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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 30, 1997.
DIAMETRICS MEDICAL, INC.
(Exact name of registrant as specified in its charter)
Minnesota 0-21982 41-1663185
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
2658 Patton Road, Roseville, MN 55113
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 639-8035
Not Applicable
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
On January 30, 1997, Diametrics Medical, Inc. (the "Company")
completed the sale in a private placement (the "Private Placement") of 750,000
shares of Series I Junior Participating Preferred Stock, par value $0.01 per
share (the "Preferred Stock"), at a price of $16.00 per share. Each share of
Preferred Stock shall be convertible into four shares of the Company's Common
Stock, par value $0.01 per share ("Common Stock"), upon shareholder approval of
an increase in the number of authorized shares of Common Stock. Each purchaser
of Preferred Stock also received a detachable warrant to purchase one share of
Common Stock for each share of Preferred Stock purchased, with an exercise price
(subject to adjustment) equal to $5.0625 per share. The foregoing information is
a summary only and is qualified in its entirety by the information contained in
the documents filed as exhibits to this Form 8-K.
The proceeds from the Private Placement of $12,000,000 will be
used by the Company for general corporate purposes.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
4.1 Stock Purchase Agreement, dated as of January 30, 1997 (the
"Purchase Agreement"), between Diametrics Medical, Inc. (the
"Company") and the Purchasers named therein (the "Purchasers")
4.2 Registration Rights Agreement, dated as of January 30, 1997, by
and between the Company and the Purchasers.
4.3 Certificate of Designation of Series I Junior Participating
Preferred Stock of Diametrics Medical, Inc., as amended.
4.4 Specimen Certificate, Series I Junior Participating Preferred
Stock
4.5 Form of Stock Purchase Warrant
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
DIAMETRICS MEDICAL, INC.
Date: March 21, 1997
By /s/ Laurence L. Betterley
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Laurence L. Betterley
Chief Financial Officer
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EXHIBIT INDEX
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EXHIBIT DESCRIPTION OF EXHIBIT
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4.1 Stock Purchase Agreement, dated as of January 30, 1997 (the
"Purchase Agreement"), between Diametrics Medical, Inc. (the
"Company") and the Purchasers named therein (the "Purchasers")
4.2 Registration Rights Agreement, dated as of January 30, 1997, by
and between the Company and the Purchasers.
4.3 Certificate of Designation of Series I Junior Participating
Preferred Stock of Diametrics Medical, Inc., as amended.
4.4 Specimen Certificate, Series I Junior Participating Preferred
Stock
4.5 Form of Stock Purchase Warrant
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EXHIBIT 4.1
STOCK PURCHASE AGREEMENT
AGREEMENT, made as of January 30, 1997, between DIAMETRICS MEDICAL, INC. a
Minnesota corporation (the "Company") and the purchasers (the "Purchasers")
listed on Schedule A hereto.
WHEREAS, the Company wishes to raise additional capital; and
WHEREAS, the Company does not yet have sufficient authorized shares of its
$.01 par value common stock ("Common Stock") for purposes of a private placement
of 3,000,000 shares of its Common Stock; and
WHEREAS, the Company does have 5,000,000 authorized shares of undesignated
preferred stock; and
WHEREAS, the Company will call a special shareholders meeting to approve an
increase in its authorized Common Stock; and
WHEREAS, the Purchasers desire to purchase shares of a series of the
Company's preferred stock (the "Preferred Stock") that will be convertible into
Common Stock upon approval by shareholders of an increase in the authorized
Common Stock together with detachable warrants to purchase additional shares of
Common Stock.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Purchase of Preferred Stock. The Purchasers hereby agree to purchase
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from the Company and the Company hereby agrees to sell to Purchasers the number
of shares of Preferred Stock (the "Preferred Stock") set forth opposite the name
of each Purchaser in Schedule A at a purchase price equal to $16.00 per share,
together with a detachable warrant in the form attached hereto as Exhibit I (the
"Warrant"). Each Warrant will (subject to adjustment) have an exercise price
equal to $5.0625 per share, and will be exercisable (subject to adjustment) into
a number of shares of Common Stock equal to 1/4 of the number of shares of
Common Stock into which the shares of Preferred Stock are initially convertible.
Pursuant to the terms of this Agreement, Additional Warrants (as hereinafter
defined) may be issued. Each share of Preferred Stock shall be convertible into
four shares of the Company's Common Stock upon approval of an increase in the
authorized number of shares of Common Stock at the special shareholders meeting
referred to in Article 7, and shall contain the terms and conditions as
specified in Exhibit II. The Purchasers will receive certain registration rights
with respect to the shares of Common Stock issuable upon conversion of the
Preferred Stock and exercise of the Warrants and Additional Warrants, if any,
pursuant to an agreement in substantially the form attached hereto as Exhibit
III (the "Registration Rights Agreement").
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2. Closing Date. The closing of the purchase and sale of the Preferred
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Stock hereunder (the "Closing") will be held at the offices of Dorsey & Whitney
LLP, 220 South Sixth Street, Minneapolis, Minnesota 55402 at such time and date
as the Company and the Purchasers may agree (the "Closing Date").
3. Delivery. At the Closing, the Company will deliver to each Purchaser
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a certificate dated the Closing Date registered in such Purchaser's name
representing the Preferred Stock purchased by such Purchaser, together with a
Warrant registered in such Purchaser's name representing the number of shares of
Common Stock purchasable upon the exercise of such Warrant. At the Closing each
Purchaser will pay to the Company the amount of the purchase price set forth
opposite the name of such Purchaser in Schedule A attached hereto by certified
check, wire transfer or any combination of the above.
4. Representations and Warranties of the Company. The Company hereby
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makes the following representations and warranties to the Purchasers which
representations and warranties survive the purchase of the Preferred Stock and
Warrants by the Purchasers:
4.1 Corporate Existence and Power. The Company is duly incorporated,
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validly existing and in good standing under the laws of the State of Minnesota.
The Company's only subsidiary is Diametrics Medical, Ltd., a private limited
company incorporated in England and Wales (the "Subsidiary") and, other than in
the ordinary course of business and with respect to the Subsidiary, has made no
investment in any Person. Each of the Company and the Subsidiary has all
corporate powers and authority and all governmental licenses, authorizations,
consents and approvals (collectively, the "Permits") required to carry on its
business as now conducted, except where the failure to obtain such Permits,
individually or in the aggregate, would not have a Material Adverse Effect (as
defined below) on the Company. Each of the Company and the Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except for
those jurisdictions where the failure to be so qualified would not, individually
or in the aggregate, have a Material Adverse Effect. The Company has made
available to Purchasers, if requested by Purchasers, true and complete copies of
the Company's articles of incorporation and bylaws as currently in effect. For
purposes of this Agreement, a "Material Adverse Effect" means, with respect to
any Person, a material adverse effect, on the condition (financial or
otherwise), business, assets or properties of such Person and its subsidiaries
taken as a whole or on the ability of such Person to perform its obligations
hereunder. For purposes of this Agreement, any reference to any event, change or
effect being "material" with respect to any Person means an event, change or
effect, whether existing or prospective, which is material in relation to the
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condition (financial or otherwise), business, assets or properties of such
Person and its subsidiaries taken as a whole or on the ability of such Person to
perform its obligations hereunder. For the purposes of this Agreement, "Person"
means any individual, partnership, firm, corporation, limited liability company
or partnership, association, trust, unincorporated organization or other entity,
as well as any syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
4.2 Corporate Authorization. The execution, delivery and performance by
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the Company of this Agreement, the Warrants, and the Registration Rights
Agreement and the consummation by the Company of the transactions contemplated
hereby and thereby are within the Company's corporate powers and, except for any
required approval by the Company's stockholders in connection with the
authorization of additional shares of Common Stock necessary to permit the
conversion of the Preferred Stock, have been duly authorized by all necessary
corporate action. Each of this Agreement, the Warrants and the Registration
Rights Agreement constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except as such
enforcement may be subject to (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, (b) general principles of equity (whether
considered in a proceeding in equity or at law) and, (c) insofar as they relate
to indemnification provisions, the effect of federal and state securities laws
and public policy relating thereto.
4.3 Consents; Approvals. The execution, delivery and performance by the
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Company of this Agreement, the Warrants and the Registration Rights Agreement
and consummation of the transactions contemplated hereby and thereby by the
Company require no action, by or in respect of, notices to, or filing with, any
governmental body, agency, official or authority or any third party, other than
those that have been or will be taken or made in a timely manner.
4.4 Non-Contravention. The execution, delivery and performance by the
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Company of this Agreement, the Warrants and the Registration Rights Agreement
and the consummation by the Company of the transactions contemplated hereby and
thereby do not and will not (except in the case of clauses (b), (c) and (d) of
this Section 4.4, for any such matters that, individually or in the aggregate,
have not had, and will not have, a Material Adverse Effect on the Company) (a)
contravene or conflict with the articles of incorporation or bylaws of the
Company, (b) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to the Company or any of its properties or assets, (c)
constitute a default under or give rise to a right of termination, cancellation,
restriction or acceleration of any right or obligation of the Company or to a
loss of any benefit to which the Company is entitled under any provision of any
agreement, contract or other instrument binding upon or
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applicable to the Company or any of its properties or assets or any license,
franchise, permit or other similar authorization held by or applicable to the
Company, or (d) result in the creation or imposition of any Lien on any asset of
the Company. For purposes of this Agreement, "Lien" means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset.
4.5 Capitalization. The authorized capital stock of the Company consists
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of 20,000,000 shares of Common Stock and 5,000,000 shares of preferred stock,
par value $0.01 per share (the "Preferred Stock"). As of the date hereof (i)
15,210,614 shares of Common Stock are issued and outstanding and (ii) no shares
of Preferred Stock are issued and outstanding. As of the date hereof 2,431,570
shares of Common Stock are reserved for issuance pursuant to the exercise of
outstanding stock options and 786,814 shares of Common Stock are reserved for
issuance pursuant to the exercise of outstanding warrants. All outstanding
shares of capital stock of the Company have been duly authorized and validly
issued, are fully paid and nonassessable, are free from preemptive rights and
were issued in compliance with all state and federal securities laws. Assuming
in each case proper payment is made therefor, each share of Preferred Stock
issued to the Purchasers pursuant hereto and each share of Additional Preferred
Stock (as hereinafter defined), if any, will be, and upon the conversion of the
Preferred Stock, the Additional Preferred Stock, if any, and/or exercise of the
Warrants, each share of Common Stock issued in respect thereof will be, duly
authorized, validly issued and outstanding, fully paid and nonassessable, free
from preemptive rights and issued in compliance with all state and federal
securities laws. Except as set forth in this Section, there are outstanding (a)
no other shares of capital stock or other voting securities of the Company, (b)
no securities of the Company convertible into or exchangeable for shares of
capital stock or voting securities of the Company, and (c) no other options or
other rights to acquire from the Company, and no obligation of the Company to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company (the items in
clauses (a), (b) and (c) being referred to collectively as the "Company
Securities"). There are no outstanding obligations of the Company to repurchase,
redeem or otherwise acquire any Company Securities.
4.6 SEC Filings.
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(a) The Company has filed all required reports, schedules, forms,
statements and other documents filed or required to be filed by the Company
with the Securities and Exchange Commission (the "SEC") since January 1,
1995. The Company has delivered to Purchasers (i) the annual reports on
Form 10-K for its fiscal year ended 1995 (ii) its quarterly report on Form
10-Q for its fiscal quarter ended September 30, 1996, (iii) its proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the
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stockholders of the Company held since January 1, 1996, and (iv) all of its
other reports, statements, schedules and registration statements filed by
the Company with the SEC since January 1, 1996 (collectively, "SEC
Reports").
(b) Except to the extent that information contained in any SEC
Report has been revised or superseded by a later-filed SEC Report, filed
and publicly available prior to the date of this Agreement, as of the date
of this Agreement, none of the SEC Reports contains any untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the SEC Reports complied as to form in all material
respects with the requirements of the Securities Act of 1933, as amended,
(the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such
SEC Reports.
