Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of August 28, 2003, by and between EP Medsystems, Inc., a New Jersey
corporation (the "Company"), Laurus Master Fund, Ltd. (the "Purchaser") and each
person or entity that subsequently becomes a party to this Agreement pursuant
to, and in accordance with, the provisions of Section 8(h) hereof (each a
"Holder" and together the "Holders").
This Agreement is made pursuant to the Security Agreement, dated as of the
date hereof, between the Purchaser and the Company (the "Security Agreement"),
and is entered into pursuant to the Notes and the Warrants.
The Company and the Purchaser hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Security Agreement shall have the meanings given such
terms in the Security Agreement. As used in this Agreement, the following terms
shall have the following meanings:
"Effectiveness Date" means the 90th day following the applicable Filing Date.
"Effectiveness Period" shall have the meaning set forth in Section 2(a).
"Filing Date" means, with respect to each Registration Statement required
to be filed hereunder, no later than sixty (60) days following (1) the funding
by Purchaser of the Loans on the initial funding date (the "Initial Filing
Date") and (2) the earlier to occur of (a) that date which is twelve months
following the date of this Agreement and (b) that date on which debt evidenced
by one or more of the Notes has been converted into at least 1,250,000 shares of
Company's Common Stock in accordance with the terms of the applicable Notes.
"Indemnified Party" shall have the meaning set forth in Section 5(c).
"Indemnifying Party" shall have the meaning set forth in Section 5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Notes" has the meaning set forth in the Security Agreement.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" means the shares of Common Stock issued upon the
conversion of each Note and issuable upon exercise of the Warrants.
"Registration Statement" means each registration statement required to be
filed hereunder, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 424" means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Warrants" means the Common Stock purchase warrants issued pursuant to the
Security Agreement.
2. REGISTRATION.
(a) On or prior to each Filing Date, the Company shall prepare and file
with the Commission a Registration Statement covering the Registrable Securities
for an offering to be made on a continuous basis pursuant to Rule 415; provided,
however, not more than 1,500,000 shares of Registrable Securities shall be
covered by the Registration Statement to be filed on the Initial Filing Date.
Each Registration Statement shall be on Form S-3 (except if the Company is not
then eligible to register for resale the Registrable Securities on Form S-3, in
which case such registration shall be on another appropriate form in accordance
herewith). The Company shall cause each Registration Statement to become
effective and remain effective as provided herein. The Company shall use its
reasonable commercial efforts to cause each Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event no later than the Effectiveness Date, and shall
keep each Registration Statement continuously effective under the Securities Act
until the date which is the earlier date of when (i) all Registrable Securities
have been sold or (ii) all Registrable Securities may be sold immediately
without registration under the Securities Act and without volume restrictions
pursuant to Rule 144(k), as determined by the counsel to the Company pursuant to
a written opinion letter to such effect, addressed and acceptable to the
Company's transfer agent and the affected Holders (the "Effectiveness Period").
At the end of the Effectiveness Period, the Company shall be entitled to
withdraw the Registration Statement and shall have no further obligation to
register the Registrable Securities.
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(b) If: (i) any Registration Statement is not filed on or prior to the
applicable Filing Date (except if the delay is directly caused by the actions or
inaction of the Holder); (ii) a Registration Statement filed hereunder is not
declared effective by the Commission by the Effectiveness Date (except if the
delay is directly caused by the actions or inaction of the Holder); (iii) after
a Registration Statement is filed with and declared effective by the Commission,
such Registration Statement ceases to be effective (by suspension or otherwise)
as to all Registrable Securities to which it is required to relate at any time
prior to the expiration of the Effectiveness Period (without being succeeded
immediately by an additional registration statement filed and declared
effective) for a period of time which shall exceed 30 days in the aggregate per
year or more than 20 consecutive calendar days (defined as a period of 365 days
commencing on the date such Registration Statement is declared effective); or
(iv) the Common Stock is not listed or quoted, or is suspended from trading on
any Trading Market (as defined below) for a period of three (3) consecutive
Trading Days (provided the Company shall not have been able to cure such trading
suspension within 30 days of the notice thereof or list the Common Stock on any
of the NASD OTC Bulletin Board, BBX Exchange, NASDAQ SmallCap Market, the Nasdaq
National Market, American Stock Exchange or New York Stock Exchange (the
"Trading Market"))(any such failure or breach being referred to as an "Event,"
and for purposes of clause (i), (ii) or (v) the date on which such Event occurs,
or for purposes of clause (iii) the date on which such 30 day or 20 consecutive
day period (as the case may be) is exceeded, or for purposes of clause (iv) the
date on which such three (3) Trading Day period is exceeded, being referred to
as "Event Date"), then until the applicable Event is cured, the Company shall
pay to each Holder an amount in cash, as liquidated damages and not as a
penalty, equal to 2.0% for each thirty (30) day period (prorated for partial
periods) on a daily basis of the original principal amount of each applicable
Note. Such liquidation damages shall be paid not less than each thirty (30) days
during an Event and within three (3) days following the date on which such Event
has been cured by the Company.
