EXHIBIT 1.3
WARRANT AGREEMENT
BY AND BETWEEN
SOMANETICS CORPORATION
AND
XXXXX XXXXXX & CO., INC.
DATED AS OF DECEMBER ___, 2001
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of December __, 2001 (this "Agreement"), by
and between SOMANETICS CORPORATION, a Michigan corporation (the "Company"), and
XXXXX XXXXXX & CO., INC. (the "Placement Agent") (the Company and the Placement
Agent are referred to collectively herein as the "Parties").
The Company proposes to issue to the Placement Agent warrants as
hereinafter described (the "Warrants") to purchase up to an aggregate of 100,000
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 100,000
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 Placement Agency Agreement, of even date
herewith, by and between the Company and the Placement Agent.
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 Placement Agent or its
bona fide officers for an aggregate price of $100. The Warrants shall be issued
to the Placement Agent 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 Placement Agent 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. The
Warrants shall be registered initially in the name of the Placement Agent in
such denominations as the Placement Agent may request in writing from the
Company; provided, however, that the Placement Agent 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 Placement Agent. Such designation will only be made by
the Placement Agent 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 Placement Agent 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 [120% of the offering price] 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
December ___, 2006 (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 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
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(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 (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.
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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 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
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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
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
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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.
(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
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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 (1)
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.
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.
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10. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS.
(i) The Company covenants and agrees with the
Placement Agent 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 Placement
Agent 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 Securities, (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
Securities (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-l, Registration No. 333-[ ] as filed with the Securities and
Exchange Commission on December ___, 2001, 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
such registration shall be entitled to select the underwriter
or managing underwriter (in the case of a syndicated offering)
of such offering.
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(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 Securities 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 Securities in proportion, as nearly as
practicable, to the number of Registrable Securities desired
and eligible to be sold by each Holder of such Registrable
Securities 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
Securities that the Holders desire to have registered, and (y)
the Company does not thereafter effect a registration to
include the Registrable Securities 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 Placement Agent 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) 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
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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 Securities 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 Securities 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 Securities in proportion, as nearly as
practicable, to the number of Registrable Securities desired
and eligible to be sold by each Holder of such Registrable
Securities 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.
(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 Securities 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
-10-
before the Effective Date, (y) next to be registered will be
the Registrable Securities in proportion, as nearly as
practicable, to the number of Registrable Securities desired
and eligible to be sold by each Holder of such Registrable
Securities 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.
(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
-11-
(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
Placement Agent 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
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 Securities received upon exercise of
Warrants, and (ii) the term "Registrable Securities" shall mean the Shares, if
issued, until five years after the Effective Date.
-12-
(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
Securities or the initiation or threatening of any 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.
-13-
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 and Chief Executive Officer
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.
[Remainder of page intentionally left blank.]
-14-
IN WITNESS WHEREOF, the Parties have caused this Warrant 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:
--------------------------
-15-
SCHEDULE I
NAME OF NUMBER OF
INITIAL HOLDER WARRANTS
-------------- --------
Xxxxx Xxxxxx & Co., Inc. 100,000
Total 100,000
EXHIBIT A
No. 100,000 Warrants
--------
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 DECEMBER ___, 2006
SOMANETICS CORPORATION
Warrant Certificate
THIS CERTIFIES THAT for value received XXXXX XXXXXX & CO., INC., 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 December ___,
2002, until 5:00 p.m., New York City time on December ___, 2006 (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 $[120% of the offering
price] 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".
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
December __, 2001 (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.
[Remainder of page intentionally left blank.]
-2-
IN WITNESS WHEREOF, SOMANETICS CORPORATION has caused the signature (or
facsimile signature) of its President and its Secretary to be printed on this
Warrant Certificate.
Dated December ___, 2001
SOMANETICS CORPORATION
By:
-------------------------------
Its: President and Chief
Executive Officer
Attest:
-----------------------------------
Xxxx Xxx Xxxxxx, Secretary
-3-
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.
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:
