SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report(Date of earliest event reported): April 13,1998
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EP MedSystems, Inc.
(Exact name of registrant as specified in its charter)
Commission file number 0-28260
New Jersey 22-3212190
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
100 Stierli Court, Mount Arlington, New Jersey 07865
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (973) 398-2800
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ITEM 5. OTHER EVENTS
On April 9, 1998, EP MedSystems, Inc. (the "Company") sold
and issued 2,250,000 shares of its common stock, no par
value, stated value $.001 per share (the "Regulation D
Shares") to six United States institutional investors (the
"Investors"). The Regulation D Shares were issued and sold
pursuant to the provisions of Regulation D promulgated by
the Securities and Exchange Commission under the Securities
Act of 1933, as amended. The aggregate offering price of the
Regulation D Shares was $5,062,500, based on a per share
price of $2.25. The form of Common Stock Purchase Agreement
pursuant to which the Regulation D Shares were sold is
attached hereto as Exhibit 4.1.
The Company granted to the Investors certain registration
rights with respect to the Regulation D Shares pursuant to a
Registration Rights Agreement, a form of which is attached
hereto as Exhibit 4.2 (the "Registration Rights Agreement").
Under the terms and conditions of the Registration Rights
Agreement, the Company is obligated to file, subject to
certain limitations specified in the Registration Rights
Agreement, a shelf registration statement on Form S-3 by May
9, 1998, which shelf registration agreement shall cover all
of the Regulation D Shares.
The Company intends to use the net proceeds from the sale of
the Regulation D Shares for working capital purposes.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
Exhibits
4.1 Form of Common Stock Purchase Agreement between EP
MedSystems, Inc. and the Purchasers, dated April 9,
1998.
4.2 Form of Registration Rights Agreement between EP
MedSystems, Inc. and the Purchasers, dated April 9,
1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
EP MEDSYSTEMS, INC.
Dated: April 14, 1998 By /s/ James J. Caruso
------------------------
James J. Caruso
Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
4.1 Form of Common Stock Purchase Agreement
between EP MedSystems, Inc. and the
Purchasers, dated April 9, 1998.
4.2 Form of Registration Rights Agreement between
EP MedSystems, Inc. and the Purchasers, dated
April 9, 1998.
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, Stevens & Young, LLP, 2600 One Commerce Square,
Philadelphia, Pennsylvania 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 Hart-Scott-Rodino
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.
100 Stierli Court
Mount Arlington, NJ 07856
Attention: David Jenkins, 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: David A. Jenkins
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
10 East 50th Street
21st Floor
New York, NY 10022
Attn: Joseph J. D'Ambrosio
SC Fundamental Value BVI, Ltd. 335,500 $754,875
c/o SC Fundamental Value BVI, Inc.
10 East 50th Street
21st Floor
New York, NY 10022
Attention: Joseph J. D'Ambrosio
H & Q Life Sciences Investors 430,000 $967,500
50 Rowes Wharf
Boston, MA 02110-6679
Attn: Alan Carr
H & Q Healthcare Investors 645,000 $1,451,250
50 Rowes Wharf
Boston , MA 02110-6679
Attn: Alan Carr
Special Situations Fund III L.P. 375,000 $843,750
153 East 53rd Street
New York, NY 10022
Attn: Austin W. Marxe
Special Situations Cayman Fund 125,000 $281,250
L.P.
153 East 53rd Street
New York NY 10022
Attn: Austin W. Marxe
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the 9th day
of April, 1998, by and between EP MedSystems, Inc., a New
Jersey corporation (the "Company"), and the purchasers
listed on Schedule 1 hereto (collectively, the
"Purchasers").
RECITALS
WHEREAS, the Company and the Purchasers are parties to the
Common Stock Purchase Agreement of even date herewith (the
"Stock Purchase Agreement");
WHEREAS, in order to induce the Company to enter into the
Stock Purchase Agreement and to induce the Purchasers to
invest funds in the Company pursuant to the Stock Purchase
Agreement, the Purchasers and the Company hereby agree that
this Agreement shall govern the rights of the Purchasers to
cause the Company to register shares of Common Stock
issuable to the Purchasers and certain other matters as set
forth herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees
as follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of
1933, as amended.
(b) The terms "Form S-3" means such form under the
Act as in effect on the date hereof or any registration form
under the Act subsequently adopted by the SEC which permits
inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the
SEC.
(c) The term "Holder" means one of the Purchasers
and any transferees of Registrable Securities permitted in
accordance with Section 1.12.
