EXECUTION COPY
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ATS MEDICAL, INC.
as the Company
and
BUYERS,
as defined herein
REGISTRATION RIGHTS AGREEMENT
Dated as of October 7, 2005
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS................................................ 1
SECTION 2. REGISTRATION............................................... 2
SECTION 3. RELATED OBLIGATIONS........................................ 6
SECTION 4. OBLIGATIONS OF THE INVESTORS............................... 11
SECTION 5. EXPENSES OF REGISTRATION................................... 11
SECTION 6. INDEMNIFICATION............................................ 12
SECTION 7. CONTRIBUTION............................................... 15
SECTION 8. REPORTING.................................................. 15
SECTION 9. ASSIGNMENT OF REGISTRATION RIGHTS.......................... 16
SECTION 10. AMENDMENT OF REGISTRATION RIGHTS........................... 16
SECTION 11. MISCELLANEOUS.............................................. 17
EXHIBITS
Exhibit A... Schedule of Buyers
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is entered into as
of October 7, 2005, by and among ATS Medical, Inc., a Minnesota corporation (the
"Company"), and the buyers listed on the Schedule of Buyers attached hereto as
Exhibit A (each, a "Buyer" and, collectively, the "Buyers").
THE PARTIES TO THIS AGREEMENT enter into this agreement on the basis of the
following facts, intentions and understanding:
A. The Company and the Buyers entered into that certain Securities Purchase
Agreement of even date herewith (the "Securities Purchase Agreement"), and, upon
the terms and subject to the conditions of the Securities Purchase Agreement,
the Company has agreed to issue and sell to the Buyers an aggregate of up to
Twenty-Three Million Seven Hundred and Fifty Thousand United States Dollars
($23,750,000) of the Company's 6% Convertible Senior Notes due 2025 (such
Convertible Senior Notes, as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof, the "Notes"), which
shall be convertible into shares of common stock, $0.01 par value per share (the
"Common Stock") of the Company (as converted, the "Conversion Shares"), and
Warrants (such Warrants, as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof, the "Warrants") to
purchase up to One Million Four Hundred and Twenty-Five Thousand (1,425,000)
shares of Common Stock (as exercised, the "Warrant Shares").
B. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights to the
Buyers under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
hereby agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
(a) "Business Day" means any day other than Saturday, Sunday or any other
day on which commercial banks in The City of New York are required by law or
executive order to remain closed.
(b) "Commission" means the Securities and Exchange Commission.
(c) "Investor" means each Buyer and any transferee or assignee thereof to
whom a Buyer assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with Section 9 of this
Agreement, and any subsequent transferee or assignee thereof to whom a
transferee or assignee assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with Section 9 of
this Agreement.
(d) "Person" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization or association and governmental or any department or agency
thereof.
(e) "register," "registered," and "registration" means a registration
effected by preparing and filing one or more Registration Statements (as defined
below) in compliance with the Securities Act and pursuant to Rule 415 under the
Securities Act or any successor rule providing for offering securities on a
continuous or delayed basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statements by the Commission.
(f) "Registrable Securities" means (i) the Notes, (ii) the Warrants, (iii)
the Conversion Shares issued or issuable upon conversion of the Notes, (iv) the
Warrant Shares issued or issuable upon exercise of the Warrants, (v) any shares
of capital stock issued or issuable with respect to the Conversion Shares or the
Warrant Shares as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitations on
conversions of the Notes or the exercise of the Warrants, and (vi) any shares of
capital stock of any entity issued in respect of the securities referenced in
the immediately preceding clauses (i), (ii), (iii), (iv) and (v) as a result of
a merger, consolidation, sale of assets, sale or exchange of capital stock or
other similar transaction; provided, that any Registrable Securities that have
been sold pursuant to a Registration Statement or Rule 144 promulgated under the
Securities Act shall no longer be Registrable Securities.
(g) "Registration Statement" means a registration statement or registration
statements of the Company filed under the Securities Act and, subject to Section
4(b), covering all of the Registrable Securities.
(h) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement.
SECTION 2. REGISTRATION.
(a) Mandatory Registration. The Company shall prepare and, as soon as
practicable but in no event later than 30 calendar days after the Closing Date
and the Option Closing Date, if any, (as those terms are defined in the
Securities Purchase Agreement) (each a "Filing Deadline"), file with the
Commission a Registration Statement on Form S-3 covering the resale of all of
the Registrable Securities purchased on the Closing Date or Option Closing Date,
as the case may be. In the event that Form S-3 is unavailable for such a
registration, the Company shall use such other form as is available for such a
registration, subject to the provisions of Section 2(d) of this Agreement. Each
Registration Statement prepared pursuant hereto shall register the Registrable
Securities for resale, including at least 105% of the number of shares of Common
Stock issuable upon conversion of the Notes and exercise of the Warrants by the
Investors from time to time in accordance with the methods of distribution
elected by such Investors or such other amount as required by Section 4(e) of
the Securities Purchase Agreement. The Company shall use its best efforts to
have each Registration Statement declared effective by the Commission as soon as
practicable, but not later than 90 calendar days after the Closing Date or the
Option Closing Date, as the case may be, (each an "Effectiveness Deadline");
provided,
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however, that if the Commission reviews a Registration Statement and requires
the Company to make modifications thereto, then the Effectiveness Deadline shall
be extended to 120 calendar days after the Closing Date. In the event that,
after the Closing Date or the Option Closing Date, as the case may be, and
before the related Registration Statement is declared effective, the offices of
the Commission are closed due to acts of God, war or terror, the Effectiveness
Deadline will be extended by a number of days equal to the days of any such
closure.