4.7 Financial Statements.
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(a) Except to the extent that information contained in any SEC
Report has been revised or superseded by a later-filed SEC Report, filed
and publicly available prior to the date of this Agreement, the audited
financial statements and unaudited interim financial statements of the
Company included in its annual reports on Form 10-K and the quarterly
reports on Form 10-Q referred to in Section 4.6 are true and correct and
fairly present, in conformity with generally accepted accounting
principles, applied on a consistent basis (except as may be indicated in
the notes thereto), the financial position of the Company as of the dates
thereof and results of operations and changes in financial position for the
periods then ended (subject to non-material normal year-end adjustments in
the case of any unaudited interim financial statements). For purposes of
this Agreement "Balance Sheet" means the Company's balance sheet as of
September 30, 1996, including the notes thereto, as set forth in the
Company's 10-Q referred to in Section 4.6 and "Balance Sheet Date" means
the date of the Balance Sheet.
(b) Except and to the extent set forth in the Balance Sheet, the
Company does not have any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise), except for liabilities and
obligations incurred after the Balance Sheet Date in the ordinary course of
business which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
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4.8 Disclosure Documents.
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(a) Each document required to be filed by the Company with the SEC
in connection with the transactions contemplated by this Agreement (the
"Company Disclosure Documents"), will, when filed, comply as to form in all
material respects with the applicable requirements of the Exchange Act.
(b) The Company Disclosure Documents will not contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 4.8 will not apply
to statements or omissions included in the Company Disclosure Documents
based upon information furnished to the Company in writing by Purchasers
specifically for use therein.
4.9 Intellectual Property. Each of the Company and the Subsidiary owns
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or has the right to use (without material payment) the Intellectual Property (as
defined below) as is necessary or appropriate for the conduct of its business as
it is now being conducted, as it is anticipated to be conducted and with respect
to the transactions contemplated by this Agreement (collectively, the "Company
Intellectual Property"). To the Company's knowledge after due inquiry, no
infringement or unauthorized use by the Company or the Subsidiary of any
Intellectual Property of any third party exists, has occurred or is threatened.
Other than as disclosed in the Company's reports or statements previously filed
pursuant to the Exchange Act, no current or former shareholder, officer,
director, consultant, employee or affiliate of the Company or the Subsidiary has
any right, title or interest in any Company Intellectual Property. For the
purposes of this Agreement, "Intellectual Property" means any and all of a
Person's right, title and interest in and to United States and foreign patents,
copyrights, mask works, trade and service names and marks, whether or not
registered, pending, issued or applied for; technical knowledge; works,
processes and designs; hardware; software (in source code and object code form,
including all related annotations and listings); inventions; trade secrets and
other intellectual property rights; all things authored, made for hire,
discovered, developed, designed or acquired by a Person or, to the extent that a
Person has any right, title or interest thereto, any of their respective agents,
contractors and employees in any stage of development, regardless of whether any
or all of the foregoing constitutes copyrightable or patentable subject matter
or is in tangible or intangible form; and all embodiments, expressions,
representations, fruits and products of any of the foregoing.
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4.10 Absence of Certain Changes. Since the Balance Sheet Date, the
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Company has conducted its business in the ordinary course consistent with past
practice and there has not been:
(a) any event, occurrence or development which has had or reasonably
could be expected to have a Material Adverse Effect on the Company; or
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the
Company or any repurchase, redemption or other acquisition by the Company
of any outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company.
4.11 Litigation. There is no action, suit, investigation or proceeding
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(or any basis therefor) pending against or, to the knowledge of the Company,
threatened against or affecting, the Company or the Subsidiary or any of its
properties before any court or arbitrator or any governmental body, agency or
official which, if determined or resolved adversely to the Company or the
Subsidiary, could reasonably be expected to have a Material Adverse Effect on
the Company, nor is there any judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against the Company or the Subsidiary having, or which,
insofar as can reasonably be foreseen, may have, any such effect.
4.12 Compliance with Laws and Agreements. Except as disclosed in the SEC
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Reports and except in the case of clauses (b), (c) and (d) for breaches,
violations and defaults which in the aggregate do not, and insofar as reasonably
can be foreseen could not, have a Material Adverse Effect on the Company,
neither the Company nor the Subsidiary is in violation of, nor has it violated,
nor to the best knowledge is it under investigation with respect to, nor has it
received notice or been charged with any violation of, any applicable provisions
of any laws, statutes, ordinances or regulations. Neither the Company nor the
Subsidiary is in breach or violation of or in default in the performance or
observance of any term or provision of, and no event has occurred which, with
lapse of time or action by a third party, could result in a default under, (a)
the articles of incorporation, bylaws or similar governing documents of the
Company or the Subsidiary, (b) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or other
instrument to which the Company or the Subsidiary is a party or by which it is
bound or to which any of its property is subject, (c) any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or the
Subsidiary or any of their respective properties or assets, or (d) any
certificate, license, Permit, registration, accreditation or other consent or
approval of governmental agencies or accreditation organizations.
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4.13 Finders' Fees. There is no investment banker, broker, finder or
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other intermediary which has been retained by or is authorized to act on behalf,
of the Company who might be entitled to any fee or commission upon consummation
of the transactions contemplated by this Agreement.
4.14 Full Disclosure; No Misrepresentations. No information contained in
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the representations and warranties of the Company set forth in this Agreement or
in any of the certificates, schedules, lists, documents, exhibits or other
instruments relating hereto or to be delivered to Purchasers hereunder contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statement contained herein or therein, in light of the
circumstances under which they were made, not misleading. To the knowledge of
the Company, there is no fact or condition which has not been heretofore
disclosed to Purchasers in writing which has a Material Adverse Effect on the
Company, or reasonably could be expected to have a Material Adverse Effect on
the Company.
5. Representations and Warranties of the Purchasers. Each Purchaser
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hereby makes the following representations and warranties to the Company which
representations and warranties survive the issuance of the Preferred Stock and
Warrants by the Company:
5.1 Availability of Information. Purchaser has been given access to full
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and complete information regarding the Company (including the opportunity to
meet with officers of the Company and review such documents as it may have
requested in writing) and has utilized such access to its satisfaction for the
purpose of obtaining information.
5.2 Risk of Investment. Purchaser:
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(a) realizes that the purchase of the Preferred Stock and Warrants
represents a speculative investment involving a high degree of
risk;
(b) can bear the economic risk of an investment in the Preferred
Stock and Warrants for an indefinite period of time, can afford
to sustain a complete loss of such investment, has no need for
liquidity in connection with an investment in the Preferred
Stock and Warrants; and can afford to hold the Preferred Stock
and Warrants indefinitely;
(c) realizes that the Preferred Stock and Warrants have not been
registered for sale under the Securities Act or applicable state
securities laws (the "State Laws"), and may be sold only
pursuant
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to registration under the Securities Act and State Laws, or an
opinion of counsel that such registration is not required; and
(d) is experienced and knowledgeable in financial and business
matters, capable of evaluating the merits and risks of investing
in the Preferred Stock and Warrants, and does not need or desire
the assistance of a knowledgeable representative to aid in the
evaluation of such risks.
5.3 Investment Intent.
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(a) Purchaser acknowledges that it has been advised that the
Preferred Stock and Warrants are being offered and sold pursuant
to exemptions from the Securities Act and applicable State Laws,
and the Company's reliance upon such exemptions is predicated in
part on Purchaser's representations contained herein.
(b) The Preferred Stock and Warrants are being purchased for
Purchaser's own account and for investment and without the
current intention of reselling or redistributing the Preferred
Stock.
(c) Purchaser has made no agreement with others regarding any of the
Preferred Stock or Warrants.
(d) Purchaser acknowledges that the shares of Preferred Stock and
the shares of Common Stock into which the Preferred Stock is
convertible are further restricted by a legend placed on the
certificate representing the Preferred Stock and/or Common Stock
containing substantially the following language:
"The securities represented by this certificate have not been
registered under either the Securities Act of 1933 or applicable
state securities laws and may not be sold, transferred,
assigned, offered, pledged or otherwise distributed for value
unless there is an effective registration statement under such
Act and such laws covering such securities, or the Company
receives an opinion of counsel acceptable to the Company stating
that such sale, transfer, assignment, offer, pledge or other
distribution for value is exempt from the registration and
prospectus delivery requirements of such Act and such laws."
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5.4 Residence. The principal office or residence of each Purchaser is
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located at the address set forth in Schedule A.
5.5 Accredited Status . Each Purchaser is an "accredited investor" as
------------------
that term is defined under Regulation D promulgated pursuant to the Securities
Act.
6. Covenant of Purchasers. Each Purchaser agrees that if such Purchaser
----------------------
should later desire to dispose of or transfer any of the Preferred Stock or
Warrants in any manner, Purchaser shall not do so without first obtaining (i) an
opinion of counsel satisfactory to the Company that such proposed disposition or
transfer may be made lawfully without the registration of such Preferred Stock
pursuant to the Securities Act and applicable State Laws, or (ii) registration
of such Preferred Stock pursuant to the Securities Act and applicable State
Laws.
7. Affirmative Covenants of the Company. The Company covenants to each
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of the Purchasers as follows:
7.1 Special Shareholder Meeting. The Company will, as soon as reasonable
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and practicable, properly call a special shareholders meeting to approve an
increase in the authorized capital stock of the Company in an amount sufficient
to allow the conversion of all of the shares of Preferred Stock purchased
pursuant to this Agreement and the Additional Preferred Stock, if any, into
shares of Common Stock. The Company shall use its best efforts to cause the
shareholders to approve such increase. Pursuant to the terms specified in
Exhibit II to this Agreement, neither the Preferred Stock nor the Additional
Preferred Stock, if any, shall be convertible into Common Stock unless and until
such approval is obtained. If such approval is not obtained within six months of
the Closing Date, the Company will use its best efforts to seek to have the
shares of Preferred Stock and the Additional Preferred Stock (as hereinafter
defined), if any, listed for inclusion on the automated quotation system of the
National Association of Securities Dealers, Inc. or any national securities
exchange on which a class of the Company's equity securities is listed.
7.2 Additional Warrants. The Company will issue additional warrants (the
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"Additional Warrants") to the Purchasers exercisable for 187,500 shares of
Series I Junior Participating Preferred Stock (the "Additional Preferred Stock")
at a per share purchase price equal to $20.25 in the event that the Company
breaches its obligations set forth in Section 3 of the Registration Rights
Agreement. The Company will take all necessary corporate and other action in
connection with such issuance.
7.3 Reservation of Capital Stock. The Company shall reserve and maintain
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a sufficient number of shares of Common Stock for issuance upon conversion of
all of the outstanding shares of Preferred Stock and Additional
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Preferred Stock, if any, and exercise of all Warrants; provided, however, that
-----------------
in the case of the Preferred Stock and the Additional Preferred Stock, if any,
such reservation shall be subject to the approval by the shareholders of the
Company of an increase in the authorized capital stock of the Company in an
amount sufficient to allow the conversion of the Preferred Stock and the
Additional Preferred Stock, if any. The Company shall reserve and maintain a
sufficient number of shares of preferred stock for issuance upon exercise of the
Additional Warrants, if any.