(c) Unless otherwise agreed to by the Company, the offer and sale of
the Registrable Securities pursuant to the Registration Statement shall not be
underwritten.
3. REGISTRATION PROCEDURES. If and whenever the Company is required by the
provisions hereof to effect the registration of the Registrable Securities under
the Act, the Company will, as expeditiously as possible:
(a) prepare and file with the SEC a registration statement with respect to
such securities, and use its best efforts to cause such registration statement
to become and remain effective for the Effectiveness Period, and promptly
provide to the Purchaser copies of all filings and SEC letters of comment;
(b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by the registration statement and to
keep such registration statement effective during the Effectiveness Period;
(c) furnish to the Purchaser such number of copies of the registration
statement and the prospectus included therein (including each preliminary
prospectus) as the Purchaser reasonably may request to facilitate the public
sale or disposition of the securities covered by such registration statement;
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(d) use its commercially reasonable efforts to register or qualify the
Holder's Registrable Securities covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the Holder shall
reasonably request, provided, however, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction; and provided further that
(notwithstanding anything in this Agreement to the contrary with respect to the
bearing of expenses) if any jurisdiction in which any of such Registrable
Securities shall be qualified shall require that expenses incurred in connection
with the qualification therein of any such Registrable Securities be borne by
the selling Holders, then the selling Holders shall, to the extent required by
such jurisdiction, pay their pro rata share of such qualification expenses;
(e) list the Registrable Securities covered by such registration statement
with any securities exchange on which the Common Stock of the Company is then
listed;
(f) immediately notify the Purchaser at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event of which the Company has knowledge as a result of which the
prospectus contained in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing; and
(g) make available for inspection by the Purchaser and any attorney,
accountant or other agent retained by the Purchaser, all publicly available,
non-confidential financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all publicly available, non-confidential information
reasonably requested by the attorney, accountant or agent of the Purchaser.
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4. REGISTRATION EXPENSES. All expenses relating to the Company's
compliance with Sections 2 and 3 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including reasonable counsel fees of one counsel to the Holders) incurred in
connection with complying with state securities or "blue sky" laws, fees of the
NASD, transfer taxes, fees of transfer agents and registrars, fees of, and
disbursements incurred by, one counsel for the Holders, and costs of insurance
are called "Registration Expenses". All selling commissions applicable to the
sale of Registrable Securities, including any fees and disbursements of any
special counsel to the Holders beyond those included in Registration Expenses,
are called "Selling Expenses." The Company shall be responsible for all
Registration Expenses and the Holders shall be responsible for all Selling
Expenses.
5. INDEMNIFICATION.
(a) In the event of a registration of any Registrable Securities under the
Securities Act pursuant to this Agreement, to the extent permitted by law, the
Company will indemnify and hold harmless the Purchaser, and its officers,
directors and each other person, if any, who controls the Purchaser within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities ("Losses"), joint or several, to which the Purchaser, or such
persons may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
Registrable Securities were registered under the Securities Act pursuant to this
Agreement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Purchaser, and each such person for any reasonable legal or
other expenses incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 5(a) shall not apply to amounts
paid in settlement of any such Loss if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld) and
the Company will not be liable in any such case if and to the extent that any
such Loss arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by any Holder or its representatives or any such person in writing
specifically for use in any such document.
(b) In the event of a registration of the Registrable Securities under the
Securities Act pursuant to this Agreement, the Holders, jointly and severally,
will indemnify and hold harmless the Company, and its officers, directors and
each other person, if any, who controls the Company within the meaning of the
Securities Act, against all Losses, joint or several, to which the Company or
such persons may become subject under the Securities Act or otherwise, insofar
as such Losses (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact which was
furnished in writing by the any Holder or its representatives to the Company
expressly for use in (and such information is contained in) the registration
statement under which such Registrable Securities were registered under the
Securities Act pursuant to this Agreement, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and each such person for
any reasonable legal or other expenses incurred by them in connection with
investigating or defending any such Loss, provided, however, that the Holders
will be liable in any such case if and only to the extent that any such Loss
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information furnished
in writing to the Company by any Holder or its representatives specifically for
use in any such document. Notwithstanding the provisions of this paragraph, the
Holders shall not be required to indemnify any person or entity in excess of the
amount of the aggregate net proceeds received by the Holders of Registrable
Securities in connection with any such registration under the Securities Act.
