EXHIBIT 4.1
SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"Agreement"), is entered into as of February 28, 2005, by and among Cardiac
Science, Inc., a Delaware corporation (the "Company") and the investors listed
on the signature page hereto (the "Investors"), and shall be effective
immediately prior to the Effective Time (as defined in Section 1.1 below).
A. WHEREAS, the Company entered into that certain Registration
Rights Agreement dated as of May 30, 2002, as amended and restated on July 20,
2004 (the "Registration Rights Agreement"), by and among the Company and the
Investors;
B. WHEREAS, the Company, Xxxxxxx Cardiology Systems, Inc., CSQ
Holding Company ("Newco"), Heart Acquisition Corporation and Rhythm Acquisition
Corporation have entered into an Agreement and Plan of Merger of even date
herewith (the "Merger Agreement");
C. WHEREAS, in connection with the entry into the Merger
Agreement, the Company, Newco and the other parties named on the signature pages
thereto have entered into that certain Senior Note and Warrant Conversion
Agreement of even date herewith (the "Conversion Agreement").
D. WHEREAS, as contemplated by Section 8 of the Conversion
Agreement, the Investors executing this Agreement and the Company desire to
further amend and restate the Registration Rights Agreement in its entirety as
set forth herein;
E. WHEREAS, Section 10.6 of the Registration Rights Agreement
permits the amendment of such Registration Rights Agreement upon the consent in
writing by the Company and the Designated Holders (as defined in Section 1.1
below) of at least 70% of the Registrable Securities (as defined in Section 1.1
below);
F. WHEREAS, the Investors executing this Agreement are Designated
Holders who collectively hold at least 70% of the Registrable Securities; and
G. WHEREAS, as contemplated by Section 8 of the Conversion
Agreement, Newco has agreed to assume the rights and obligations of the Company
under this Agreement concurrently with the Effective Time.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"2004 Purchase Agreement" means that certain Purchase Agreement dated
as of July 20, 2004 among the Company and certain of the Investors.
"2004 Shelf Registration" shall mean the shelf registration filed on
Form S-3 (Registration No. 333-122397) in connection with the shares of common
stock and warrants to purchase common stock issued under the 2004 Purchase
Agreement.
"Affiliate" shall mean any Person who is an "affiliate" as defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act. In
addition, any partner or member, as the case may be, of an Investor shall be
deemed to be an Affiliate of such Investor.
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in the states of New York or California are authorized
or required by law or executive order to close.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means (i) the Common Stock, par value $.001 per share,
of the Company or, from and after the Effective Time, Newco or (ii) any other
capital stock of the Company or, from and after the Effective Time, Newco into
which any such stock is reclassified or reconstituted.
"Company" has the meaning set forth in the preamble to this Agreement
and, after the Effective Time and the assumption by Newco of this Agreement,
shall mean Newco.
"Conversion Agreement" has the meaning set forth in the recitals
hereto.
"Demand Registration" has the meaning set forth in Section 3.2.
"Designated Holder" means each of the Investors and any transferee of
any of them to whom the Warrants or Registrable Securities have been transferred
in accordance with Section 7.6 of this Agreement, other than a transferee to
whom Registrable Securities have been transferred pursuant to a Registration
Statement under the Securities Act or Rule 144 or Regulation S promulgated under
the Securities Act (or any successor rule thereto).
"Effective Time" shall mean the effective time of the mergers
contemplated by the Merger Agreement.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder.
"Existing Shelf Registration" shall mean the shelf registration filed
on Form S-3 (Registration No. 333-110898) in connection with the senior notes
and warrants issued under the Note Purchase Agreement.
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"Filing Period" has the meaning set forth in Section 3.1.
"Holders' Counsel" has the meaning set forth in Section 4.1(a).
"Indemnified Party" has the meaning set forth in Section 5.3.
"Indemnifying Party" has the meaning set forth in Section 5.3.
"Initiating Holders" has the meaning set forth in Section 3.2.
"Inspector" has the meaning set forth in Section 4.1(g).
"Investors" has the meaning set forth in the preamble.
"Liability" has the meaning set forth in Section 5.1.
"Merger Agreement" has the meaning set forth in the recitals hereto.
"NASD" means the National Association of Securities Dealers, Inc.