7.4 Additional Covenants. For the period commencing on the Closing Date
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and ending on the later of the conversion of all of the Preferred Stock and the
Additional Preferred Stock, if any, into Common Stock or the date that the
registration statement described in Section 3 of the Registration Rights
Agreement is declared effective by the SEC, the Company covenants to each of the
Purchasers as follows:
(a) The Company will promptly pay and discharge, or cause to be paid
and discharged, when due and payable, all lawful Taxes imposed upon the
income, profits, property, or business of the Company or any of its
subsidiaries; provided, however, that any such Tax need not be paid if the
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validity thereof shall currently be contested in good faith by appropriate
proceedings and if the Company or any such subsidiary, as the case may be,
shall have set aside on its books adequate reserves therefor; and provided,
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further, that the Company or any such subsidiary, as the case may be, will
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pay all such Taxes forthwith upon the commencement of proceedings to
foreclose any lien that may have attached as security therefor. The
Company will promptly pay or cause to be paid when due, or in conformance
with customary trade terms, all other indebtedness incident to the
operations of the Company or its subsidiaries. For purposes of this
Agreement, "Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, goods and services, capital,
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transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property
or other taxes, customs duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any taxing authority;
(b) The Company will keep, and will cause each of its subsidiaries
to keep, its properties in good repair, working order, and condition,
reasonable wear and tear excepted, and from time to time make all necessary
and proper repairs, renewals, replacements, additions, and improvements
thereto; and the Company will at all times, and will cause each of its
subsidiaries to, comply with the provisions of all material leases to which
it is a party or
-11-
<PAGE>
under which it occupies property so as to prevent any loss or forfeiture
thereof or thereunder;
(c) The Company will keep, and will cause each of its subsidiaries
to keep, its assets that are of an insurable character insured by
financially sound and reputable insurers against loss or damage by fire,
extended coverage, and explosion insurance in amounts customary for
companies in similar businesses similarly situated; and the Company will
maintain, and will cause each of its subsidiaries to maintain, with
financially sound and reputable insurers, insurance against other hazards,
risks, and liabilities to persons and property to the extent and in the
manner customary for companies in similar businesses similarly situated;
(d) The Company will keep, and will cause its subsidiaries to keep,
true records and books of account in which full, true and correct entries
will be made of all dealings or transactions in relation to its business
and affairs in accordance with generally accepted accounting principles;
(e) The Company will comply, and will cause its subsidiaries to
comply, with the requirements of all applicable provisions of any laws,
statutes, ordinances or regulations, a breach of which could have a
Material Adverse Effect;
(f) The Company shall, and shall cause each of its subsidiaries to,
maintain in full force and effect its corporate existence, rights, and
franchises and all licenses and other rights to use patents, processes,
licenses, trademarks, trade names, or copyrights owned or possessed by it
and deemed by the Company to be necessary to the conduct of its business.
(g) The Company shall require all persons now or hereafter employed
by the Company who have access to confidential and proprietary information
of the Company to enter into agreements of confidentiality. The Company
will cause its subsidiaries to use reasonable efforts to require all
persons hereafter employed by such subsidiaries who have access to
confidential and proprietary information of the Company or any such
subsidiary to enter into agreements of confidentiality.
7.5 Purchasers' Rights in Any Future Private Financing. For a period
--------------------------------------------------
commencing on the date of this Agreement and ending on the fifth anniversary of
this Agreement, in the event of any proposed sale of securities of the Company
(including, without limitation, the sale of Common Stock, preferred stock,
convertible securities and debt instruments, other than commercial loans or
extensions of credit made by a bank, insurance company or other third-party
financial institution), other than pursuant to grants of employee stock options,
-12-
<PAGE>
warrants in lieu of compensation, performance warrants and similar arrangements
and shares issued upon the exercise of stock options and warrants outstanding as
of the date of this Agreement, each Purchaser shall be provided at least 30
days' advance notice and have the right to invest in such sale of securities, on
the same terms as offered to any third party, in a percentage amount based on
such Purchaser's pro rata investment in the Preferred Stock sold pursuant to
this Agreement; provided, however, that such right does not include any sale of
-----------------
the Company's equity securities in connection with a public offering pursuant to
a registration statement filed with the SEC.
7.6 Transfer of Registered Stock. Following effectiveness of a
----------------------------
registration statement filed with the SEC pursuant to Section 3 of the
Registration Rights Agreement, upon attempted transfer of securities registered
under such registration statement pursuant to the terms of the Registration
Rights Agreement and in accordance with applicable laws, rules and regulations,
the Company will, as promptly as practicable following receipt of all
documentation reasonably requested by the Company from the transferor, take all
action necessary to cause its transfer agent to permit transfer of such
securities without restrictive legend.
8. Conditions to Closing.
---------------------
8.1 Conditions to Purchasers' Obligations at the Closing. The
----------------------------------------------------
obligations of each Purchaser to purchase the Preferred Stock at the Closing are
subject to the fulfillment on or before the Closing of each of the following
conditions, the waiver of which shall not be effective against any Purchaser who
does not consent in writing thereto:
(a) The representations and warranties made by the Company in
Section 4 hereof shall be true and correct in all material
respects as of the Closing Date with the same force and effect
as if they had been made as of the Closing Date, and the Company
shall have performed all obligations and conditions herein
required to be performed or observed by it on or prior to the
Closing.
(b) On the Closing Date, the sale and issuance of the Preferred
Stock and Warrants and the proposed issuance of the Company's
Common Stock upon conversion of the Preferred Stock or exercise
of the Warrants shall be legally permitted by all laws and
regulations to which Purchasers and the Company are subject.
(c) The Registration Rights Agreement shall have been executed and
delivered by the parties thereto.
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<PAGE>
(d) The Purchasers shall have received on the Closing Date, a
certificate or certificates of the chief executive officer and
the chief financial officer of the Company to the effect that,
as of such Closing Date, each of them severally represents that
the representations and warranties of the Company set forth in
Section 4 of this Agreement are true and correct in all material
respects as of the Closing Date and the Company has performed
all of its obligations under this Agreement to be performed at
or prior to such Closing Date.
(e) The Purchaser shall have received on the Closing Date the
opinion of Dorsey & Whitney LLP, counsel for the Company, dated
the Closing Date substantially in the form attached hereto as
Exhibit IV.
(f) A copy of (i) the Articles of Incorporation, as amended, of the
Company, certified by the secretary of state of Minnesota, as of
a date not earlier than ten (10) business days prior to the
Closing Date and accompanied by a certificate of the Secretary
or Assistant Secretary of the Company, dated as of the Closing
Date, stating that no amendments have been made to such Articles
of Incorporation since the date of the last filing indicated in
the secretary of states' certificate, and (ii) the By-laws of
the Company, certified by the Secretary or Assistant Secretary
of the Company, each of which to be in the form and substance as
previously made available to the Purchasers pursuant to Section
4.1.
(g) Good standing certificates for the Company from the Secretary of
State of Minnesota and the Secretary of State of each
jurisdiction in which it is qualified to do business in each
case dated as of the date not earlier than five (5) business
days prior to the Closing Date.
(h) A certificate signed by a duly authorized officer of the Company
certifying that since the Balance Sheet Date no event or events
has occurred, or is reasonably likely to occur, which,
individually or in the aggregate, has, or could reasonably be
expected to have, a Material Adverse Effect.
(i) Evidence reasonably satisfactory to the Purchasers that the
Certificate of Designation (Exhibit II) has been filed with the
Secretary of State of Minnesota.
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<PAGE>
8.2 Conditions to Obligations of the Company. The obligations of
----------------------------------------
the Company to each Purchaser under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by each
Purchaser:
(a) The representations and warranties made by the Purchasers in
Section 5 hereof shall be true and correct in all material
respect at the Closing Date with the same force and effect as if
they had been made on and as of said date.
(b) The Purchasers shall have performed and complied with all
agreements and conditions herein required to be performed or
complied with by the Purchasers on or before the Closing.
9. Indemnification of Purchasers.
-----------------------------
9.1 Survival. All agreements, covenants, representations and warranties
--------
contained herein and made in writing by or on behalf of the parties hereto in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby and shall survive until the fifth anniversary of the date of
this Agreement (the "Indemnity Period").
9.2 Purchasers' Right to Indemnification. Subject to the provisions of
------------------------------------
this Section 9, the Company hereby agrees to indemnify and hold harmless
Purchasers, and their respective employees, agents, directors, officers,
successors, predecessors and assigns (collectively, the "Purchaser Indemnified
Parties") from and against (i) any and all losses, obligations, liabilities,
damages, claims, deficiencies, costs and expenses (including, but not limited
to, the amount of any settlement entered into pursuant hereto and all reasonable
legal and other expenses incurred in connection with the investigation,
prosecution or defense of the matter but excluding consequential damages)
(collectively, "Claims"), which may be asserted against or sustained or incurred
by the Purchaser Indemnified Parties in connection with, arising out of, or
relating to (A) any breach or alleged breach of any of the representations,
warranties, agreements and covenants made by the Company herein or in any
certificate or other document delivered to any Purchaser Indemnified Party by or
on behalf of the Company in connection with this Agreement; or (B) any false,
incorrect or misleading representation or warranty made by or on behalf of the
Company herein or in any certificate or other document delivered to any
Purchaser Indemnified Party by or on behalf of the Company in connection with
this Agreement; and (ii) any and all costs and expenses (including, but not
limited to, reasonable legal expenses) incurred by any Purchaser Indemnified
Party in connection with the enforcement of its rights under this Agreement. No
claim for indemnification under Section 9 may be commenced after the Indemnity
Period; provided, however, that claims made within the applicable time period
-----------------
shall
-15-
<PAGE>
survive to the extent of such claim until such claim is finally determined and,
if applicable, paid. The parties to this Agreement acknowledge that such
indemnification provisions apply only with respect to the Preferred Stock, the
Warrants, the Additional Warrants (if any) and the shares of Common Stock
issuable upon the conversion of the Preferred Stock and/or exercise of the
Warrants and the Additional Warrants, if any, and the shares of Common Stock
issued or issuable as dividends on, or other distributions with respect to the
Preferred Stock, the Warrants, the Additional Warrants (if any) and the shares
of Common Stock issuable upon the conversion of the Preferred Stock and/or
exercise of the Warrants and the Additional Warrants; and any other security
issued or issuable in exchange for, or in replacement of, the Preferred Stock,
the Warrants, the Additional Warrants (if any) and the shares of Common Stock
issuable upon the conversion of the Preferred Stock and/or exercise of the
Warrants and the Additional Warrants.
9.3 Procedure for Claims.
--------------------
(a) Notice of Claim. Promptly, but in any event within 10 days
---------------
after obtaining knowledge of any claim or demand which may give rise to, or
could reasonably give rise to, a claim for indemnification hereunder
(referred to herein as an "Indemnification Claim"), a Purchaser shall give
written notice to the Company of such Indemnification Claim ("Notice of
Claim"). A Notice of Claim shall be given with respect to all
Indemnification Claims; provided, however, that the failure to give a
-----------------
timely Notice of Claim to the Company shall not relieve the Company from
any liability that it may have to the Purchaser Indemnified Parties
hereunder to the extent that the Company is not prejudiced by such failure.
The Notice of Claim shall set forth the amount (or a reasonable estimate)
of the loss, damage or expense suffered, or which may be suffered, by the
Purchaser Indemnified Party as a result of such Indemnification Claim and
the aggregate amount of all Indemnification Claims to date and a brief
description of the facts giving rise to such Indemnification Claim.
Purchasers shall furnish to the Company such information (in reasonable
detail) as Purchasers may have with respect to such Indemnification Claim
(including copies of any summons, complaint or other pleading which may
have been served on it and any written claim, demand, invoice, billing or
other document evidencing or asserting the same).
(b) Third Party Claims.
------------------
(i) If the claim or demand set forth in the Notice of Claim is
a claim or demand asserted by a third party (a "Third Party Claim"),
the Company shall have fifteen days (or such shorter period (but not
less than ten days) if an answer or other response or filing with
respect to the pleadings served by the third party is required prior
to the fifteenth
-16-
<PAGE>
day) after the date of receipt by the Company of the Notice of Claim
(the "Notice Date") to notify Purchasers in writing of the election
by the Company to defend the Third Party Claim on behalf of the
Purchaser Indemnified Parties.
(ii) If the Company elects to defend a Third Party Claim on
behalf of the Purchaser Indemnified Parties, Purchasers shall make
available to the Company and its agents and representatives all
records and other materials in Purchasers' possession which are
reasonably required in the defense of the Third Party Claim and the
Company shall pay any expenses payable in connection with the defense
of the Third Party Claim as they are incurred (whether incurred by
Purchasers or the Company).
(iii) If the Company has assumed control of the defense, the
Company may contest or settle the Third Party Claim on such terms as
the Company may choose, provided, however, that the Company will not
-----------------
have the right, without Purchasers' prior written consent, to settle
any such claim if such settlement (i) arises from or is part of any
criminal action, suit or proceeding (ii) contains a stipulation to,
confession of judgment with respect to, or admission or
acknowledgment of, any liability or wrongdoing on the part of any
Purchaser Indemnified Party, (iii) relates to any foreign federal,
state or local tax matters, (iv) provides for injunctive relief, or
other relief other than damages, which is binding on any Purchaser
Indemnified Party, (v) does not fully release all Purchaser
Indemnified Parties with respect to the relevant Third Party Claim or
(vi) has any res judicata or collateral estoppel effect that could be
adverse to any Purchaser Indemnified Party.