(d) The term "register," "registered," and
"registration" refer to a registration effected by preparing
and filing a registration statement or similar document in
compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document;
(e) The term "Registrable Securities" means (1)
the Common Stock issued pursuant to the Stock Purchase
Agreement and (2) any Common Stock of the Company issued as
(or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or
other distribution with respect to, or in exchange for or in
replacement of, such Common Stock, excluding in all cases,
however, any Registrable Securities which are sold,
assigned, pledged, hypothecated or otherwise disposed of by
a Holder in a transaction in which such Holder's rights
under this Agreement are not assigned or assignable;
(f) The number of shares of "Registrable
Securities then outstanding" shall be determined by the
number of shares of Common Stock outstanding which are, and
the number of shares of Common Stock issuable pursuant to
then exercisable or convertible securities which are,
Registrable Securities; and
(g) The term "SEC" means the Securities and
Exchange Commission.
1.2 Shelf Registration.
(a) The Company shall, subject to the limitations
specified in this Agreement (i) file a shelf registration
statement on Form S-3 or any other form available to the
Company as soon as practicable but in any event within
thirty (30) days from the date hereof (the "Filing Date")
covering the registration under the Act of all Registrable
Securities then outstanding to be offered or sold on a
delayed or continuous basis as provided by this Agreement,
pursuant to Rule 415 of the Act (the "Shelf Registration
Statement"); and (ii) maintain the effectiveness of the
Shelf Registration Statement until such date as is the
earlier of (i) the date on which all of the Registrable
Securities have been sold and (ii) the date on which the
Registrable Securities may be immediately sold without
restriction (including without limitation as to volume by
each Holder thereof) and without registration under the
Securities Act.
(b) If any offering pursuant to Section 1.2(a) hereof
involves an underwritten offering, an underwriter will be
selected by the Holders of three-fourths of the Registrable
Securities then outstanding and shall be reasonably
acceptable to the Company. In such event, the right of any
Holder to include its Registrable Securities in such
registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute
Registrable Securities through such underwriting shall
(together with the Company as provided in Section 1.4(e))
enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Holders in
writing that marketing factors require a limitation of the
number of shares to be underwritten, then the number of
shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof in
proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder;
provided, however, that the number of shares of Registrable
Securities to be included in such underwriting shall not be
reduced unless all Other Securities (as defined below) are
first entirely excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall
furnish to the Holders a certificate signed by the Chief
Executive Officer or President of the Company stating that,
in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental (a "Detrimental
Condition") to the Company and its stockholders for a
registration statement to be filed or to become or remain
effective, as the case may be, (i) the Company shall have
the right to defer taking action with respect to the filing
of the Shelf Registration Statement for a period of not more
than ninety (90) days after the Filing Date, (ii) in case a
Shelf Registration Statement has been filed but has not
become effective, the Company may cause such registration
statement to be withdrawn or may postpone amending or
supplementing such registration statement until such
Detrimental Condition no longer exists, but in no event for
more than ninety (90) days, (iii) in case a Shelf
Registration Statement has been filed and has become
effective, the Company may postpone amending or
supplementing such registration statement until such
Detrimental Condition no longer exists, but in no event for
more than ninety (90) days or (iv) require all Holders to
suspend or cease selling any Registrable Securities until
such Detrimental Condition no longer exists, but in no event
for more than ninety (90) days, provided that the Company's
right pursuant to this Section 1.2(c) to give notice of a
Detrimental Condition may not be exercised for more than
sixty (60) days in any twelve (12) month period hereunder.
The Company shall give written notice of its determination
to postpone or withdraw a registration statement and of the
fact that the Detrimental Condition for such postponement or
withdrawal no longer exists, in each case, promptly after
the occurrence thereof. The following events or
circumstances may be a Detrimental Condition: a pending
material acquisition, merger or sale or purchase of assets,
pending or threatened material litigation, pending or
threatened material regulatory or governmental action,
pending material change in the business, prospects,
condition (financial or other) or properties of the Company.
The foregoing list is for illustrative purposes only and is
not meant to be exclusive.