"Newco" shall mean CSQ Holdings Company, a Delaware corporation.
"Note Purchase Agreement" means the Note Purchase agreement dated May
29, 2002 by and among the Company and certain Investors.
"Person" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, government (or an agency or political subdivision
thereof) or other entity of any kind, and shall include any successor (by merger
or otherwise) of such entity.
"Records" has the meaning set forth in Section 4.1(g).
"Registrable Securities" means each of the following: (a) any and all
shares of Common Stock issued or issuable upon the exercise of the Warrants, (b)
the Common Stock received by the Investors pursuant to the Merger Agreement,
including in exchange for the Common Stock issued to the Investors under the
2004 Purchase Agreement, (c) the Common Stock to be issued pursuant to the terms
of the Conversion Agreement, and (d) any shares of Common Stock issued or
issuable to any of the Designated Holders with respect to the Registrable
Securities by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise and any shares of Common Stock issuable upon
conversion, exercise or exchange thereof.
"Registration Expenses" has the meaning set forth in Section 4.4.
"Registration Statement" means a Registration Statement filed pursuant
to the Securities Act.
"Replacement Shelf Registration" has the meaning set forth in Section
3.1.
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"Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Valid Business Reason" has the meaning set forth in Section 3.2.
"Warrants" mean the warrants exercisable for shares of Common Stock
issued in connection with the 2004 Purchase Agreement, which warrants are to be
assumed by Newco pursuant to the terms of the Merger Agreement.
ARTICLE II
GENERAL; SECURITIES SUBJECT TO THIS AGREEMENT
2.1 Grant of Rights. The Company hereby grants registration rights
to the Designated Holders upon the terms and conditions set forth in this
Agreement.
2.2 Registrable Securities. For the purposes of this Agreement,
Registrable Securities will cease to be Registrable Securities, when (i) a
Registration Statement covering such Registrable Securities has been declared
effective under the Securities Act by the Commission and such Registrable
Securities have been disposed of pursuant to such effective Registration
Statement, (ii) such Registrable Securities are reacquired by the Company, or
(iii) such Registrable Securities are sold to the public pursuant to Rule 144
under the Securities Act or may otherwise be sold without restriction by reason
of Rule 144(k) under the Securities Act or any other rule of similar effect.
2.3 Holders of Registrable Securities. A Person is deemed to be a
holder of Registrable Securities whenever such Person owns of record Registrable
Securities, or a security convertible into or exercisable or exchangeable for,
Registrable Securities whether or not such acquisition or conversion has
actually been effected. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company may act upon the basis of the instructions,
notice or election received from the registered owner of such Registrable
Securities. Registrable Securities issuable upon conversion or exercise of
another security shall be deemed outstanding for the purposes of this Agreement.
ARTICLE III
REGISTRATION
3.1 Replacement Shelf Registration. Immediately prior to the
Effective Time, the Company shall terminate the Existing Shelf Registration and
the 2004 Shelf Registration. Not later than ninety (90) days after the Effective
Time (the "Filing Period"), the Company shall, at its own cost and expense, use
its best efforts to file with the Commission a shelf registration statement
pursuant to Rule 415 of the Securities Act (the "Replacement Shelf
Registration"), on Form S-3 (or any successor form thereto), with respect to the
resale, from time to time, of all of the Registrable Securities. The Filing
Period may be extended for up to 30 days if after using its best efforts the
Company is unable to file with the Commission the Replacement Shelf
Registration. The Company shall use its reasonable best efforts to cause the
Replacement Shelf Registration to become effective as soon as practicable after
the filing thereof, and shall keep the Replacement Shelf Registration
continuously effective under the Securities Act, subject to provisions of
Section 4.3, until all Registrable Securities registered thereunder are sold or
are eligible for resale without registration by
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reason of Rule 144(k) under the Securities Act or any other rule of similar
effect. Notwithstanding anything in this Agreement to the contrary, the Company
shall not be obligated to cause the Registrable Securities to be registered
during the Filing Period.
3.2 Request for Demand Registration. If the Replacement Shelf
Registration is not effective within 90 days after the expiration of the Filing
Period or, if any time after the Replacement Shelf Registration is declared
effective the Replacement Shelf Registration ceases to remain effective (in
either case, a "Non-Effective Registration Statement"), Designated Holders who
propose to sell their Registrable Securities entitled to be covered by a
Non-Effective Registration Statement to the public at an aggregate price of at
least $1,000,000 (the "Initiating Holders"), shall have the right to make a
written request that the Company register, under the Securities Act (other than
pursuant to a Registration Statement on Form S-4 or S-8 or any successor
thereto) (a "Demand Registration"), the offer and sale of the Registrable
Securities stated in such request; provided, however, that the Company shall not
be obligated to effect more than two (2) such Demand Registrations for the
Investors. For purposes of the preceding sentence, two or more Registration
Statements filed in response to one demand shall be counted as one Demand
Registration. If the Board of Directors, in its good faith judgment, determines
that any registration of Registrable Securities should not be made or continued
because it would (A) materially interfere with any material financing,
acquisition, corporate reorganization or merger or other material transaction
involving the Company or (B) involve effort or expense in excess of that which
would customarily be involved in effecting a resale registration (a "Valid
Business Reason"), the Company may (i) postpone filing a Demand Registration
statement until such Valid Business Reason no longer exists, but in no event for
more than ninety (90) days, and (ii) in the event that a Demand Registration
statement has been filed, if the Valid Business Reason has not resulted from
actions taken by the Company, the Company, upon the approval of a majority of
the Board of Directors, may cause such registration statement to be withdrawn
and its effectiveness terminated or may postpone amending or supplementing such
registration statement. The Company shall give written notice of its
determination to postpone or withdraw a registration statement and of the fact
that the Valid Business Reason for such postponement or withdrawal no longer
exists, in each case, promptly after the occurrence thereof. Notwithstanding
anything to the contrary contained herein, the Company may not postpone or
withdraw a filing under this Section 3.2 more than once in any twelve (12) month
period. Each request for a Demand Registration shall state the amount of the
Registrable Securities proposed to be sold.
3.3 Incidental or "Piggy-Back" Rights with Respect to a Demand
Registration. Each of the Designated Holders (other than Initiating Holders who
have requested a registration under Section 3.2) may offer and sell its or his
Registrable Securities under any Demand Registration pursuant to this Section
3.3. Within seven (7) business days after the receipt of a request for a Demand
Registration from an Initiating Holder, the Company shall (i) give written
notice thereof to all of the Designated Holders (other than Initiating Holders
which have requested a registration under Section 3.2), and (ii) include in such
registration all of the Registrable Securities held by such Designated Holders
from whom the Company has received a written request for inclusion therein
within ten (10) days of the receipt by such Designated Holders of such written
notice referred to in clause (i) above. Each such request by such Designated
Holders shall specify the number of Registrable Securities to be included in the
Registration Statement. The failure of any Designated Holder to respond within
such 10 day period referred to in clause (ii) above shall be deemed to be a
waiver of such Designated Holder's rights under this Article III with respect to
such Demand Registration. Any Designated Holder may waive its rights under this
Article III prior to the expiration of such 10-day period by giving written
notice to the Company, with a copy to the
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Initiating Holders. If a Designated Holder sends the Company a written request
for inclusion of part or all of such Designated Holder's Registrable Securities
in a registration, such Designated Holder shall not be entitled to withdraw or
revoke such request without the prior written consent of the Company in its sole
discretion unless, as a result of facts or circumstances relating to the Company
or to market conditions arising after the date on which such request was made,
such Designated Holder reasonably determines that participation in such
registration would have a material adverse effect on such Designated Holder.
3.4 Effective Demand Registration. Subject to the last four
sentences of Section 3.2, the Company shall use its commercially reasonable
efforts to cause any such Demand Registration to be filed and to become
effective as soon as reasonably practicable after it receives valid written
notice requesting the Demand Registration from the Initiating Holders. A
registration shall not constitute a Demand Registration until it has become
effective and remains continuously effective for the lesser of (i) the period
during which all Registrable Securities registered in the Demand Registration
are sold and (ii) 120 days; provided, however, that a registration shall not
constitute a Demand Registration if (x) after such Demand Registration has
become effective, such registration or the related offer, sale or distribution
of Registrable Securities thereunder is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason not attributable to the Initiating Holders and
such interference is not thereafter eliminated or (y) the conditions specified
in the underwriting agreement, if any, entered into in connection with such
Demand Registration are not satisfied or waived, other than by reason of a
failure by the Initiating Holder.
