EXHIBIT 4.1
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COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is made as
of this 9th day of April, 1998 by and among EP MEDSYSTEMS, INC.
(the "Company") and the entities listed on Schedule I hereto
(each, a "Purchaser" and collectively, the "Purchasers").
BACKGROUND
The Company desires to issue and sell to the Purchasers an
aggregate of 2,250,000 shares of its authorized but unissued
Common Stock (as defined in Section 1.1) and each Purchaser
desires to purchase that number of shares of Common Stock shown
next to its name on Schedule I hereto, on the terms and
conditions set forth herein.
Intending to be legally bound hereby, the parties hereto agree as
follows:
1. SALE AND PURCHASE OF COMMON STOCK; CLOSING
1.1 Subscription, Sale and Purchase.
(a) Upon the terms and subject to the conditions of this
Agreement, on the Closing Date (as hereinafter defined) the
Company agrees to issue, sell and deliver to the Purchasers, and
the Purchasers agree to purchase and take from the Company, an
aggregate of 2,250,000 shares of its Common Stock, $.001 stated
value per share (the "Common Stock"). Hereinafter, "Common
Shares" means the shares of Common Stock purchased by the
Purchasers hereunder.
(b) The aggregate purchase price for the Common Shares
purchased by each Purchaser is as set forth on Schedule I hereto
(the "Purchase Price").
1.2 Closing.
(a) The closing of the issuance and sale of the Common Shares
to the Purchasers hereunder shall be held at the offices of
Stradley, Ronon, Xxxxxxx & Xxxxx, LLP, 2600 Xxx Xxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx as soon as practicable following the
satisfaction or waiver of all the closing conditions set forth in
Sections 4 and 5 but in no event later than April 10, 1998. As
used herein "Closing" shall mean the closing of the issuance and
sale of the Common Shares to the Purchasers hereunder and the
"Closing Date" shall mean the date on which such Closing takes
place.
(b) At the Closing (or within three (3) days of the Closing
Date), against satisfaction or waiver of each of the conditions
set forth in Sections 4 and 5, the Company shall deliver to each
Purchaser stock certificates representing the Common Shares to be
purchased by each such Purchaser, duly executed by the Company,
registered in each such Purchaser's name (or the name of its
nominee), free of all restrictive and other legends (other than
the legend specified in Section 8.2 and otherwise in form for
good delivery. At the Closing, against such delivery of said
stock certificates (or evidence reasonably satisfactory to the
Purchasers that the stock certificates will be delivered to the
Purchasers within three (3) days of the Closing Date) and subject
to the satisfaction or waiver of each of the conditions set forth
in Sections 4 and 5, the Purchasers will deliver to the Company,
by wire transfer to a bank in the United States specified by the
Company for the account of the Company, funds in an amount equal
to the Purchase Price for the Common Shares being purchased
hereunder.
1.3 Nature of Obligations. The Company shall not be obligated
to issue and sell less than all of the Common Shares to the
Purchasers. In committing to purchase the Common Shares under
this Section 1, each Purchaser is contracting severally (and not
jointly) to purchase only the number of Common Shares specified
on Schedule I opposite its name. No Purchaser shall be obligated
to purchase any Common Shares unless all of the Common Shares to
be purchased by it as shown on Schedule I are tendered for
purchase. Each party shall pay all costs and expenses incurred
by it in connection with this Agreement and contemplated
transaction.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser as follows:
2.1 Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of New Jersey and has all requisite
power and authority, and all necessary licenses and permits, to
own and lease its properties and assets and to conduct its
business as now conducted. Each Subsidiary as referred to in the
SEC Reports (as hereinafter defined) is a corporation duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite
power and authority, and all necessary licenses and permits, to
own and lease its properties and assets and to conduct its
business as now conducted. The Company and its Subsidiaries are
each qualified to do business as a foreign corporation and are in
good standing in all states where the conduct of their respective
businesses or their ownership or leasing of property requires
such qualification, except where the failure to so qualify would
not have a material adverse effect on the Company's and the
Subsidiaries' business, properties, assets, operations or
condition (financial or otherwise), taken as a whole.