(b) Allocation of Registrable Securities. The initial number of Conversion
Shares or Warrant Shares included in any Registration Statement and each
increase in the number of Conversion Shares and Warrant Shares included therein
shall be allocated pro rata among the Investors based on the number of
Conversion Shares and Warrant Shares covered by that Registration Statement
(determined as if all of the Notes held by Investors then outstanding have been
converted into Conversion Shares and all Warrants then outstanding have been
exercised for Warrant Shares, without regard to any limitations on conversion of
the Notes or exercise of the Warrants) held by each Investor at the time the
Registration Statement covering such initial number of Conversion Shares and
Warrant Shares or increase thereof is declared effective by the Commission. In
the event that an Investor sells or otherwise transfers any of such Investor's
Registrable Securities, each transferee shall be allocated the portion of the
then remaining number of Registrable Securities included in such Registration
Statement allocable to the transferor. In no event shall the Company include any
securities other than Registrable Securities on any Registration Statement
without the prior written consent of the Investors holding at least a majority
of the Conversion Shares and Warrant Shares covered by that Registration
Statement, determined as if all of the Notes held by Investors then outstanding
have been converted into Conversion Shares and all Warrants then outstanding
have been exercised for Warrant Shares without regard to any limitations on
conversion of the Notes or exercise of the Warrants.
(c) Legal Counsel. Subject to Section 5 of this Agreement, the Investors
holding at least a majority of the Conversion Shares and Warrant Shares,
determined as if all of the Notes held by Investors then outstanding have been
converted into Conversion Shares and all Warrants then outstanding have been
exercised for Warrant Shares without regard to any limitations on conversion of
the Notes or on the exercise of the Warrants, shall have the right to select one
legal counsel to review and comment upon any registration pursuant to this
Agreement (the "Legal Counsel"), which counsel shall be designated in writing by
the holders of at least a majority of the Conversion Shares and Warrant Shares.
Such counsel designated in writing by the holders of at least a majority of the
Conversion Shares and Warrant Shares shall not represent any Investor that sends
such counsel written notice that such Investor does not wish such counsel to
represent it in connection with the matters discussed in this Section 2(c). The
Investors, other than any Investor that delivers the notice discussed in the
preceding sentence, hereby waive any conflict of interest or potential conflict
of interest that may arise as a result of the representation of such Investors
by such counsel in connection with the subject matter of this Agreement. The
provision will not prohibit any other counsel to an Investor from reviewing and
commenting on any registration filed pursuant to this Agreement at no cost to
the Company.
(d) Ineligibility for Form S-3. If Form S-3 is not available for the
registration of the resale of the Registrable Securities hereunder or the
Company is not permitted by the Securities
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Act or the Commission to use Form S-3, then the Company shall (i) register the
resale of the Registrable Securities on another appropriate form reasonably
acceptable to the holders of at least a majority of the Conversion Shares and
Warrant Shares to be registered on such Registration Statement, determined as if
all of the Notes held by Investors then outstanding have been converted into
Conversion Shares and all Warrants then outstanding have been exercised for
Warrant Shares without regard to any limitations on conversion of the Notes or
on the exercise of the Warrants, and (ii) undertake to register the Registrable
Securities on Form S-3 as soon as such form is available; provided, however,
that the Company shall maintain the effectiveness of the Registration Statement
then in effect until such time as a Registration Statement on Form S-3 covering
all of the Registrable Securities has been declared effective by the Commission
or, if earlier, until the end of the Registration Period (as defined in Section
3(a)).
(e) Sufficient Number of Shares Registered. In the event the number of
Conversion Shares or Warrant Shares registered under a Registration Statement
filed pursuant to Section 2(a) of this Agreement is insufficient to cover all of
the Conversion Shares or Warrant Shares relating to that Registration Statement
or all of an Investor's allocated portion of the Conversion Shares or Warrant
Shares pursuant to Section 2(b) of this Agreement, the Company shall amend the
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so as to cover at least one hundred
five percent (105%) of the number of such Conversion Shares or Warrant Shares as
of the trading day immediately preceding the date of the filing of such
amendment and/or new Registration Statement, in each case, as soon as
practicable, but in no event later than fifteen (15) days after the necessity
therefor arises. The Company shall use its best efforts to cause such amendment
and/or new Registration Statement to become effective as soon as practicable
following the filing thereof. The calculation of the number of shares sufficient
to cover all of the Conversion Shares or Warrant Shares shall be made without
regard to any limitations on the conversion of the Notes or the exercise of the
Warrants, and such calculation shall assume that all of the Notes are then
convertible into, and all the Warrants are then exercisable for, shares of
Common Stock at the then prevailing Conversion Price (as defined in the Notes)
or Exercise Price (as defined in the Warrants), as applicable. Notwithstanding
anything herein to the contrary, if the amendment to the Registration Statement
or new Registration Statement required by this Section 2(e) relates to a number
of Conversion Shares or Warrant Shares equal to or greater than ten percent
(10%) of the number of Conversion Shares or Warrant Shares as of the trading day
immediately preceding the date of the filing of such amendment and/or new
Registration Statement, such amendment or new Registration Statement shall be
declared effective by the Commission not later than 90 calendar days after the
filing date thereof; provided, however, that if the Commission reviews such
amendment or new Registration Statement and requires the Company to make
modifications thereto, then this deadline shall be extended to 120 calendar days
after the filing date. In the event that, after the Closing Date or the Option
Closing Date, as the case may be, and before the Registration Statement is
declared effective, the offices of the Commission are closed due to acts of God,
war or terror, this deadline will be extended by a number of days equal to the
days of any such closure.