(d) If the Company shall give any notice of
postponement or withdrawal of any registration statement or
of suspension of selling the Registrable Securities in
accordance with subsection (c) above, the Company shall not,
during the period of postponement, withdrawal or suspension
pursuant to clauses (i), (ii), (iii) or (iv) of the prior
paragraph, register any Common Stock, other than pursuant to
a registration statement on Form S-4 or S-8 (or an
equivalent registration form then in effect). Each Holder
of Registrable Securities agrees that, upon receipt of any
notice from the Company that the Company has determined to
withdraw any registration statement pursuant to the
immediately preceding paragraph, such Holder will
discontinue its disposition of Registrable Securities
pursuant to such registration statement and, if so directed
by the Company, will deliver to the Company (at the
Company's expense) all copies, other than permanent file
copies, then in such Holder's possession of the prospectus
covering such Registrable Securities that was in effect at
the time of receipt of such notice. If the Company shall
have withdrawn or prematurely terminated a registration
statement filed under this Section 1.2 (whether pursuant to
the immediately preceding paragraph, or as a result of any
stop order, injunction or other order or requirement of the
SEC or any other governmental agency or court), the Company
shall not be considered to have effected an effective
registration for the purposes of this Agreement until the
Company shall have filed a new registration statement
covering the Registrable Securities covered by the withdrawn
registration statement and such registration statement shall
have been declared effective and shall not have been
withdrawn. If the Company shall give any notice of
withdrawal or postponement of a registration statement, the
Company shall, at such time as the Detrimental Condition
that caused such withdrawal or postponement no longer exists
(but in no event later than ninety (90) days after the date
of the postponement or withdrawal), use its reasonable best
efforts to effect the registration under the Act of the
Registrable Securities covered by the withdrawn or postponed
registration statement in accordance with this Section 1.2
(unless the Holder shall have withdrawn such request).
1.3 Company Registration. If (but without any obligation to
do so) the Company proposes to register (including for this
purpose a registration effected by the Company for
stockholders other than the Holders) any of its stock or
other securities under the Act in connection with the public
offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to
participants in a Company stock option, stock purchase or
similar plan or a SEC Rule 145 transaction or a registration
on any form which does not include substantially the same
information as would be required to be included in a
registration statement covering the sale of the Registrable
Securities) within two (2) years of the date of this
Agreement, the Company shall, at such time, promptly give
each Holder written notice of such registration. Upon the
written request of each Holder given within twenty (20) days
after mailing of such notice by the Company in accordance
with Section 2.5, the Company shall, subject to the
provisions of Section 1.8, cause to be registered under the
Act all of the Registrable Securities that each such Holder
has requested to be registered. No registration effected
pursuant to this Section 1.3 shall relieve the Company of
its obligations to effect the required registration pursuant
to Section 1.2. Any Holder shall have the right to withdraw
his request for inclusion of its Registrable Securities in
any registration statement pursuant to this Section 1.3 by
giving written notice to the Company of its request to
withdraw prior to the filing of such registration statement.
1.4 Obligations of the Company. When required under this
Section 1 to effect the registration of the Registrable
Securities, the Company shall, as expeditiously as
reasonably possible:
(a) Prepare and file with the SEC a Shelf Registration
Statement or, if applicable, any other form of registration
statement, as the case may be, with respect to the
Registrable Securities and use its reasonable best efforts
to cause such registration statement to become effective
within one hundred twenty (120) days after such registration
statement was filed and to keep such Shelf Registration
Statement effective for the period specified in Section
1.2(a); provided, however, that before filing a registration
statement or prospectus or any amendments or supplements
thereto, or comparable statements under securities or blue
sky laws of any jurisdiction, the Company will furnish to
one counsel for the Holders (the "Holders' Counsel")
participating in the planned offering (selected by the
Holders of three-fourths of the Registrable Securities then
outstanding included in such registration), and the
underwriters, if any, copies of all such documents proposed
to be filed (including all exhibits thereto), which
documents will be subject to the reasonable review and
reasonable comment of such counsel.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the
prospectus used in connection with such registration
statement as may be necessary to comply with the provisions
of the Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holders whose Registrable Securities
are covered by the Shelf Registration Statement such numbers
of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Act,
and such other documents as they may reasonably request in
order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its reasonable best efforts to register and
qualify the securities covered by the Shelf Registration
Statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the
Holders whose Registrable Securities are covered by the
Shelf Registration Statement; provided that the Company
shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a
general consent to service of process in any such states or
jurisdictions unless the Company is already subject to
service in such jurisdiction.
(e) In the event the Registrable Securities are to be
sold through an underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of
such offering. The Holders proposing to distribute
Registrable Securities through such underwritten public
offering shall also enter into and perform their obligations
under such an agreement.