2.2 Authorization. The Company has all requisite power and
authority to execute and deliver this Agreement and each other
agreement required to be executed and delivered by it pursuant to
this Agreement (collectively, the "Company Agreements") and to
carry out the transactions contemplated hereby and thereby. The
execution, delivery and performance by the Company of this
Agreement, and each other Company Agreement have been duly
authorized by all requisite corporate action, and this Agreement
has been duly executed and delivered by the Company and
constitutes (and, when executed and delivered against payment
therefor as contemplated herein, each other Company Agreement
will constitute) the valid and binding obligation of the Company,
enforceable against the Company in accordance with their
respective terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium, reorganization and other
similar laws relating to or affecting the enforcement of
creditors' rights generally, and except that the availability of
specific performance, injunctive relief or other equitable
remedies is subject to the discretion of the court before which
any such proceeding may be brought.
2.3 No Conflict with Law or Documents. The execution, delivery
and performance of this Agreement or any Company Agreement by the
Company will not violate any provision of law, any rule or
regulation of any governmental authority, or any judgment, decree
or order of any court binding on the Company and, will not
conflict with or result in any material breach of any of the
terms, conditions or provisions of, or constitute a default
under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties, assets or
outstanding stock of the Company under its Amended and Restated
Certificate of Incorporation or By-Laws, or any material
indenture, mortgage, lease, agreement or other instrument to
which the Company is a party or by which it or any of its
properties is bound.
2.4 Capital Stock of Company.
(a) The authorized capital stock of the Company consists
of: (i) 5,000,000 shares of preferred stock of the Company, no
par value per share, of which no shares are issued and
outstanding; and (ii) 25,000,000 shares of Common Stock, no par
value, $.001 stated value per share, of which 9,849,917 shares
are issued and outstanding (including the offering contemplated
hereunder) and all such outstanding shares are validly issued,
fully paid and nonassessable, (iii) 700,000 shares of Common
Stock have been reserved for issuance pursuant to the Company's
1995 Long Term Incentive Plan (of which options to purchase
365,852 shares of Common Stock have been granted and are
outstanding), (iv) 360,000 shares of Common Stock have been
reserved for issuance pursuant to the Company's 1995 Director
Option Plan (of which options to purchase 228,000 shares of
Common Stock have been granted and are outstanding), and (iv)
839,000 shares of Common Stock have been reserved for issuance
pursuant to existing non-plan stock options.
(b) There are no preemptive or similar rights to
purchase or otherwise acquire shares of capital stock of the
Company pursuant to any provision of law or the Amended and
Restated Certificate of Incorporation or By-Laws of the Company
or by agreement or otherwise. Except as set forth in this
Section 2.4, there are no outstanding subscriptions, warrants,
options or other rights or commitments of any character to
subscribe for or purchase from the Company, or obligating the
Company to issue, any shares of capital stock of the Company or
any securities convertible into or exchangeable for such shares.
2.5 Valid Issuance of the Common Shares. The Common Shares
when issued, sold and delivered to each Purchaser in accordance
with this Agreement will be duly and validly issued, fully paid
and non-assessable.
2.6 Consents and Approvals. Except for filings under Federal
and applicable state securities laws, no permit, consent,
approval or authorization of, or declaration to or filing with,
any federal, state, local or foreign governmental or regulatory
authority or other person, not made or obtained, other than the
filing with, and approval of, the Nasdaq National Market System
("NASDAQ") with respect to the listing of the Common Shares which
will be made and obtained prior to closing, is required in
connection with the execution or delivery of this Agreement or
any Company Agreement by the Company, the offer, issuance, sale
or delivery of the Common Shares, or the carrying out by the
Company of the other transactions contemplated hereby. The
issuance and sale by the Company of the Common Shares as
contemplated hereby will not require compliance with the
notification or other requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder, nor require any action by or
approval of the Company's shareholders as such or of any other
individual or entity which has not already been obtained.
2.7 Private Offering. Assuming the accuracy of the Purchasers'
representations and warranties contained in Section 3 herein, the
offer, issuance and delivery to the Purchasers' pursuant to the
terms of this Agreement of the Common Shares and, assuming
compliance by the Purchasers with the terms of this Agreement and
applicable law, the Common Shares, are exempt from registration
under the Securities Act of 1933, as amended (the "Securities
Act"). Based on the representations of the Purchasers contained
in Section 3, it is not necessary, under the circumstances
contemplated by this Agreement, to register the Common Shares,
under the Securities Act or the New Jersey blue sky laws.