3.5 Expenses. Subject to Section 4.4 hereof, the Company shall pay
all Registration Expenses in connection with a Replacement Shelf Registration or
a Demand Registration, whether or not such Replacement Shelf Registration or
Demand Registration becomes effective.
ARTICLE IV
REGISTRATION PROCEDURES
4.1 Obligations of the Company. Whenever registration of
Registrable Securities has been requested pursuant to Article III of this
Agreement, subject to the last four sentences of Section 3.2, the Company shall
use its commercially reasonable efforts to effect the registration and sale of
such Registrable Securities in accordance with the intended method of
distribution thereof as quickly as reasonably practicable, and in connection
with any such request, the Company shall, as expeditiously as reasonably
practicable:
(a) prepare and file with the Commission a Registration
Statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall be
available for the sale of such Registrable Securities in accordance
with the intended method of distribution thereof, and cause such
Registration Statement to become effective; provided, however, that (x)
before filing a Registration Statement or prospectus or any amendments
or supplements thereto, the Company shall provide counsel selected by
the Designated Holders holding a majority of the Registrable Securities
being registered in such registration ("Holders' Counsel") and any
other Inspector with an adequate and appropriate opportunity to review
and comment on such Registration Statement and each prospectus included
therein (and each amendment or supplement thereto) to be filed with the
Commission, subject to such documents being under the Company's
control, and (y) the Company shall notify the Holders'
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Counsel and each seller of Registrable Securities of any stop order
issued or threatened by the Commission and take all action required to
prevent the entry of such stop order or to remove it if entered;
(b) prepare and file with the Commission such amendments
and supplements to such Registration Statement and the prospectus used
in connection therewith as may be necessary to keep such Registration
Statement effective for the lesser of (x) 180 days and (y) such shorter
period which will terminate when all Registrable Securities covered by
such Registration Statement have been sold; and shall comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement;
(c) furnish to each seller of Registrable Securities,
prior to filing a Registration Statement, at least one copy of such
Registration Statement as is proposed to be filed, and thereafter such
number of copies of such Registration Statement, each amendment and
supplement thereto (in each case including all exhibits thereto), and
the prospectus included in such Registration Statement (including each
preliminary prospectus) and any prospectus filed under Rule 424 under
the Securities Act as each such seller may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by
such seller;
(d) register or qualify the offer and sale of such
Registrable Securities under such other securities or "blue sky" laws
of such jurisdictions as any seller of Registrable Securities may
request, and to continue such qualification in effect in such
jurisdiction for as long as permissible pursuant to the laws of such
jurisdiction, or for as long as any such seller requests or until all
of such Registrable Securities are sold, whichever is shortest, and do
any and all other acts and things which may be reasonably necessary or
advisable to enable any such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such seller;
provided, however, that the Company shall not be required to (x)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 4.1(d), (y)
subject itself to taxation in any such jurisdiction or (z) consent to
general service of process in any such jurisdiction;
(e) notify each seller of Registrable Securities at any
time when a prospectus relating thereto is required to be delivered
under the Securities Act, upon discovery that, or upon the happening of
any event as a result of which, the prospectus included in such
Registration Statement contains an untrue statement of a material fact
or omits to state any 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 the Company shall
promptly prepare a supplement or amendment to such prospectus and
furnish to each seller of Registrable Securities a reasonable number of
copies of such supplement to or an amendment of such prospectus as may
be necessary so that, after delivery to the purchasers of such
Registrable Securities, such prospectus shall not contain an untrue
statement of a material fact or omit to state any 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;
(f) take such actions as are customary, prudent and
reasonably required in order to expedite or facilitate the disposition
of such Registrable Securities;
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(g) make available at reasonable times for inspection by
any seller of Registrable Securities, Holders' Counsel and any
attorney, accountant or other agent retained by any such seller (each,
an "Inspector" and collectively, the "Inspectors") (provided that the
Designated Holders shall cooperate with each other to minimize, to the
extent practicable, the number of such attorneys, accountants and other
agents who are Inspectors so as not to unduly interfere with the
day-to-day operations of the Company and its subsidiaries) all
financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause the Company's and its
subsidiaries' officers, directors and employees, and the independent
public accountants of the Company, to supply all information reasonably
requested by any such Inspector in connection with such Registration
Statement. Records that the Company determines, in good faith, to be
confidential and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors (and the Inspectors shall
confirm their agreement in writing in advance to the Company if the
Company shall so request) unless (x) the disclosure of such Records is
necessary, in the Company's judgment, to avoid or correct a
misstatement or omission in the Registration Statement, (y) the release
of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction after exhaustion of all appeals
therefrom or (z) the information in such Records was known to the
Inspectors on a non-confidential basis prior to its disclosure by the
Company or has been made generally available to the public. Each seller
of Registrable Securities agrees that it shall, upon learning that
disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at the
Company's expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(h) furnish, at the request of any seller of Registrable
Securities on the date the Registration Statement with respect to such
securities becomes effective, an opinion, dated such date, of counsel
representing the Company for the purposes of such registration,
addressed to the seller making such request, covering such legal
matters with respect to the registration in respect of which such
opinion is being given as such seller may reasonably request and are
customarily included in such opinions;
(i) comply with all applicable rules and regulations of
the Commission, and make available to its security holders, as soon as
reasonably practicable but no later than fifteen (15) months after the
effective date of the Registration Statement, an earnings statement
covering a period of twelve (12) months beginning after the effective
date of the Registration Statement, in a manner which satisfies the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(j) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the
Company are then listed, provided that the applicable listing
requirements are satisfied;
(k) keep Holders' Counsel advised in writing as to the
initiation and progress of any registration under Article III
hereunder;
(l) cooperate with each seller of Registrable Securities
in the disposition of such Registrable Securities and their respective
counsel in connection with any filings required to be made with the
NASD; and
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(m) take all other steps reasonably necessary to effect
the registration of the Registrable Securities contemplated hereby.
4.2 Seller Information. The Company may require each seller of
Registrable Securities as to which any registration is being effected to
furnish, and such seller shall furnish, to the Company such information
regarding the distribution of such securities as the Company may from time to
time reasonably request in writing.
4.3 Notice to Discontinue. Each Designated Holder agrees that,
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 4.1(e), such Designated Holder shall forthwith
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Designated Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 4.1(e) and, if so directed by the Company, such Designated Holder shall
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Designated Holder's possession, of the
prospectus covering such Registrable Securities which is current at the time of
receipt of such notice. If the Company shall give any such notice, the Company
shall extend the period during which such Registration Statement shall be
maintained effective pursuant to this Agreement (including, without limitation,
the period referred to in Section 4.1(b)) by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 4.1(e) to and including the date when sellers of such Registrable
Securities under such Registration Statement shall have received the copies of
the supplemented or amended prospectus contemplated by and meeting the
requirements of Section 4.1(e).
4.4 Registration Expenses. The Company shall pay all expenses
arising from or incident to its performance of, or compliance with, this
Agreement, including, without limitation, (i) Commission, stock exchange and
NASD registration and filing fees, (ii) all fees and expenses incurred in
complying with securities or "blue sky" laws, (iii) all printing, messenger and
delivery expenses, (iv) the fees, charges and disbursements of counsel to the
Company and of its independent public accountants and any other accounting fees,
charges and expenses incurred by the Company (including, without limitation, any
expenses arising from any "cold comfort" letters or any special audits incident
to or required by any registration or qualification), (v) the fees, charges and
expenses of one counsel to the Designated Holders, up to an aggregate maximum of
$5,000 per Registration Statement (inclusive of any amendments or supplements
thereto), and (vi) any liability insurance or other premiums for insurance
obtained in connection with any Demand Registration pursuant to the terms of
this Agreement, regardless of whether such Registration Statement is declared
effective. The expenses described in the preceding sentence of this Section 4.4
are referred to herein as "Registration Expenses." Notwithstanding the
foregoing, if the Designated Holders shall cease to own at least 10% of the
Registrable Securities acquired by the Investors on the effective date of the
Registration Rights Agreement, the fees, charges and expenses of legal counsel
(and other professionals) retained by the Designated Holders shall not be deemed
Registration Expenses for all purposes under this Agreement (and the Company
shall be under no obligation to make any payments in connection therewith). In
addition, the Designated Holders of Registrable Securities sold pursuant to a
Registration Statement shall bear the expense of any broker's commission or
underwriter's discount or commission relating to registration and sale of such
Designated Holders' Registrable Securities and, subject to clause (v) above,
shall bear the fees and expenses of their own counsel.