(f) In the event the Registrable Securities are to be
sold through an underwritten public offering, use its
reasonable best efforts to furnish, on the date that such
Registrable Securities are delivered to the underwriters for
sale in connection with a registration pursuant to this
Section 1, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such
registration, in form and substance as is customarily given
to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) a letter, dated such
date, from the independent certified public accountants of
the Company addressed to the underwriters, stating that such
accountants are independent public accountants within the
meaning of the Act and the applicable published rules and
regulations thereunder, and otherwise in form and in
substance as is customarily given by independent certified
public accountants to underwriters in connection with an
underwritten public offering.
(g) Promptly notify (i) each Holder selling Registrable
Securities covered by such registration statement and each
managing underwriter, if any: (A) when the registration
statement, the prospectus or any prospectus supplement
related thereto or post-effective amendment to the
registration statement has been filed and, with respect to
the registration statement or any post-effective amendment,
when the same has become effective, (B) of the issuance by
the SEC of any stop order suspending the effectiveness of
the registration statement or the initiation of any
proceedings for that purpose, (C) of the receipt by the
Company of any notification with respect to the suspension
of the qualification of any Registrable Securities for sale
under the securities or blue sky laws of any jurisdiction or
the initiation of any proceeding for such purpose, and (D)
when a prospectus relating to the registration statement is
required to be delivered under the Act of the happening of
any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of
the circumstances then existing; and (ii) Holders' Counsel
and each managing underwriter of any request by the SEC for
amendments or supplements to such registration statement or
prospectus related thereto or for additional information.
If the notification relates to an event described in clause
(i)(D), the Company shall, in accordance with paragraph (b)
of this Section 1.4, promptly prepare and furnish to each
Holder selling Registrable Securities covered by such
registration statement and each managing underwriter, if
any, a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to
the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein in the light of the circumstances under which they
were made not misleading.
(h) Cooperate with the selling Holders of Registrable
Securities and the managing underwriter, if any, to
facilitate the timely preparation and delivery of
certificates not bearing any restrictive legends
representing the Registrable Securities to be sold, and
cause such Registrable Securities to be issued in such
denominations and registered in such names in accordance
with the underwriting agreement prior to any sale of
Registrable Securities to the underwriters or, if not an
underwritten offering, in accordance with the instructions
of the selling Holders of Registrable Securities and
instruct any transfer agent and registrar of Registrable
Securities to release any stop transfer orders in respect
thereto.
(i) Comply with all applicable rules and regulations of
the SEC, and make generally available to its security
holders, as soon as reasonably practicable after the
effective date of the registration statement (and in any
event within 16 months thereafter), an earnings statement
(which need not be audited) covering the period of at least
twelve consecutive months beginning with the first day of
the Company's first calendar quarter after the effective
date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Act and
Rule 158 thereunder.
(j) (i) Cause all such Registrable Securities covered
by such registration statement to be listed on the principal
securities exchange on which similar securities issued by
the Company are then listed (if any), if the listing of such
Registrable Securities is then permitted under the rules of
such exchange, or (ii) if no similar securities are then so
listed, to either cause all such Registrable Securities to
be listed on a national securities exchange or to secure
designation of all such Registrable Securities as a National
Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ") "national market system security" within
the meaning of Rule 11Aa2-1 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") or, failing that,
secure NASDAQ authorization for such shares and, without
limiting the generality of the foregoing, use its reasonable
best efforts to take all actions that may be required by the
Company as the issuer of such Registrable Securities in
order to facilitate the managing underwriter's arranging for
the registration of at least two market makers as such with
respect to such shares with the National Association of
Securities Dealers, Inc. (the "NASD").
(k) Provide and cause to be maintained a transfer agent
and registrar for all such Registrable Securities covered by
such registration statement not later than the effective
date of such registration statement.
(l) Deliver promptly to Holders' Counsel and each
underwriter, if any, copies of all correspondence between
the SEC and the Company, its counsel or auditors and all
memoranda relating to discussions with the SEC or its staff
with respect to the registration statement, other than those
portions of any such memoranda which contain information
subject to attorney-client privilege with respect to the
Company, and, upon receipt of such confidentiality
agreements as the Company may reasonably request, make
reasonably available for inspection by Holders' Counsel, by
any underwriter, if any, participating in any disposition to
be effected pursuant to such registration statement and any
attorney, accountant or other agent retained by any such
underwriter, all pertinent financial and other records,
pertinent corporate documents and properties of the Company,
and cause all of the Company's officers, directors and
employees to supply all information reasonably requested by
Holders' Counsel or such underwriter, attorney, accountant
or agent in connection with such registration statement.
(m) Use reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of the
registration statement.
(n) Upon written request, furnish to each Holder
participating in the offering and the managing underwriter,
without charge, at least one conformed copy of the
registration statement and any post-effective amendments
thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits
(including those incorporated by reference).