2.8 Certificate of Incorporation and By-Laws. The copies of
the Company's Amended and Restated Certificate of Incorporation
and By-Laws, as amended, in the form delivered to the Purchasers
are true and correct copies of such documents and are in full
force and effect.
2.9 SEC Filings. The Company has delivered to the Purchasers,
or has made available, prior to the date hereof true and correct
copies of (i) its Annual Report on Form 10-K for its year ended
December 31, 1997 and Quarterly Reports on Form 10-Q for the
quarters ended September 30, 1997, June 30, 1997 and March 31,
1997 and (ii) any other reports and documents filed with the
Securities and Exchange Commission (the "SEC") since January 1,
1997. All documents described in this Section are hereinafter
referred to as the "SEC Reports." The Company has made all
filings required to be made by it under the Securities Act, the
Securities Exchange Act of 1934 (the "Exchange Act") and the
securities laws of any state, and any rules and regulations
promulgated thereunder. The Company's reports and other
documents filed with the SEC pursuant to the Exchange Act
conformed in all material respects to the requirements of the
Exchange Act and the rules and regulations of the SEC thereunder,
and none of such documents contained any untrue statement of
material fact or omitted to state a material fact necessary to
make the statements made therein, in light of the circumstances
under which they were made, not misleading. The Company is
currently eligible to utilize a registration statement on Form S-
3 with respect to the registration of the Common Shares required
by Section 1.2 of the Registration Rights Agreement contemplated
by Section 4.8 hereof.
2.10 Litigation. Except as set forth in the SEC Reports, there
is no pending or, to the knowledge of the Company, threatened
suit, action or litigation, or administrative, arbitration or
other proceeding or governmental inquiry or investigation
questioning the validity of this Agreement or the transactions
contemplated hereby, or affecting in any material adverse respect
the Company and its Subsidiaries, taken as a whole.
2.11 Compliance with Laws. The Company and each Subsidiary is in
compliance with all laws, ordinances, rules and regulations of
governmental authorities applicable to or affecting it, its
properties or its business, except where non-compliance would not
have a material adverse effect on the business, properties,
assets, operations or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole, and neither the
Company nor any Subsidiary has received written notice of any
claimed default with respect to such laws, ordinances, rules and
regulations.
2.12 Financial Statements.
(a) (i) The audited consolidated balance sheets and
stockholders' equity of the Company and its Subsidiaries as of
December 31, 1997 and 1996, and (ii) the audited consolidated
statements of income and cash flow of the Company and its
Subsidiaries, for the three years ended December 31, 1997, 1996
and 1995, together with the notes thereto, copies of all of which
have heretofore been furnished to the Purchasers, or have been
made available, in each case, present fairly in all material
respects the consolidated financial position of the Company and
its Subsidiaries at such dates and the consolidated results of
their operations and their consolidated cash flows for the
periods then ended, in conformity with generally accepted
accounting principles, consistently applied ("GAAP"). The
audited consolidated balance sheet dated December 31, 1997 is
referred to herein as the "Balance Sheet".
(b) Since December 31, 1997 (the "Balance Sheet Date"),
there has been no material adverse change in the business,
properties, assets, operations or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole.
2.13 Assets. The Company and each Subsidiary has good and
marketable title to all of the real and personal properties and
assets reflected on the Balance Sheet as being owned by the
Company or such Subsidiary at the Balance Sheet Date, except for
properties and assets sold or otherwise disposed of in the
ordinary course of business since the Balance Sheet Date or that
are not material to its business.
2.14 Tax Matters. The Company and each Subsidiary has filed
all U.S. Federal, state, local, foreign and other tax returns
which were required to be filed on or before the date hereof and
has paid all taxes which have become due and payable. All such
reports and returns (copies of which have been made available to
the Purchasers) were materially accurate and complete when filed
and reflect all taxes required to be paid by the Company and its
Subsidiaries for the periods reported therein. No tax returns or
reports of the Company or any Subsidiary are or ever have been
under audit.
