1
EXHIBIT 10.60
P&M DRAFT
05/29/97
FORM OF
WARRANT AGREEMENT
BY AND BETWEEN
SOMANETICS CORPORATION
AND
XXXXX XXXXXX & CO., INC.
DATED AS OF JUNE [__], 1997
2
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of June [__], 1997 by and between SOMANETICS
CORPORATION, a Michigan corporation (the "Company"), and XXXXX XXXXXX & CO.,
INC. (the "Representative") (the Company and the Representative are referred to
collectively herein as the "Parties").
The Company proposes to issue to the Representative warrants as
hereinafter described (the "Warrants") to purchase up to an aggregate of
200,000 shares of the Company's Common Shares, $0.01 par value per share (the
"Common Shares"), subject to adjustment as provided in Section 8 hereof (such
200,000 shares, as adjusted, being hereinafter referred to as the "Shares"),
each warrant entitling the holder ("Holder") thereof to purchase one Common
Share. All capitalized terms used herein and not otherwise defined herein
shall have the same meanings as in that certain underwriting agreement, of even
date herewith, by and between the Company and the several underwriters named
therein (the "Underwriting Agreement").
NOW, THEREFORE, in consideration of the following promises and mutual
agreements and for other good and valuable consideration, the Parties agree as
follows:
1. ISSUANCE OF WARRANTS; FORM OF WARRANT. On the Closing Date the
Company will issue, sell and deliver the Warrants to the Representative or its
bona fide officers for an aggregate price of $100. The Warrants shall be issued
to the Representative or such designees in the amounts set forth on Schedule I
attached hereto. The form of the Warrant and of the form of election to
purchase Shares to be attached thereto shall be substantially as set forth on
Exhibit A attached hereto. The Warrants shall be executed on behalf of the
Company by the manual or facsimile signature of the present or any future
President or any Vice President of the Company, under its corporate seal,
affixed or in facsimile, and attested by the manual or facsimile signature of
the present or any future Secretary or Assistant Secretary of the Company. The
Representative and each other Holder, severally and not jointly, represents and
warrants to the Company that (i) such Holder is acquiring the Warrants, and any
Shares acquired upon exercise of any Warrants, for such Holder's own account and
not with a view to, or for sale in connection with, any distribution of the
Warrants or any Common Shares, unless such distribution is registered or exempt
from registration under the Securities Act of 1933, as amended (the "Act"), and
any applicable state and foreign securities or blue sky laws and (ii) such
Holder is aware that the Warrants and the Shares have not been registered under
the Act or the securities or blue sky laws of any state or other jurisdiction,
and that the Warrants may not be exercised and the Warrants and the Shares may
not be resold (and the Holder covenants not to resell them) unless they are
registered under applicable Federal and state securities laws or unless
exemptions from all such applicable registration requirements are available, and
that the Warrants and the Shares will be legended to indicate the foregoing
restrictions.
2. REGISTRATION. The Warrants shall be numbered and shall be registered
in a Warrant register (the "Warrant Register"). The Company shall be entitled
to treat the registered holder of any Warrant on the Warrant Register as the
owner in fact thereof for all purposes and shall not be bound to recognize any
equitable or other claim to or interest in such Warrant on the part of any other
person, and shall not be liable for any registration or transfer of Warrants
which are registered or are to be registered in the name of a fiduciary or the
nominee of a fiduciary.
3
The Warrants shall be registered initially in the name of the Representative in
such denominations as the Representative may request in writing from the
Company; provided, however, that the Representative may designate that all or a
portion of the Warrants be issued in varying amounts directly to its bona fide
officers and not to the Representative. Such designation will only be made by
the Representative if it determines that such issuances would not violate the
interpretation of the Board of Governors of the National Association of
Securities Dealers, Inc. (the "NASD"), relating to the review of corporate
financing arrangements.
3. TRANSFER OF WARRANTS. The Warrants will not be sold, transferred,
assigned or hypothecated, in part or in whole, prior to the first anniversary of
the effective date of the Registration Statement (the "Effective Date"), and
thereafter only to bona fide officers, directors, shareholders, employees or
registered representatives of the Representative upon written request to the
Company (including a certificate of the Holder that the transferee is a
permitted transferee under this Section 3) delivered in accordance with Section
12 hereof and upon delivery of the Warrant Certificate to the Company with the
form of assignment at the end thereof duly endorsed by the Holder or by its duly
authorized attorney or representative. In all cases of transfer by an attorney,
the original power of attorney, duly approved, or an official copy thereof, duly
certified, shall be deposited with the Company. In case of transfer by
executors, administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced, and may be required
to be deposited with the Company in its discretion. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the persons
entitled thereto. Any of the Warrants may be exchanged at the option of its
Holder for other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of Common
Shares upon surrender of the Warrants to the Company or its duly authorized
agent. The Company may require payment of a sum sufficient to cover all taxes
and other governmental charges that may be imposed in connection with any
transfer, exchange or other disposition of the Warrants or Shares. However, the
Company shall have no obligation to cause Warrants or Shares to be transferred
on its books to any person, if such transfer would violate the Act, the rules
and regulations promulgated thereunder (the "Rules and Regulations") or
applicable state securities laws, rules and regulations.
4. TERM OF WARRANTS; EXERCISE OF WARRANTS.
(a) TERM OF WARRANTS. Each Warrant entitles the registered owner
thereof to purchase one fully paid and nonassessable Share at a purchase price
of $4.80 per Share (as adjusted from time to time pursuant to the provisions
hereof, the "Exercise Price") at any time from the first anniversary of the
Effective Date until 5:00 p.m., New York City time, on May 29, 2002 (the
"Warrant Expiration Date").