(f) Effect of Failure to File and Obtain and Maintain Effectiveness of
Registration Statement. Subject to any elections made pursuant to Section 4(b),
if (i) a Registration Statement covering all of the Registrable Securities
required to be covered by such Registration Statement
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is not filed with the Commission on or before the Filing Deadline or is not
declared effective by the Commission on or before the Effectiveness Deadline,
(ii) a Registration Statement covering all of the Registrable Securities
required to be covered thereby, as described in Section 2(e) of this Agreement,
is not filed with the Commission on or before the deadline described in Section
2(e) of this Agreement or is not declared effective by the Commission on or
before the deadline described in Section 2(e) of this Agreement, (iii) the
Company fails to respond within 15 days to comments from the Commission
regarding a Registration Statement, (iv) a Registration Statement is not
declared effective within 10 days after receipt by the Company of a "no review"
letter from the Commission, (v) on any day after such Registration Statement has
been declared effective by the Commission, sales of all of the Registrable
Securities required to be included on such Registration Statement cannot be made
as a matter of law (other than during an Allowable Grace Period (as defined in
Section 3(o) of this Agreement)) pursuant to such Registration Statement
(including, without limitation, because of a failure to keep such Registration
Statement effective, to disclose such information as is necessary for sales to
be made pursuant to such Registration Statement or to register a sufficient
number of shares of Common Stock), (vi) the Company fails to maintain a
quotation or listing of its Common Stock on The New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. or The Nasdaq National Market or SmallCap
Market, or (vii) a Grace Period (as defined in Section 3(o) of this Agreement)
exceeds the length of an Allowable Grace Period (each of the items described in
clauses (i) through (vi) above shall be referred to as a "Registration Delay"),
then the Company shall pay (1) to each holder of the Notes or Conversion Shares
covered by such Registration Statement an amount in cash equal to the product of
(i) the initial principal amount paid for the Note held by such holder or
related to the Conversion Shares held by such holder multiplied by (ii) the
product of (I) the percentage determined by dividing (A) the Applicable
Percentage by (B) 360, multiplied by (II) the sum of (x) the number of days
(including any partial days) after the Filing Deadline or the deadline described
in Section 2(e) of this Agreement, as applicable, that the Registration
Statement is not filed with the Commission, plus (y) the number of days
(including any partial days) after the Effectiveness Deadline or the deadline
described in Section 2(e) of this Agreement that the Registration Statement is
not declared effective by the Commission, plus (z) after the Registration
Statement has been declared effective by the Commission, the number of days
(including any partial days) that such Registration Statement is not available
(other than during an Allowable Grace Period) for the sale of all the
Registrable Securities, and (2) to each holder of the Warrants or Warrant Shares
covered by such Registration Statement an amount in cash equal to the product of
(i) the aggregate Exercise Price for such Warrant or paid for the related
Warrant Shares multiplied by (ii) the product of (I) the percentage determined
by dividing (A) the Applicable Percentage by (B) 360, multiplied by (II) the sum
of (x) the number of days (including any partial days) after the Filing Deadline
or the deadline described in Section 2(e) of this Agreement, as applicable, that
the Registration Statement is not filed with the Commission, plus (y) the number
of days (including any partial days) after the Effectiveness Deadline or the
deadline described in Section 2(e) of this Agreement, as applicable, that the
Registration Statement is not declared effective by the Commission, plus (z)
after the Registration Statement has been declared effective by the Commission,
the number of days (including any partial days) that such Registration Statement
is not available (other than during an Allowable Grace Period) for the sale of
all Registrable Securities. The "Applicable Percentage" shall mean (A) for
periods that only include days on or before the day that is 60 days after the
commencement of a Registration Delay, eight-tenths percent (0.8%), (B) for
periods that only include days after the
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date that is 60 days after the commencement of a Registration Delay, one and
two-tenths percent (1.2%) and (C) for periods that include days both before and
after the date that is 60 days after the commencement of a Registration Delay, a
percentage equal to a fraction, the numerator of which shall be the sum of (i)
the number of days in such period that are on or before the date that is 60 days
after the commencement of such Registration Delay multiplied by eight-tenths
percent (0.8%) and (ii) the number of days in such period that are after the
date that is 60 days after the commencement of such Registration Delay
multiplied by one and two-tenths percent (1.2%) and the denominator of which
shall be the total number of days comprising such period. The payments to which
a holder shall be entitled pursuant to this Section 2(f) are referred to herein
as "Registration Delay Payments." The Registration Delay Payments shall be paid
in cash on the earlier of (A) the last day of the calendar month during which
such Registration Delay Payments are incurred and (B) the third Business Day
after the event or failure giving rise to the Registration Delay Payments is
cured. In the event the Company fails to make Registration Delay Payments in a
timely manner, such Registration Delay Payments shall bear interest at the rate
of one and six-tenths percent (1.6%) per month (prorated for partial months)
until paid in full.