(iv) If the Company elects to defend a Third Party Claim, the
Purchaser Indemnified Parties shall have the right to participate in
the defense of the Third Party Claim, at the Purchaser Indemnified
Parties' expense (and without the right to indemnification for such
expense under this Agreement); provided, however, that the reasonable
-----------------
fees and expenses of counsel retained by the Purchaser Indemnified
Parties shall be at the expense of the Company if (A) the use of the
counsel chosen by the Company to represent the Purchaser Indemnified
Parties would present such counsel with a conflict of interest; (B)
the parties to such proceeding include both Purchaser Indemnified
Parties and the Company and there may be legal defenses available to
Purchaser Indemnified Parties which are different from or additional
to those available to the Company; (C) within ten days after being
advised by the Company of the identity of counsel to be retained to
represent
-17-
<PAGE>
Purchaser Indemnified Parties, Purchasers shall have objected to the
retention of such counsel for valid reasons (which shall be stated in
a written notice to the Company), and the Company shall not have
retained different counsel reasonably satisfactory to Purchasers; or
(iv) the Company shall authorize the Purchaser Indemnified Parties to
retain separate counsel at the expense of the Company.
(v) If the Company elects to defend a Third Party Claim, and
does not defend a Third Party Claim in good faith, the Purchaser
Indemnified Parties shall have the right, in addition to any other
right or remedy it may have hereunder, at the sole and exclusive
expense of the Company, to defend such Third Party Claim; provided,
--------
however, that such expenses shall be payable by the Company only if
-------
and when such Third Party Claim becomes payable.
(c) Cooperation in Defense. Purchasers shall cooperate with the
----------------------
Company in the defense of Third Party Claims. Subject to the foregoing, (i)
the Purchaser Indemnified Parties shall not have any obligation to
participate in the defense of or to defend any Third Party Claim and (ii)
the Purchaser Indemnified Parties' defense of or its participation in the
defense of any Third Party Claim shall not in any way diminish or lessen
its right to indemnification as provided in this Agreement.
10. Entire Agreement. This Agreement and the other documents referenced
----------------
herein contain the entire agreement between the parties with respect to the
subject matter hereof and supersede any and all prior arrangements and
understandings, both written and oral, with respect thereto.
11. Severability. It is the desire and intent of the parties that the
------------
provisions of this Agreement be enforced to the fullest extent permissible under
the law and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, in the event that any provision of this Agreement would be
held in any jurisdictions to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
12. Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, provided that no party may assign, delegate or otherwise
-18-
<PAGE>
transfer any of its rights or obligations under this Agreement without obtaining
the prior written consent of the other party hereto.
13. Governing Law. This Agreement shall be construed in accordance with
-------------
and governed by the law of the State of Minnesota, without giving effect to the
principles of conflict of laws thereof.
14. Counterparts; Effectiveness. This Agreement may be signed in any
---------------------------
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereof and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
15. Notice. Whenever a party to this Agreement is required to give
------
notice to the other party hereunder at the address set forth in this paragraph,
such notice shall be made in writing and deemed to have been duly delivered when
(a) delivered by hand, (b) one day after upon confirmation of delivery by a
national recognized overnight delivery service, (c) three days after sent by
Certified U.S. Mail, return receipt requested or (d) by telecopy when received.
The address for notices given hereunder shall be: if to a Purchaser, at the
address set forth on Schedule A hereto, and if to the Company, at 2658 Patton
Road, Roseville, Minnesota 55113, Attention: President (telecopy: (612) 639-
8549), or at such other address as the parties designate to each by giving
notice hereunder.
16. Expenses. Except as otherwise specified in this Agreement, all costs
--------
and expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses; provided, however, that the Company shall pay the fees
-----------------
and costs of Neal, Gerber & Eisenberg relating to this Agreement and the
transactions contemplated hereby.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
DIAMETRICS MEDICAL, INC.
By /s/ Laurence L. Betterley
----------------------------------
Its Chief Financial Officer
-------------------------------
PURCHASERS:
[SIGNATURES OF PURCHASERS]
<PAGE>
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
-----------------------------
Registration Rights Agreement (the "Agreement"), dated as of January 30,
1997, by and between Diametrics Medical, Inc., a Minnesota corporation (the
"Company"), and the Persons whose signatures appear on the signature pages
hereto as of the date hereof or hereafter.
R E C I T A L S:
---------------
A. This Agreement is made pursuant to the Stock Purchase Agreement dated
as of the date hereof (the "Purchase Agreement") between the Company and the
purchasers signatories thereto (the "Purchasers"). Capitalized terms not
otherwise defined herein shall have the meanings set forth in the Purchase
Agreement.
B. The Purchase Agreement provides, among other things, for the sale and
issuance by the Company to the Purchasers of units each consisting of (i) one
share of the Company's Series I Junior Participating Preferred Stock, par value
$0.01 per share (the "Preferred Stock"), and (ii) a detachable warrant to
purchase one share of common Stock for each share of Preferred Stock purchased
(the "Warrants"). The Purchase Agreement also provides for the issuance of
certain additional warrants under certain circumstances (the "Additional
Warrants") for the purchase of additional shares of the Company's Series I
Junior Participating Preferred Stock, par value $0.01 per share (the "Additional
Preferred Stock"). Each share of Preferred Stock is, and each share of
Additional Preferred Stock, if any, will be, convertible (subject to approval of
the stockholders of the Company for the authorization of additional shares of
Common Stock sufficient to accommodate the conversion of the Preferred Stock)
into four shares (subject to adjustment) of Common Stock as provided in the
Certificate of Designation relating to the Preferred Stock.
C. In order to induce the Purchasers to enter into and perform its
obligations under the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement.
NOW,THEREFORE, the parties hereby agree as follows:
1. Definitions.
-----------
In addition to terms defined elsewhere in this Agreement, as used in this
Agreement, the following capitalized terms shall have the following meanings:
"Common Stock" means the common stock of the Company, $0.01 per share.
------------
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any similar or successor federal statute and the rules and regulations of the
SEC promulgated thereunder, all as the same shall be in effect at the time.
"Holder" means any Person who executes a counterpart of this Agreement
------
on or after the date hereof and any Person who becomes a Holder after the date
of this Agreement pursuant to Paragraph 14(a).
"Indemnified Party" has the meaning set forth in Paragraph 8(c).
-----------------
"Indemnifying Party" has the meaning set forth in Paragraph 8(c).
------------------
"NASD" means the National Association of Securities Dealers, Inc.
----
"Person" means an individual, partnership, corporation, limited
------
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof, or any other entity of any kind.
"Registered Securities" means Registrable Securities which have been
---------------------
registered under the Securities Act pursuant to a registration statement filed
with and declared effective by the SEC.
"Registrable Securities" means (i) the Shares; (ii) the shares of
----------------------
Common Stock issued or issuable as dividends on, or other distributions with
respect to the Shares; and (iii) any other security issued or issuable in
exchange for, or in replacement of, any of the Shares, in each case until any
such security ceases to be a Registrable Security in accordance with Paragraph 2
hereof.
"Registration Expenses" means all expenses (excluding Selling Expenses)
---------------------
incident to the Company's performance of or compliance with Paragraphs 3, 4 and
5 of this Agreement, including without limitation all registration and filing
fees, including fees with respect to filings required to be made with any stock
exchange or the NASD, fees and expenses of compliance with state securities or
blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities),
messenger, telephone and delivery expenses, and the fees and expenses of counsel
for the underwriter, costs of printing prospectuses, and fees and disbursements
of counsel for the Company and of all independent certified public accountants
of the Company (including the expenses of any special audit and "cold comfort"
letters required by or incident to such performance).
"Registration Statement" means any registration statement of the
----------------------
Company which includes any of the Registrable Securities pursuant to the
provisions of this Agreement, including the prospectus included or deemed
-2-
<PAGE>
included in the Registration Statement and all amendments and supplements to the
Registration Statement or the prospectus, including post-effective amendments,
and all exhibits to, and all materials incorporated by reference in, the
Registration Statement.
"SEC" means the United States Securities and Exchange Commission or any
---
similar agency then having the authority to enforce the Exchange Act or the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar or successor statute, and the rules and regulations of the SEC
promulgated thereunder, all as the same shall be in effect at the time.
"Selling Expenses" means (i) all fees and expenses of counsel and
----------------
accountants for the Holder(s), (ii) all discounts, commissions or fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Registrable Securities, (iii)
transfer taxes and (iv) any other expenses of the Holder(s) incident to this
Agreement (excluding Registration Expenses).
"Selling Holders" has the meaning set forth in Paragraph 6(b).
---------------
"Shares" means the shares of Common Stock into which the shares of
------
Preferred Stock, the shares of Additional Preferred Stock, if any, and the
Warrants are convertible or exercisable, as the case may be. The Preferred
Stock, the Additional Preferred Stock, if any, and the shares of Additional
Preferred Stock into which the Additional Warrants, if any, are convertible,
shall be deemed to be Shares if and when it is listed for inclusion on the
automated quotation system of the National Association of Securities Dealers,
Inc. ("NASD") or any national securities exchange on which a class of the
Company's equity securities is listed.
2. Securities Subject to this Agreement. The securities entitled to the
------------------------------------
benefits of this Agreement are the Registrable Securities, but such benefits
shall continue with respect to each such security only so long as such security
continues to be a Registrable Security. A security ceases to be a Registrable
Security when (a) a Registration Statement covering the sale of such Registrable
Security has been declared effective under the Securities Act and the
Registrable Security has been sold in accordance with the Registration
Statement; (b) it is distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act; (c) a new certificate
representing such security has been delivered (to the original Holder or any
subsequent transferee) by the Company free from any restrictive legend and
without issuance of stop transfer or other instructions to the Company's
transfer agent and the Holder of such security has been advised by counsel
reasonably acceptable to it that subsequent disposition of such security will
-3-
<PAGE>
not require registration or qualification under the Securities Act then in
effect; or (d) the security has ceased to be outstanding.
3. Shelf Registration.
------------------
(a) The Company shall file within 60 days following the date hereof
with the SEC, and shall use its best efforts to cause the SEC to promptly
declare effective, a Registration Statement relating to the Registrable
Securities, which Registration Statement shall provide for the sale by the
holders thereof of the Registrable Securities from time to time on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act (the "Shelf
Registration").
(b) The foregoing notwithstanding, the Company shall have the right
in order to avoid the disclosure of any corporate development that the Company
is not otherwise obligated to disclose to delay the filing of the Registration
Statement with respect to the Shelf Registration for a reasonable length of time
(a "Delay Period"); provided, that the aggregate number of days in the Delay
--------
Period shall not exceed 30. The Company shall provide written notice to each
holder of Registrable Securities to be covered by the Shelf Registration of the
beginning and end of the Delay Period.
(c) Failure to file a Registration Statement or cause such
Registration Statement to become effective pursuant to the provisions of this
Section 3 by reason of delays caused by any of the Holders in connection with
their rights set forth in Section 6(l) of this Agreement shall not result in a
breach of this Section 3.
(d) To the extent that the holders of Registrable Securities would
not be adversely effected, the Company may include other securities in such
Shelf Registration (whether for the account of the Company or otherwise,
including without limitation any securities of the Company held by security
holders, if any, who have piggyback registration rights with respect thereto) or
otherwise combine the offering of the Registrable Securities with any offering
of other securities of the Company (whether for the account of the Company or
otherwise).
4. Preferred Stock Shelf Registration.
----------------------------------
(a) If the Shelf Registration is not declared effective by the SEC
prior to such time as the Preferred Stock and the Additional Preferred Stock, if
any, is listed (the "Listing") for inclusion on the automated quotation system
of the NASD or any national securities exchange on which a class of the
Company's equity securities is listed, the Company shall file within 60 days
following the Listing with the SEC, and shall use its best efforts to cause the
SEC to promptly declare effective, a new or appropriately amended Registration
Statement relating to the Registrable
-4-
<PAGE>
Securities, which Registration Statement shall provide for the sale by the
holders thereof of the Registrable Securities from time to time on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act (the "Preferred
Stock Shelf Registration").