(b) EXERCISE OF WARRANTS. The Exercise Price and the Shares issuable
upon exercise of Warrants are subject to adjustment upon the occurrence of
certain events, pursuant to
- 2 -
4
the provisions of Section 8 of this Agreement. Subject to the provisions of
this Agreement, and in addition to the right to surrender Warrants without any
cash payment as set forth in subsection (c) below, each Holder shall have the
right, which may be exercised as set forth in such Warrants, to purchase from
the Company (and the Company shall issue and sell to such Holder) the number of
fully-paid and nonassessable Shares specified in such Warrants, upon surrender
to the Company, or its duly authorized agent, of such Warrants, with the form of
election to purchase attached thereto duly completed and signed, with signatures
guaranteed by a member firm of a national securities exchange, a commercial bank
(not a savings bank or savings and loan association) or trust company located in
the United States or a member of the NASD and upon payment to the Company of the
Exercise Price, as adjusted in accordance with the provisions of Section 8 of
this Agreement, for the number of Shares in respect of which such Warrants are
then exercised and upon compliance with the requirements of the Act, the Rules
and Regulations and applicable state securities laws, rules and regulations. No
adjustment shall be made for any cash dividends paid to shareholders of record
before the date on which the Warrants are exercised. Upon each surrender of
Warrants, payment of the Exercise Price and compliance with the requirements of
the Act, the Rules and Regulations and applicable state securities laws, rules
and regulations, the Company shall issue and cause to be delivered with all
reasonable dispatch, but in no event later than three (3) trading days following
such surrender, to or (subject to Section 3) upon the written order of the
Holder of such Warrants and (subject to Section 3) in such name or names as such
Holder may designate, a certificate or certificates for the number of full
Shares so purchased upon the exercise of such Warrants, together with cash, as
provided in Section 9 of this Agreement, in respect of any fractional Shares
otherwise issuable upon such surrender. Such certificate or certificates shall
be deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Shares as of the date
of the surrender of Warrants, payment of the Exercise Price and compliance with
the requirements of the Act, the Rules and Regulations and applicable state
securities laws, rules and regulations as aforesaid; provided, however, that if,
at the date of surrender of such Warrants, the transfer books for the Common
Shares or other class of securities issuable upon the exercise of such Warrants
shall be closed, the certificates for the Shares shall be issuable as of the
date on which such books shall next be opened (whether before, on or after the
Warrant Expiration Date) and until such date the Company shall be under no duty
to deliver any certificate for such Shares; provided, further, however, that the
transfer books of record, unless otherwise required by law, shall not be closed
at any one time for a period longer than twenty (20) days. The rights of
purchase represented by the Warrants shall be exercisable, at the election of
the Holder(s) thereof, either in full or from time to time in part and, in the
event that any Warrant is exercised in respect of less than all of the Shares
issuable upon such exercise at any time prior to the Warrant Expiration Date, a
new Warrant or Warrants will be issued for the remaining number of Shares
specified in the Warrant so surrendered.
(c) PAYMENT OF EXERCISE PRICE. Payment of the Exercise Price may be made
in cash, by wire transfer of immediately available funds or by certified check
or official bank check payable to the order of the Company. In addition and in
lieu of any cash payment, the Holder of the Warrants shall have the right at any
time and from time to time to exercise the Warrants in full or in part by
surrendering the Warrants in exchange for the number of Shares equal to the
product of (x) the number of shares as to which the Warrants are being exercised
multiplied by
- 3 -
5
(y) a fraction, the numerator of which is the Market Price (as defined in
Section 8(d) below) of the Shares less the Exercise Price and the denominator of
which is such Market Price.
5. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes, if
any, attributable to the issuance of Shares upon the exercise of Warrants;
provided, however, that the Company shall not be required to pay any taxes
payable in respect of any transfer involved in the issue or delivery of any
certificates for Shares in a name other than that of the Holder of Warrants in
respect of which such Shares are issued, which taxes shall be paid by the
Holder.
6. MUTILATED OR MISSING WARRANTS. In case any of the Warrants shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest, but only
upon receipt of evidence reasonably satisfactory to the Company of ownership of
such Warrant and of such mutilation, loss, theft or destruction of such Warrant
and indemnity and affidavit of loss, if requested, reasonably satisfactory to
the Company. An applicant for such substitute Warrants shall also comply with
such other reasonable regulations and pay such other reasonable charges and
expenses as the Company may prescribe.
7. RESERVATION OF SHARES, ETC. The Company has reserved, and shall at all
times keep reserved, out of the authorized and unissued Common Shares, a number
of Common Shares sufficient to provide for the exercise of the rights of
purchase represented by the outstanding Warrants. American Stock Transfer &
Trust Company, transfer agent for the Common Shares (the "Transfer Agent"), and
any subsequent transfer agent for the Company's securities issuable upon the
exercise of the Warrants will be irrevocably authorized and directed at all
times until the Warrant Expiration Date to reserve such number of authorized and
unissued shares as shall be required for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent and with every subsequent
transfer agent for any shares of the Company's securities issuable upon the
exercise of the Warrants. The Company will supply the Transfer Agent or any
subsequent transfer agent with duly executed certificates for such purpose and
will itself provide or make available any cash distributable as provided in
Section 9 of this Agreement. All Warrants surrendered in the exercise in
compliance with this Agreement of the rights thereby evidenced shall be
canceled, and such canceled Warrants shall constitute sufficient evidence of the
number of Shares that are issuable upon the exercise of such Warrants. No
Common Shares shall be subject to reservation in respect of unexercised Warrants
after the Warrant Expiration Date.
8. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise Price
and the number and kind of securities issuable upon exercise of each Warrant
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
(a) If the Company (i) declares a dividend on its Common Shares in
Common Shares or makes a distribution to all holders of its Common Shares in
Common Shares without charge to such holders, (ii) subdivides its outstanding
Common Shares, (iii) combines its outstanding Common Shares into a smaller
number of Common Shares or (iv) issues by
- 4 -
6
reclassification of its Common Shares other securities of the Company (including
any such reclassification in connection with a consolidation or merger in which
the Company is the surviving entity, but excluding those referred to in
paragraph (b) below), the number and kind of Common Shares purchasable upon
exercise of each Warrant immediately prior thereto shall be adjusted so that the
Holder of each Warrant shall be entitled to receive the kind and number of
Common Shares or other securities of the Company which such Holder would have
owned or have been entitled to receive after the happening of any of the events
described above, had such Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. Such
adjustment shall be made whenever any of the events listed above shall occur.
An adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to immediately
after the record date, if any, for such event.
(b) If the Company issues rights, options or warrants to all holders
of its Common Shares, without any charge to such holders, entitling them to
subscribe for or to purchase Common Shares at a price per share lower than the
then current Market Price per Common Share at the record date mentioned below
(as defined in paragraph (d) below), the Holders of unexercised Warrants as of
such record date, upon exercise of such Warrants, shall receive the same rights,
options or warrants which such Holder would have received or have been entitled
to receive after such issuance, had such Warrants been exercised immediately
prior to such issuance or any record date with respect thereto. Such adjustment
shall be made whenever such rights, options or warrants are issued as described
above, and shall become effective retroactively to immediately after the record
date for the determination of shareholders entitled to receive such rights,
options or warrants.
(c) If the Company distributes to all holders of its Common Shares,
without any charge to such holders, shares of its stock other than Common Shares
or evidences of its indebtedness or assets (excluding cash dividends and
dividends or distributions referred to in paragraph (a) or (b) above) or rights,
options or warrants or convertible or exchangeable securities containing the
right to subscribe for or purchase Common Shares (excluding those referred to in
paragraph (a) or (b) above), then in each case the Holders of unexercised
Warrants as of the record date mentioned below, upon exercise of such warrants,
shall receive the same distribution which such Holder would have received or
have been entitled to receive after such distribution, had such Warrants been
exercised immediately prior to such distribution or any record date with respect
thereto. Such adjustment shall be made whenever any such distribution is made
as described above, and shall become effective on the date of distribution
retroactive to immediately after the record date for the determination of
shareholders entitled to receive such distribution.
(d) For the purpose of any computation under paragraph (b) of this
Section 8, the current "Market Price" per Common Share at any date shall be the
average of the daily closing prices for fifteen (15) consecutive trading days
commencing twenty (20) trading days before the date of such computation. The
closing price for each day shall be the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
- 5 -
7
closing bid and asked prices regular way for such day, in either case on the
principal national securities exchange on which the shares are listed or
admitted to trading, or if they are not listed or admitted to trading on any
national securities exchange, but are traded in the over-the-counter market, the
closing sale price of the Common Shares or, in case no sale is publicly
reported, the average of the representative closing bid and asked quotations for
the Common Shares on The Nasdaq National or SmallCap Market or any comparable
system, or if the Common Shares are not listed on The Nasdaq Stock Market or a
comparable system, the closing sale price of the Common Shares or, in case no
sale is publicly reported, the average of the closing bid and asked prices as
furnished by two members of the NASD selected from time to time by the Company
for that purpose.
(e) No adjustment in the number of Shares purchasable hereunder shall
be required unless such adjustment would require an increase or decrease of at
least one percent (1%) in the number of Shares purchasable upon the exercise of
each Warrant; provided, however, that any adjustments which by reason of this
paragraph (e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment but not later than three (3) years
after the happening of the specified event or events. All calculations shall be
made to the nearest one thousandth of a share.
(f) Whenever the number of Shares purchasable upon exercise of each
Warrant is adjusted, as herein provided, the Exercise Price shall be adjusted by
multiplying the Exercise Price in effect immediately prior to such adjustment by
a fraction, of which the numerator shall be the number of Shares purchasable
upon the exercise of each Warrant immediately prior to such adjustment, and of
which the denominator shall be the number of shares so purchasable immediately
thereafter.
(g) For the purpose of this Section 8, the term "Common Shares" shall
mean (i) the class of stock designated as the Common Shares of the Company at
the date of this Agreement or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting solely of
changes in par value, or from no par value to par value, or from par value to no
par value. If at any time, as a result of an adjustment made pursuant to
paragraph (a) above, the Holders become entitled to purchase any shares of
capital stock of the Company other than Common Shares, thereafter the number of
such other shares so purchasable upon exercise of each Warrant and the Exercise
Price of such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Shares contained in paragraphs (a) through (f), inclusive, and
paragraphs (h) through (m), inclusive, of this Section 8, and the provisions of
Sections 4, 5, 7 and 10 hereof, with respect to the Shares, shall apply on like
terms to any such other shares.
(h) Upon the expiration of any rights, options, warrants or
conversion rights or exchange privileges that caused adjustments under this
Section 8, such adjustments with respect to any Warrants that have not been
exercised shall, upon such expiration, be readjusted and shall thereafter be
such as they would have been had such rights, options, warrants or conversion
rights or exchange privileges never existed.
- 6 -
8
(i) The Company may, at its option at any time during the term of the
Warrants, reduce the then current Exercise Price to any amount deemed
appropriate by the Board of Directors of the Company.
(j) Whenever the number of Shares issuable upon the exercise of each
Warrant or the Exercise Price of such Shares is adjusted, as herein provided,
the Company shall promptly mail by first class-mail, postage prepaid, to each
Holder notice of such adjustment or adjustments. No failure to mail such notice
nor any defect therein or in the mailing thereof shall affect the validity
thereof except as to the Holder to whom the Company failed to mail such notice
or whose notice was defective. A certificate of an officer of the Company, on
behalf of the Company, that such notice has been mailed shall be prima facie
evidence of the facts stated therein. After any such adjustment, the Company
shall prepare a certificate setting forth the number of Shares issuable upon the
exercise of each Warrant and the Exercise Price of such Warrant after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment. Such certificate shall, except as provided below, be conclusive as
to the correctness of such adjustment and each Holder shall have the right to
inspect such certificate during reasonable business hours. Any determination as
to whether an adjustment is required pursuant to this Section 8, or as to the
amount of any such adjustment, shall be initially made in good faith by the
Board of Directors of the Company. If the Holders of a majority of the then
outstanding Warrants shall, in the exercise of their discretion, object to such
determination, the amount of such adjustment shall be made by an independent
accounting or investment banking firm selected by the Holders of a majority of
the then outstanding Warrants and reasonably acceptable to the Company.
(k) Except as provided in this Section 8, no adjustment in respect of
any dividends shall be made during the term of a Warrant or upon the exercise of
a Warrant.
(l) If the Company consolidates with or merges into another
corporation or if the Company sells or conveys all or substantially all its
property to another corporation, or if the Company enters into a statutory share
exchange with another Company pursuant to which its Common Shares are exchanged
for, or changed into, securities or property of another Company, the Company or
such successor or purchasing corporation (or an affiliate of such successor or
purchasing corporation), as the case may be, agrees that each Holder shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of each Warrant the kind and
amount of shares and other securities and property (including cash) which such
Holder would have owned or been entitled to receive after the happening of the
consolidation, merger, sale, conveyance or share exchange had such Warrant been
exercised immediately prior to such action. The provisions of this paragraph
(l) shall apply to successive consolidations, mergers, sales, conveyances or
share exchanges.
(m) Notwithstanding any adjustment in the Exercise Price or the
number or kind of shares purchasable upon the exercise of the Warrants pursuant
to this Agreement, certificates for Warrants issued prior or subsequent to such
adjustment may continue to express the same price and number and kind of shares
as are initially issuable pursuant to this Agreement.
- 7 -
9
9. FRACTIONAL INTERESTS. The Company shall not be required to issue
fractions of Shares on the exercise of Warrants. If more than one Warrant is
presented for exercise in full at the same time by the same Holder, the number
of Shares issuable upon the exercise thereof shall be computed on the basis of
the aggregate number of Shares issuable on exercise of the Warrants so
presented. If any fraction of a Share would, except for the provisions of this
Section 9, be issuable on the exercise of any Warrants (or specified portions
thereof), the Company shall purchase such fraction for an amount in cash equal
to the same fraction of the current Market Price per share of Common Shares
(determined as provided in Section 8(d) of this Agreement) on the date of
exercise.
- 8 -
10
10. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS.
(i) The Company covenants and agrees with the Representative and
any other or subsequent Holders of the Registrable Securities (as
defined in paragraph (f) of this Section 10) that, upon the written
request of the then Holder(s) of Warrants, Registrable Securities, or
both, representing at least a majority of the Common Shares underlying
the Warrants originally issued to the Representative or its designees,
made at any time within the period commencing one (1) year and ending
five (5) years after the Effective Date, the Company will file as
promptly as practicable and, in any event, within 60 days after
receipt of such written request, at its expense (other than (x) all
underwriters', broker-dealers', placement agents' and similar selling
discounts, commissions and fees relating to the sale of the Holder's
Registrable Shares, (y) any costs and expenses of counsel, accountants
or other advisors retained by the Holder and (z) all transfer,
franchise, capital stock and other taxes, if any, applicable to the
Holder's Registrable Shares (collectively, "Holders' Expenses"), all
of which shall be paid by the Holder), no more than once (except as
otherwise provided below), a post-effective amendment (the
"Amendment") to the Company's Registration Statement on Form S-1,
Registration No. 333-25275 as filed with the Securities and Exchange
Commission on May 30, 1997, or a new registration statement on an
appropriate form under the Act, registering or qualifying the
Registrable Securities for sale in accordance with the intended method
of sale or other disposition described in such request. Within
fifteen (15) days after receiving any such notice, the Company shall
give notice to the other Holders of the outstanding Warrants or
Registrable Securities advising that the Company is proceeding with
such Amendment or registration statement and offering to include the
Registrable Securities of such Holders. The Company shall not be
obligated to any other such Holder unless that other Holder accepts
such offer by notice in writing to the Company within twenty (20) days
thereafter. The Company will use its best efforts, through its
officers, directors, auditors and counsel in all matters necessary or
advisable, to file and cause such Amendment or registration statement
to become effective as promptly as practicable (but in any event
within 90 days of the initial filing of such Amendment or registration
statement) and for a period of 12 months thereafter to reflect in the
Amendment or registration statement financial statements which are
prepared in accordance with Section 10(a)(3) of the Act and any facts
or events arising that, individually, or in the aggregate, represent a
fundamental or material change in the information set forth in the
Amendment or registration statement to enable Holders of the
Registrable Securities registered to sell such Registrable Securities.
