Exhibit 3.1
CERTIFICATE OF AMENDMENT OF THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
EP MEDSYSTEMS, INC.
Pursuant to the provisions of Section 14A:7-2(4) of the New Jersey
Business Corporation Act, the undersigned, being duly authorized officers of EP
MedSystems, Inc., a New Jersey corporation (the "Corporation"), do hereby
certify as follows:
FIRST: The name of the corporation is EP MedSystems, Inc.
SECOND: Pursuant to the authority conferred upon the Board of Directors by
the Amended and Restated Certificate of Incorporation, by unanimous consent,
dated as of October 22, 2001, the Board of Directors adopted the following
resolution creating a series of preferred stock designated as Series A
Convertible Preferred Stock and that the Board of Directors approved an
amendment to the Amended and Restated Certificate of Incorporation of the
Corporation so that the rights, preferences and privileges of such series of
Preferred Stock are as stated in the following resolution:
RESOLVED, that pursuant to the authority vested in the
Board of Directors of the Corporation in accordance with the
provisions of its Certificate of Incorporation, as amended and
restated, a series of Preferred Stock of the Corporation be, and it
hereby is, created and that the designation and amount thereof and
the voting powers, preferences and relative participating, optional
and other special rights of the shares of such series, and the
qualifications, limitations or restrictions are as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Convertible Preferred Stock" and
the number of shares constituting such series shall be One Million
Four Hundred Thousand shares, without par value per share (the
"Series A Preferred Stock"), which number, subject to compliance
with applicable protective provisions set forth herein, may be
increased or decreased by the Board of Directors without a vote of
the shareholders, provided, however, that such number may not be
decreased below the number of then currently outstanding shares of
Series A Preferred Stock.
Ex.3.1 - Page 1
Section 2. Dividends and Distributions. The Corporation shall
not declare or pay any cash dividends or other distributions on
shares of its common stock, without par value (the "Common Stock")
until the holders of the Series A Preferred Stock then outstanding
shall have first received, or simultaneously receive, a
non-cumulative cash dividend on each share of Preferred Stock in an
amount at least equal to the per share amount, if any, of the
dividends or other distributions to be declared, paid or set aside
for the Common Stock (as adjusted for any stock dividends,
combinations or splits with respect to such shares) per annum, or if
greater, (as determined on a per annum basis and on an as converted
basis for the Series A Preferred Stock) an amount equal to that paid
on any other outstanding shares of the Corporation, payable when, as
and if declared by the Board of Directors of the Corporation, out of
funds legally available for the purpose.
Section 3. Liquidation.
(a) Effect of Liquidation. In the event of a liquidation,
dissolution or winding up of the Corporation (whether voluntary or
involuntary) or upon any Disposition Event (as hereinafter defined),
each holder of Series A Preferred Stock shall be entitled to
receive, out of the assets of the Corporation available for
distribution to its shareholders (whether from capital or surplus),
an amount per share equal to $2.048 for each outstanding share of
Series A Preferred Stock (the "Original Series A Issue Price") plus
all dividends which have been declared on such shares but not paid,
if any (the "Series A Liquidation Preference"), prior to any payment
to holders of the Common Stock. For purposes hereof, the term
"Disposition Event" shall mean (A) the acquisition of the
Corporation by means of merger (other than a merger (1) in which the
shareholders of the Corporation immediately prior to the merger own
a majority of the shares of capital stock of the surviving entity or
(2) with a wholly-owned subsidiary of the Corporation in which the
Corporation is the surviving corporation) or other form of corporate
reorganization in which the outstanding shares of the Corporation
are exchanged for securities or other consideration issued or caused
to be issued by the acquiring corporation or its subsidiary (other
than a mere reincorporation transaction) or (B) a sale of all or
substantially all of the assets of the Corporation.
(b) Insufficient Assets. In the event, however, that there are
not sufficient assets available to permit payment in full of
Ex.3.1 - Page 2
the Series A Liquidation Preference and the liquidation preferences
of all other series of preferred stock, if any, which rank on parity
with the Series A Preferred Stock, then the available assets shall
be distributed ratably to the holders of such parity shares in
proportion of their respective liquidation preferences.
(c) Distribution of Remaining Assets. After distribution of
the amounts set forth in 3(a) or 3(b) hereof, as applicable, the
remaining assets of the Corporation available for distribution, if
any, to the shareholders of the Corporation shall be distributed
among the holders of the Series A Preferred Stock and Common Stock
pro rata based on the number of shares of common stock held by each
(assuming full conversion of all such Series A Preferred Stock).
Section 4. Voting Rights. Each holder of outstanding shares of
Series A Preferred Stock shall be entitled to notice of all
shareholders' meetings in accordance with the Corporation's by-laws
and shall be entitled to vote on all matters submitted to the
shareholders for a vote together with the holders of Common Stock.
