EXHIBIT 4.1
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
COMMON STOCK AND WARRANT PURCHASE AGREEMENT (this "Agreement") made as of
the 16th day of February, 2001 by and among EP MEDSYSTEMS, INC. (the "Company")
and the entities listed on Schedule I hereto (each, a "Purchaser" and
collectively, the "Purchasers").
RECITALS
WHEREAS, the Company desires to issue and sell to the Purchasers (i) an
aggregate of 1,625,000 shares of its authorized but unissued Common Stock (as
defined in Section 1.1) and (ii) warrants to purchase an aggregate of 812,500
shares of Common Stock; and
WHEREAS, each Purchaser desires to purchase that number of shares of
Common Stock and warrants shown next to its name on Schedule I hereto, all upon
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises herein made, and
in consideration of the representations, warranties and covenants herein
contained, the parties hereto agree as follows:
SECTION 1. SALE AND PURCHASE OF COMMON STOCK AND WARRANTS; 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
from the Company, an aggregate of (i) 1,625,000 shares of the Company's Common
Stock, $.001 stated value per share (the "Common Stock") and (ii) warrants to
purchase an aggregate of 812,500 shares of Common Stock (the "Warrants" and
together with the Common Shares, the "Securities"). Hereinafter, "Common Shares"
means the shares of Common Stock purchased by the Purchasers hereunder.
(b) The quantity and purchase price for the Securities to be
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 Securities to
the Purchasers hereunder shall occur in such location and manner (i.e., by
telecopy exchange of signature pages with originals to follow by overnight
delivery) as the parties may mutually agree. As used herein "Closing" shall mean
the closing of the issuance and sale of the Securities to the Purchasers
hereunder and the "Closing Date" shall mean the date on which such Closing takes
place. The Closing Date shall be the fifth (5th) business day following approval
by the Company's shareholders of the issuance and sale of the Securities to the
Purchasers pursuant to this Agreement; provided, however, in no event shall the
Closing Date be after April 30, 2001.
(b) At the Closing (or within three (3) business days after
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 (i) stock
certificates representing the Common Stock 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) and (ii) a Warrant for Warrant Shares (as defined in the Warrant), all
in the quantities set forth in Schedule I. At the Closing, against such delivery
of said stock certificates and Warrants (or evidence satisfactory to the
Purchasers that the stock certificates and Warrants will be delivered to the
Purchasers within three (3) business days after 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 Securities being purchased
hereunder. The Purchase Price shall be allocated based on $1.99 per Common Share
and $.02 per Warrant Share.
1.3 Nature of Obligations. The Company shall not be obligated to
issue and sell less than those Securities specified on Schedule I to each
Purchaser opposite its name. In committing to purchase the Securities under this
Section 1, each Purchaser is contracting severally (and not jointly) to purchase
only the number of Securities specified on Schedule I opposite its name. No
Purchaser shall be obligated to purchase any Securities unless all of the
Securities to be purchased by it as shown on Schedule I are tendered for
purchase. The Company shall pay all costs and expenses (i) incurred by it in
connection with this Agreement and contemplated transaction and (ii) provided
the Purchase Price for the Securities being purchased by Cardiac Capital, LLC is
received on or before the close of business April 30, 2001, the costs and
expenses of Cardiac Capital, LLC and its legal counsel in connection with this
Agreement and the contemplated transactions incurred through the date hereof, up
to an aggregate of $10,000.
SECTION 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 Company
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
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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.
2.3 No Conflict with Law or Documents. The execution, delivery and
performance of this Agreement or any Company Agreement by the Company, the
issuance of the Common Shares sold hereunder, the issuance of the Warrant Shares
upon exercise of the Warrants and the consummation by the Company of the
transactions contemplated hereby and thereby do not and 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, do not 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 (except for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
under any such indenture, mortgage, lease, agreement or other instrument as
would not, individually or in the aggregate, have a material adverse effect on
the Company and its subsidiaries' business, properties, assets, operations or
condition (financial or otherwise) taken as a whole).
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, $.00l stated value per share, of which 12,023,167
shares are issued and outstanding as of the date hereof (excluding the offering
contemplated hereunder) and all such outstanding shares (including the offering
contemplated hereunder) are validly issued, fully paid and nonassessable, (iii)
1,000,000 shares of Common Stock reserved for issuance pursuant to the Company's
1995 Long Term Incentive Plan , (iv) 360,000 shares of Common Stock reserved for
issuance pursuant to the Company's 1995 Director Option Plan, and (v) 1,167,000
shares of Common Stock reserved for issuance pursuant to existing non-plan stock
options; of which with respect to the 1995 Long Term Incentive Plan, the 1995
Director Option Plan and other non-plan stock options, an aggregate of 1,162,560
options have been granted and are outstanding as of December 31, 2000. A further
362,250 shares of Common Stock are reserved for issuance pursuant to outstanding
warrants issued pursuant to that certain Common Stock and Warrant Purchase
Agreement dated as of August 31, 1999, as subsequently amended.