The Holders may sell the Registrable Securities pursuant to the
Amendment or registration statement without exercising the Warrants.
If any registration pursuant to this paragraph (a) is an underwritten
offering, the Holders of a majority of the Registrable Securities to
be included in
- 9 -
11
such registration shall be entitled to select the underwriter or
managing underwriter (in the case of a syndicated offering) of such
offering.
(ii) Anything in this Section 10(a) to the contrary
notwithstanding, if the Company's securities proposed to be registered
for sale are to be distributed in an underwritten offering and the
managing underwriter shall advise the Company in writing that, in its
opinion, the amount of securities to be offered should be limited in
order to assure a successful offering, the amount of Registrable
Shares to be included in such Amendment or registration statement
shall be so limited and shall be allocated among the persons selling
such securities in the following order of priority: (x) first to be
registered will be the securities subject to any demand or piggyback
registration rights granted by the Company before the Effective Date,
(y) next to be registered will be the Registrable Shares in
proportion, as nearly as practicable, to the number of Registrable
Shares desired and eligible to be sold by each Holder of such
Registrable Shares and (z) next to be registered will be any other
Common Shares subject to similar demand or piggyback registration
rights granted by the Company in proportion, as nearly as practicable,
to the number of Common Shares desired and eligible to be sold by each
holder of such Common Shares. In the event that, (x) pursuant to the
preceding sentence, the managing underwriter limits the number of
Registrable Shares that the Holders desire to have registered, and (y)
the Company does not thereafter effect a registration to include the
Registrable Shares that the Holders were not then permitted to sell
within 180 days after the effective date of the Amendment or
registration statement from which the Holders have been excluded,
then, at any time after such 180-day period until the period ending
five years after the Effective Date, the Holders of a majority of such
Registrable Securities not so included may make a request to the
Company for registration under the Act of all or part of such
Registrable Securities not so included in accordance with Section
10(a)(ii).
(iii) Notwithstanding anything in this Section 10(a) to the
contrary, the Company will not be required to file an Amendment or
registration statement (i) at a time when the audited financial
statements required to be included therein are not available, which
time shall be limited to the period commencing 135 days after the end
of the Company's third quarter and ending 90 days after the end of
such fiscal year, or (ii) for the period beginning with the filing of
a registration statement under the Act with respect to a public
offering by the Company of its securities and ending 180 days after
the closing of such public offering, or (iii) if in the reasonable
opinion of the Company it would adversely impact the Company in its
capital raising plans or otherwise (in which latter case filing may be
delayed for up to 135 days).
(b) PIGGYBACK REGISTRATION RIGHTS. The Company covenants and agrees
with the Representative and any other Holders or subsequent Holders of the
Registrable Securities that if, at any time within the period commencing one (1)
year and ending five (5)
- 10 -
12
years after the Effective Date, it proposes to file a new registration statement
with respect to the public sale of Common Shares for cash (other than in
connection with an offering to the Company's employees, an acquisition, merger
or similar transaction, an employee benefit plan, an exchange offer or a
dividend reinvestment plan) under the Act in a primary registration on behalf of
the Company and/or in a secondary registration on behalf of holders of such
securities and the registration form to be used may be used for registration of
the Registrable Securities, the Company will give written notice at least 30
days prior to such filing to the Holders of Warrants or Registrable Securities
(regardless whether some of the Holders have theretofore availed themselves of
the right provided in Section 10(a) of this Agreement) at the addresses
appearing on the records of the Company of its intention to file a registration
statement and will offer to use its reasonable efforts to include in such
registration statement any of the Registrable Securities, subject to paragraphs
(i) and (ii) of this paragraph (b), such number of Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within twenty (20) days after the giving of notice by the Company. All
registrations requested pursuant to this paragraph (b) are referred to herein as
"Piggyback Registrations". All Piggyback Registrations pursuant to this
paragraph (b) will be made solely at the Company expense, except for the
Holders' Expenses, which shall be paid by the Holder. If the securities or blue
sky laws of any jurisdiction in which the securities so registered are proposed
to be offered would require the Holder's payment of greater registration
expenses than those otherwise required by this Section 10 and if the Company
shall determine, in good faith, that the offering of such securities in such
jurisdiction is necessary for the successful consummation of the registered
offering, then the Holder shall either agree to pay the portion of the
registration expenses required by the securities or blue sky laws of such
jurisdiction to be paid by the Holder or withdraw his request for inclusion of
his Registrable Shares in such registration.
(i) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is part of an underwritten primary registration for the
Company, and the managing underwriter(s) for such offering advise(s)
the Company in writing that, in its opinion, the amount of securities
to be offered should be limited in order to assure a successful
offering, the amount of Registrable Shares to be included in such
registration statement shall be so limited and shall be allocated
among the persons selling such securities in the following order of
priority: (w) first to be registered will be the securities the
Company proposes to sell, (x) next to be registered will be the
securities subject to any demand or other piggyback registration
rights granted by the Company before the Effective Date, (y) next to
be registered will be the Registrable Shares in proportion, as nearly
as practicable, to the number of Registrable Shares desired and
eligible to be sold by each Holder of such Registrable Shares and (z)
next to be registered will be any other Common Shares subject to
similar demand or piggyback registration rights granted by the
- 11 -
13
Company in proportion, as nearly as practicable, to the number of
Common Shares desired and eligible to be sold by each holder of such
Common Shares.