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ARTICLE V
INDEMNIFICATION; CONTRIBUTION
5.1 Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Designated Holder, its partners, directors,
officers, affiliates and each Person who controls (within the meaning of Section
15 of the Securities Act) such Designated Holder from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs of
investigation) (each, a "Liability" and collectively, "Liabilities"), arising
out of or based upon any untrue, or allegedly untrue, statement of a material
fact contained in any Registration Statement, prospectus or preliminary
prospectus or notification or offering circular (as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) or
arising out of or based upon 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 under the circumstances such statements were made, except
insofar as such Liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission contained in such
Registration Statement, preliminary prospectus or final prospectus in reliance
and in conformity with information concerning such Designated Holder furnished
in writing to the Company by such Designated Holder expressly for use therein,
including, without limitation, the information furnished to the Company pursuant
to Section 5.2.
5.2 Indemnification by Designated Holders. In connection with any
Registration Statement in which a Designated Holder is participating pursuant to
Article III hereof, each such Designated Holder shall promptly furnish to the
Company in writing such information with respect to such Designated Holder as
the Company may reasonably request or as may be required by law for use in
connection with any such Registration Statement or prospectus and all
information required to be disclosed in order to make the information previously
furnished to the Company by such Designated Holder not materially misleading or
necessary to cause such Registration Statement not to omit a material fact with
respect to such Designated Holder necessary in order to make the statements
therein not misleading. Each Designated Holder agrees to indemnify and hold
harmless the Company and each Person who controls the Company (within the
meaning of Section 15 of the Securities Act) to the same extent as the foregoing
indemnity from the Company to the Designated Holders, but only if such statement
or alleged statement or omission or alleged omission was made in reliance upon
and in conformity with information with respect to such Designated Holder
furnished in writing to the Company by such Designated Holder expressly for use
in such registration statement or prospectus, including, without limitation, the
information furnished to the Company pursuant to this Section 5.2; provided,
however, that the total amount to be indemnified by such Designated Holder
pursuant to this Section 5.2 shall be limited to the net proceeds received by
such Designated Holder in the offering to which the Registration Statement or
prospectus relates.
5.3 Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder (the "Indemnified Party") agrees to give prompt
written notice to the indemnifying party (the "Indemnifying Party") after the
receipt by the Indemnified Party of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof made in writing
for which the Indemnified Party intends to claim indemnification or contribution
pursuant to this Agreement; provided, however, that the failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party of any Liability
that it may have to the Indemnified Party hereunder (except to the extent that
the Indemnifying Party is materially prejudiced or otherwise forfeits
substantive rights or defenses by reason of such failure). If notice of
commencement of any such action is given
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to the Indemnifying Party as above provided, the Indemnifying Party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other Indemnifying Party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and reasonably satisfactory
to such Indemnified Party. The Indemnified Party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be paid by the Indemnified Party
unless (i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying
Party fails to assume the defense of such action with counsel reasonably
satisfactory to the Indemnified Party or (iii) the named parties to any such
action (including any impleaded parties) include both the Indemnifying Party and
the Indemnified Party and such parties have been advised by such counsel that
either (x) representation of such Indemnified Party and the Indemnifying Party
by the same counsel would be inappropriate under applicable standards of
professional conduct or (y) there may be one or more legal defenses available to
the Indemnified Party which are different from or additional to those available
to the Indemnifying Party. In any of such cases, the Indemnifying Party shall
not have the right to assume the defense of such action on behalf of such
Indemnified Party, it being understood, however, that the Indemnifying Party
shall not be liable for the fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for all Indemnified Parties. No
Indemnifying Party shall be liable for any settlement entered into without its
written consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the consent of such Indemnified Party, effect
any settlement of any pending or threatened proceeding in respect of which such
Indemnified Party is a party and indemnity has been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability for claims that are the subject matter
of such proceeding.
