Principals shall
(after written request for such notice, describing the information required in
the response) notify the Company of the number of shares registered which
remain unsold promptly upon receipt of such notice from the Company.
7. Expenses of Registration. All expenses incurred in effecting
any registration pursuant to this Agreement, including, without limitation, all
registration and filing fees, printing expenses, expenses of compliance with
blue sky laws, fees and disbursements of counsel for the Company and expenses
of any audits incidental to or required by any such registration, shall be
borne by the Company, except that all underwriting discounts and commissions,
if any, shall be borne by the CardioMac Principals, Purchasing Partners, the
Holders and the Key Employees holding the securities registered pursuant to
such registration, pro-rata according to the quantity of their securities so
registered.
8. Indemnification.
(a) To the extent permitted by law, the Company will
indemnify the CardioMac Principals, each agent, officer and director
of a CardioMac Principal, each person controlling a CardioMac
Principal, and each underwriter and selling broker of the securities
so registered (collectively, "Representative" and collectively with
the
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CardioMac Principals, each such agent, officer, director or person,
"Indemnitees") against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained
in any prospectus, offering circular or other document incident to any
registration, qualification or compliance (or in any related
registration statement, notification or the like) or any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances in which they were made,
or any violation by the Company of any rule or regulation promulgated
under the Securities Act and any state law applicable to the Company
and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance,
and will reimburse each such Indemnitee for any legal and any other
expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, provided,
however, that the Company will not be liable to any Indemnitee in any
such case to the extent that any such claim, loss, damage or liability
is caused by any untrue statement or omission so made in strict
conformity with written information furnished to the Company by an
instrument duly executed by such Indemnitee and stated to be
specifically for use therein and except that the foregoing indemnity
agreement is subject to the condition that, insofar as it relates to
any such untrue statement (or alleged untrue statement) or omission
(or alleged omission) made in the preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement becomes effective or
in the amended prospectus filed with the Commission pursuant to Rule
424(b) (the "Final Prospectus"), such indemnity agreement shall not
inure to the benefit of any Representative, if a copy of the Final
Prospectus was not furnished to the person or entity asserting the
loss, liability, claim or damage at or prior to the time such
furnishing is required by the Securities Act; provided, further, that
the indemnity agreement contained in this subsection 8(a) shall not
apply to amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the consent
of the Company, which consent shall not be unreasonably withheld.
(b) To the extent permitted by law, the CardioMac
Principals and each underwriter of the securities registered will
indemnify each other, the Company and its officers and directors and
each person, if any, who controls any thereof within the meaning of
Section 15 of the Securities Act and their respective successors
against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document incident to any
registration, qualification or compliance (or in any related
registration statement, notification or the like) or any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances in which they were made;
and will reimburse the Company and each other person indemnified
pursuant to this paragraph 8(b) for all legal and any other expenses
reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, provided, however, that
this paragraph 8(b) shall
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apply only if (and only to the extent that) such statement or omission
was made in reliance upon and in strict conformity with written
information (including, without limitation, written negative responses
to inquiries) furnished to the Company by an instrument duly executed
by the CardioMac Principals or such underwriter and stated to be
specifically for use in such prospectus, offering circular or other
document (or related registration statement, notification or the like)
or any amendment or supplement thereto and except that the foregoing
indemnity agreement is subject to the condition that, insofar as it
relates to any such untrue statement (or alleged untrue statement) or
omission (or alleged omission) made in the preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement becomes effective or
in the Final Prospectus, such indemnity agreement shall not inure to
the benefit of (i) the Company and (ii) any Representative, if a copy
of the Final Prospectus was not furnished to the person or entity
asserting the loss, liability, claim or damage at or prior to the time
such furnishing is required by the Securities Act; provided, further,
that this indemnity shall not be deemed to relieve any underwriter of
any of its due diligence obligations; provided, further, that the
indemnity agreement contained in this subsection 8(b) shall not apply
to amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the consent
of the CardioMac Principals, which consent shall not be unreasonably
withheld; and provided, further, that the obligations of the CardioMac
Principals shall be limited to an amount equal to the proceeds to the
CardioMac Principals of the Subject Stock sold by them as contemplated
herein, unless such claim, loss, damage, liability or action resulted
from the CardioMac Principals' fraudulent misconduct.
(c) Each party entitled to indemnification hereunder (the
"indemnified party") shall give notice to the party required to
provide indemnification (the "indemnifying party") promptly after such
indemnified party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the indemnifying party (at
its expense) to assume the defense of any claim or any litigation
resulting therefrom, provided that counsel for the indemnifying party,
who shall conduct the defense of such claim or litigation, shall be
satisfactory to the indemnified party, and the indemnified party may
participate in such defense at such party's expense, and provided,
further, the omission by any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its
obligations under this Section 8, except to the extent that the
omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the
failure to give notice. No indemnifying party, in the defense of any
such claim or litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.
(d) The reimbursement required by this Section 8 shall be
made by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred.
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(e) The obligation of the Company under this Section 8
shall survive the completion of any offering of Subject Stock in a
registration statement under this Agreement, or otherwise.