2.15 Patents, Trademarks, Proprietary Rights.
(a) To the Company's knowledge, each of the Company and its
Subsidiaries owns or has the right to use all of the Intellectual
Property Rights (as defined below), except where such failure
would not have a material adverse effect on the business,
properties or assets of the Company and its Subsidiaries, taken
as a whole. For purposes of this Agreement, "Intellectual
Property Rights" means all patents, copyrights, trademarks,
servicemarks, tradenames, permits, trade secrets, computer
programs, software designs and related materials and other
intellectual property that are used by the Company or a
Subsidiary and are material to the conduct of the Company's or a
Subsidiary's business.
(b) To the Company's knowledge, the Company's and each
Subsidiary's use and enjoyment of the Intellectual Property
Rights do not violate any license or conflict with or infringe
the intellectual property rights of others in a manner which
would materially and adversely affect the business, assets,
properties, operations or condition (financial or otherwise) of
the Company and its Subsidiaries, taken as a whole.
2.16 Insurance. All the insurable properties of the Company
and the Subsidiaries are insured for the benefit of the Company
and the Subsidiaries against all risks usually insured against by
persons operating similar properties in the locality where such
properties are located under valid and enforceable policies
issued by insurance companies of recognized responsibility in
reasonably sufficient amounts.
2.17 Use of Proceeds. The proceeds from the sale of the
Common Shares will be used by the Company (i) for working capital
purposes including research and development expenses and (ii) to
pay the fees and expenses incident to this Agreement.
2.18 Environmental Compliance.
(a) Neither the Company nor any Subsidiary has generated,
stored, treated, discharged or disposed of any hazardous
substances or hazardous waste in violation of any applicable law
or regulation, nor is the Company or any Subsidiary aware of any
allegations that any such violations have occurred. Neither the
Company nor any Subsidiary is aware of any claims,
investigations, litigation or administrative proceedings, whether
actual or threatened, against the Company or any Subsidiary
relating to any environmental contamination of any property
owned, used or leased by any of them or arising out of any
alleged violation of any environmental law or regulation.
(b) To the Company's knowledge, none of the real property
owned and/or occupied by the Company or any Subsidiary has ever
been used by previous owners and/or operators to generate,
manufacture, refine, transport, treat, store, handle or dispose
of "Hazardous Substances" or "Hazardous Wastes," as such terms
are defined in the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq.,
or applicable state and local laws, or any regulations issued
under any such laws.
2.19 Minute Books. The minute books of the Company and its
Subsidiaries heretofore made available for inspection by the
Purchasers contain summaries of all meetings of directors and
stockholders since the incorporation of the Company or such
Subsidiary, as applicable, and reflect accurately in all material
respects all transactions referred to in such minutes or records.
2.20 Labor Agreements and Actions. Neither the Company nor
any Subsidiary thereof is bound by or subject to, any written or
oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the
knowledge of the Company, has sought to represent any of the
employees, representatives or agents of the Company or any such
Subsidiary thereof. There is no strike or other labor dispute
involving the Company or any Subsidiary thereof pending, or to
the knowledge of the Company threatened, which could have a
material adverse effect on the business, assets, properties,
operations or condition (financial or otherwise) of the Company
and its Subsidiaries, taken as a whole, nor is the Company aware
of any labor organization activity involving any of the employees
of the Company or any Subsidiary thereof.
3. PURCHASERS' REPRESENTATIONS AND WARRANTIES
The Purchasers understand that the sale to them of the
Common Shares will not be registered under the Securities Act, on
the grounds that the sales provided for in this Agreement are
exempt pursuant to Section 4(2) of the Securities Act and/or
Regulation D promulgated under Section 4(2) of the Securities
Act, and that the reliance of the Company on such exemptions is
predicated in part on the Purchasers' representations,
warranties, covenants and acknowledgements set forth in this
Section 3.
3.1 Pre-Existing Entity. Each Purchaser that is an entity
represents and warrants to the Company that it was not organized
for the specific purpose of purchasing the Common Shares
purchased by it hereunder.
3.2 Principal Place of Business. Each Purchaser represents
and warrants to the Company that the address of its principal
place of business or residence is as set forth on Schedule I
hereto.
3.3 Purchase Without View to Distribute. Each Purchaser
represents and warrants to the Company that the Common Shares to
be purchased by it are being acquired by such Purchaser for its
own account, not as a nominee or agent, and not with a view to
resale or distribution within the meaning of the Securities Act,
and the rules and regulations thereunder, and such Purchaser will
not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose any of the Common Shares in violation of the
Securities Act or any applicable state securities laws.