(ii) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is part of an underwritten secondary registration for
holders of securities of the Company (other than pursuant to Section
10(a)) and not a primary registration for the Company, and the
managing underwriter(s) for such offering advise(s) the Company in
writing that, in its opinion, the amount of securities to be offered
should be limited in order to assure a successful offering, the amount
of Registrable Shares to be included in such registration statement
shall be so limited and shall be allocated among the persons selling
such securities in the following order of priority: (x) first to be
registered will be the securities subject to any demand or other
piggyback registration rights granted by the Company before the
Effective Date, (y) next to be registered will be the Registrable
Shares in proportion, as nearly as practicable, to the number of
Registrable Shares desired and eligible to be sold by each Holder of
such Registrable Shares and (z) next to be registered will be any
other Common Shares subject to similar demand or piggyback
registration rights granted by the Company in proportion, as nearly as
practicable, to the number of Common Shares desired and eligible to be
sold by each holder of such Common Shares.
Notwithstanding the provisions of this Section 10(b), the Company shall
have the right at any time and for any reason or for no reason after it shall
have given written notice pursuant to this Section 10(b) (irrespective of
whether a written request for inclusion of any such securities has been made) to
elect not to file any such proposed registration statement, or to withdraw the
same after the filing but before the effective date thereof and, thereupon,
shall be relieved from its obligation to proceed with such registration. If any
registration pursuant to this paragraph (b) is an underwritten offering, the
Company shall be entitled to select the underwriter or managing underwriter(s)
(in the case of a syndicated offering) of such offering.
- 12 -
14
(c) OTHER REGISTRATION RIGHTS. In addition to the rights above
provided, during the period commencing one (1) year and ending five (5) years
after the Effective Date, the Company will cooperate with the then Holders of
the Registrable Securities in preparing and signing one (but not more than one)
registration statement, in addition to the registration statements discussed
above, required in order to sell or transfer the Registrable Securities and will
supply all information required therefor, but the then Holders shall pay the
costs and expenses of such additional registration (including all of the
Company's reasonable out-of-pocket costs and expenses); provided, however, that
if the Company elects to register or qualify additional Common Shares, the cost
and expense of such registration statement will be pro rated between the Company
and the Holders of the Registrable Securities according to the aggregate sales
price of the securities being issued. However, the Company will not be required
to file a registration statement pursuant to this paragraph (c) (i) at a time
when the audited financial statements required to be included therein are not
available, which time shall be limited to the period commencing 135 days after
the end of the Company's third quarter and ending 90 days after the end of such
fiscal year, or (ii) for the period beginning with the filing of a registration
statement under the Act with respect to a public offering by the Company of its
securities and ending 180 days after the closing of such public offering, or
(iii) if in the reasonable opinion of the Company it would adversely impact the
Company in its capital raising plans or otherwise (in which latter case filing
may be delayed for up to 135 days).
(d) ACTION TO BE TAKEN BY THE COMPANY. In connection with the
registration of Registrable Securities in accordance with paragraphs (a), (b) or
(c) of this Section 10, the Company agrees to:
(i) Bear the expenses of any registration or qualification under
paragraphs (a) or (b) of this Section 10, including, but not limited
to, legal, accounting and printing fees; provided, however, that in no
event shall the Company be obligated to pay any of the Holders'
Expenses, which shall be paid by the Holders; and
(ii) Use its reasonable efforts to register or qualify the
Registrable Securities included in an Amendment or registration
statement for offer or sale under state securities or Blue Sky laws of
such jurisdictions in which the Underwriters or such Holders shall
reasonably request and do all other acts or things necessary or
advisable to effect the registration or qualification of the
Registrable Securities covered by such Amendment or registration
statement in the various states; provided, however, that no
registration or qualification shall be required in any jurisdiction
where, as a result thereof, the Company would be subject to service of
general process, to taxation as a foreign corporation doing
- 13 -
15
business in such jurisdiction, to any requirement that it qualify
generally to do business as a foreign corporation in such
jurisdiction, or to any requirement that it agree to restrictions on
future actions by the Company to which it is not then subject.
(e) ACTION TO BE TAKEN BY THE HOLDERS. Any written request to exercise
registration rights pursuant to paragraphs (a) or (b) of this Section 10 shall
contain, as applicable, (i) a description of the proposed plan of distribution
of the Registrable Securities, including the name of any underwriters, the
amounts underwritten and any material relationship between any proposed
underwriter and the Company, (ii) the full name of the Holder, the number of
Warrants, Registrable Securities and other securities of the Company owned by
such Holder and the number proposed to be registered and (iii) a description of
any position, office, or other material relationship which the Holder has had
within the past three years with the Company or any of its predecessors or
affiliates.
In addition, in connection with the registration of Registrable Securities
in accordance with paragraphs (a), (b) or (c) of this Section 10, the Company's
obligation shall be conditioned as to each such public offering upon a timely
receipt by the Company in writing of:
(i) Information as to participating Holders (to the extent
required by the Rules and Regulations) and the terms of such public
offering furnished by or on behalf of each Holder intending to make a
public offering of such Holder's Registrable Securities;
(ii) Such other information as the Company may reasonably require
from such Holders, or any underwriter for any of them, for inclusion
in such Registration Statement; and
(iii) All documents reasonably requested by any underwriter in
connection with the offering and any other documents customary in
similar offerings, signed and delivered by such Holder, including,
without limitation, underwriting agreements, custody agreements,
powers of attorney, indemnification agreements, and agreements
restricting other sales of securities.
(f) For purposes of this Section 10, (i) the term "Holder" shall
include holders of Registrable Shares received upon exercise of Warrants, and
(ii) the term "Registrable Securities" shall mean the Shares, if issued, until
five years after the Effective Date.
(g) The Holders agree that, upon receipt of any notice from the
Company of the happening of any of the following: (i) the issuance by the
Securities and Exchange Commission of any stop order denying or suspending the
effectiveness of any Amendment or registration statement covering Registrable
Shares or the initiation or threatening of any
- 14 -
16
proceeding for that purpose, (ii) the Company's receipt of any stop order
denying registration or suspending the qualification of the Registrable
Securities for sale or the initiation or threatening of any proceeding for such
purpose or (iii) the happening of any event that makes any statement made in
such Amendment or registration statement, the related prospectus or any document
incorporated by reference therein untrue or that requires any change in such
Amendment or registration statement, prospectus or document incorporated by
reference therein to make the statements not include an untrue statement of
material fact or not omit any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, the Holders shall discontinue the disposition of
Registrable Securities until the Holders receive a supplemental or amended
prospectus from the Company or until the Company advises such Holders in writing
that the Holders may resume the use of such prospectus, and have received copies
of any additional or supplemental filings which are incorporated by reference in
the prospectus. If the Company so directs, such Holders will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in the Holders' possession, of the prospectus covering the Registrable
Securities at the time the Holders received the notice. Upon the occurrence of
such event, the Company shall immediately take such action as may be necessary
to resume sale of the Registrable Securities and the use of such prospectus, by
amendment or otherwise.
11. NOTICES TO HOLDERS.
(a) Nothing in this Agreement or in any Warrants shall be construed as
conferring upon the Holders the right to vote or to receive dividends or to
consent or to receive notice as shareholders in respect of the meetings of
shareholders or the election of directors of the Company or any other matter, or
any rights whatsoever as shareholders of the Company prior to the exercise
hereof and such Holder becoming a holder of record of Shares; provided, however,
that in the event that any meeting of shareholders shall be called, the Company
shall cause a notice thereof to be sent by first-class mail, postage prepaid, at
least twenty (20) days prior to the date fixed as a record date or the date of
closing the transfer books in relation to such meeting, to each registered
Holder of Warrants at such Holder's address appearing on the Warrant Register.
(b) If the Company intends to make any distribution on its Common
Shares (or other securities which may be issuable in lieu thereof upon the
exercise of Warrants), including, without limitation, any such distribution to
be made in connection with a consolidation or merger in which the Company is the
surviving entity, or to issue subscription rights or warrants to holders of its
Common Shares, the Company shall cause a notice of its intention to make such
distribution to be sent by first-class mail, postage prepaid, at least twenty
(20) days prior to the date fixed as a record date or the date of closing the
transfer books in relation to such distribution, to each registered Holder of
Warrants at such Holder's address appearing on the Warrant Register, but failure
to mail or to receive such notice or any defect therein or in the mailing
thereof shall not affect the validity of any action taken in connection with
such distribution.
- 15 -
17
12. NOTICES. Any notice pursuant to this Agreement to be given by the
Holder of any Warrant or the holder of any Share to the Company shall be
sufficiently given or made three business days after sent by first-class mail,
postage prepaid, addressed as follows or to such other address as the Company
may designate by notice given in-accordance with this Section 12, to the Holders
of Warrants or the holders of Shares:
Somanetics Corporation
0000 Xxxx Xxxxx Xxxx
Xxxx, Xxxxxxxx 00000-0000
Attn.: President
Notices or demands authorized by this Agreement to be given or made by the
Company to or on the Holder of any Warrant or the holder of any Share shall be
sufficiently given or made (except as otherwise provided in this Agreement) if
sent by first-class mail, postage prepaid, addressed to such Holder or such
holder of Shares at the address of such Holder or such holder of Shares as shown
on the Warrant Register or the books of the Company, as the case may be.
13. GOVERNING LAW. This Agreement and each Warrant issued hereunder shall
be governed by and construed in accordance with the substantive laws of the
State of New York. The Company hereby agrees to accept service of process by
notice given to it pursuant to the provisions of Section 12 hereof.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original; but
such counterparts together shall constitute one and the same instrument.
- 16 -
18
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the day, month and year first above written.
SOMANETICS CORPORATION
By:
-----------------------------
Its:
-------------------------
XXXXX XXXXXX & CO., INC.