5.4 Contribution. If the indemnification provided for in this
Article V from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any Liabilities referred to herein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Liabilities in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions which resulted in such Liabilities, as well as any other relevant
equitable considerations. The relative faults of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the Liabilities referred to above shall be
deemed to include, subject to the limitations set forth in Sections 5.1, 5.2 and
5.3, any legal or other fees, charges or expenses reasonably incurred by such
party in connection with any investigation or proceeding; provided that the
total amount to be contributed by such Designated Holder shall be limited to the
net proceeds received by such Designated Holder in the offering.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.4 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
11
ARTICLE VI
COVENANTS
6.1 Rule 144. The Company covenants that from and after the date
hereof, it shall (a) file any reports required to be filed by it under the
Exchange Act and (b) take such further action as each Designated Holder of
Registrable Securities may reasonably request (including providing any
information necessary to comply with Rule 144 under the Securities Act), all to
the extent required from time to time to enable such Designated Holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (i) Rule 144 under the Securities Act,
as such rule may be amended from time to time, or Regulation S under the
Securities Act or (ii) any similar rules or regulations hereafter adopted by the
Commission. The Company shall, upon the request of any Designated Holder of
Registrable Securities, deliver to such Designated Holder a written statement as
to whether it has complied with such requirements.
6.2 Restrictions on Public Sale by the Company. The Company agrees
not to effect any public sale or distribution of any of its securities, or any
securities convertible into or exchangeable or exercisable for such securities
(except pursuant to registrations on Form S-4 or S-8 or any successor thereto),
during the period beginning on the effective date of the first Registration
Statement under Section 3.2 in which at least two thirds of the Registrable
Securities requested to be included in such Registration Statement were included
in such Registration Statement and ending on the earlier of (i) the date that
all Registrable Securities registered on such Registration Statement are sold
and (ii) thirty (30) days after the effective date of such Registration
Statement (except as part of such registration).
ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement shall not be effective if the
Merger Agreement is terminated for any reason. Either party may terminate this
Agreement if the Effective Time shall not have taken place by December 31, 2005,
in which case the parties hereto shall have no further obligations with respect
to this Agreement and the Registration Rights Agreement shall continue in its
entirety pursuant to its terms.
7.2 Recapitalizations, Exchanges, etc. The provisions of this
Agreement shall apply to the full extent set forth herein with respect to (i)
the shares of Common Stock, (ii) any and all shares of common stock of the
Company into which the shares of Common Stock are converted, exchanged or
substituted in any recapitalization or other capital reorganization by the
Company and (iii) any and all equity securities of the Company or any successor
or assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in conversion of, in exchange for
or in substitution of, the shares of Common Stock and shall be appropriately
adjusted for any stock dividends, splits, reverse splits, combinations,
recapitalizations and the like occurring after the date hereof. The Company
shall cause any successor or assign (whether by merger, consolidation, sale of
assets or otherwise) to enter into a new registration rights agreement with the
Designated Holders on terms substantially the same as this Agreement as a
condition of any such transaction.
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7.3 No Inconsistent Agreements. The Company represents and
warrants that, except as set forth on Schedule 7.3 hereto, it has not granted to
any Person the right to request or require the Company to register any
securities issued by the Company, which right is effective as of the date of
this Agreement, other than the rights granted to the Designated Holders herein.
The Company shall not enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Designated Holders in this
Agreement or grant any additional registration rights to any Person or with
respect to any securities which are not Registrable Securities which are prior
in right to or inconsistent with the rights granted in this Agreement.
7.4 Remedies. The Designated Holders, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
shall be entitled to specific performance of their rights under this Agreement.
The Company agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive in any action for specific performance the
defense that a remedy at law would be adequate.
7.5 Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be made
by registered or certified first-class mail, return receipt requested,
telecopier, courier service or personal delivery:
(a) if to the Company:
Cardiac Science, Inc.
00000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Telecopier No.: 000-000-0000
Attention: Xxxxxxxx xx Xxxxx
with a copy to:
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
if to any Investor, to such Investor at the address
set forth on the signature pages hereto, with a copy
to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: : Xxxxx X. Xxxxxxxxx, Esq
(b) if to any other Designated Holder, at its address as
it appears on the record books of the Company.
13
All such notices, demands and other communications shall be
deemed to have been duly given when delivered by hand, if personally delivered;
when delivered by courier, if delivered by commercial courier service; five (5)
Business Days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is mechanically acknowledged, if telecopied. Any party may by
notice given in accordance with this Section 7.5 designate another address or
Person for receipt of notices hereunder.