3.4 Restrictions on Transfer. Each Purchaser (i)
acknowledges that the Common Shares are "Restricted Securities"
under the Federal securities laws and are not registered under
the Securities Act, (ii) acknowledges that the Common Shares to
be acquired by it must be held indefinitely by it unless they are
subsequently registered under the Securities Act or an exemption
from registration is available, (iii) is aware that any routine
sales under Rule 144 of the SEC under the Securities Act of
Common Shares may be made only in limited amounts and in
accordance with the terms and conditions of that Rule and that in
such cases where the Rule is not applicable, compliance with some
other registration exemption will be required, (iv) is aware that
Rule 144 is not presently available for use by the Purchaser for
resale of any such Common Shares and (v) is aware that, except as
provided in Section 4.8 herein, the Company is not obligated to
register under the Securities Act any sale, transfer or other
disposition of the Common Shares.
3.5 Access to Information. Each Purchaser confirms that
the Company has made available to it the opportunity to ask
questions of and receive answers from the Company's officers and
directors concerning the terms and conditions of the offering and
the business and financial condition of the Company and its
Subsidiaries, and to acquire, and such Purchaser has received to
its satisfaction, such additional information, in addition to
that set forth herein, about the business and financial condition
of the Company and its Subsidiaries and the terms and conditions
of the offering as it has requested.
3.6 Additional Representations of the Purchaser. Each
Purchaser represents and warrants that (i) it is an "accredited
investor" as such term is defined in Rule 501 promulgated under
the Securities Act, (ii) its financial situation is such that it
can afford to bear the economic risk of holding the Common Shares
for an indefinite period of time and suffer complete loss of its
investment in the Common Shares, (iii) its knowledge and
experience in financial and business matters are such that it is
capable of evaluating the merits and risks of its purchase of the
Common Shares as contemplated by this Agreement, (iv) it has all
requisite power and authority to execute, deliver and perform
this Agreement, (v) and the purchase of the Common Shares by it
has been duly and properly authorized and this Agreement has been
duly executed and delivered by it or on its behalf and
constitutes the valid and binding obligation of each Purchaser,
and is enforceable against such Purchaser in accordance with its
terms, and (vi) it has no contract, arrangement or understanding
with any broker, finder of similar agent with respect to the
transactions contemplated by this Agreement.
3.7 Legends. Each Purchaser understands that the
certificates evidencing the Common Shares shall bear the legend
set forth in Section 8.2 herein.
4. CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATIONS
Each Purchaser's obligation to purchase and make payment for
the Common Shares subscribed for hereunder by it on the Closing
Date is subject, at its option, to the satisfaction of each of
the following conditions:
4.1 Representations and Warranties. On the Closing Date,
the representations and warranties contained in Section 2 hereof
shall be true and correct in all material respects with the same
effect as though made on and as of the Closing Date, and the
Company shall have so certified to the Purchasers in writing.
4.2 Performance. All the covenants, agreements and
conditions contained in this Agreement to be performed or
complied with by the Company on or prior to the Closing Date
shall have been performed or complied with in all material
respects, and the Company shall have so certified to the
Purchasers in writing.
4.3 Opinion of Counsel to the Company. On the Closing
Date, the Purchasers shall have received an opinion from counsel
for the Company, dated the Closing Date, which shall be in the
form attached as Exhibit B hereto.
4.4 Proceedings; Certified Copies. All proceedings to be
taken in connection with the transactions contemplated by this
Agreement to be consummated on or prior to the Closing Date, and
all documents incident thereto, shall be satisfactory in form and
substance to the Purchasers. The Purchasers shall have received
such certified copies or other copies of such documents as they
may reasonably request.
4.5 No Proceeding or Litigation. No suit, action, or other
proceeding seeking to restrain, prevent or change the
transactions contemplated hereby or otherwise questioning the
validity or legality of such transactions shall have been
instituted and be pending.
4.6 No Material Adverse Change. There shall have been no
material adverse change since the Balance Sheet Date in the
business, properties, assets, operations, or condition (financial
or otherwise) of the Company and its Subsidiaries, taken as a
whole.