9. Rights Which May Be Granted to Subsequent Investors.
(a) Within the limitations prescribed by this paragraph
(a), but not otherwise, the Company may grant to subsequent investors
in the Company and to persons who as of the date hereof are holders of
Common Stock or holders of options to purchase Common Stock rights of
incidental registration (such as those provided in Section 5). Such
rights may only pertain to shares of Common Stock, including shares of
Common Stock into which any other securities may be converted. Such
rights may be granted with respect to (i) a registration requested by
Purchasing Partners pursuant to Section 2, but only in respect to that
portion of such registration as remains available after inclusion of
all Registrable Stock requested by Purchasing Partners, Holders and
Key Employees, (ii) registrations initiated by the Company, but only
in respect of that portion of such registration as is available under
the limitations set forth in Section 3 (which limitations shall apply
pro-rata to the CardioMac Principals, Purchasing Partners, all Holders
and Key Employees (to the extent Purchasing Partners and such Holders
and Key Employees still have rights under the Other Registration
Agreements)), and such rights shall be limited in all cases to sharing
pro-rata in the available portion of the registration in question with
the CardioMac Principals, Purchasing Partners, Holders and Key
Employees, such sharing to be based on the number of shares of Common
Stock held or to be held by the CardioMac Principals, Purchasing
Partners, Holders and Key Employees and held or to be held by such
other investors, plus the number of shares of Common Stock into which
other securities held by such other investors are convertible, which
are entitled to registration rights, and (iii) registrations requested
by Holders under the Other Registration Agreement, but only with
respect to that portion of such registration as remains available
after inclusion of all Registrable Stock requested by Holders, Key
Employees and Purchasing Partners. With respect to registrations
which are for underwritten public offerings, "available portion" shall
mean the portion of the underwritten shares which is available as
specified in clauses (i), (ii) and (iii) of the third sentence of this
paragraph (a). Shares not included in such underwriting shall not be
registered.
(b) The Company may grant to subsequent investors in the
Company rights of registration upon request (such as those provided in
Section 2 of the Other Registration Agreements), to the extent so
permitted in the Other Registration Agreements.
10. Transfer of Registration Rights. The registration rights
granted to the CardioMac Principals under this Agreement may not be
transferred, except that the CardioMac Principals may assign and transfer such
rights to underwriters of the Subject Stock.
11. "Stand-Off" Agreement. In consideration for the Company
performing its obligations under this Agreement, the CardioMac Principals agree
for a period of time (not to
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exceed 180 days) from the effective date of any registration of securities of
the Company (upon request of the Company or of the underwriters managing any
underwritten offering of the Company's securities) not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of
any Registrable Stock, other than shares of Registrable Stock included in the
registration, without the prior written consent of the Company or such
underwriters, as the case may be, provided that all officers and directors of
the Company, Purchasing Partners and each Holder who is then entitled to
registration rights under the Other Registration Agreements and each holder of
more than 5% of the outstanding Common Stock shall enter into similar
agreement.
12. Delay of Registration. The CardioMac Principals shall have no
right to take any action to restrain, enjoin, or otherwise delay any
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Agreement.
13. Notices. All notices, requests, consents and other
communications herein (except as stated in the last sentence of this Section
13) shall be in writing, and shall be mailed by first-class or certified mail,
postage prepaid, delivered by Federal Express or similar overnight courier, or
personally delivered, as follows:
If to the Company:
Apache Medical Systems, Inc.
0000 Xxxxxx Xxxxxxxxx - Xxxxx 000
XxXxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Xx., Ph.D., Chairman and Chief
Executive Officer
with a copy to:
Xxxxxxx, Carton & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx - Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
If to CardioMac Principals:
Iowa Health Centers, P.C.,
d/b/a Iowa Heart Center, P.C.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxx Administrator
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Mercy Hospital Medical Center
Sixth and University
Xxx Xxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, President
Xxxx X. Xxxxxxxxxx, M.D.
0000 Xxxx Xxxxxxx Xxxx
Xxxx Xxx Xxxxxx, Xxxx 00000
With a copy to:
Xxxxx Xxxxxx Xxxxxx XxXxxxxxx
A Professional Corporation
0000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx
or such other addresses as each of the parties hereto may provide from time to
time in writing to the other party.
14. Conflict with Other Agreements. The terms of this Agreement
shall be binding upon the parties hereof notwithstanding any conflicting
provision in any other agreement to which either is a party.
15. Modifications; Waiver. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated unless
effected by a writing executed and delivered by the Company and each of the
CardioMac Principals.
16. Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes all negotiations, agreements, representations, warranties,
commitments, whether in writing or oral, prior to the date hereof.
17. Successors. All of the terms of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors of the parties hereto, including, without limitation the estate of
Xx. Xxxxxxxxxx.
18. Execution and Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed an original, and such counterparts together shall constitute one
instrument.
19. Governing Law and Severability. This Agreement shall be
governed by the laws of the State of Delaware as applied to agreements entered
into and to be performed entirely within Delaware. In the event any provision
of this Agreement or the application of such provision to any party shall be
held by a court of competent jurisdiction to be contrary to law, the remaining
provisions of this Agreement shall remain in full force and effect.
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20. Headings. The descriptive headings of the Sections hereof and
the Schedules hereto are inserted for convenience only, and do not constitute a
part of this Agreement.
This Agreement is hereby executed as of the date first above written.
APACHE MEDICAL SYSTEMS, INC.
By:
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Name:
Title:
IOWA HEALTH CENTERS, P.C.,
D/B/A IOWA HEART CENTER, P.C.
By:
By:
--------------------------------
Name:
Title:
MERCY HOSPITAL MEDICAL CENTER
By:
By:
--------------------------------
Name:
Title:
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XXXX X. XXXXXXXXXX, M.D.
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