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(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 5(c) and shall only relieve
it from any liability which it may have to such indemnified party under this
Section 5(c) if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 5(c) for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof; if the
indemnified party retains its own counsel, then the indemnified party shall pay
all fees, costs and expenses of such counsel, provided, however, that, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified parties shall have the right to
select one separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the reasonable expenses and fees
of such separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
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(d) In order to provide for just and equitable contribution in the event of
joint liability under the Securities Act in any case in which either (i) the
Purchaser, or any controlling person of the Purchaser, makes a claim for
indemnification pursuant to this Section 5(d) but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that this Section 5(d) provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of the
Purchaser or controlling person of the Purchaser in circumstances for which
indemnification is provided under this Section 5(d); then, and in each such
case, the Company and the Holders will contribute to the aggregate Losses to
which they may be subject (after contribution from others) in such proportion as
is appropriate to reflect the relative fault of the indemnifying party, on the
one hand, and of the indemnified party, on the other, in connection with the
statements or omissions that resulted in such loss, claim or expense as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission. If, however, the allocation provided in the
previous two sentences is not permitted by applicable law, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative faults but also the relative benefits of the indemnifying party and the
indemnified party as well as any other relevant equitable considerations. The
parties hereto agree that it would not be just and equitable if contributions
pursuant to this Section 5(d) were to be 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 preceding sentences of this Section 5(d). The
amount paid or payable in respect of any claim shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending such loss, claim, damage or liability
(including legal expenses reasonably incurred). Notwithstanding anything in this
Section 5(d) to the contrary, no Holder shall be required to contribute an
amount in excess of the portion represented by the percentage that the public
offering price of its securities offered by the registration statement bears to
the public offering price of all securities offered by such registration
statement, provided, however, that, in any such case, (A) the Holders will not
be required to contribute any amount in excess of the public offering price of
all such securities offered by them pursuant to such registration statement; and
(B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company and the Holders under this Section 5
shall survive the completion of any offering of Registrable Securities pursuant
to (i) a Registration Statement or (ii) any registration statement pursuant to
which Registrable Securities are registered under Section 8(e) hereof.
(f) Notwithstanding anything to the contrary herein, the indemnifying party
shall not be entitled to settle any claim, suit or proceeding unless in
connection with such settlement the indemnified party receives an unconditional
release with respect to the subject matter of such claim, suit or proceeding and
such settlement does not contain any admission of fault by the indemnified
party.
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6. REPRESENTATIONS AND WARRANTIES.
(a) The Common Stock of the Company is registered pursuant to Section 12(b)
or 12(g) of the Exchange Act and the Company has timely filed all proxy
statements, reports, schedules, forms, statements and other documents required
to be filed by it under the Exchange Act. The Company has filed (i) its Annual
Report on Form 10-K for the fiscal year ended December 31, 2002 and (ii) its
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003
(collectively, the "SEC Reports"). Each SEC Report was, at the time of its
filing, in substantial compliance with the requirements of its respective form
and none of the SEC Reports, nor the financial statements (and the notes
thereto) included in the SEC Reports, as of their respective filing dates,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed) and fairly present in all material respects the financial
condition, the results of operations and the cash flows of the Company and its
subsidiaries, on a consolidated basis, as of, and for, the periods presented in
each such SEC Report.
(b) The Company Common Stock is listed for trading on the Nasdaq SmallCap
Market and satisfies all requirements for the continuation of such listing. The
Company has not received any notice that its Common Stock will be delisted from
the Nasdaq SmallCap Market or that the Common Stock does not meet all
requirements for the continuation of such listing.
(c) Neither the Company, nor any of its affiliates, nor any person acting
on its or their behalf, has directly or indirectly made any offers or sales of
any security or solicited any offers to buy any security under circumstances
that would cause the offering of the Securities pursuant to this Agreement to be
integrated with prior offerings by the Company for purposes of the Securities
Act which would prevent the Company from selling the Common Stock pursuant to
Rule 506 under the Securities Act, or any applicable exchange-related
stockholder approval provisions. Nor will the Company or any of its affiliates
or subsidiaries take any action or steps that would cause the offering of the
Securities to be integrated with other offerings.
(d) The Registrable Securities are restricted securities under the
Securities Act as of the date of this Agreement. The Company will not issue any
stop transfer order or other order impeding the sale and delivery of any of the
Registrable Securities at such time as the Registrable Securities are registered
for public sale or an exemption from registration is available, except as
required by federal or state securities laws.