(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 Securities. The Securities when issued,
sold and delivered to each Purchaser in accordance with this Agreement will be
duly and validly issued, fully paid and non-
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assessable. There are no New Jersey state or city taxes, fees or other charges
payable in connection with the execution or delivery of the Company Agreements
or the Securities.
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 Securities which will be made
prior to Closing and the filing of any registration statement which may be filed
pursuant to the Registration Rights Agreement, 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 Securities, or the
carrying out by the Company of the other transactions contemplated hereby. The
issuance and sale by the Company of the Securities 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 Securities and, assuming compliance by the Purchasers with the terms of
this Agreement and applicable law, the Securities, are exempt from registration
under the Securities Act.
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 made available 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-KSB for its year ended December 31, 1999 and Quarterly
Reports on Form 10-QSB for the quarters ended March 31, 2000, June 30, 2000 and
September 30, 2000; (ii) all other reports and documents filed with the
Securities and Exchange Commission (the "SEC") since January 1, 2000; and (iii)
certain other internal Company financial books and records . All documents
described in this Section 2.9 are hereinafter referred to as the "Company
Reports." The Company has made all filings required to be made by it under the
Securities Act, the Securities Exchange Act of 1934, as amended (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
Registrable Securities (as defined in the Registration Rights Agreement)
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 Company 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
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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
shareholders' equity of the Company and its subsidiaries as of December 31, 1999
and 1998, and (ii) the audited consolidated statements of income and cash flow
of the Company and its subsidiaries, for the two years ended December 31, 1999
and 1998, 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, 1999 is referred to herein as the "Balance Sheet".
(b) Except as set forth on Schedule 2.12(b) attached hereto,
since December 31, 1999 (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 except as set forth on Schedule
2.14 attached hereto.
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, service marks, trade
names, permits, trade secrets, computer
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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 Securities
will be used by the Company for working capital purposes including research and
development expenses.
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 shareholders 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.
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2.21 Company Status. The Company has registered its Common Stock
pursuant to Section 12(g) of the Exchange Act, is in full compliance with all
reporting requirements of the Exchange Act, and the Company has maintained all
requirements for the continued listing of its Common Stock on NASDAQ, and such
Common Stock is currently listed and traded on NASDAQ subject to NASDAQ
acknowledgment and acceptance of the listing application and its receipt of the
listing fee for the Securities being issued hereunder.
2.22 No Directed Selling Efforts or General Solicitation in Regard
to this Transaction. The Company has not conducted any general solicitation (as
that term is used in Regulation D) with respect to any of the Securities, nor
has it made any offers or sales of any Securities or solicited any offers to buy
any Securities, under circumstances that would require registration of the
Securities under the Securities Act.
2.23 Third Party Consents; Business Not in Violation. The Company
has obtained from third parties all consents necessary to consummate the
transactions contemplated hereby and by the other Company Agreements. The
business of the Company and its subsidiaries is not being conducted in violation
of any law, ordinance or regulations of any governmental entity, except for
violations or potential violations which either individually or in the aggregate
do not and will not have a material adverse effect on the Company and the
subsidiaries business, properties, assets, operations or condition (financial or
otherwise) taken as a whole.
2.24 No Integration. Neither the Company nor any of its subsidiaries
nor any person acting on the Company's behalf has, directly or indirectly, at
any time within the past six (6) months made any offer or sale of any security
or solicitation of any offer to buy any security under circumstances that would
(i) eliminate the availability of the exemption from registration under
Regulation D under the Securities Act in connection with the offer and sale of
the Securities as contemplated hereby or (ii) cause the offering of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the Securities Act or any applicable stockholder
approval provisions, including, without limitation, under the rules and
regulations of the National Association of Securities Dealers ("NASD"), as
applicable.
2.25 Investment Company. The Company is not, and is not controlled
by or under common control with an affiliate of, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
2.26 Permits. Each of the Company and its subsidiaries possesses all
franchises, certificates, licenses, authorizations and permits or similar
authority necessary to conduct its business as described in the SEC Reports
except where the failure to possess such permits would not, individually or in
the aggregate, have a material adverse effect on the Company or its
subsidiaries, or their businesses, properties, assets, operations or condition
(financial or otherwise) taken as a whole ("Material Permits"), and neither the
Company nor any such subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit.