Each holder of outstanding shares of Series A Preferred Stock shall
be entitled to the number of votes equal to the number of whole
shares of Common Stock into which the shares of Series A Preferred
Stock held by such holder are then convertible. Except as provided
by applicable law, holders of Series A Preferred Stock and any other
outstanding series of Preferred Stock shall vote together with the
holders of Common Stock as a single class.
Section 5. Conversion Rights.
(a) Holder's Right to Convert. The holder of any share or
shares of Series A Preferred Stock shall have the right, at its
option, at any time and from time to time from and after the earlier
of (A) December 31, 2001 and (B) the date of an FDA Event (as
hereinafter defined), upon at least twenty (20) days' prior written
notice to the Corporation but without the payment of additional
consideration, to convert any such shares of Series A Preferred
Stock into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Original Series A
Issue Price by the conversion price applicable to such shares,
determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. The initial conversion
price per share for shares of Series A Preferred Stock shall be the
Ex.3.1 - Page 3
Original Series A Issue Price; provided, however, that the
conversion price for the Series A Preferred Stock shall be subject
to adjustment as set forth in subsection (e) below (such price as
last adjusted being referred to as the "Conversion Price"). Before
any holder of Series A Preferred Stock shall be entitled to convert
the same into full shares of Common Stock, the holder shall
surrender his or its certificate or certificates therefor, duly
endorsed for transfer, at the office of the Corporation or any
transfer agent of the Corporation, and shall give written notice to
the Corporation at such office of the election convert the same,
such notice to state the name or names in which certificates for
Common Stock should be issued and the addresses to which such
certificates should be sent.
(b) Corporation's Right to Convert. The Corporation shall have
the right, at its option, at any time and from time to time, from
and after the date of an FDA Event to require the conversion, upon
at least twenty (20) days' prior written notice to the holder but
without the payment of additional consideration, of outstanding
shares of Series A Preferred Stock into an equal number of fully
paid and nonassessable shares of Common Stock. Such notice shall be
sent by first class mail, postage prepaid, to each holder of record
of the Series A Preferred Stock at such holder's address as shown in
the records of the Corporation. On or before the date so fixed for
conversion, each holder of shares of the Series A Preferred Stock
shall surrender his or its certificate or certificates for all such
shares duly endorsed for transfer, at the office of the Corporation
or any transfer agent of the Corporation, and shall give notice to
the Corporation stating the name or names in which certificates for
common stock should be issued and the addresses to which such
certificates should be sent.
(c) "FDA Event." For purposes hereof, the term "FDA Event"
shall mean the occurrence of either of the following events: (A)
receipt from the United States Food and Drug Administration (or any
successor thereto) of 510K approval of the Corporation's
ViewMate(TM) Ultrasound Imaging System device, or (B) receipt from
the United States Food and Drug Administration of pre-market
approval of the Corporation's ALERT(R) System device, in each case
for the marketing and sale of such devices in the United States.
(d) Conversion Price Adjustments for Certain Dilutive
Issuances, Splits and Combinations. The Conversion Price of the
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Series A Preferred Stock shall be subject to adjustment from time to
time as follows:
(i) (A) If the Corporation shall issue, after the date upon
which any shares of Series A Preferred Stock were first issued (the
"Purchase Date") any Additional Stock (as defined below) without
consideration or for a consideration per share less than the
Conversion Price for such series in effect immediately prior to the
issuance of such Additional Stock, the Conversion Price for such
series in effect immediately prior to each such issuance shall
forthwith (except as otherwise provided in this clause (i)) be
adjusted to a price determined by multiplying such Conversion Price
by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such issuance
(including shares of Common Stock deemed to be issued pursuant to
subsection 5(d)(i)(E)(1) or (2)) plus the number of shares of Common
Stock that the aggregate consideration received by the Corporation
for such issuance would purchase at the Conversion Price then
applicable; and the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to such
issuance (including shares of Common Stock deemed to be issued
pursuant to subsection 5(d)(i)(E)(1) or (2)) plus the number of
shares of such Additional Stock.
(B) No adjustment of the Conversion Price for the Series A Preferred
Stock shall be made in an amount less than one cent per share,
provided that any adjustments that are not required to be made by
reason of this sentence shall be carried forward and shall be either
taken into account in any subsequent adjustment made prior to three
(3) years from the date of the event giving rise to the adjustment
being carried forward, or shall be made at the end of three (3)
years from the date of the event giving rise to the adjustment being
carried forward. Except to the limited extent provided for in
subsections (E)(3) and (E)(4), no adjustment of such Conversion
Price pursuant to this subsection 5(d)(i) shall have the effect of
increasing the Conversion Price above the Conversion Price in effect
immediately prior to such adjustment.