(b) The foregoing notwithstanding, the Company shall have the right
in order to avoid the disclosure of any corporate development that the Company
is not otherwise obligated to disclose to delay the filing of the Registration
Statement with respect to the Preferred Stock Shelf Registration for a
reasonable length of time (a "Preferred Stock Delay Period"); provided, that
--------
the aggregate number of days in the Preferred Stock Delay Period shall not
exceed 30. The Company shall provide written notice to each holder of
Registrable Securities to be covered by the Shelf Registration of the beginning
and end of the Preferred Stock Delay Period.
(c) Failure to file a Registration Statement or cause such
Registration Statement to become effective pursuant to the provisions of this
Section 4 by reason of delays caused by any of the Holders in connection with
their rights set forth in Section 6(l) of this Agreement shall not result in a
breach of this Section 4.
(d) To the extent that the holders of Registrable Securities would
not be adversely effected, the Company may include other securities in such
Preferred Stock Shelf Registration (whether for the account of the Company or
otherwise, including without limitation any securities of the Company held by
security holders, if any, who have piggyback registration rights with respect
thereto) or otherwise combine the offering of the Registrable Securities with
any offering of other securities of the Company (whether for the account of the
Company or otherwise).
5. Registration under the Securities Act: Piggy-Back Registration.
---------------------------------------------------------------
(a) Piggy-Back Registration. If at any time the Company proposes to
-----------------------
register for itself or any of its stockholders any of its capital stock under
the Securities Act in connection with the public offering of such securities on
a form and in a manner that would permit registration of Registrable Securities
for sale to the public under the Securities Act, then:
(i) the Company in each case will notify in writing each Holder
of the filing or intended filing of a Registration Statement in connection
therewith prior to the proposed effective date thereof;
(ii) the Company will offer each Holder the opportunity to
include in such registration all or such lesser amount of Registrable Securities
as
-5-
<PAGE>
each Holder may request. Upon the request of one or more Holders given in
writing within 20 days after receipt of the notice described under clause (i)
above, the Company, subject to the provisions of Paragraph 5(b), shall cause any
of the Registrable Securities specified by such Holder to be included in the
Registration Statement; and
(iii) if the registration of which the Company gives written
notice under clause (i) above involves an underwriting, the Company shall use
its best efforts to cause the managing underwriter(s) of the proposed
underwritten offering to permit Holders to include their Registrable Securities
in the underwriting on the same terms and conditions as similar terms of the
Company included therein.
(b) Limitations on the Company's Obligations to Effect Piggy-Back
-------------------------------------------------------------
Registration. Notwithstanding the provisions of Paragraph 5(a) above:
- ------------
(i) if and to the extent that the managing underwriter(s)
advise the Company in writing that, in its good faith determination, inclusion
of the number of Registrable Securities held by Holders requesting inclusion in
the Registration Statement would materially interfere with the underwriter's
ability to effectuate the registration and sale of securities proposed to be
offered and sold pursuant to the Registration Statement, the managing
underwriter(s) shall select the permissible quantity of Registrable Securities
to be sold by the Holders (which may be none) by reducing the total number of
securities to be sold by the holders of securities other than Registrable
Securities and the Holders on a pro rata basis; provided, however, that no such
--- ----
reduction may reduce the securities being offered by the Company for its own
account. For purposes of apportionment pursuant to this Paragraph 5(b), for any
selling holder that is a partnership or a corporation, the affiliates of such
partnership or corporation shall collectively, with such holder be deemed to be
one "selling holder," and any pro rata reduction with respect to such "selling
holder" shall be based upon the aggregate amount of shares carrying registration
rights owned by entities and individuals included in such "selling holder"; and
(ii) if, at any time after giving such written notice of its
intention to register any of its securities and prior to the effective date of
the applicable Registration Statement filed in connection with such
registration, the Company shall determine for any reason not to register such
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and thereupon shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration.
(c) Underwritten Offer. If the registration of which the Company
------------------
gives written notice under Paragraph 5(a)(i) above involves an underwriting, the
-6-
<PAGE>
Company shall so advise in such written notice. In such event the right of any
Holder to registration pursuant to Paragraph 5(a) shall be conditioned upon such
Holders's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in such underwriting. All Holders proposing to
distribute their Registrable Securities through such underwriting shall
(together with the Company and the other holders distributing their Registrable
Securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw from the underwriting by prompt
written notice to the Company and the underwriter.
6. Registration Obligations of the Company. In connection with the
---------------------------------------
filing of a Registration Statement pursuant to Paragraphs 3, 4 and 5 the Company
shall:
(a) Use its best efforts to cause such Registration Statement to
remain in effect until the earlier of (i) the completion of the distribution of
the Registrable Securities included in the Registration Statement, and (ii) two
years after the date on which the Registration Statement is declared effective.
(b) Notify the Holders whose Registrable Securities are included in
such Registration Statement (the "Selling Holders") as to the filing of the
Registration Statement and of all amendments or supplements thereto filed prior
to the effective date of such Registration Statement;
(c) Notify the Selling Holders, promptly after the company shall
receive notice thereof, of the time when such Registration Statement became
effective or when any amendment or supplement to any prospectus forming a part
of said Registration Statement has been filed;
(d) Notify the Selling Holders promptly of any request by the SEC for
the amending or supplementing of such Registration Statement or prospectus or
for additional information;
(e) During the period in which the Company is obligated to use its
reasonable best efforts to keep a Registration Statement effective pursuant to
this Paragraph 6, prepare and promptly file with the SEC and promptly notify the
Selling Holders of the filing of any amendments or supplements to such
Registration Statement or prospectus as may be necessary to correct any
statements or omissions if, at any time when a prospectus relating to the
Registrable Securities is required to be delivered under the Securities Act, any
event with respect to the Company shall have occurred as a result of which any
such prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading; and, in
-7-
<PAGE>
addition, during such period, prepare and file with the SEC, promptly upon the
Selling Holders' written request, any amendments or supplements to such
Registration Statement or prospectus which may be reasonably necessary or
advisable in connection with the distribution of the Registrable Securities;
(f) Prepare promptly upon request of the Selling Holders or any
underwriters for the Selling Holders made during the period in which the Company
is obligated to use its best efforts to keep a Registration Statement effective,
such amendment or amendments to such Registration Statement and such prospectus
or prospectuses as may be reasonably necessary to permit compliance with the
requirements of Section 10(a)(3) of the Securities Act;
(g) Advise the Selling Holders promptly after the Company shall
receive notice or obtain knowledge of the issuance of any stop order by the SEC
suspending the effectiveness of any such Registration Statement or amendment
thereto or of the initiation or threatening of any proceeding for that purpose,
and promptly use its reasonable best efforts to prevent the issue of any stop
order or obtain its withdrawal promptly if such stop order should be issued;
(h) Use its best efforts to qualify as soon as reasonably practicable
the Registrable Securities for sale under the securities or blue sky laws of
such states and jurisdictions within the United States as shall be reasonably
requested by the Selling Holders; provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business, to become subject to taxation or to file a consent to service of
process generally in any of the aforesaid states or jurisdictions;
(i) Furnish the Selling Holders, as soon as available, copies of any
Registration Statement and each preliminary or final prospectus, or supplement
or amendment required to be prepared pursuant hereto, all in such quantities as
the Selling Holders may from time to time reasonably request;
(j) Furnish each Selling Holder with copies of such opinions of
counsel and accountants' "comfort" letters as it reasonably may request with
respect to the registration of its Registrable Securities, the Registration
Statement covering such Registrable Securities and the financial statements
included therein;
(k) Apply for listing and use its best efforts to list the
Registrable Securities, if any, being registered on any national securities
exchange on which a class of the Company's equity securities is listed (and to
maintain such listing during the pendency of the relevant registration period)
or, if the Company does not have a class of equity securities listed on a
national securities exchange, apply for qualification and use its reasonable
best efforts to qualify the Registrable Securities, if any, being registered for
inclusion on the automated quotation system of the NASD
-8-
<PAGE>
(and to maintain such qualification during the pendency of the relevant
registration period);
(l) In connection with the preparation and filing of each
Registration Statement registering Registrable Securities under the Securities
Act, give the holders of Registrable Securities on whose behalf such Registrable
Securities are to be so registered and their underwriters, if any, and their
respective counsel and accountants, the opportunity to participate in the
preparation of such Registration Statement, each prospectus included therein or
filed with the SEC, and each amendment thereof or supplement thereto, and will
give each of them such access to its books and records and such opportunities to
discuss the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders and such underwriters, or their respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act; and
(m) Make senior executives of the Company reasonably available to
assist the underwriters with respect to, and accompanying the underwriters on
the so-called "road show", in connection with marketing efforts for, and the
distribution and sale of Registrable Securities pursuant to a Registration
Statement in connection with an underwritten public offering.
7. Expenses. The Company will pay all Registration Expenses in
--------
connection with registrations of Registrable Securities effected pursuant to
Paragraphs 3, 4 and 5. All Selling Expenses in connection with any registration
effected pursuant to this Agreement shall be borne by the Holder(s).
8. Indemnification.
---------------
(a) To the extent permitted by applicable law, the Company will
indemnify each Holder of the Registrable Securities requesting or joining in a
registration, each Person who controls such Holder within the meaning of Section
15 of the Securities Act, and each underwriter of the securities so registered
and each person who controls such underwriter, and their respective officers,
directors, partners, agents, employees and successors (each a "Section 8(a)
Indemnitee"), against all costs, expenses, demands, claims, losses, damages,
liabilities, fines and penalties (or actions in respect thereof), to which such
Section 8(a) Indemnitee may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such claims, losses, damages, liabilities,
fines and penalties arise out of or are based on any untrue statement (or
alleged untrue statement) of a material fact contained in any Registration
Statement or prospectus, or arise out of or are based upon any omission (or
alleged omission) to state therein a fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
state
-9-
<PAGE>
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law and will reimburse each such
Section 8(a) Indemnitee for (and will make periodic advances to cover) any legal
and any other expenses reasonably incurred in connection with investigating or
defending any such demand, claim, loss, damage, liability or action promptly
after submission of supporting materials with respect to such expenses;
provided, however, that the Company shall not be required to indemnify any
- -------- -------
Section 8(a) Indemnitee for any cost, expense, demand, claim, loss, damage,
liability, fine or penalty which arises out of or is based upon (i) any written
information provided by any such Section 8(a) Indemnitee, respectively,
expressly for inclusion in the Registration Statement or (ii) the circumstances
set forth in clause (y) of paragraph (b) below.
(b) To the extent permitted by applicable law, each Holder requesting
or joining in a registration, severally and not jointly, will indemnify the
Company, each of its officers, directors, employees, agents, successors and
controlling persons (within the meaning of Section 15 of the Exchange Act)
(each, a "Section 8(b) Indemnitee"), against all costs, expenses, demands,
claims, losses, damages, liabilities, fines and penalties (or actions in respect
thereof) to which such Section 8(b) Indemnitee may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities, fines and penalties arise out of or are based upon an
untrue statement (or alleged untrue statement) of a material fact contained in
any Registration Statement or prospectus, or arise out of or are based upon (x)
the omission (or alleged omission) to state therein a fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement (or alleged
untrue statement or omission (or alleged omission) was made in any Registration
Statement or prospectus in reliance upon and in conformity with information
furnished to the Company by such Holder requesting or joining in a registration
specifically for use in the preparation thereof, or (y) any untrue statement or
alleged untrue statement of a material fact contained in, or any omission or
alleged omission of a material fact from, a prospectus if (i) a later prospectus
corrected the untrue statement or alleged untrue statement, or omission or
alleged omission, (ii) at such time the Company had advised the Holder of the
availability of the revised prospectus, and (iii) there would have been no such
liability had such later prospectus actually been delivered to the purchaser at
or prior to confirmation of sale; provided, however, that the obligations of
-------- -------
such Holders hereunder shall be limited to an amount equal to the proceeds to
each Holder of the Registrable Securities sold in connection with such
registration.