1.5 Furnish Information. It shall be a condition precedent
to the obligations of the Company to take any action
pursuant to this Section 1 (including without limitation, to
maintain the accuracy of information previously furnished by
the Holders for use in the Shelf Registration Statement)
with respect to the Registrable Securities of the Holders
whose Registrable Securities are covered by the Shelf
Registration Statement that each of such Holders shall
furnish to the Company such information regarding itself,
the Registrable Securities held by it, and the intended
method of disposition of such securities as shall be
reasonably requested by the Company or required to effect
the registration of such Holders' Registrable Securities.
1.6 Expenses of Registration.
(a) "Expenses" shall mean any and all fees and expenses
incident to the Company's performance of or compliance with
this Article 1, including, without limitation: (i) SEC,
stock exchange or NASD registration and filing fees and all
listing fees and fees with respect to the inclusion of
securities in NASDAQ, (ii) fees and expenses of compliance
with state securities or "blue sky" laws and in connection
with the preparation of a "blue sky" survey, including
without limitation, reasonable fees and expenses of blue sky
counsel, (iii) printing and copying expenses, (iv) messenger
and delivery expenses, (v) fees and disbursements of counsel
for the Company and (vi) fees and disbursements of the
Company's independent public accountants (including the
expenses of any audit and/or "cold comfort" letter) and fees
and expenses of other persons, including special experts,
retained by the Company (collectively, "Expenses").
(b) The Company shall pay all Expenses (other than
underwriting discounts and commissions and any transfer
taxes) with respect to any registration pursuant to Section
1.2, whether or not such registration statement becomes
effective or remains effective for the period contemplated
by Section 1.2(a).
(c) Notwithstanding the foregoing, (i) the provisions
of this Section 1.6 shall be deemed amended to the extent
necessary to cause these expense provisions to comply with
"blue sky" laws of each state in which the offering is made
and (ii) in connection with any registration hereunder, each
Holder of Registrable Securities being registered shall pay
all underwriting discounts and commissions and any transfer
taxes, if any, attributable to the sale of such Registrable
Securities, pro rata with respect to payments of discounts
and commissions in accordance with the number of shares sold
in the offering by such Holder, and (iii) the Company shall,
in the case of all registrations under this Section 1, be
responsible for all its internal expenses (including,
without limitation, all salaries and expenses of its
officers and employees performing legal or accounting
duties).
1.7 Expenses of Company Registration. The Company shall
bear and pay all Expenses incurred in connection with any
registration filing or qualification of Registrable
Securities with respect to the registrations pursuant to
Section 1.3 for each Holder (which right may be assigned as
provided in Section 1.12), but excluding underwriting
discounts and commissions and transfer taxes, if any,
relating to Registrable Securities.
1.8 Underwriting Requirements. In connection with any
offering involving an underwriting of shares of the
Company's capital stock, the Company shall not be required
under Section 1.3 to include any of the Holders' securities
in such underwriting unless such Holders accept the terms of
the underwriting as agreed upon between the Company and the
underwriters selected by the Company (or by other persons
entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole
discretion will not jeopardize the success of the offering
by the Company. If the total amount of securities,
including Registrable Securities, requested by stockholders
to be included in such offering exceeds the amount of
securities sold other than by the Company that the
underwriters determine in their sole discretion is
compatible with the success of the offering, then the
Company shall be required to include in the offering only
that number of such securities, including Registrable
Securities, that the underwriters determine in their sole
discretion will not jeopardize the success of the offering
(the securities so included to be apportioned pro rata among
the selling stockholders according to the total amount of
securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall
mutually be agreed to by such selling stockholders). For
purposes of the preceding parenthetical concerning
apportionment, for any selling stockholder that is a Holder
of Registrable Securities and that is a partnership or
corporate partners, retired partners and stockholders of
such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a
single "selling stockholder," and any pro-rata reduction
with respect to such "selling stockholder" shall be based
upon the aggregate amount of shares carrying registration
rights owned by all entities and individuals included in
such "selling stockholder," as defined in this sentence.