(C) In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor
before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by the Corporation for any
underwriting or otherwise in connection with the issuance and sale
thereof.
Ex.3.1 - Page 5
(D) In the case of the issuance of Common Stock for a consideration
in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined by
the Board of Directors irrespective of any accounting treatment.
(E) In the case of the issuance (whether before, on or after the
applicable Purchase Date) of options to purchase or rights to
subscribe for Common Stock, securities by their terms convertible
into or exchangeable for Common Stock or options to purchase or
rights to subscribe for such convertible or exchangeable securities,
the following provisions shall apply for all purposes of this
subsection 5(d)(i) and subsection 5(d)(ii):
(1) The aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at
the time such options or rights were granted and for a consideration
equal to the consideration (determined in the manner provided in
subsections 5(d)(i)(C) and (d)(i)(D)), if any, received by the
Corporation upon the issuance of such options or rights plus the
minimum exercise price provided in such options or rights for the
Common Stock covered thereby.
(2) The aggregate maximum number of shares of Common Stock
deliverable upon conversion of, or in exchange for, any such
convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such
securities were issued or such options or rights were issued and for
a consideration equal to the consideration, if any, received by the
Corporation for any such securities and related options or rights
(excluding any cash received on account of accrued interest or
accrued dividends), plus the minimum additional consideration, if
any, to be received by the Corporation upon the conversion or
exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the
manner provided in subsections 5(d)(i)(C) and (d)(i)(D)).
(3) In the event of any change in the number of shares of Common
Stock deliverable or in the consideration payable to the Corporation
upon exercise of such options or rights or upon
Ex.3.1 - Page 6
conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from
the anti-dilution provisions thereof (unless such options or rights
or convertible or exchangeable securities were merely deemed to be
included in the numerator and denominator for purposes of
determining the number of shares of Common Stock outstanding for
purposes of subsection 5(d)(i)(A)), the Conversion Price of the
Series A Preferred Stock, to the extent in any way affected by or
computed using such options, rights or securities, shall be
recomputed to reflect such change, but no further adjustment shall
be made for the actual issuance of Common Stock or any payment of
such consideration upon the exercise of any such options or rights
or the conversion or exchange of such securities.
(4) Upon the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or
exchangeable securities, the Conversion Price of the Series A
Preferred Stock, to the extent in any way affected by or computed
using such options, rights or securities or options or rights
related to such securities (unless such options or rights were
merely deemed to be included in the numerator and denominator for
purposes of determining the number of shares of Common Stock
outstanding for purposes of subsection 5(d)(i)(A)), shall be
recomputed to reflect the issuance of only the number of shares of
Common Stock (and convertible or exchangeable securities that remain
in effect) actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such securities or upon
the exercise of the options or rights related to such securities.
(5) The number of shares of Common Stock deemed issued and the
consideration deemed paid therefor pursuant to subsections
5(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any
change, termination or expiration of the type described in either
subsection 5(d)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any shares of Common Stock issued
(or deemed to have been issued pursuant to subsection 5(d)(i)(E)) by
the Corporation after the Purchase Date other than:
(A) shares of Common Stock issued pursuant to a transaction
described in subsection 5(d)(iii) hereof; or
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(B) shares of Common Stock issuable or issued to employees,
consultants, directors or vendors (if in transactions with primarily
non-financing purposes) of the Corporation directly or pursuant to a
stock option plan or restricted stock plan approved by the Board of
Directors of the Corporation.
(iii) In the event that the Corporation should at any time or from
time to time after the Purchase Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of
Common Stock or the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in
additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive
directly or indirectly, additional shares of Common Stock
(hereinafter referred to as "Common Stock Equivalents") without
payment of any consideration by such holder for the additional
shares of Common Stock or the Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such
dividend distribution, split or subdivision if no record date is
fixed), the Conversion Price of the Series A Preferred Stock shall
be appropriately decreased so that the number of shares of Common
Stock issuable on conversion of each share of such series shall be
increased in proportion to such increase of the aggregate of shares
of Common Stock outstanding and those issuable with respect to such
Common Stock Equivalents.
(iv) If the number of shares of Common Stock outstanding at any time
after the Purchase Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date
of such combination, the Conversion Price for the Series A Preferred
Stock shall be appropriately increased so that the number of shares
of Common Stock issuable on conversion of each share of such series
shall be decreased in proportion to such decrease in outstanding
shares.