By:
-----------------------------
Its:
-------------------------
- 17 -
19
SCHEDULE I
NAME OF NUMBER OF
INITIAL HOLDER WARRANTS
-------------- --------
Xxxxx Xxxxxx & Co., Inc. 200,000
Total 200,000
20
EXHIBIT A
No. _______
NEITHER THIS WARRANT NOR THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY STATE OR OTHER
JURISDICTION. THIS WARRANT MAY NOT BE EXERCISED, AND THIS WARRANT AND THE
COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE RESOLD OR
OTHERWISE TRANSFERRED, UNLESS THEY ARE REGISTERED UNDER APPLICABLE STATE AND
FEDERAL SECURITIES LAWS OR UNLESS EXEMPTIONS FROM ALL SUCH REGISTRATION
REQUIREMENTS ARE AVAILABLE.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME
ON MAY 29, 2002
SOMANETICS CORPORATION
Warrant Certificate
THIS CERTIFIES THAT for value received ______________, or registered
assigns, is the owner of the number of Warrants set forth above, each of which
entitles the owner thereof to purchase at any time from May 30, 1998, until
5:00 p.m., New York City time on May 29, 2002 (the "Warrant Expiration
Date"), one fully paid and nonassessable Common Share, $0.01 par value per
share (a "Common Share"), of SOMANETICS CORPORATION, a Michigan corporation
(the "Company"), at the purchase price of $4.80 per Common Share (as
adjusted from time to pursuant to the Warrant Agreement referenced below, the
"Exercise Price") upon presentation and surrender of this Warrant Certificate
with the Form of Election to Purchase duly executed. The number of Warrants
evidenced by this Warrant Certificate (and the number of Common Shares which
may be purchased upon exercise hereof) set forth above, and the Exercise Price
per Common Share set forth above, are the number and Exercise Price as of the
date of original issuance of the Warrants, based on the Common Shares of the
Company as constituted at such date. As provided in the Warrant Agreement
referred to below, the Exercise Price and the number or kind of shares which
may be purchased upon the exercise of the Warrants evidenced by this Warrant
Certificate are, upon the happening of certain events, subject to modification
and adjustment. The Common Shares, as so modified and adjusted, are herein
referred to as the "Shares".
- 1 -
21
This Warrant Certificate is subject to, and entitled to the benefits of,
all of the terms, provisions and conditions of an agreement dated as of June
[4], 1997 (the "Warrant Agreement") between the Company and Xxxxx Xxxxxx &
Co., Inc., which Warrant Agreement is hereby incorporated herein by reference
and made a part hereof and to which Warrant Agreement reference is hereby made
for a full description of the rights, limitations of rights, duties and
immunities hereunder of the Company and the holders of the Warrant
Certificates. Copies of the Warrant Agreement are on file at the principal
office of the Company.
This Warrant Certificate, with or without other Warrant Certificates, upon
surrender at the principal office of the Company, may be exchanged for another
Warrant Certificate or Warrant Certificates of like tenor and date evidencing
Warrants entitling the holder to purchase a like aggregate number of Common
Shares as the Warrants evidenced by the Warrant Certificate or Warrant
Certificates surrendered entitled such holder to purchase. If this Warrant
Certificate shall be exercised in part, the holder hereof shall be entitled to
receive upon surrender hereof another Warrant Certificate or Warrant
Certificates for the number of whole Warrants not exercised.
No fractional Common Shares will be issued upon the exercise of any
Warrant or Warrants evidenced hereby, but in lieu thereof a cash payment will
be made, as provided in the Warrant Agreement.
No holder of this Warrant Certificate will be entitled to vote, receive
dividends, subscription rights or be deemed the holder of the Shares of the
Company which may at any time be issuable on the exercise hereof for any
purpose, nor shall anything contained in the Warrant Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action (whether upon any recapitalization,
issue of stock, reclassification of stock, change of par value or change of
stock to no par value, consolidation, merger, conveyance, or otherwise) or,
except as provided in the Warrant Agreement, to receive notice of meetings,
until the Warrant or Warrants evidenced by this Warrant Certificate shall have
been exercised and such holder shall have become a holder of record of the
Shares as provided in the Warrant Agreement.
If this Warrant shall be surrendered for exercise within any period during
which the transfer books for the Shares purchasable upon the exercise of this
Warrant are closed for any purpose, the Company shall not be required to make
delivery of certificates for Shares purchasable upon such exercise until the
date of the reopening of said transfer books, provided, however, that such
books shall not be closed for longer than a 20-day period.
- 2 -
22
IN WITNESS WHEREOF, SOMANETICS CORPORATION has caused the signature (or
facsimile signature) of its President and its Secretary to be printed hereon.
Dated June [4], 1997
SOMANETICS CORPORATION
By:
-----------------------------
Its: President
------------------------
Attest:
------------------------------
Xxxxxxx X. Xxxx, Secretary
- 3 -
23
FORM OF
ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificates.)
FOR VALUE RECEIVED ________________________________ hereby sells, assigns
and transfers unto ________________________________ this Warrant Certificate,
together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint __________________________, to transfer the
within Warrant Certificate on the books of the within-named Company, with full
power of substitution.
Dated: _________________________
__________________________________
Signature
Signature Guaranteed:
NOTICE
The signature on the foregoing Assignment must correspond to the name as
written upon the face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
- 4 -
24
FORM OF
ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Warrants)
TO: SOMANETICS CORPORATION
The undersigned hereby irrevocably elects to exercise Warrants represented
by this Warrant Certificate to purchase __________ Common Shares issuable upon
the exercise of such Warrants and requests that certificates for such Common
Shares be issued in the name of:
Please insert social security, tax identification or other identifying number
------------------------
------------------------
------------------------
If such number of Warrants is not all the Warrants evidenced by this Warrant
Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
Please insert social security, tax identification or other identifying number
-------------------------------
-------------------------------
-------------------------------
(Please print name and address)
Dated:
-----------------------
----------------------------
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Warrant Certificate)
Signature Guaranteed:
-5-