1.9 Delay of Registration. The Holders shall not have any
right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of
any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.10 Indemnification. In the event any Registrable
Securities are included in a registration statement under
this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless the Holder whose Registrable
Securities are covered by the Registration Statement, its
directors, officers, fiduciaries, employees and stockholders
or general or limited partners (and the directors, officers,
employees and stockholders thereof), any underwriter (as
defined in the Act) for such Holders and each person, if
any, who controls such Holders or underwriter within the
meaning of the Act or the Securities Exchange Act, each
officer, director, employee, stockholder or partner of such
underwriter, against any losses, claims, damages, or
liabilities (joint or several) or actions or proceedings
(whether commenced or threatened) and expenses (including
reasonable fees of counsel and any amounts paid in any
settlement effected with the Company's consent), to which
they may become subject under the Act, the Exchange Act or
any state securities law, insofar as such losses, claims,
damages, or liabilities (or actions or proceedings in
respect thereof) ("Claims") or expenses arise out of or are
based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus, summary prospectus or final
prospectus contained therein or any amendments or
supplements thereto, together with documents incorporated by
reference therein, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading,
or (iii) any violation or alleged violation by the Company
of the Act, the Exchange Act, any state securities law or
any rule or regulation promulgated under the Act, the
Exchange Act, any state securities law or NASDAQ; and the
Company will pay, as incurred, to such Holders, and each
such underwriter or controlling person any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability, expense or action or proceeding; provided,
however, that (A) the indemnity agreement contained in this
Section 1.10 shall not apply to amounts paid in settlement
of any such Claim if such settlement is effected without the
consent of the Company (which consent shall not be
unreasonably withheld), (B) the Company shall not be liable
in any case for any such Claim to the extent that it arises
out of or is based upon a Violation which occurs in reliance
upon and in conformity with written information furnished
expressly for use in connection with such registration by
any such Holders, or any such underwriter or controlling
person. Such indemnity and reimbursement of expenses shall
remain in full force and effect regardless of any
investigation made by or on behalf of such indemnified party
and shall survive the transfer of such securities by such
Holder.
(b) To the extent permitted by law, each Holder whose
Registrable Securities are covered by the Shelf Registration
Statement will, severally and not jointly, indemnify and
hold harmless the Company, each of its directors, officers,
fiduciaries and employees and each person, if any, who
controls the Company within the meaning of the Act or the
Exchange Act, any underwriter, and any controlling person of
any such underwriter, against any losses, claims, damages,
or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Act, or the
Exchange Act, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by
such Holder expressly for use in connection with such
registration; and such Holder will pay, as incurred, any
legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this Section 1.10, in
connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in
this Section 1.10 shall not apply to amounts paid in
settlement of any such Claim if such settlement is effected
without the consent of such Holder, which consent shall not
be unreasonably withheld; provided that, in no event shall
any indemnity under this Section 1.10 exceed the net
proceeds from the offering received by such Holder. Such
indemnity and reimbursement of expenses shall remain in full
force and effect regardless of any investigation made by or
on behalf of such indemnified party and shall survive the
transfer of such securities by such Holder.
(c) Promptly after receipt by an indemnified party
under this Section 1.10 of notice of the commencement of any
action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section 1.10,
deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with
all other indemnified parties) shall have the right to
retain one separate counsel, with the fees and expenses to
be paid by the indemnifying party, (i) if representation of
such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party
and any other party represented by such counsel in such
proceeding; or (ii) if the indemnifying party fails to take
reasonable steps necessary to defend diligently the action
or proceeding within 30 days after receiving notice from
such indemnified party. The failure to deliver written
notice to the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party
under this Section 1.10, but the omission so to deliver
written notice to the indemnifying party will not relieve it
of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.
(d) If the indemnification provided for in this Section
1.10 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any
Claim or expense referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such Claim or expense
in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the
statements or omissions that resulted in such Claim or
expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying
party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission
to state a material fact relates to information supplied by
the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement or
omission. If, however, the allocation provided in the first
sentence of this paragraph is not permitted by applicable
law, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such
relative faults but also the relative benefits of the
indemnifying party and the indemnified party as well as any
other relevant equitable considerations. The parties hereto
agree that it would not be just and equitable if
contributions pursuant to this Section 1.10(d) were to be
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the preceding sentences of
this Section 1.10(d). The amount paid or payable in respect
of any Claim shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending such Claim. No
person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding anything in
this Section 1.10(d) to the contrary, no indemnifying party
(other than the Company) shall be required pursuant to this
Section 1.10(d) to contribute any amount in excess of the
net proceeds received by such indemnifying party from the
sale of Registrable Securities in the offering to which the
Claims of the indemnified parties relate, less the amount of
any indemnification payment made by such indemnifying party
pursuant to Sections 1.10(b).
(e) Notwithstanding the foregoing, to the extent that
the provisions on indemnification and contribution contained
in the underwriting agreement entered into in connection
with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under
this Section 1.10 shall survive the completion of any
offering of Registrable Securities in a registration
statement under this Section 1, and otherwise.