(c) Each party entitled to indemnification under this Paragraph 8
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has received written notice of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any
-10-
<PAGE>
litigation resulting therefrom, provided such counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld or delayed). The Indemnified Party may participate in such defense at
such party's expense; provided, however, that the Indemnifying Party shall bear
the expense of such defense of the Indemnified Party if (i) the Indemnifying
Party has agreed in writing to pay such expenses, (ii) the Indemnifying Party
shall have failed to assume the defense of such claim or employ counsel
reasonably satisfactory to the Indemnified Party, or (iii) in the reasonable
judgment of the Indemnified Party, based upon the written advice of such
Indemnified Party's counsel, representation of both parties by the same counsel
would be inappropriate due to actual or potential conflicts of interest. In the
event that the Indemnifying Party properly does not assume such defense, the
Indemnifying Party shall not be subject to any liability for any settlement made
without its prior written consent, which consent shall not be unreasonably
withheld or delayed. The failure of any Indemnified Party to give notice as
provided herein shall relieve the Indemnifying Party of its obligations under
this Paragraph 8 only to the extent that such failure to give notice shall
materially adversely prejudice the Indemnifying Party in the defense of any such
claim or any such litigation. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the prior written consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation in form and substance reasonably
satisfactory to such Indemnified Party.
9. Contribution.
------------
(a) If the indemnification provided for in Paragraph 8 from the
Indemnifying Party is unavailable to or unenforceable by the Indemnified Party
in respect to any losses, claims, damages, liabilities or expenses referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such Indemnifying
Party or Indemnified Parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to
-11-
<PAGE>
include, subject to the limitations set forth in Paragraph 8, any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
(b) The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Paragraph 9 were determined by pro
---
rata allocation or by any other method of allocation which does not take into
- ----
account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
(c) If Indemnification is available under Paragraph 8, the
Indemnifying Parties shall indemnify each Indemnified Party to the full extent
provided in Paragraph 8 without regard to the relative fault of the Indemnifying
Party or Indemnified Party or any other equitable consideration provided for in
this Paragraph 9.
10. Holdback Agreements.
--------------------
(a) Restrictions on Public Sale by Holder of Registrable Securities.
----------------------------------------------------------------
To the extent requested by the Company and the managing underwriter with respect
to the applicable Registration Statement, each Holder whose Registrable
Securities are included in a Registration Statement filed pursuant to Paragraphs
3, 4 and 5 hereof agrees not to effect any public sale or distribution of the
issue being registered or any similar security of the Company, including a sale
pursuant to Rule 144 or Rule 144A under the Securities Act, during the seven
(7)-day period prior to, and during the 90-day period beginning on, the
effective date of such Registration Statement, to the extent such sales may
prevent the Company from being in compliance with the Exchange Act; provided,
---------
however, that all officers and directors of the Company enter into similar
- --------
agreements. Such agreement shall be in writing reasonably satisfactory to the
Company and such managing underwriter.
(b) Restrictions on Public Sale by the Company and Others. The
------------------------------------------------------
Company shall not make any public or nonpublic sale or distribution of any
securities of the same class as those being registered, or any securities
convertible into or exchangeable or exercisable for any such securities, during
the seven day period prior to, and during the 60-day period beginning on, the
effective date of any Registration Statement in which holders of Registrable
Securities are participating or the commencement of a public distribution of
Registrable Securities pursuant to any such Registration Statement (except (i)
as part of such registration or pursuant to registrations on SEC Forms S-4 or S-
8 or any similar or successor form, or on any form filed in connection with an
exchange offer or an offering of securities solely to the existing stockholders
or employees of the Company or (ii) for sales or other
-12-
<PAGE>
issuances of securities pursuant to outstanding options, warrants, rights or
similar obligations).
11. Rule 144 and Stock Exchange Listings.
-------------------------------------
To the extent that the Company is subject to the filing and reporting
requirements of the Securities Act and the Exchange Act, and so long as there
are Registrable Securities outstanding:
(a) The Company will file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and will take such further action as any holder
of Registrable Securities may reasonably request, all to the extent required
from time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 or Rule 144A under the Securities Act, as such Rule may
be amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any holder of Registrable Securities,
the Company will deliver to such holder a written statement as to whether it has
complied with such information and requirements
(b) The Company will use its best efforts to avoid taking any action
which would cause the Common Stock to cease to be eligible for inclusion on
either of the NASD Automated Quotation System or for listing on any securities
exchange on which it may become listed.
12. Obligations of Holder.
----------------------
(a) Each Holder of Registrable Securities included in any
registration shall furnish to the Company such information regarding such Holder
and the distribution proposed by such Holder, and shall otherwise use reasonable
best efforts to cooperate with the Company and any underwriter(s), as the
Company may reasonably request and as shall be reasonably required in connection
with any registration, qualification or compliance referred to in this
Agreement.
(b) Each Holder of the Registrable Securities agrees by acquisition
of such Registered Securities that upon receipt of any notice from the Company
pursuant to Paragraph 6(g), such Holder will forthwith discontinue such Holder's
disposition of Registered Securities pursuant to the Registration Statement
relating to such Registered Securities under such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Paragraph 6(g) and if
so directed by the Company, will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the prospectus relating to such Registered Securities at the time
of receipt of such notice.
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<PAGE>
13. Mergers, etc.
-------------
The Company shall not, directly or indirectly, enter into any merger,
consolidation or reorganization in which the Company shall not be the surviving
corporation unless the surviving corporation shall, prior to such merger,
consolidation or reorganization, agree in writing to assume the obligations of
the Company under this Agreement, and for that purpose references hereunder to
"Registrable Securities" shall be deemed to include the securities which the
Holders would be entitled to receive in exchange for Common Stock under any such
merger, consolidation or reorganization, provided that to the extent such
securities to be received are convertible into shares of common stock of the
issuer thereof, then any such shares of common stock or other securities as are
issued or issuable upon conversion of said convertible securities shall also be
included within the definition of "Registrable Securities."
14. Miscellaneous
-------------
(a) Transfer of Certain Rights. The rights granted to the Holders
--------------------------
under this Agreement may be transferred only to a transferee who delivers to the
Company, within a reasonable time after such transfer, a written instrument by
which such transferee agrees to be bound by the applicable terms of this
Agreement. Notwithstanding the foregoing, nothing herein shall prohibit: (i)
any Holder from transferring any of its rights under this Agreement to any
wholly-owned subsidiary of such Holder or to any entity which merges or
consolidates with or acquires all or substantially all of the equity securities
or assets of such Holder, (ii) any Holder which is a partnership from
transferring any of its rights under this Agreement to a partner of such
partnership where such partner receives Registrable Securities in a distribution
from such partnership, (iii) any Holder who is an individual from transferring
any of its rights under this Agreement to such Holder's spouse or to other
relatives, or to a trust for the benefit of the Holder, or his or her spouse or
other relatives; or (iv) any trustee of a trust which holds Registerable
Securities from distributing such Registrable Securities to the beneficiaries of
such trusts; provided that any such transferee under subparagraphs (i), (ii),
--------
(iii) or (iv) above will hold the Registrable Securities subject to the terms
and conditions of this Agreement. Upon any transfer of the rights of a Holder
permitted by and completed in compliance with the terms of this Agreement, the
transferee shall become a "Holder" for purposes of this Agreement.
(b) Remedies. In the event of a breach by the Company of its
--------
obligations under this Agreement, each holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this
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<PAGE>
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(c) Amendments and Waivers. The provisions of this Agreement may not
----------------------
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given without the written consent of the
Company and Holders of at least a majority of the Registrable Securities
affected by such amendment, modification, supplementation, waiver or consent.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof with respect to a matter which relates exclusively to the
rights of Holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and which does not directly or indirectly
affect the rights of other Holders of Registrable Securities may be given by the
Holders of a majority of the Registrable Securities being sold by such Holders,
provided that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(d) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing and shall be delivered by hand,
overnight courier service, registered or certified first-class mail, return
receipt requested, or telecopier; if to a Holder, at the address set forth
opposite such Holder's name on the signature pages attached hereto or such other
address as may have been furnished to the Company in writing; if to the Company,
at 2658 Patton Road, Roseville, Minnesota 55113, Attention: President and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Paragraph 13(d).
All such notices and communications shall be deemed to have been duly
given when delivered by hand, if personally delivered; one business day after
sent if sent by courier service.
(e) No Inconsistent Agreements. The Company shall not on or after
--------------------------
the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. To the extent the Company on or after the date of this
Agreement grants any superior or more favorable rights or terms to any Person
with respect to its securities, any such superior or more favorable rights or
terms shall also be deemed to have been granted simultaneously to the holders of
Registrable Securities. The Company agrees to deliver to representatives of the
initial Holders hereunder, upon the request of such initial Holders, copies of
all agreements which it has previously entered into or become a party to, or by
which it is bound, with respect to its securities granting any registration
rights to any Person which is inconsistent with the rights granted hereunder.
The rights granted to the holders of Registrable
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<PAGE>
Securities hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of the securities of the Company under
any other agreements.
(f) Governing Law; Forum. This Agreement shall be governed by and
--------------------
construed in accordance with the laws of the State of Minnesota without
regarding to the conflict of laws provisions thereof. The parties irrevocably
agree that all actions arising directly or indirectly as a result or in
consequence of this Agreement and the transactions contemplated hereby, shall be
instituted and litigated only on federal, state or local courts sitting in the
City of Minneapolis, Minnesota and each of the parties hereby consents to the
exclusive jurisdiction and venue of any such court, and waives any objection
based on forum nonconveniens.
----- -------------
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement and the Purchase Agreement (and
----------------
all exhibits and/or schedules attached hereto and thereto) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the securities now or hereafter owned by the Holders.
(k) Attorneys' Fees. If any legal action or other proceeding is
---------------
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it may be entitled.
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<PAGE>
IN WITNESS WHEREOF, the Agreement has been duly executed by the
parties as of the date first above written.
DIAMETRICS MEDICAL, INC.
By /s/ Laurence L. Betterley
-----------------------------------
Its Chief Financial Officer
-------------------------------
HOLDERS:
[SIGNATURES OF HOLDERS]
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<PAGE>
EXHIBIT 4.3
CERTIFICATE OF DESIGNATION
OF
SERIES I JUNIOR PARTICIPATING PREFERRED STOCK
OF
DIAMETRICS MEDICAL, INC.
The undersigned hereby certifies that the Board of Directors of
Diametrics Medical, Inc. (the "Corporation"), a corporation organized and
existing under the Minnesota Business Corporation Act, duly approved the terms
contained in the following resolution effective on January 29, 1997:
RESOLVED, that a series of preferred stock of the Corporation is
hereby created, and the designation and amount thereof and the relative rights
and preferences of the shares of such series, are as follows:
Section 1. Designation and Amount. The shares of such series shall
----------------------
be designated as "Series I Junior Participating Preferred Stock" (the "Preferred
Shares") and the number of shares constituting the Preferred Shares shall be
1,000,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors and any necessary shareholder approval; provided,
---------
however, that no decrease shall reduce the number of shares of Preferred Shares
- -------
to a number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Preferred Shares.
Section 2. Dividends and Distributions.
---------------------------
(a) Dividends shall be payable on the Preferred Shares out of funds
legally available for the declaration of dividends only if and when declared by
the Board of Directors. In no event shall any dividend be paid or declared, nor
shall any distribution be made, on the Common Stock, other than a dividend or
distribution payable solely in shares of Common Stock, unless the holders of the
Preferred Shares shall participate in such dividend on a pro rata basis with the
holders of Common Stock, counting one Preferred Share for each four shares of
Common Stock. In no event shall any dividend be paid or declared, nor shall any
distribution be made, on any outstanding series of preferred stock, unless the
holders of all of the outstanding Preferred Shares shall participate in such
dividend or distribution on a pro rata basis with the holders of such series of
preferred stock, counting shares of both such series and shares of the Preferred
Shares on an as-if-converted basis.
(b) If the Conversion Date (as defined in Section 4 hereof) has not
occurred on or before July 29, 1997, then in such event dividends shall accrue
on the
<PAGE>
Preferred Shares at the rate of 7.0% per annum of the liquidation preference
thereof compounded quarterly from the initial date of issuance of such Preferred
Shares to and including the later of the Conversion Date or the Redemption Date
(as hereinafter defined). Such dividends shall be cumulative from the Accrual
Date and shall be paid on March 31, June 30, September 30 and December 31 of
each year, commencing September 30, 1997. Each such dividend shall be paid to
the holders of record of the Preferred Shares on such record date, not exceeding
15 days preceding the payment date thereof, as shall be fixed by the Board of
Directors. Dividends on account of arrears for any past dividend periods may be
declared and paid at any time, without reference to any regular dividend payment
date, to holders of record on such date, not exceeding 30 days preceding the
payment date thereof, as may be fixed by the Board of Directors.
Section 3. Voting Rights.
-------------
(a) Subject to the provision for adjustment hereinafter set forth,
each Preferred Share shall entitle the holder thereof to 2.844 votes on all
matters submitted to a vote of the shareholders of the Corporation. In the
event the Corporation shall at any time, declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the number of votes per share to which
holders of shares of Preferred Shares were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(b) Unless the vote of the holders of a greater number of shares
shall then be required by law, none of the following actions may be taken by the
Corporation without the approval by vote of the holders of 66.667% of issued and
outstanding Preferred Shares, voting together as a single class:
(i) Any amendment, restatement or modification of the Articles of
Incorporation, By-laws or other governance documents which would reasonably
be expected to adversely affect the powers, preferences, privileges or
rights of the Preferred Shares;
(ii) Declaration of payment of any dividend or making of any
distribution on or with respect to the Common Stock;
(iii) Purchase, redemption or retirement, directly or indirectly,
of any shares of capital stock or other equity securities of the
Corporation;
-2-
<PAGE>
(iv) Authorization, creation or issuance of any additional shares of
capital stock or other securities which would reasonably be expected to
adversely affect the powers, preferences, privileges or rights of the
Preferred Shares, or are ranked prior to or pari passu with, the Preferred
---- -----
Shares; or
(v) A voluntary dissolution, liquidation or winding up.
(c) Except as otherwise provided herein or by law, the holders of
Preferred Shares and the holders of Common Stock and any other capital stock of
the Corporation having general voting rights shall vote together as one class on
all matters submitted to a vote of shareholders of the Corporation.
(d) Except as set forth herein or required by law, holders of
Preferred Shares shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
Section 4. Mandatory Conversion. When the shareholders of the
--------------------
Corporation have properly authorized a sufficient number of shares of Common
Stock to allow the conversion of all outstanding Preferred Shares into shares of
Common Stock and appropriate filings have been made with governmental
authorities to effect such authorization (such event being herein referred to as
a "Conversion Event"), which filings will be promptly made by the Corporation,
the Preferred Shares shall automatically be converted into fully paid and
nonassessable shares of Common Stock (and such other securities and property as
the holders of Preferred Shares may be entitled to upon the conversion thereof,
as hereinafter provided) at the Conversion Rate (as hereinafter defined) plus an
amount equal to any accrued and unpaid dividends thereon. The Corporation shall
give prompt notice of such mandatory conversion by first class mail, postage
prepaid, to the holders of record of the Preferred Shares, addressed to such
holders at their last addresses as shown on the stock books of the Corporation.
The date (the "Conversion Date") of such mandatory conversion shall be the date
of consummation of the Conversion Event. Each notice of mandatory conversion
shall specify: the Conversion Date and then-effective Conversion Rate (which
shall be four shares of Common Stock for each Preferred Share, unless otherwise
adjusted hereunder); that the holders of Preferred Shares were deemed to have
become holders of record of Common Stock on the Conversion Date; that, from and
after the Conversion Date, the Preferred Shares were no longer considered
outstanding; and that all rights with respect to the shares of Preferred Shares
(and such other securities and property as the holders of the Preferred Shares
may be entitled to upon the conversion thereof, as hereinafter provided) so
converted terminated on the Conversion Date, except the right to receive Common
Stock (and such other securities and property as the holders of Preferred Shares
may be entitled to upon the conversion thereof, as hereinafter provided) as
herein provided. On and after the Conversion Date, each holder of Preferred
Shares shall surrender the certificate or certificates evidencing such shares to
the Corporation at a place to be designated
-3-
<PAGE>
in such notice and shall thereupon be entitled to receive the Common Stock (and
such other securities and property as the holders of Preferred Shares may be
entitled to upon the conversion thereof, as hereinafter provided) receivable in
exchange therefor. Notwithstanding that the certificates evidencing any shares
of Preferred Shares mandatorily converted into Common Stock shall not have been
surrendered on the Conversion Date, such shares shall no longer be deemed
outstanding, and the holders thereof shall nevertheless be deemed to have become
holders of record of Common Stock (and such other securities and property as the
holders of Preferred Shares may be entitled to upon the conversion thereof, as
hereinafter provided) on the Conversion Date.
Except where registration is requested in a name other than the name
of the registered holder, the Corporation will pay any and all documentary stamp
or similar issue or transfer taxes payable in respect of the issue or delivery
of shares of Common Stock on conversion of the Preferred Shares pursuant hereto.
Section 5. Reacquired Shares. Any Preferred Shares purchased,
-----------------
converted or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock and may be reissued as part of a new series of preferred stock
subject to the conditions and restrictions on issuance set forth herein, in the
Articles of Incorporation, or in any other certificate of designation creating a
series of preferred stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up; Rank. Upon any
--------------------------------------------
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Preferred
Shares unless, prior thereto, the holders of Preferred Shares shall have
received the greater of (i) $16.00 per share, plus an amount equal to any
accrued and unpaid dividends and distributions thereon, to the date of such
payment, or (ii) an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to four times the aggregate amount to be
distributed per share to holders of Common Stock, or (2) to the holders of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Preferred Shares, except distributions made ratably on the
Preferred Shares and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time,
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Preferred Shares were entitled
immediately prior to such event under clause (1)(ii) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the
-4-
<PAGE>
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. For the purposes hereof, a
consolidation or merger of the Corporation with or into any other person or
entity, or a sale or transfer of all or substantially all the Corporation's
assets for cash or securities, shall be considered a liquidation, dissolution or
winding up of the Company, unless, with respect to a merger, consolidation or
sale, the holders of shares of Common Stock immediately preceding such merger or
consolidation hold at least a majority of the equity securities of the surviving
entity entitled to vote in the election of directors (or similar governing body)
of the surviving entity.
So long as any Preferred Shares remain outstanding, no stock of any
class or series of the Corporation shall rank prior to or pari passu with the
----------
Preferred Shares, as to liquidation preference, dividends or distributions.
Section 7. Consolidation, Merger, etc. In case of any
---------------------------
reclassification or change of outstanding shares of Common Stock (other than a
change in par value, or as a result of a subdivision or combination), or in case
of any consolidation of the Corporation with, or merger of the Corporation with
or into, any other entity that results in a reclassification, change,
conversion, exchange or cancellation of outstanding shares of Common Stock or
any sale or transfer of all or substantially all of the assets of the
Corporation, each holder of shares of the Preferred Shares then outstanding, if
it has elected not to require a distribution pursuant to Section 6, shall have
the right thereafter to convert the shares of the Preferred Shares held by the
holder into the kind and amount of securities, cash and other property which the
holder would have been entitled to receive upon such reclassification, change,
consolidation, merger, sale or transfer if the holder had held the Common Stock
issuable upon the conversion of the Preferred Stock immediately prior to the
reclassification, change, consolidation, merger, sale or transfer.
Section 8. Redemption. (a) The Preferred Shares shall not be
----------
redeemable at the option of the Corporation and shall be redeemable at the
option of the holder thereof only as provided in this Section 8(b).
(b) In the event that as of January 29, 1999 (the "Put Date") the
Conversion Date has not occurred and the Corporation has not caused the
Preferred Shares to be registered for inclusion on the automated quotation
system of the National Association of Securities Dealers, Inc. or any national
securities exchange on which a class of the Corporation's equity securities is
listed, the Preferred Shares shall be redeemable at the option of the holder
thereof at a price equal to the greater of (i) Current Market Price on the Put
Date (as hereinafter defined) and (ii) the liquidation preference thereof, plus
accrued and unpaid dividends thereon to the date fixed for redemption (the
"Redemption Price") as of the close of business on the 30th business day
following the Put Date (the "Redemption Date"). Notwithstanding the foregoing,
in the event that the Corporation fails to declare and pay a dividend pursuant
to Section 2(b) above, the Put Date shall be accelerated
-5-
<PAGE>
to the payment date that would otherwise apply to such defaulted dividend
payment. The Corporation shall give prompt notice of the Put Date (the "Put
Date Notice") by certified mail, return-receipt requested, to the holders of
record of the Preferred Shares, addressed to such holders at their last
addresses as shown on the stock books of the Corporation. A holder of record of
the Preferred Shares as of the Put Date shall be required to give written notice
to the Corporation of such holder's election to require such redemption (a
"Notice of Redemption") on or before the 20th business day following the date
receipt of such notice is acknowledged. In the event that the Corporation
receives Notices of Redemption from holders representing in excess of 75% of the
Preferred Shares outstanding, the Corporation shall redeem all outstanding
Preferred Shares on the Redemption Date. Notice of Redemption having been given
as aforesaid, the Preferred Shares so to be redeemed shall, on the Redemption
Date, become due and payable at the Redemption Price, and from and after such
date such Preferred Shares shall cease to accrue dividends. Upon surrender of
any certificate representing Preferred Shares for redemption, the record holder
of such Preferred Shares shall be paid by the Corporation the Redemption Price.
"Current Market Price" means four (the "Multiple") times (a) the closing price
on the previous trading day for the Common Stock on the principal stock exchange
on which the Common Stock is traded or (b) if not so traded, the closing price
(or, if no closing price is available, the average of the bid and asked prices)
for such date on the NASDAQ if the Common Stock is listed on the NASDAQ or (c)
if not listed on any exchange or quoted on the NASDAQ, such value as may be
determined in good faith by the Corporation's Board of Directors, which
determination shall be conclusively binding. In the event the Corporation shall
at any time, declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
Multiple shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 9. Fractional Shares. Preferred Shares may be issued in
-----------------
fractions of a share which are integral multiples of one one-hundredth of a
share which shall entitle the holder, in proportion to such holder's fractional
shares, to receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Preferred Shares.
-6-
<PAGE>
IN WITNESS WHEREOF, I have subscribed my name this 29th day of
January, 1997.
DIAMETRICS MEDICAL, INC.
/s/ LAURENCE L. BETTERLEY
-------------------------------
Laurence L. Betterley
Chief Financial Officer
-7-
<PAGE>
ARTICLES OF CORRECTION
OF
DIAMETRICS MEDICAL, INC.
In order to correct the Certificate of Designation of Series I Junior
Participating Preferred Stock as filed with the Minnesota Secretary of State on
January 29, 1997, in accordance with the provisions set forth in Minnesota
Statutes Section 5.16, the undersigned hereby makes the following statements:
1. The name of the person who filed the instrument is Laurence L.
Betterley.
2. The instrument to be corrected is the Certificate of Designation of
Series I Junior Participating Preferred Stock of Diametrics Medical, Inc. filed
with the Minnesota Secretary of State on January 29, 1997.
3. The error to be corrected is the number of votes each Preferred Share
entitles its holder to cast, as set forth in Section 3(a) of the Certificate of
Designation.
4. The following portion of the Certificate of Designation is hereby set
forth in its corrected form as follows:
"Section 3. Voting Rights.
-------------
(a) Subject to the provision for adjustment hereinafter set forth,
each Preferred Share shall entitle the holder thereof to 3.16 votes on all
matters submitted to a vote of the shareholders of the Corporation. In the event
the Corporation shall at any time, declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which holders of shares of
Preferred Shares were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Unless the vote of the holders of a greater number of shares
shall then be required by law, none of the following actions may be taken by the
Corporation without the approval by vote of the holders of 66.667% of issued and
outstanding Preferred Shares, voting together as a single class:
(i) Any amendment, restatement or modification of the Articles of
Incorporation, By-laws or other governance documents which would
<PAGE>
reasonably be expected to adversely affect the powers, preferences,
privileges or rights of the Preferred Shares;
(ii) Declaration of payment of any dividend or making of any
distribution on or with respect to the Common Stock;
(iii) Purchase, redemption or retirement, directly or indirectly, of
any shares of capital stock or other equity securities of the Corporation;
(iv) Authorization, creation or issuance of any additional shares of
capital stock or other securities which would reasonably be expected to
adversely affect the powers, preferences, privileges or rights of the
Preferred Shares, or are ranked prior to or pari passu with, the Preferred
---- -----
Shares; or
(v) A voluntary dissolution, liquidation or winding up.