SECTION 3. RELATED OBLIGATIONS. At such time as the Company is obligated to
file a Registration Statement with the Commission pursuant to Section 2(a), 2(d)
or 2(e) of this Agreement, the Company will use reasonable best efforts to
effect the registration of all of the Registrable Securities required to be
covered by that Registration Statement in accordance with the intended method of
disposition thereof and, in connection with its obligations with respect to the
Registration Statement, the Company shall have the following obligations:
(a) The Company shall promptly prepare and file with the Commission a
Registration Statement with respect to all of the Registrable Securities
required to be covered by that Registration Statement (but in no event later
than the applicable Filing Deadline) and use reasonable best efforts to cause
such Registration Statement relating to all of the Registrable Securities
required to be covered thereby to become effective as soon as practicable after
such filing (but in no event later than the applicable Effectiveness Deadline).
The Company shall, subject to the terms of this Agreement, keep each
Registration Statement effective pursuant to Rule 415 at all times during the
period from the date it is initially declared effective until the earliest of
(i) the second anniversary of the date such Registration Statement is filed,
(ii) the date as of which all of the Investors (other than any Investors who are
"affiliates" of the Company as such term is used in Rule 144(k) promulgated
under the Securities Act) may sell all of the Registrable Securities covered by
that Registration Statement without restriction pursuant to Rule 144(k) (or the
successor rule thereto) promulgated under the Securities Act, (iii) the date on
which all Registrable Securities covered by that Registration Statement have
been transferred under Rule 144 under circumstances in which all legends borne
by such Registrable Securities relating to restrictions on transferability
thereof, under the Securities Act or otherwise, are removed, or (iv) the date on
which all of the Investors shall have sold all of the Registrable Securities
covered by that Registration Statement (the "Registration Period") pursuant to a
Registration Statement, which Registration Statement, as of its filing and
effective dates and each day thereafter (including all amendments or supplements
thereto, as of their respective filing and effective dates and each day
thereafter), shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein, or necessary to make
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the statements therein, not misleading, and the prospectus contained in such
Registration Statement, as of its filing date and each day thereafter (including
all amendments and supplements thereto, as of their respective filing dates and
each day thereafter), shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading.
(b) Subject to Section 3(o) of this Agreement, the Company shall prepare
and file with the Commission such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus
used in connection with such Registration Statement, which prospectus is to be
filed pursuant to Rule 424 (or any successor rule thereto) promulgated under the
Securities Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act and respond within 15 days to
comments from the Commission regarding the Registration Statement. In the case
of amendments and supplements to a Registration Statement and the prospectus
used in connection with such Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, or any similar successor statute (the
"Exchange Act"), the Company shall have incorporated such report by reference
into such Registration Statement, if applicable, or shall file such amendments
or supplements with the Commission on the same day on which the Exchange Act
report is filed which created the requirement for the Company to amend or
supplement such Registration Statement and prospectus.
(c) The Company shall permit Legal Counsel, or if no Legal Counsel shall
have been chosen by the Investors, the Investors and their respective legal
counsel, to review and provide written comment upon each Registration Statement,
prospectus and all amendments and supplements thereto at least three (3)
Business Days prior to their filing with the Commission. The Company shall
furnish to the Investors and Legal Counsel, without charge, (i) promptly after
receipt of such correspondence, copies of all correspondence from the Commission
or the staff of the Commission to the Company or its representatives relating to
each Registration Statement, prospectus and all amendments and supplements
thereto, (ii) promptly after the same is prepared and filed with the Commission,
one (1) copy of each Registration Statement, prospectus and all amendments and
supplements thereto, including all exhibits and financial statements related
thereto, and (iii) promptly upon the effectiveness of each Registration
Statement and each amendment and supplement thereto, one (1) copy of the
prospectus included in each such Registration Statement and all amendments and
supplements thereto. The Company agrees that it will, and it will cause its
counsel to, consider in good faith any comments or objections from Legal
Counsel, or if no Legal Counsel shall have been selected, the Investors and
their respective legal counsel, as to the form or content of each Registration
Statement, prospectus and all amendments or supplements thereto or any written
communications with the Commission or the staff of the Commission concerning a
Registration Statement, prospectus or any amendment or supplement thereto
including, without limitation, a request for acceleration of the effectiveness
of each Registration Statement, prospectus and all amendments or supplements
thereto.
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(d) The Company shall furnish to each Investor whose Registrable Securities
are included in any Registration Statement, without charge to such Investor, (i)
promptly after the same is prepared and filed with the Commission, at least one
copy of such Registration Statement and all amendments and supplements thereto,
including all exhibits and financial statements and each preliminary prospectus,
(ii) upon the effectiveness of each Registration Statement, such number of
copies of the prospectus included in such Registration Statement and all
amendments and supplements thereto as such Investor may reasonably request, and
(iii) such other documents, including copies of any preliminary or final
prospectus, as such Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities.
(e) Subject to Section 3(o) of this Agreement, and excluding any
Registrable Securities held by Investors electing to exclude their Registrable
Securities from the Registration Statement under Section 4(b), the Company shall
use reasonable best efforts to (i) promptly register and qualify, unless an
exemption from registration and qualification applies, the resale of the
Registrable Securities under such other securities or "blue sky" laws of all
applicable jurisdictions in the United States as any holder of Registrable
Securities reasonably requests in writing, (ii) promptly prepare and file in
those jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii)
promptly take such other actions as may be reasonably necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (iv) promptly take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to file a general consent to service of
process in any such jurisdiction, except in such jurisdictions where the Company
is subject to service of process. The Company shall promptly notify each
Investor who holds Registrable Securities and Legal Counsel of the receipt by
the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of notice of the initiation or threatening of any proceeding for
such purpose.
(f) Notwithstanding anything to the contrary set forth herein, as promptly
as practicable after becoming aware of such event, the Company shall notify each
Investor and Legal Counsel in writing of the happening of any event as a result
of which (i) any Registration Statement or any amendment or supplement thereto,
as then in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the prospectus related to such
Registration Statement or any amendment or supplement thereto includes an untrue
statement of a material fact or omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and, subject to
Section 3(o) of this Agreement, promptly prepare a supplement or amendment to
such Registration Statement and prospectus to correct such untrue statement or
omission, and deliver such number of copies of such supplement or amendment to
each Investor and Legal Counsel as such Investor or Legal Counsel may reasonably
request. The Company shall also promptly notify each Investor and Legal Counsel
in writing (i) when a prospectus and
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each prospectus supplement or amendment thereto has been filed, and when a
Registration Statement and each amendment (including post-effective amendments)
and supplement thereto has been declared effective by the Commission
(notification of such effectiveness shall be delivered to each Investor and
Legal Counsel by facsimile on the same day of such effectiveness and by
overnight mail), (ii) of any request by the Commission for amendments or
supplements to a Registration Statement or related prospectus or related
information or of receipt by the Company of any stop order from the Commission
relating to a Registration Statement, (iii) when the financial statements
included in a Registration Statement or related prospectus no longer satisfy the
requirements of such Registration Statement or prospectus and (iv) of the
Company's reasonable determination that an amendment (including any
post-effective amendment) or supplement to a Registration Statement or
prospectus would be appropriate (subject to Section 3(o) hereof).
(g) Subject to Section 3(o) of this Agreement, the Company shall use
reasonable best efforts to (i) prevent the issuance of any stop order or other
suspension of effectiveness of a Registration Statement, or the suspension of
the qualification of any of the Registrable Securities for sale in any
jurisdiction, and (ii) if such an order or suspension is issued, obtain the
withdrawal of such order or suspension at the earliest practicable moment and
notify each holder of Registrable Securities and Legal Counsel of the issuance
of such order and the resolution thereof or its receipt of notice of the
initiation or threat of any proceeding for such purpose.
(h) The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with United States federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, prospectus
or any amendment or supplement thereto, (iii) the release of such information is
ordered pursuant to a subpoena or other final, non-appealable order from a court
or governmental body of competent jurisdiction, or (iv) such information has
been made generally available to the public other than by disclosure in
violation of this Agreement or any other agreement. The Company agrees that it
shall, upon learning that disclosure of such information concerning an Investor
is sought in or by a court or governmental body of competent jurisdiction or
through other means, unless ordered or requested by the Commission or other
governmental authority not to do so, give prompt written notice to such Investor
and allow such Investor, at the Investor's expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information.
(i) The Company shall use reasonable best efforts to cause all the
Conversion Shares or Warrant Shares to be listed on each securities exchange or
automated quotation system on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such Conversion
Shares or Warrant Shares is then permitted under the rules of such exchange. The
Company shall pay all fees and expenses in connection with satisfying its
obligation under this Section 3(i).
(j) The Company shall cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Registrable Securities, cooperate with the Trustee and the
Holders to effect such changes to the Indenture as
9
may be required for the Indenture to be so qualified in accordance with the
terms of the TIA and execute, and use their best efforts to cause the Trustee to
execute, all documents as may be required to effect such changes and all other
forms and documents required to be filed with the SEC to enable the Indenture to
be so qualified in a timely manner.
(k) In connection with any sale or transfer of Registrable Securities
pursuant to a Registration Statement, the Company shall cooperate with the
Investors who hold Registrable Securities being offered and, to the extent
applicable, facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legend) representing the Registrable Securities to be
offered pursuant to a Registration Statement and enable such certificates to be
in such denominations or amounts, as the case may be, as the Investors may
reasonably request and, registered in such names as the Investors may request.
(l) If requested by an Investor, the Company shall (i) as soon as
practicable, incorporate in each prospectus supplement or post-effective
amendment to a Registration Statement such information as an Investor provides
in writing and reasonably requests to be included therein relating to the sale
and distribution of the Registrable Securities, and (ii) as soon as practicable,
make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment.
(m) The Company shall comply with all applicable rules and regulations of
the Commission in connection with any registration hereunder.
(n) Within one (1) Business Day after a Registration Statement is ordered
effective by the Commission, the Company will so notify the transfer agent for
the Registrable Securities and the Investors whose Registrable Securities are
included in the Registration Statement.