(e) The Company understands the nature of the Registrable Securities
issuable upon the conversion of each Note and the exercise of each Warrant and
recognizes that the Registrable Securities may have a potential dilutive effect.
The Company specifically acknowledges that its obligation to issue the
Registrable Securities is binding upon the Company and enforceable regardless of
the dilution such issuance may have on the ownership interests of other
shareholders of the Company.
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(f) Except for agreements made in the ordinary course of business, there is
no agreement that has not been filed with the SEC as an exhibit to a
registration statement or to a form required to be filed by the Company under
the Securities Exchange Act the breach of which could have a material and
adverse effect on the Company and its subsidiaries, or would prohibit or
otherwise interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement in any material respect.
(g) The Company will at all times have authorized and reserved a sufficient
number of shares of Common Stock for the full conversion of each Note and
exercise of each Warrant.
7. DEFERRAL AND LOCK-UP. Notwithstanding anything in this Agreement to the
contrary, if the Company shall furnish to the Purchaser a certificate signed by
the President or Chief Executive Officer of the Company stating that the Board
of Directors of the Company has made the good faith determination (i) that
continued use by the Holders of the Registration Statement for purposes of
effecting offers or sales of Registrable Securities pursuant thereto would
require, under the Securities Act, premature disclosure in the Registration
Statement (or the prospectus relating thereto) of material, nonpublic
information concerning the Company, its business or prospects or any proposed
material transaction involving the Company, (ii) that such premature disclosure
would be materially adverse to the Company, its business or prospects or any
such proposed material transaction or would make the successful consummation by
the Company of any such material transaction significantly less likely and (iii)
that it is therefore essential to suspend the use by the Holders of such
Registration Statement (and the prospectus relating thereto) for purposes of
effecting offers or sales of Registrable Securities pursuant thereto, then the
right of the Holders to use the Registration Statement, (and the prospectus
relating thereto) for purposes of effecting offers or sales of Registrable
Securities pursuant thereto shall be suspended for not more than two 15-business
day periods in a twelve month period (the "Suspension Period(s)") after delivery
by the Company of the certificate referred to above in this Section 7. In no
event, however, will any suspension be any longer than is reasonably necessary
to avoid the adverse effect. During the Suspension Period, none of the Holders
shall offer or sell any Registrable Securities publicly pursuant to or in
reliance upon the Registration Statement (or the prospectus relating thereto).
8. MISCELLANEOUS.
(a) REMEDIES. In the event of a breach by the Company or by a Holder, of
any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.
(b) NO PIGGYBACK ON REGISTRATIONS. Except as and to the extent specified in
Schedule 8(b) hereto, neither the Company nor any of its security holders (other
than the Holders in such capacity pursuant hereto) may include securities of the
Company in any Registration Statement other than the Registrable Securities, and
the Company shall not after the date hereof enter into any agreement providing
any such right for inclusion of shares in the Registration Statement to any of
its security holders. Except as and to the extent specified in Schedule 8(b)
hereto, the Company has not previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person that has
not been fully satisfied.
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(c) COMPLIANCE. Each Holder covenants and agrees that it will comply with
the prospectus delivery requirements of the Securities Act as applicable to it
in connection with sales of Registrable Securities pursuant to the Registration
Statement.
(d) DISCONTINUED DISPOSITION. Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of a Discontinuation Event (as defined below), such Holder will
forthwith discontinue disposition of such Registrable Securities under the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph. For purposes of this Section 8(d), a "Discontinuation Event" shall
mean when the Commission notifies the Company whether there will be a "review"
of such Registration Statement and whenever the Commission comments in writing
on such Registration Statement (the Company shall provide true and complete
copies thereof and all written responses thereto to each of the Holders); (iii)
any request by the Commission or any other Federal or state governmental
authority for amendments or supplements to such Registration Statement or
Prospectus or for additional information; (iv) the issuance by the Commission of
any stop order suspending the effectiveness of such Registration Statement
covering any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (v) the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any Proceeding for such purpose; and (vi)
the occurrence of any event or passage of time that makes the financial
statements included in such Registration Statement ineligible for inclusion
therein or any statement made in such Registration Statement or Prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or Prospectus, as the case may be, it will not
contain any 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.
(e) PIGGY-BACK REGISTRATIONS. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen days after receipt of such notice, any such
Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights and subject to the consent of
any selling stockholder(s) under such registration statement.
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(f) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Holders of
the then outstanding Registrable Securities. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of certain Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of at least a majority of the Registrable Securities to which such
waiver or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence.