(e) Other Distributions. In the event that the Corporation
shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by the Corporation or other
persons, assets (excluding cash dividends) or options or rights not
referred to in subsection 5(d)(iii), then, in each such case for the
purpose of this subsection 5(e), the holders of the Series A
Preferred Stock shall be entitled to a proportionate share of any
such distribution as though they were the holders of the number of
Ex.3.1 - Page 8
shares of Common Stock of the Corporation into which their shares of
Series A Preferred Stock are convertible as of the record date fixed
for the determination of the holders of Common Stock of the
Corporation entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time
there shall be a recapitalization of the Common Stock (other than a
subdivision, combination or merger or sale of assets transaction
provided for elsewhere in this Section 5) provision shall be made so
that the holders of the Series A Preferred Stock shall thereafter be
entitled to receive upon conversion of the Series A Preferred Stock
the number of shares of stock or other securities or property of the
Corporation or otherwise, to which a holder of Common Stock
deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be
made in the application of the provisions of this Section 5 with
respect to the rights of the holders of the Series A Preferred Stock
after the recapitalization to the end that the provisions of this
Section 5 (including adjustment of the Conversion Price then in
effect and the number of shares purchasable upon conversion of the
Series A Preferred Stock) shall be applicable after that event as
nearly equivalent as may be practicable.
(g) No Impairment. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 5 and in the
taking of all such action as may be necessary or appropriate in
order to protect the Conversion Rights of the holders of the Series
A Preferred Stock against impairment.
(h) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon the conversion of any
share or shares of the Series A Preferred Stock, and the number of
shares of Common Stock to be issued shall be rounded to the nearest
whole share. Whether or not fractional shares are issuable upon such
conversion shall be determined on the basis of
Ex.3.1 - Page 9
the total number of shares of Series A Preferred Stock the holder is
at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of the
Conversion Price of Series A Preferred Stock pursuant to this
Section 5, the Corporation, at its expense, shall promptly compute
such adjustment or readjustment in accordance with the terms hereof
and prepare and furnish to each holder of Series A Preferred Stock a
certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series A Preferred Stock,
furnish or cause to be furnished to such holder a like certificate
setting forth (A) such adjustment and readjustment, (B) the
Conversion Price for such series of Preferred Stock at the time in
effect, and (C) the number of shares of Common Stock and the amount,
if any, of other property that at the time would be received upon
the conversion of a share of Series A Preferred Stock.
(i) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities
for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash dividend) or other
distribution, any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the Corporation shall mail
to each holder of Series A Preferred Stock, at least twenty (20)
days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of
such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the shares of the Series A
Preferred Stock, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then
outstanding shares of the Series A Preferred Stock, in addition to
such other remedies as shall be available to the holder of such
Ex.3.1 - Page 10
Preferred Stock, the Corporation will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including, without
limitation, engaging in best efforts to obtain the requisite
shareholder approval of any necessary amendment to this Restated
Certificate of Incorporation.
(k) Notices. Any notice required by the provisions of this
Section 5 to be given to the holders of shares of Series A Preferred
Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his
address appearing on the books of the Corporation.
(l) Effect of Surrender. All shares of the Series A Preferred
Stock which shall have been surrendered for conversion as herein
provided shall no longer be deemed to be outstanding and all rights
with respect to such shares, including the rights, if any, to
receive notices and to vote, shall forthwith cease and terminate
except only the right of the holders thereof to receive shares of
Common Stock in exchange therefor and to receive payment of any
declared but unpaid dividends thereon. Any shares of the Series A
Preferred Stock so converted shall be retired and canceled and shall
not be reissued, and the Corporation may from time to time take such
appropriate action as may be necessary to reduce the authorized
Series A Preferred Stock.
Section 6. Redemption. The Corporation shall not, nor shall it
allow any subsidiary to, redeem or otherwise acquire any shares of
Series A Preferred Stock, except pursuant to a purchase offer made
pro rata to all holders of Series A Preferred Stock on the basis of
the number of shares owned by each such holder.
Section 7. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall, upon their cancellation,
become authorized but unissued shares of preferred stock and may be
reissued as part of a new series of preferred stock to be created by
resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
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Section 8. Amendment. At any time when any shares of Series A
Preferred Stock are outstanding, the Restated Certificate of
Incorporation, as amended, shall not be amended in any manner which
would materially alter or change the powers, privileges, preferences
or rights of the Series A Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of a majority
or more of the outstanding shares of Series A Preferred Stock,
voting as a separate class.
THIRD: That the Restated Certificate of Incorporation of the Corporation,
as amended, is further amended so that the designation and number of shares of
Series A Preferred Stock acted upon in the foregoing resolutions and the
relative rights, preferences and limitations of such series of authorized
preferred stock are as stated in such resolutions.
Ex.3.1 - Page 12
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed by its Chief Executive Officer and attested to by its
Secretary as of the 23rd day of October, 2001.
EP MEDSYSTEMS, INC.
By: s/ David A. Jenkins
Name: David A. Jenkins
Title: Chief Executive Officer
ATTEST:
By: s/ Joseph M. Turner
Name: Joseph M. Turner
Title: Secretary
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