(o) Notwithstanding anything to the contrary herein, at any time after a
Registration Statement has been declared effective by the Commission, the
Company may delay the disclosure of material non-public information concerning
the Company if the disclosure of such information at the time is not, in the
good faith judgment of the Board of Directors of the Company, in the best
interests of the Company (a "Grace Period"); provided, however, that the Company
shall promptly (i) notify the Investors in writing of the existence of material
non-public information giving rise to a Grace Period (provided that the Company
shall not disclose the content of such material non-public information to the
Investors) and the date on which the Grace Period will begin, and (ii) notify
the Investors in writing of the date on which the Grace Period ends; provided
further, that no single Grace Period shall exceed thirty (30) consecutive days,
and during any three hundred sixty-five (365) day period, the aggregate of all
of the Grace Periods relating to a single Registration Statement shall not
exceed an aggregate of sixty (60) days and the first day of any Grace Period
relating to a single Registration Statement must be at least ten (10) trading
days after the last day of any prior Grace Period relating to that Registration
Statement (each Grace Period complying with this provision being an "Allowable
Grace Period"). For purposes of determining the length of a Grace Period, the
Grace Period shall be deemed to begin on and include the date the Investors
receive the notice referred
10
to in clause (i) above and shall end on and include the later of the date the
Investors receive the notice referred to in clause (ii) above and the date
referred to in such notice; provided, however, that no Grace Period shall be
longer than an Allowable Grace Period. The provisions of Section 3(g) of this
Agreement shall not be applicable during the period of any Allowable Grace
Period. Upon expiration of the Grace Period, the Company shall again be bound by
the first sentence of Section 3(f) of this Agreement.
(p) The Company shall supply to the Investors CUSIP numbers for the
Securities prior to effectiveness of the Registration Statement.
SECTION 4. OBLIGATIONS OF THE INVESTORS.
(a) At least five (5) Business Days prior to the first anticipated filing
date of a Registration Statement, the Company shall notify each Investor in
writing of the information the Company requires from each such Investor if such
Investor elects to have any of such Investor's Registrable Securities included
in such Registration Statement. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Investor
that such Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be reasonably
required to effect the effectiveness of the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request. Each Investor shall promptly notify the
Company of any material change with respect to such information previously
provided to the Company by such Investor.
(b) Each Investor agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from such Registration Statement, in which case, such
Investor does not need to so cooperate with the Company until it notifies the
Company of its desire to include one or more shares of the Registrable
Securities in such Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(g) or 3(o) of
this Agreement or the first sentence of Section 3(f) of this Agreement, such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statements covering such Registrable Securities
until such Investor's receipt of the copies of the amended or supplemented
prospectus contemplated by Section 3(g) of this Agreement or the first sentence
of Section 3(f) of this Agreement or receipt of notice that no amendment or
supplement is required and, if so directed by the Company, such Investor shall
deliver to the Company (at the expense of the Company) or destroy (and deliver
to the Company a certificate of destruction) all copies of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice (other than a single file copy, which such Investor may keep) in such
Investor's possession.
SECTION 5. EXPENSES OF REGISTRATION. All expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings or
qualifications
11
pursuant to Sections 2 and 3 of this Agreement, including, without limitation,
all registration, listing and qualifications fees, printers and accounting fees,
transfer agent fees and fees and disbursements of counsel for the Company, shall
be paid by the Company. The Company shall pay all fees and disbursements
relating to the qualification of the Indenture under the TIA. The Company shall
also reimburse the Investors for the fees and disbursements of Legal Counsel in
connection with registration, filing or qualification pursuant to Sections 2 and
3 of this Agreement which amount shall be limited to Ten Thousand United States
Dollars ($10,000) for each Registration Statement. The Company shall pay all of
the Investors' reasonable costs (including fees and disbursements of Legal
Counsel) incurred in connection with the successful enforcement of the
Investors' rights under this Agreement.
SECTION 6. INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend each Investor, the directors,
officers, members, partners, employees, agents, and representatives thereof, and
each Person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified Person"), against any
losses, claims, damages, liabilities, judgments, fines, penalties, charges,
costs, reasonable attorneys' fees, amounts paid in settlement or expenses, joint
or several, (collectively, "Claims") incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation or appeal
taken from the foregoing by or before any court or governmental, administrative
or other regulatory agency, body or the Commission, whether pending or
threatened, whether or not an indemnified party is or may be a party thereto
("Indemnified Damages"), to which any of them may become subject insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or any amendment
(including post-effective amendments) or supplement thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which the Registrable Securities
are offered ("Blue Sky Filing"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus if authorized for use by
the Company prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if any) or the
omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement, or (iv) any material violation
of this Agreement by the Company (the matters in the foregoing clauses (i)
through (iv) being, collectively, "Violations"). Subject to Section 6(c) of this
Agreement, the Company shall reimburse the Indemnified Persons, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement
12
contained in this Section 6(a) and the agreement with respect to contribution
contained in Section 7 of this Agreement: (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person or its legal counsel expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto; (ii) shall not be available to the
extent such Claim is based on a failure of the Investor to deliver or to cause
to be delivered the prospectus made available by the Company, including a
corrected prospectus, if such prospectus or corrected prospectus was timely made
available by the Company pursuant to Section 3(d) of this Agreement; and (iii)
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld, conditioned or delayed. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9 of this Agreement.
(b) In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a) of this Agreement, the Company, each of its directors,
each of its officers who signs the Registration Statement, its agents and each
Person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act (each, an "Indemnified Party"), against any Claims or
Indemnified Damages to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims or
Indemnified Damages arise out of or are based upon any Violation (including for
purposes of this paragraph, a material violation of this Agreement by the
Investor), in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor or its legal counsel expressly for use
in connection with such Registration Statement and, subject to Section 6(c) of
this Agreement, such Investor will reimburse any legal or other expenses
reasonably incurred by an Indemnified Party in connection with investigating or
defending any such Claim; provided, however, that the indemnification agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 of this Agreement shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld or
delayed; provided, further, that the Investor shall be liable under this Section
6(b) for only that amount of the Claims and Indemnified Damages as does not
exceed the net proceeds to such Investors as a result of the sale of Registrable
Securities giving rise to such liability. Such indemnification agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9 of this Agreement.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented.