1.11 Reports Under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefits of Rule
144 promulgated under the Act and any other rule or
regulation of the SEC that may at any time permit a Holder
to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the
Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in SEC Rule 144, at
all times;
(b) take such action as is necessary to maintain the
Holder's ability to utilize Form S-3 for the sale of their
Registrable Securities;
(c) file with the SEC in a timely manner all reports
and other documents required of the Company under the Act
and the Exchange Act; and
(d) furnish to any Holder, so long as the Holder owns
over five percent (5%) of the outstanding common stock of
the Company, forthwith upon request (i) a written statement
by the Company that it has complied with the reporting
requirements of SEC Rule 144, the Act and the Exchange Act
(at any time after it so qualifies), (ii) a copy of the most
recent annual or quarterly report of the Company and such
other reports and documents filed by the Company with the
SEC, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation
of the SEC which permits the selling of any such securities
without registration or pursuant to such form.
1.12 Assignment of Registration Rights.
(a) The rights to cause the Company to register
Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder
to a transferee or assignees of such securities who acquires
at least five percent (5%) of the Registrable Securities (as
adjusted for stock splits, combinations and the like),
provided: (i) the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and
address of such transferee or assignee and the securities
with respect to which such registration rights are being
assigned; (ii) such transferee or assignee agrees in writing
to be bound by and subject to the terms and conditions of
this Agreement, including, without limitation, the
provisions of Section 1.14 below; and (iii) such assignment
shall be effective only if such transfer is exempt from
registration under the Act. For the purposes of determining
the number of shares of Registrable Securities held by a
transferee or assignee, the holding of transferees and
assignees of a partnership who are partners or retired
partners of such partnership (including spouses and
ancestors, lineal descendants and siblings of such partners
or spouses who acquire Registrable Securities by gift, will
or intestate succession) shall be aggregated together with
the partnership; provided that all assignees and transferees
who would not qualify individually for assignment of
registration rights shall have a single attorney-in-fact for
the purpose of exercising any rights, receiving notices or
taking any action under this Section 1.
(b) Subject to clause (a) above, the right to have the
Company register the Registrable Securities pursuant to this
Section 1 may not otherwise be assigned; provided, however,
that (i) any heir or the estate of a Holder which acquires
the Registrable Securities from such Holder by will or
intestate succession shall be entitled to have the Company
register the Registrable Securities pursuant to this Section
1 (provided that such heirs or such estate shall have a
single attorney-in-fact for the purpose of exercising any
rights, receiving any notices or taking any action under
this Section 1), and (ii) any individual Holder may sell,
assign or transfer Registrable Securities to his or her
spouse or children or to a trust established for the benefit
of his or her spouse, children or himself or herself, and
such transferee shall be entitled to have the Company
register the Registrable Securities pursuant to this Section
1, if, and only if, such transferee agrees in writing to be
bound by the terms of this Agreement. In each such event
and for purposes of this Agreement, the term "Holder" as
used herein shall include all such heirs, such estate or
such transferees.
1.13 Limitations on Subsequent Registration Rights. From
and after the date of this Agreement, the Company shall not,
without the prior written consent of the Holders of three-
fourths of the Registrable Securities then outstanding,
enter into any agreement with any holder or prospective
holder of any securities of the Company that would allow
such holder or prospective holder to include such securities
in any registration filed under Section 1.2 hereof, unless
under the terms of such agreement, such holder or
prospective holder may include such securities in any such
registration only to the extent that the inclusion of his
securities will not reduce the amount of the Registrable
Securities of the Holders that is included.
1.14 "Market Stand-Off" Agreement. Each Holder hereby
agrees that, during the period of duration specified by the
Company and an underwriter of Common Stock or other
securities of the Company, following the effective date of a
registration statement of the Company filed under the Act,
it shall not, to the extent requested by the Company and
such underwriter, directly or indirectly sell, offer to
sell, contract to sell (including, without limitation, any
short sale), grant any option to purchase or otherwise
transfer or dispose of (other than to donees who agree to be
similarly bound) any securities of the Company held by it at
any time during such period except Common Stock included in
such registration, and each Holder agrees to enter into an
agreement to such effect with such underwriter; provided,
however, that (a) all officers and directors of the Company
enter into similar agreements, (b) such market stand-off
time period shall not exceed 120 days, and (c) the market
stand-off period provided by this Section 1.14 shall be
effective with respect to only one registration statement
designated by the Company. If the underwriters agree to any
waivers of such restrictions, then the Holders shall be
entitled to sell, transfer or dispose of the same number or
amount of securities of the Company as the person or entity
receiving such waiver, upon the same terms and conditions
set forth in such waiver.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the
Registrable Securities of the Holders (and the shares or
securities of every other person subject to the foregoing
restriction) until the end of such period.