4.7 Blue Sky Compliance. The Company shall have complied
with all applicable requirements of federal and state securities
or "blue sky" laws with respect to the issuance of the Common
Shares sold at the Closing.
4.8 Registration Rights Agreement. The Company shall have
executed and delivered a Registration Rights Agreement in the
form attached hereto as Exhibit A.
4.9 NASDAQ Listing. The Common Shares shall have been
approved for listing on NASDAQ.
5.CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
The Company's obligation to sell the Common Shares
subscribed for by the Purchasers on the Closing Date is subject,
at the Company's option, to the satisfaction of each of the
following conditions:
5.1 Representations and Warranties. On the Closing Date,
the representations and warranties contained in Section 3 hereof
shall be true and correct in all material respects with the same
effect as though made on and as of the Closing Date and the
Purchasers shall have so certified to the Company in writing.
5.2 Performance. All the covenants, agreements and
conditions contained in this Agreement to be performed or
complied with by the Purchasers on or prior to the Closing Date
shall have been performed or complied with in all material
respects, and the Purchasers shall have so certified to the
Company in writing.
5.3 No Proceeding or Litigation. No suit, action, or other
proceeding seeking to restrain, prevent or change the
transactions contemplated hereby or otherwise questioning the
validity or legality of such transactions shall have been
instituted and be pending.
6. COVENANTS OF THE COMPANY PRIOR TO CLOSING
6.1 Operation of Business in Ordinary Course. Prior to the
Closing, the Company and each Subsidiary will operate its
business only in the usual and normal course.
6.2 Conditions Precedent. The Company and the Purchasers
shall use their best efforts to cause the conditions specified in
Sections 4 and 5 to be satisfied by the Closing Date.
7. COVENANTS OF THE PARTIES AFTER CLOSING
7.1 Rule 144. The Company covenants that (i) the Company
will use its best efforts to comply with the current public
information requirements of Rule 144(c)(1) under the Securities
Act; and (ii) at all such times as Rule 144 is available for use
by the holders of the Common Shares, the Company will furnish
each such holder upon request with all information within the
possession of the Company required for the preparation and filing
of Form 144.
7.2 Delivery of Financial Statements. From the Closing
Date and for as long as each Purchaser owns 5% or more of the
outstanding Common Stock, the Company shall deliver to such
Purchaser, a copy of each and every report on Form 10-K, Form 8-
K, Form 10-Q, Proxy Report and all other reports filed by the
Company or any Subsidiary with the SEC within fifteen (15) days
of such filing.
7.3 Inspection. From the Closing Date and for as long as
each Purchaser owns 5% or more of the outstanding Common Stock,
upon reasonable advance written notice, the Company and each
Subsidiary shall permit such Purchaser, at its expense, to visit
and inspect the properties of the Company and each of its
Subsidiaries during normal business hours, and to discuss its
affairs, finances, and accounts with its executive officers in
each case for any purpose reasonably related to such Purchaser's
investment in the Company, provided that such Purchaser shall
agree not to disclose any confidential information received as a
result thereof. Any such Purchaser is authorized to disclose to
the other Purchaser any information it discovers as a result of
such inspections, provided such other Purchaser agrees not to
disclose any confidential information received. The rights set
forth in this Section 7.3 shall be in addition to and not in lieu
of the rights of inspection that any holder of Common Shares may
have under applicable law.
7.4 Shareholder Rights Plan. The Company contemplates
obtaining approval of the Board of Directors and shareholders, if
required at the 1998 annual meeting, for a Shareholder Rights
Plan, which Plan will be designed to encourage an acquiror of the
Company's common stock to negotiate with the Company. It is
expected that pursuant to such Plan rights will be dividended
which under certain circumstances will permit a holder thereof
(excluding such acquiror) to purchase additional securities of
the Company at a formula value. If presented to the Company's
shareholders, the Purchasers covenant to vote their Common Shares
for such Plan adopted by the Company's Board of Directors to the
extent such Plan may be deemed to be in the best interests of the
Company and its shareholders and is satisfactory to the
Purchasers in their reasonable opinion at such time.
7.5 Waivers' Consents, Etc. Compliance with any of the
covenants in this Section 7 may be waived, either generally or in
the particular instance, and any consent required thereunder may
be given, by holders of Common Shares sufficient to consent to an
amendment to this Agreement under Section 10.8.