(c) Promptly after an Indemnified Person or Indemnified Party under this
Section 6 has knowledge of any Claim as to which such Indemnified Person or
Indemnified Party
13
reasonably believes indemnity may be sought or promptly after such Indemnified
Person or Indemnified Party receives notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of such Claim, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding; provided, further, that the indemnifying party shall not be
responsible for the reasonable fees and expense of more than one (1) separate
legal counsel for such Indemnified Person or Indemnified Party. In the case of
an Indemnified Person, the legal counsel referred to in the immediately
preceding sentence shall be selected by the Investors holding at least a
majority in interest of the Registrable Securities included in the Registration
Statement to which the Claim relates. The Indemnified Party or Indemnified
Person shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the Indemnified Party or Indemnified Person which relates to such action or
Claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent; provided, however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the prior written consent of the Indemnified Party or Indemnified
Person, consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
full release from all liability in respect to such Claim and action and
proceeding. After indemnification as provided for under this Agreement, the
rights of the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party as provided in
this Agreement shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
(d) No Person involved in the sale of Registrable Securities who is guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) in connection with such sale shall be entitled to
indemnification from any Person involved in such sale of Registrable Securities
who is not guilty of fraudulent misrepresentation.
14
(e) The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
(f) The indemnification agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
SECTION 7. CONTRIBUTION. If the indemnification provided for in Section 6
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any Claim referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such Claim 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 Violation that resulted in such Claims 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. Notwithstanding the foregoing, (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section 6
of this Agreement, (ii) no Person involved in the sale of Registrable Securities
who is guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) in connection with such sale shall be entitled to
contribution from any Person involved in such sale of Registrable Securities who
is not guilty of fraudulent misrepresentation, and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the dollar amount
of the proceeds (net of all expenses paid by such holder in connection with any
claim relating to Section 6 or this Section 7 and the amount of any damages such
holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission) received by it upon the sale
of the Registrable Securities giving rise to such contribution obligation. The
provisions of this Section 7 shall remain in full force and effect, regardless
of the investigation made by or on behalf of the beneficiaries of this Section 7
and shall survive the transfer of Registrable Securities by the Investors
pursuant to Section 9 of this Agreement.
SECTION 8. REPORTING.
(a) Reports Under The Exchange Act. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the Commission that may at any time permit
the Investors to sell securities of the Company to the public without
registration ("Rule 144"), for so long as Registrable Securities remain
outstanding, the Company shall use reasonable best efforts to:
15
(1) make and keep public information available, as those terms are
understood and defined in Rule 144;
(2) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(3) furnish to each Investor, so long as such Investor owns Registrable
Securities, promptly upon request, (A) a written statement by the Company, if
true, that it has complied with the applicable reporting requirements of Rule
144, the Securities Act and the Exchange Act, (B) a copy of the most recent
annual or quarterly report of the Company and copies of such other reports and
documents so filed by the Company, and (C) such other information as may be
reasonably requested to permit the Investors to sell such securities pursuant to
Rule 144 without registration.
(b) Rule 144A Information. The Company shall, for so long as Registrable
Securities remain outstanding, upon request of any Investor, for so long as such
Investor owns Registrable Securities, make available to such Investor the
information required by Rule 144A(d)(4) (or any successor rule) under the
Securities Act.
SECTION 9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights under this
Agreement shall be automatically assignable by the Investors to any transferee
of all or any portion of such Investor's Registrable Securities if: (i) the
Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such rights are being transferred or assigned; (iii)
immediately following such transfer or assignment, the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing with the Company to be bound by all of
the obligations of an Investor under this Agreement; (v) such transfer shall
have been made in accordance with the applicable requirements of the Securities
Purchase Agreement, the Indenture, the Notes, the Warrant Agent Agreement and
the Warrants; and (vi) such transfer shall have been conducted in accordance
with all applicable federal and state securities laws. With respect to any
transferee who fulfilled the foregoing obligations, the Company agrees to take
such actions as shall be necessary to permit such transferee to use the
Registration Statement and related prospectus, including, without limitation,
listing such transferee as a "selling shareholder" in the Registration Statement
and related prospectus.
SECTION 10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance of any provision of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who then hold at least a majority of the Conversion Shares and the
Warrant Shares, determined as if all of the Notes held by Investors then
outstanding have been converted into Conversion Shares and all Warrants then
outstanding
16
have been exercised for Warrant Shares without regard to any limitations on
conversion of the Notes or on the exercise of the Warrants. Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company. No such amendment shall be effective to the extent
that it applies to less than all of the holders of the Registrable Securities.
No consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.
SECTION 11. MISCELLANEOUS.
(a) A Person is deemed to be a holder of Registrable Securities whenever
such Person owns or is deemed to own of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from such record
owner of such Registrable Securities.
(b) Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (evidenced by mechanically
or electronically generated receipt by the sender's facsimile machine); or (iii)
one (1) Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
ATS Medical, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xx. Xxxx X. Xxxx
with a copy to:
Xxxxxx & Whitney LLP
00 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to a Buyer, to its address and facsimile number set forth on the
Schedule of Buyers attached hereto as Exhibit A, with copies to such
Buyer's representatives as set forth on the Schedule of Buyers,
17
or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting 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 suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such 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.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
(e) This Agreement, the Securities Purchase Agreement, the Indenture, the
Notes, the Warrant Agent Agreement, the Warrants and the documents referenced
herein and therein constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, the Securities Purchase Agreement, the
Indenture, the Notes, the Warrant Agent Agreement and the Warrants supersede all
prior
18
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
(f) Subject to the requirements of Section 9 of this Agreement, this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.