7.6 Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto as hereinafter provided. The rights of
the Designated Holder contained in Article III hereof shall be, with respect to
any Registrable Security that is transferred, automatically transferred to such
transferee. All of the obligations of the Company hereunder shall survive any
such transfer. Except as provided in Article V, no Person other than the parties
hereto and their successors and permitted assigns are intended to be a
beneficiary of this Agreement.
7.7 Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless consented to in writing by the Company and Designated Holders that
hold at least 70% of the Registrable Securities; provided that any such
amendment, modification, supplement, waiver or consent to departure that
adversely affects a Designated Holder in a manner differently than it affects
the other Designated Holders shall be effective only with the prior written
consent of such Designated Holder.
7.8 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
7.9 Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE NEW YORK, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
7.11 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
7.12 Rules of Construction. Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
7.13 Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto
with respect to the subject matter contained herein. There are no restrictions,
promises, representations, warranties or undertakings with respect to the
subject matter contained herein, other than those set forth or referred to
herein. This Agreement, once effective,
14
supersedes all prior agreements and understandings among the parties with
respect to such subject matter, including the Registration Rights Agreement.
7.14 Further Assurances. Each of the parties shall, and shall cause
their respective Affiliates to, execute such documents and perform such further
acts as may be reasonably required or desirable to carry out or to perform the
provisions of this Agreement.
7.15 Other Agreements. Nothing contained in this Agreement shall be
deemed to be a waiver of, or release from, any obligations any party hereto may
have under, or any restrictions on the transfer of Registrable Securities or
other securities of the Company imposed by, any other agreement including, but
not limited to, the Warrants.
[Remainder of page intentionally left blank]
15
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Second Amended and Restated Registration Rights Agreement on the
date first written above.
CARDIAC SCIENCE, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
--------------------------------------------
Title: CEO
--------------------------------------------
INVESTORS:
PERSEUS MARKET OPPORTUNITY FUND, L.P.
By: /s/ Xxx X. Xxxxxx, III
--------------------------------------------
Name: Xxx X. Xxxxxx, III
--------------------------------------------
Title: Managing Director
--------------------------------------------
c/o Perseus, L.L.C.
1325 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
Attention: Xxx X. Xxxxxx, III
PERSEUS ACQUISITION/RECAPITALIZATION FUND, L.L.C.
By: /s/ Xxx X. Xxxxxx, III
--------------------------------------------
Name: Xxx X. Xxxxxx, III
--------------------------------------------
Title: Managing Director
--------------------------------------------
c/o Perseus, L.L.C.
1325 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: 000-000-0000
Attention: Xxx X. Xxxxxx, III
16
CARDIAC SCIENCE CO-INVESTMENT, L.P.
By: /s/ Xxx X. Xxxxxx III
--------------------------------------------
Name: Xxx X. Xxxxxx III
--------------------------------------------
Title: Managing Director
--------------------------------------------
c/o Perseus, L.L.C.
1325 Avenue of the Xxxxxxxx, 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:
--------------------------------------------
c/o Babson Capital Management LLC
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Telecopier No.:
Attention:
MILL RIVER MASTER FUND, L.P.
By: Babson Capital Management LLC, as
Investment Manager
By:
--------------------------------------------
c/o Babson Capital Management LLC
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Telecopier No.:
Attention:
17
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: Babson Capital Management LLC, as
Investment Manager
By:
--------------------------------------------
c/o Babson Capital Management LLC
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Telecopier No.:
Attention:
-------------------------------------------------
Xxxxxx Xxxxxxxx
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Telecopier No.:__________________________________
18
SCHEDULE 7.3
REGISTRATION RIGHTS
The Company has outstanding registration rights as follows:
1. In July 2004, the Company amended and restated those certain
registration rights granted to investors in May 2002.
2. In October 2003, the Company granted certain registration rights to
Complient Corporation and its shareholders in connection with the
acquisition of such corporation's assets.
3. In September 2003, the Company granted certain registration rights to
investors in an equity financing.
4. In July 2003, the Company granted certain registration rights to GE
Medical Systems Information Technologies, Inc. pursuant to the warrant
issued in connection with an OEM Supply and Purchase Agreement.
5. In August/September 2001, the Company granted certain registration
rights to investors in an equity financing.