8.COMPLIANCE WITH SECURITIES ACT; RESTRICTIONS ON
TRANSFERABILITY OF COMMON SHARES
8.1 Compliance with Securities Act. The Common Shares
shall not be transferable, except upon the conditions specified
in this Section 8, which conditions are intended to insure
compliance with the provisions of the Securities Act and
applicable state securities laws in respect of any such transfer.
8.2 Restrictive Legend. Each certificate representing the
Common Shares and any shares of Common Stock or other securities
issued upon any stock split, stock dividend, recapitalization,
merger, consolidation, similar event, shall (unless otherwise
permitted by the provisions of Section 8.4 below) be stamped or
otherwise imprinted with the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW AND THE TRANSFERABILITY [T]HEREOF
IS SUBJECT TO THE PROVISIONS OF A COMMON STOCK PURCHASE AGREEMENT
BY AND AMONG EP MEDSYSTEMS, INC. AND THE PURCHASERS LISTED ON
SCHEDULE I THERETO."
8.3 Restrictions on Transferability. Until the Common
Shares are registered under the Securities Act, the Company shall
not be required to register the transfer of the Common Shares on
the books of the Company unless the Company shall have been
provided with an opinion of counsel reasonably satisfactory to it
prior to such transfer to the effect that registration under the
Securities Act or any applicable state securities law is not
required in connection with the transaction resulting in such
transfer. Each certificate for Common Shares issued upon any
transfer as above provided shall bear the restrictive legend set
forth in Section 8.2 above, except that such restrictive legend
shall not be required if the opinion of counsel reasonably
satisfactory to the Company referred to above is to the further
effect that such legend is not required in order to establish
compliance with the provisions of the Securities Act and any
applicable state securities law.
8.5 Termination of Restrictions on
Transferability.
The conditions precedent imposed by this Section 8 upon the
transferability of the Common Shares shall cease and terminate as
to any of the Common Shares when (i) such securities shall have
been registered under the Securities Act and sold or otherwise
disposed of in accordance with the intended method of disposition
by the seller or sellers thereof set forth in the registration
statement covering such securities, or (ii) at such time as an
opinion of counsel satisfactory to the Company shall have been
rendered as required pursuant to the second sentence of Section
8.3 to the effect that the restrictive legend on such securities
is no longer required, or (iii) when such securities are
transferable in accordance with the provisions of Rule 144(k)
promulgated under the Securities Act and Section 8.3 above.
Whenever the conditions imposed by this Section 8 shall terminate
as hereinabove provided with respect to any of the Common Shares,
the holder of any such securities bearing the legend set forth in
this Section 8 as to which such conditions shall have terminated
shall be entitled to receive from the Company, without expense
(except for the payment of any applicable transfer tax) new stock
certificates not bearing such legend.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties made herein and in the
certificates delivered pursuant hereto are made as of the date
hereof and shall survive the execution and delivery of this
Agreement and the issuance and sale of the Common Shares
hereunder for a period of one year.
10. MISCELLANEOUS
10.1 Owner of Common Shares. The Company may deem and
treat the person in whose name the Common Shares are registered
as the absolute owner thereof for all purposes whatsoever, and
the Company shall not be affected by any notice to the contrary.
10.2 Successors and Assigns. This Agreement shall be
binding upon and except as provided herein, shall inure to the
benefit of the respective successors, executors, personal
representatives, heirs and permitted assigns of each of the
parties hereto.
10.3 Broker or Finder. Except for the Company's agreement
with Pacific Growth Equities, Inc., each party to this Agreement
represents and warrants that, to the best of its knowledge, no
broker or finder has acted for such party in connection with this
Agreement or the transactions contemplated by this Agreement and
that no broker or finder is entitled to any broker's or finder's
fee or other commission in respect thereof based in any way on
agreements, arrangements or understandings made by such party.
The Company shall indemnify each Purchaser against, and hold it
harmless from, any liability, cost, or expense (including
reasonable attorneys' fees and expenses) resulting from any
agreement, arrangement, or understanding made by the Company, and
each Purchaser shall indemnify the Company against, and hold the
Company harmless from, any liability, cost, or expense (including
reasonable attorneys fees and expenses) resulting from any
agreement, arrangement, or understanding made by such Purchaser
with any third party, for brokerage or finder's fees or other
commissions in connection with this Agreement or any of the
transactions contemplated hereby.