2.27 Company Board of Director Action. The Board of Directors of the
Company at a meeting duly called and held has by the requisite vote of all
directors present (i) determined that the issuance and sale of Securities to the
Purchasers pursuant to this Agreement is advisable and in the best interests of
the Company and its shareholders and (ii) resolved to recommend the approval of
the issuance and sale of Securities to the Purchasers pursuant to this Agreement
by the shareholders of the
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Company and directed that such issuance and sale be submitted for consideration
by the shareholders of the Company at the Special Meeting (defined below).
2.28 Full Disclosure. The representations and warranties of the
Company set forth in this Agreement do not contain any untrue statement of a
material fact or omit any material fact necessary to make the statements
contained herein, in the light of the circumstances under which they were made,
not misleading.
SECTION 3. PURCHASERS' REPRESENTATIONS AND WARRANTIES
The Purchasers understand that the sale to them of the Securities 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 acknowledgments set forth
in this Section 3.
3.1 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.
3.2 Purchase Without View to Distribute. Each Purchaser represents
and warrants to the Company that the Securities 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 Securities in violation of the Securities Act or any applicable state
securities laws.
3.3 Restrictions on Transfer. Each Purchaser (i) acknowledges that
the Securities are "Restricted Securities" under the Federal securities laws and
are not registered under the Securities Act, (ii) acknowledges that the
Securities 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 Securities 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 Securities
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 Securities.
3.4 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.
3.5 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
Securities for an indefinite period of time and suffer complete loss of its
investment in the Securities, (iii)
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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 Securities
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
Securities 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 such 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.
3.6 Legends. Each Purchaser understands that the certificates
evidencing the Common Shares shall bear the legend set forth in Section 8.2
herein.
SECTION 4. CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATIONS
Each Purchaser's obligation to purchase and make payment for the
Securities 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 a form reasonably acceptable to the parties.
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, except as set forth on Schedule
2.12(b) attached hereto, in the business, properties, assets, operations, or
condition (financial or otherwise) of the Company and its subsidiaries, taken as
a whole.
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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 Securities 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 Warrant. The Company shall have executed and delivered a Warrant
in the form attached hereto as Exhibit B.
4.10 NASDAQ Listing. The Securities shall have been approved for
listing on NASDAQ subject to NASDAQ's official notice of issuance of the
Securities.
4.11 Company Stockholder Approval. The affirmative vote of the
holders of a majority of the outstanding shares of stock of the Company present
or represented at a meeting at which a quorum is present in favor of this
Agreement and the issuance of the Securities to the Purchasers in connection
with this Agreement shall have been obtained.
4.12 Fairness Opinion. The Board of Directors of the Company shall
have received from Xxxxxx Xxxxxxx Incorporated a written opinion (the "Fairness
Opinion"), dated as of or immediately prior to the date of submission of the
preliminary Proxy Statement to the SEC, to such Board satisfactory in form and
substance to such Board, to the effect that the price to be paid by the
Purchasers for the Securities is fair to the Public Shareholders from a
financial point of view.
4.13 Cardiac Capital Participation. It is a condition precedent to
the obligation of the Purchaser other than Cardiac Capital, LLC to purchase the
Securities that Cardiac Capital, LLC shall have complied with its obligations
hereunder. Cardiac Capital, LLC's obligations hereunder are not subject to the
precondition that the Purchaser other than Cardiac Capital shall have complied
with its obligations hereunder.
SECTION 5. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
The Company's obligation to sell the Securities 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.
10
5.4 Company Stockholder Approval. The affirmative vote of the
holders of a majority of the outstanding shares of stock of the Company present
or represented at a meeting at which a quorum is present in favor of this
Agreement and the issuance of the Securities to the Purchasers in connection
with this Agreement shall have been obtained.
5.5 Fairness Opinion. The Board of Directors of the Company shall
have received from Xxxxxx Xxxxxxx Incorporated the Fairness Opinion, dated as of
or immediately prior to the date of submission of the preliminary Proxy
Statement to the SEC.
5.6 Cardiac Capital Participation. It is a condition precedent to
the obligation of the Company to sell the Securities to the Purchasers that
Cardiac Capital, LLC shall have complied with its obligations hereunder.
SECTION 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.