(g) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(h) This Agreement may be executed in identical counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other parties hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
(i) Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
(j) All consents and other determinations required to be made by the
Investors pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by Investors holding at least a majority of the Conversion
Shares and the Warrant Shares, determined as if all of the Notes held by
Investors then outstanding have been converted into Conversion Shares and all
Warrants then outstanding have been exercised for Warrant Shares without regard
to any limitations on conversion of the Notes or on the exercise of the
Warrants.
(k) This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.
19
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
"COMPANY"
ATS MEDICAL, INC.
By: /s/ Xxxx X. Xxxx
------------------------------------
Its: Chief Financial Officer
-----------------------------------
[Signatures of Buyers on Following Page]
20
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
"BUYER"
SF Capital Partners Ltd
---------------------------------------
(print full legal name of Buyer)
By: /s/ Xxxxx Xxxxxxxx
------------------------------------
(signature of authorized
representative)
Name: Xxxxx Xxxxxxxx
----------------------------------
Its: Authorized Signatory
-----------------------------------
21
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
"BUYER"
Whitebox Convertible Arbitrage Partners, LP
-------------------------------------------------
(print full legal name of Buyer)
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------------
(signature of authorized
representative)
Whitebox Convertible Arbitrage Partners, LP
Whitebox Convertible Arbitrage Advisors LLC
Whitebox Advisors LLC
Xxxxxx Xxxxxxx, Managing Member
of the General Partner
22
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
"BUYER"
Whitebox Intermarket Partners, LP
---------------------------------------------
(print full legal name of Buyer)
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------------
(signature of authorized
representative)
Whitebox Intermarket Partners, LP
Whitebox Intermarket Advisors LLC
Whitebox Advisors LLC
Xxxxxx Xxxxxxx, Managing Member
of the General Partner
23
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
"BUYER"
HFR RVA Combined Master Trust
---------------------------------------
(print full legal name of Buyer)
By: /s/ Xxxx Xxxxx
------------------------------------
(signature of authorized
representative)
Name: Xxxx Xxxxx
----------------------------------
Its: for and on behalf of
-----------------------------------
HFR Asset Management, LLC
as attorney in fact
24
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
"BUYER"
DBZ Acquisition Partners II, LLC
---------------------------------------
(print full legal name of Buyer)
By: /s/ Xxxxx Xxxxxxx
------------------------------------
(signature of authorized
representative)
Name: Xxxxx Xxxxxxx
----------------------------------
Its: General Counsel
-----------------------------------
25
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
"BUYER"
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
-----------------------------------------------
(print full legal name of Buyer)
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
(signature of authorized
representative)
Name: Xxxxxxx X. Xxxxxx
-------------------------------------------
Its: Authorized Representative
-------------------------------------------
26
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
"BUYER"
Radcliffe SPC, Ltd. for and on behalf of
the Class A Convertible Crossover
Segregated Portfolio
By: RG Capital Management, L.P.
By: RGC Management Company, L.L.C.
By: /s/ Xxxxxx X. Xxxxxxxxxx
Managing Director
27
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
"BUYER"
Capital Ventures International
By: Heights Capital Management, Inc.
its authorized agent
---------------------------------------
(print full legal name of Buyer)
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
(signature of authorized
representative)
Name: Xxxxxx Xxxxxxxx
----------------------------------
Its: Investment Manager
-----------------------------------
28
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
"BUYER"
Smithfield Fiduciary LLC
---------------------------------------
(print full legal name of Buyer)
By: /s/ Xxxx Chill
------------------------------------
(signature of authorized
representative)
Name: Xxxx Chill
----------------------------------
Its: Authorized Signatory
-----------------------------------
29
EXHIBIT A
SCHEDULE OF BUYERS
PRINCIPAL AMOUNT OF NOTES NUMBER OF WARRANTS
NAME OF BUYER ------------------------- --------------------
CONTACT INFORMATION FOR BUYER INITIAL ADDITIONAL INITIAL ADDITIONAL
----------------------------- ---------- ---------- ------- ----------
1. SF Capital Partners, Ltd. $4,000,000 $1,000,000 240,000 60,000
0000 Xxxxx Xxxx Xxxxx
Xx. Xxxxxxx, XX 00000
2. Whitebox Entities:
- Whitebox Convertible Arbitrage $3,300,000 $ 825,000 198,000 49,500
Partners, LP
- Whitebox Intermarket Partners, LP $ 500,000 $ 125,000 30,000 7,500
- HFR RVA Combined Master Trust $ 200,000 $ 50,000 12,000 3,000
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
3. DBZ Acquisition Partners II, LLC $3,000,000 $ 750,000 180,000 45,000
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
4. The Northwestern Mutual Life $3,000,000 $ 750,000 180,000 45,000
Insurance Company
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
5. Radcliffe SPC, Ltd. for and on behalf $2,500,000 $ 625,000 150,000 37,500
of the Class A Convertible Crossover
Segregated Portfolio
0 Xxxx Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxx, XX 00000
6. Capital Ventures International $1,500,000 $ 375,000 90,000 22,500
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
7. Smithfield Fiduciary LLC $1,000,000 $ 250,000 60,000 15,000
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