10.4 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State
of New Jersey, without regard to conflicts of law principles.
10.5 Notice. Any notice or other communications required or
permitted hereunder shall be deemed given when delivered
personally, or upon receipt by the party entitled to receive the
notice when sent by registered or certified mail, postage
prepaid, or by a recognized national overnight courier service
addressed as follows or to such other address or addresses as may
hereafter be furnished in writing by notice similarly given by
one party to the other:
To the Company: EP MedSystems, Inc.
000 Xxxxxxx Xxxxx
Xxxxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx, President
To any Purchaser: At its address set
forth on Schedule I hereto
Notice to any holder of Common Shares other than a Purchaser
shall be given in a like manner to such holder at the address
reflected in the Company's records.
10.6 Full Agreement. This Agreement, together with the
Common Shares and the Exhibits and Schedules attached hereto or
delivered herewith, and any other documents delivered herewith,
sets forth the entire understanding of the parties with respect
to the transactions contemplated hereby.
10.7 Headings. The headings of the sections of this
Agreement are inserted for convenience of reference only and
shall not be considered a part hereof.
10.8 Amendment. This Agreement may be modified, amended or
changed only with the written consent of the Company and the
holders of at least 75.0% of the Common Shares then outstanding.
10.9 Schedules and Exhibits. Disclosure of any fact or item
in any Schedule or Exhibit hereto referenced by a particular
paragraph or Section in this Agreement shall be deemed to be
disclosed with respect to any other paragraph or Section (whether
or not an explicit cross-reference appears) should the existence
of such fact or item or its contents be relevant to that other
paragraph or Section.
10.10 Limitation of Liability: The name H&Q Healthcare
Investors is the designation of the trustees for the time being
under an Amended and Restated Declaration of Trust dated April
21, 1987, as amended, and all persons dealing with H&Q Healthcare
Investors must look solely to the trust property for the
enforcement of any claim against H&Q Healthcare Investors, as
neither the trustees, officers nor shareholders assume any
personal liability for the obligations entered into on behalf of
H&Q Healthcare Investors.
The name H&Q Life Sciences Investors is the designation
of the trustees for the time being under a Declaration of Trust
dated February 20, 1992, as amended, and all persons dealing with
H&Q Life Sciences Investors must look solely to the trust
property for the enforcement of any claim against H&Q Life
Sciences Investors, as neither the trustees, officers nor
shareholders assume any personal liability for the obligations
entered into on behalf of H&Q Life Sciences Investors.
10.11 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS HEREOF, each of the parties hereto has fully
executed this Agreement as of the date first set forth above.
EP MEDSYSTEMS, INC.
By: ______________________________________
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
PURCHASERS:
SC FUNDAMENTAL VALUE FUND, LP
By: ______________________________________
Name:
Title:
SC FUNDAMENTAL VALUE BVI, LTD
By: ______________________________________
Name:
Title:
H & Q LIFE SCIENCES INVESTORS
By: ______________________________________
Name:
Title:
H & Q HEALTHCARE INVESTORS
By: ______________________________________
Name:
Title:
SPECIAL SITUATIONS FUND III L.P.
By: ______________________________________
Name:
Title:
SPECIAL
SITUATIONS CAYMAN FUND L.P.
By: ______________________________________
Name:
Title:
SCHEDULE I
NUMBER
PURCHASER OF SHARES PURCHASE PRICE
SC Fundamental Value Fund, LP 339,500 $763,875
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. X'Xxxxxxxx
SC Fundamental Value BVI, Ltd. 335,500 $754,875
c/o SC Fundamental Value BVI, Inc.
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. X'Xxxxxxxx
H & Q Life Sciences Investors 430,000 $967,500
00 Xxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxx Xxxx
H & Q Healthcare Investors 645,000 $1,451,250
00 Xxxxx Xxxxx
Xxxxxx , XX 00000-0000
Attn: Xxxx Xxxx
Special Situations Fund III L.P. 375,000 $843,750
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Special Situations Cayman Fund 125,000 $281,250
L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx XX 00000
Attn: Xxxxxx X. Xxxxx