1.15 No Required Sale. Nothing in this Agreement shall be
deemed to create an independent obligation on the part of
any Holder to sell any Registrable Securities pursuant to
any effective registration statement.
2. Miscellaneous.
2.1 Successors and Assigns. Except as otherwise provided
herein, and provided that the transfer or assignment is in
accordance with the terms hereof, the terms and conditions
of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns
of the parties (including any permitted transferees of any
shares of Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon
any party other than the parties hereto or their respective
successors and permitted assigns any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
2.2 Governing Law.This Agreement shall be governed by and
construed under the laws of the State of New Jersey without
regard to principles of conflicts or choice of laws.
2.3 Counterparts. This Agreement may be executed 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.
2.4 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.
2.5 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in
writing and shall be deemed effectively given upon personal
delivery to the party to be notified or upon deposit with
the United States Post Office, by registered or certified
mail, postage prepaid or by a recognized national overnight
courier and addressed to the party to be notified at the
address indicated for such party in the Stock Purchase
Agreement, or at such other address as such party may
designate by ten (10) days' advance written notice to the
other parties.
2.6 Expenses. If any action at law or in equity is
necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such
party may be entitled.
2.7 Amendments and Waivers. Any term of this Agreement may
be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the
written consent of the Company and the Holders of three-
fourths of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this Section
2.7 shall be binding upon each Holder of any Registrable
Securities then outstanding, each future Holder of all such
Registrable Securities, and the Company.
2.8 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law,
such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in
accordance with its terms.
2.9 Nominees for Beneficial Owners. If Registrable
Securities are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof may, at its option, be
treated as the Holder of such Registrable Securities for
purposes of any request or other action by any Holder or
Holders of Registrable Securities pursuant to this Agreement
(or any determination of any number or percentage of shares
constituting Registrable Securities held by any Holder or
Holders of Registrable Securities contemplated by this
Agreement), provided that the Company shall have received
assurances
reasonably satisfactory to it of such beneficial ownership.
2.10 No Inconsistent Agreements. The rights granted to the
Holders of Registrable Securities hereunder do not in any
way conflict with and are not inconsistent with any other
agreements to which the Company is a party or by which it is
bound. Without the prior written consent of the holders of
three-fourths of the Registrable Securities then
outstanding, neither the Company nor any Holder will, on or
after the date of this Agreement, enter into any agreement
with respect to its securities which is inconsistent with
the rights granted in this Agreement or otherwise conflicts
with the provisions hereof, other than any lock-up agreement
with the underwriters in connection with any registered
offering effected hereunder, pursuant to which the Company
shall agree not to register for sale, and the Company shall
agree not to sell or otherwise dispose of, Common Stock or
any securities convertible into or exercisable or
exchangeable for Common Stock, for a specified period
following the registered offering.
2.11 Entire Agreement. This Agreement (including the
Exhibits hereto, if any) constitutes the full and entire
understanding and agreement between the parties with regard
to the subjects hereof and thereof.
2.12 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.
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first above
written.
EP MEDSYSTEMS, INC.
By:
Name: David A. Jenkins
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 1
List of Purchasers:
SC Fundamental Value Fund, LP 339,500 shares
10 East 50th Street - 21st Floor
New York, NY 10022
Attention: Joseph J. D'Ambrosio
212-888-9100
SC Fundamental Value BVI, Ltd. 335,500 shares
c/o SC Fundamental Value BVI, Inc.
10 East 50th Street - 21st Floor
New York, NY 10022
Attention: Joseph J. D'Ambrosio
212-888-9100
H & Q Life Sciences Investors 430,000 shares
50 Rowes Wharf
Boston, MA 02110-6679
Attention: Alan Carr
800-327-6679
H & Q Healthcare Investors 645,000 shares
50 Rowes Wharf
Boston, MA 02210-6699
Attention: Alan Carr
800-327-6679
Special Situations Fund III L.P. 375,000 shares
153 East 53rd Street
New York, NY 10022
Attention: Austin W. Marxe
212-832-5300
Special Situations Cayman Fund L.P. 125,000 shares
153 East 53rd Street
New York, NY 10022
Attention: Austin W. Marxe
212-832-5300