(g) NOTICES. Any notice or request hereunder may be given to the Company or
Purchaser at the respective addresses set forth below or as may hereafter be
specified in a notice designated as a change of address under this Section 8(g).
Any notice or request hereunder shall be given by registered or certified mail,
return receipt requested, hand delivery, overnight mail or telecopy (confirmed
by mail). Notices and requests shall be, in the case of those by hand delivery,
deemed to have been given when delivered to any officer of the party to whom it
is addressed, in the case of those by mail or overnight mail, deemed to have
been given when deposited in the mail or with the overnight mail carrier, and,
in the case of a telecopy, when confirmed. The address for such notices and
communications shall be as follows:
If to the Company: EP Medsystems, Inc.
000 Xxxxx 00 Xxxxx
Xxxxxxxx X
Xxxx Xxxxxx, Xxx Xxxxxx 00000-0000
Attention: President and Chief Executive Officer
Facsimile: 000-000-0000
With a copy to:
Xxxxxxxxx X. Xxxxxxxx, Esq.
Xxxxxx Xxxxxx White & XxXxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
If to a Purchaser: To the address set forth under such Purchaser name on
the signature pages hereto.
If to any other Person who is then the registered Holder:
To the address of such Holder as it
appears in the stock transfer books
of the Company
or such other address as may be designated in writing hereafter, in the
same manner, by such Person.
11
(h) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder. The Company may not assign its
rights or obligations hereunder without the prior written consent of each
Holder. None of the rights of the Purchaser under this Agreement shall be
transferred or assigned to any person unless (i) such person is a Qualifying
Holder (as defined below), and (ii) such person agrees to become a party to, and
bound by, all of the terms and conditions of, this Agreement by duly executing
and delivering to the Company an Instrument of Adherence in the form attached as
Exhibit A hereto. For purposes of this Section 8(h), the term "Qualifying
Holder" shall mean, with respect to the Purchaser, (i) any shareholder thereof,
(ii) any corporation, partnership or limited liability company controlling,
controlled by, or under common control with, the Purchaser, or (iii) any other
direct transferee from the Purchaser of at least 25,000 shares included as
Registrable Securities that are held or that may be acquired by the Purchaser.
None of the rights of the Purchaser under this Agreement shall be transferred or
assigned to any person (including, without limitation, a Qualifying Holder) that
acquires Registrable Securities in the event that and to the extent that such
person is eligible to resell such Registrable Securities pursuant to Rule 144(k)
of the Securities Act or may otherwise resell such Registrable Securities
pursuant to an exemption from the registration provisions of the Securities Act.
(i) EXECUTION AND COUNTERPARTS. This Agreement may be executed in any
number of 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. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(j) GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement shall be commenced
exclusively in the state and federal courts sitting in the City of New York,
Borough of Manhattan. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such Proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence a Proceeding to enforce any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the other party
for its reasonable attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.
12
(k) CUMULATIVE REMEDIES. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.
(l) SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(m) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
EP MEDSYSTEMS, INC.
By: /s/ Xxxxxxxx Xxxxxxx
Name: Xxxxxxxx Xxxxxxx
Title:President and Chief Executive Officer
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES OF PURCHASER TO FOLLOW]
13
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
LAURUS MASTER FUND, LTD.
By:/s/ Xxxxx Grin
Name: Xxxxx Grin
Title: Partner
Address for Notice:
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
14
Exhibit A
Instrument of Adherence
Reference is hereby made to that certain Registration Rights Agreement,
dated as of August __, 2003, among EP MedSystems, Inc., a New Jersey corporation
(the "Company"), the Purchaser and the Holders, as amended and in effect from
time to time (the "Registration Rights Agreement"). Capitalized terms used
herein without definition shall have the respective meanings ascribed thereto in
the Registration Rights Agreement.
The undersigned, in order to become the owner or holder of ___________
shares of Company common stock, no par value, $0.001 stated value per share (the
"Common Stock"), hereby agrees that, from and after the date hereof, the
undersigned has become a party to the Registration Rights Agreement in the
capacity of a Holder, and is entitled to all of the benefits under, and is
subject to all of the obligations, restrictions and limitations set forth in,
the Registration Rights Agreement that are applicable to a Holder. This
Instrument of Adherence shall take effect and shall become a part of the
Registration Rights Agreement immediately upon execution.
Executed under seal as of the date set forth below under the laws of the
State of New York.
Signature:________________
Name:_____________________
Title:____________________
Accepted:
EP MedSystems, Inc.
By:_____________________________
Name: ______________________________
Title:______________________________
Date:_________________________________