6.3 Special Company Meeting. The Company shall take all action
necessary, in accordance with applicable law and its certificate of
incorporation and bylaws, to convene a special meeting of the shareholders of
Company ("Special Meeting") as promptly as practicable for the purpose of
considering and taking action upon this Agreement and approving the issuance and
sale of Securities to the Purchasers pursuant to this Agreement. Subject to the
receipt by the Board of Directors of the Company of the Fairness Opinion as
contemplated by Paragraphs 4.12 and 5.5 herein, the Board of Directors of the
Company will recommend that the shareholders of the Company vote in favor of
this Agreement and such issuance and sale at the Special Meeting and any related
proposals.
6.4 Proxy Statement. As soon as practicable after the date hereof,
the Company shall prepare a proxy statement relating to the actions to be voted
on at the Special Meeting (the "Proxy Statement"), file it with the SEC, use its
best efforts to respond to all comments of the staff of the SEC and clear the
Proxy Statement with the staff of the SEC. Promptly after such clearance, the
Company shall mail the Proxy Statement to all holders of record of Company stock
who are holders on the record date for the Special Meeting.
SECTION 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 Securities, 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 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
11
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 any one or more
of the other Purchasers 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 7.2
shall be in addition to and not in lieu of the rights of inspection that any
holder of Securities may have under applicable law.
7.3 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.
7.4 Filing of Current Report on Form 8-K. On or before the second
business day following the Closing Date, the Company shall file a Current Report
on Form 8-K with the SEC describing the terms of the transaction consummated at
the Closing.
7.5 Form D. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof toeach
Purchaser promptly after such filing.
7.6 Right to designate member to Board of Directors. Subject to
compliance with the New Jersey Business Corporation Act, the Company's
Certificate of Incorporation, the Company's Bylaws and applicable law, from the
Closing Date and for as long as Cardiac Capital, LLC owns 400,000 or more of the
outstanding Common Stock, or securities convertible into 400,000 shares of
Common Stock, or a combination thereof, upon reasonable advance written notice,
the Company shall, at the request of Cardiac Capital, LLC, promptly use its best
efforts to take all actions necessary to cause the Company's Board of Directors
to include one representative nominated by Cardiac Capital, LLC, including,
without limitation, by accepting the resignation of an incumbent director or
increasing the number of members of the Board of Directors in accordance with
the Company's Bylaws to enable Cardiac Capital, LLC's designee to be elected or
appointed to serve on the Company's Board of Directors. The parties hereto agree
that Cardiac Capital may assign this right to Xxxxxxx Investment Fund, without
the consent of the Company.
SECTION 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 HEREOF
12
IS SUBJECT TO THE PROVISIONS OF A COMMON STOCK AND WARRANT 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.
8.4 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.
SECTION 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
Securities hereunder for a period of one year.
SECTION 10. MISCELLANEOUS.
10.1 Owner of Common Shares. The Company may deem and treat the
person in whose name the Securities 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,
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. 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
13
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
indemnity 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 000
Xxxxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx, President
To any Purchaser: At its address set forth on Schedule I
hereto and, if to Cardiac Capital, LLC
with a required copy of such notice to:
Xxxxxxx Investment Fund
0000 Xxxxxxxx Xxxx, X.X.
Xxxxxxx, XX 00000
Attention: Xxx X. Xxxxx
Notice to any holder of Securities 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 Securities
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
14
appears) should the existence of such fact or item or its contents be relevant
to that other paragraph or section.
10.10 Counterparts. This Agreement may be executed concurrently 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 upon delivery, by
telefax or otherwise, of all counterparts to all parties hereto.
[signature page follows]
15
IN WITNESS WHEREOF, each of the parties hereto has fully executed this
Agreement on the date first set forth above.
EP MEDSYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
PURCHASERS:
CARDIAC CAPITAL, LLC.
By: Xxxxxxx Investment Fund, Manager
By: /s/ R. Xxxxxxx Xxxxxxx
-----------------------------------
Name: R. Xxxxxxx Xxxxxxx
Title: General Partner
TEXADA TRUST
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Trustee
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SCHEDULE I
=====================================================================================
PURCHASER NUMBER OF NUMBER OF PURCHASE PRICE
COMMON WARRANT
SHARES SHARES
=====================================================================================
Cardiac Capital, LLC 1,500,000 750,000 $3,000,000
Attention: Manager
c/o Xxxxx X. Xxxxxxx
000 Xxxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxxxxxx, N.J. 07856
-------------------------------------------------------------------------------------
Texada Trust
0 Xxxxxxxx Xxxx 125,000 62,500 $250,000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Trustee
-------------------------------------------------------------------------------------
TOTAL 1,625,000 812,500 $3,250,000
-------------------------------------------------------------------------------------