(c) Except as otherwise provided herein or by law, the holders of
Preferred Shares and the holders of Common Stock and any other capital stock of
the Corporation having general voting rights shall vote together as one class on
all matters submitted to a vote of shareholders of the Corporation.
(d) Except as set forth herein or required by law, holders of
Preferred Shares shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action."
IN WITNESS WHEREOF, I have subscribed my name this 30th day of
January, 1997.
DIAMETRICS MEDICAL, INC.
/s/ LAURENCE L. BETTERLEY
-------------------------------
Laurence L. Betterley
Chief Financial Officer
<PAGE>
EXHIBIT 4.4
[Front of Certificate]
PLEASE SEE RESTRICTIVE LEGENDS ON REVERSE SIDE HEREOF
INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA
Number Shares
SPECIMEN SPECIMEN
DIAMETRICS MEDICAL, INC.
This certifies that SPECIMEN is the owner and registered holder of
------------
SPECIMEN Shares of fully paid and nonassessable shares of the Series I
- --------------
Junior Partricipating Preferred Stock, $.01 par value, of Diametrics Medical,
Inc.
transferable only on the books of the corporation by the holder hereof in person
or by duly authorized attorney upon surrender of this certificate properly
endorsed.
IN WITNESS WHEREOF, the said corporation has caused this certificate to be
signed by its duly authorized officers and to be sealed with the seal of the
corporation this ___ day of ___________, 19___.
________________________ ____________________________
Secretary President
NO
CORPORATE
SEAL
<PAGE>
[Back of Certificate]
The securities represented by this certificate have not been registered under
either the Securities Act of 1933 or applicable state securities laws and may
not be sold, transferred, assigned, offered, pledged or otherwise distributed
for value unless there is an effective registration statement under such Act and
such laws covering such securities, or the Company receives an opinion of
counsel acceptable to the Company stating that such sale, transfer, assignment,
offer, pledge or other distribution for value is exempt from the registration
and prospectus delivery requirements of such Act and such laws.
The issuer of the securities represented by this certiciate will furnish to any
shareholder upon request and without charge, a full statement of the
designations, preferences, limitations and relative rights of the shares of each
class or series authorized to be issued by such issuer, so far as they have been
determined, and the authority of the board of directors of such issuer to
determine the relative rights and preferences of subsequent classes or series.
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
For Value Received _______________________________________ hereby sells, assigns
and transfers unto _______________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _______________________________________________________ Attorney to
transfer the said shares on the Books of the within named Corporation with full
power of substitution in the premises.
Dated _________________________________________________________, 19___________
IN PRESENCE OF________________________________________________________________
<PAGE>
EXHIBIT 4.5
DIAMETRICS MEDICAL, INC.
STOCK PURCHASE WARRANT
THE WARRANTS EVIDENCED HEREBY AND THE SHARES OF STOCK
ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED OR SOLD WITHOUT REGISTRATION UNLESS AN EXEMPTION
FROM REGISTRATION IS AVAILABLE UNDER SUCH ACT OR THE RULES OR
REGULATIONS PROMULGATED THEREUNDER
WARRANT TO PURCHASE _____ SHARES OF COMMON STOCK
-----
AS DESCRIBED HEREIN
Issue Date: January 30, 1997.
Expiration Date: January 29, 2002.
This certifies that, for value received, __________________ , and permitted
successors and assigns ("Holder") is entitled to purchase from Diametrics
Medical, Inc. a Minnesota corporation (the "Company") up to and including [
__________ ] fully paid and nonassessable shares (the "Number of Shares") of the
common stock of the Company, $.01 par value (the "Common Stock"), on the terms
set forth herein at an exercise price per share equal to $5.0625 (the "Purchase
Price"). The Number of Shares and the Purchase Price may be adjusted from time
to time as described in this Warrant.
1. Exercise.
--------
1.1 Time for Exercise. This Warrant may be exercised in whole or in part
-----------------
at any time, and from time to time, during the period commencing on the date of
this Warrant and expiring on January 29, 2002.
1.2. Manner of Exercise. This Warrant shall be exercised by delivering it
------------------
to the Company with the exercise form duly completed and signed, specifying the
number of shares as to which the Warrant is being exercised at that time (the
"Exercise Number"). The Holder shall simultaneously deliver to the Company cash
or a certified check or wire transfer in an amount equal to the Exercise Number
multiplied by the Purchase Price, and the Holder shall be entitled to receive
the full Exercise Number of shares of Common Stock.
1.3 Effective Date of Exercise. Promptly (but in any case within ten (10)
--------------------------
business days) after any exercise, the Company shall deliver to the Holder (a)
duly executed certificates in the name or names specified in the exercise notice
representing the aggregate number of shares issuable upon such exercise, and (b)
if
<PAGE>
this Warrant is exercised only in part, a new Warrant of like tenor exercisable
for the balance of the Number of Shares. Such certificates shall be deemed to
have been issued, and the person receiving them shall be deemed to be a holder
of record of such shares, as of the close of business on the date the actions
required in Section 1.2 shall have been completed or, if on that date the stock
transfer books of the Company are closed, as of the next business day.
2. Transfer of Warrants and Stock.
------------------------------
2.1 Transfer Restrictions. This Warrant shall be freely transferable by
---------------------
the Holder in accordance with the terms hereof; provided, however, that neither
-------- -------
this Warrant nor the securities issuable upon its exercise may be sold,
transferred or pledged unless the Company shall have been supplied with
reasonably satisfactory evidence that such transfer is not in violation of the
Securities Act of 1933, as amended (the "Securities Act"), and any applicable
state securities laws. The Company may place a legend to that effect on this
Warrant, any replacement Warrant and each certificate representing shares
issuable upon exercise of this Warrant. Subject to the satisfaction of this
condition only, this Warrant shall be freely transferable by the Holder.
2.2 Manner of Transfer. Upon delivery of this Warrant to the Company with
------------------
the assignment form duly completed and signed, the Company will promptly (but in
any case within five (5) business days) execute and deliver to each transferee
and, if applicable, the Holder, Warrants of like tenor evidencing the rights (a)
of the transferee(s) to purchase the Number of Shares specified for each in the
assignment forms, and (b) of the Holder to purchase any untransferred portion,
which in the aggregate shall equal the number of Shares of the original Warrant.
If this Warrant is properly assigned in compliance with Section 2, it may be
exercised by an assignee without having a new Warrant issued.
2.3 Loss, Destruction of Warrant Certificates. Upon receipt of (a)
-----------------------------------------
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Warrant and (b) except in the case of mutilation, an
indemnity or security reasonably satisfactory to the Company, the Company will
promptly (but in any case within five (5) business days) execute and deliver a
replacement Warrant of like tenor representing the right to purchase the same
Number of Shares.
3. Cost of Issuances. The Company shall pay all expenses, transfer taxes and
-----------------
other charges payable in connection with the preparation, issuance and delivery
of stock certificates or replacement Warrants, except for any transfer tax or
other charge imposed as a result of (a) any issuance of certificates in any name
other than the name of the Holder, or (b) any transfer of the Warrant. The
Company shall not be required to issue or deliver any Stock certificate or
Warrant until it receives
-2-
<PAGE>
reasonably satisfactory evidence that any such tax or other charge has been paid
by the Holder.
4. Anti-Dilution Provisions. If any of the following events occur at any time
------------------------
hereafter during the life of this Warrant, then the Purchase Price and the
Number of Shares immediately prior to such event shall be changed as described
in order to prevent dilution:
4.1 Dividends; Stock Splits Etc. In case the Company shall (a) pay a
---------------------------
dividend in shares of Common Stock or make a distribution in shares of Common
Stock, (b) subdivide or reclassify its outstanding shares of Common Stock into a
greater number of shares, (c) combine or reclassify its outstanding shares of
Common Stock into a smaller number of shares, the Number of Shares purchasable
upon the exercise of this Warrant immediately prior thereto shall be adjusted so
that the Number of Shares purchasable upon exercise of this Warrant shall be
determined by multiplying the Number of Shares theretofore purchasable upon the
exercise of this Warrant by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding immediately following such action
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately prior thereto. Such adjustment shall be made whenever
any event listed above shall occur and shall become effective immediately after
the record date in the case of a dividend and shall become effective immediately
after the effective date in the case of a subdivision, combination or
reclassification. If the Company declares a dividend in money on its Common
Stock and at substantially the same time offers its Stockholders a right to
purchase new shares of Common Stock from the proceeds of such dividend, or for
an amount substantially equal to such dividend, all shares of Common Stock so
issued shall for purposes hereof be deemed issued as a Stock dividend.
4.2 Issuance of Rights or Warrants to Holders. In case the Company shall
-----------------------------------------
issue rights, options or warrants to all holders of its shares of Common Stock
entitling them (for a period expiring within 45 days after the record date
therefor) to subscribe for or purchase shares of Common Stock at a price per
share which is lower at the record date mentioned below than the then Current
Market Price per share of Common Stock (as hereinafter defined), the Number of
Shares thereafter purchasable upon the exercise of this Warrant shall be
determined by multiplying the Number of Shares theretofore purchasable upon
exercise of this Warrant by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding on such record date plus the number
of additional shares of Common Stock offered for subscription or purchase, and
of which the denominator shall be the number of shares of Common Stock
outstanding on such record date plus the number of shares which the aggregate
offering price of the total number shares of Common Stock so offered would
purchase at the then Current Market Price per share of Common Stock.
-3-
<PAGE>
4.3 Merger; Consolidation; Sale of Assets. In case of (a) the
-------------------------------------
consolidation or the merger of the Company or (b) the sale of all or
substantially all of the properties and assets of the Company to any Person,
this Warrant shall, after such consolidation, merger or sale, entitle the Holder
to receive upon exercise the number of shares of Stock or other securities or
property (including cash) of the Person resulting from such consolidation or
surviving such merger or to which such sale shall be made, or of the parent of
such Person, as the case may be, which the holder of securities deliverable upon
exercise of this Warrant (at the time of such consolidation, merger or sale)
would have been entitled to receive upon such consolidation, merger or sale; and
in any such case the provisions of Section 4 with respect to the rights and
interests thereafter of the holders of Warrants shall be appropriately adjusted
so as to be applicable, as nearly as practicable, to any shares of Stock or
other securities or any property (including cash) thereafter deliverable upon
exercise of this Warrant. The Person resulting from such sale or consolidation
or surviving such merger or to which such sale shall be made shall execute and
deliver to the Holder a supplemental agreement as provided in Section 6.5 below.
Any adjustment pursuant to this Section 4.3 which shall be approved in good
faith by the Board of Directors of the Company pursuant to a resolution
delivered to the Holder shall be conclusive for all purposes hereof. For the
purposes of this Agreement "person" means any individual, partnership, firm,
corporation, limited liability company or partnership, association, trust,
unincorporated organization or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended.
4.4 Other Distributions. In case the Company shall distribute to all
-------------------
holders of its shares of Common Stock shares of Stock other than Common Stock or
evidences of its indebtedness or assets (excluding cash dividends or
distributions payable out of consolidated earnings or retained earnings and
dividends or distributions referred to in Section 4.1 above) or rights, options
or warrants or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock (excluding those referred to in
Section 4.2 above), then in each case the Number of Shares thereafter
purchasable upon the exercise of this Warrant shall be determined by multiplying
the Number of Shares theretofore purchasable upon the exercise of this Warrant,
by a fraction of which the numerator shall be the Current Market Price per share
of Common Stock on the record date mentioned below in this Section 4.4 plus the
then fair value (as reasonably determined by the Board of Directors of the
Company in good faith, whose determination shall be conclusive absent manifest
error, irrespective of the accounting treatment thereof) of the portion of the
shares of Stock other than Common Stock or assets or evidences of indebtedness
so distributed or of such subscription rights, options or warrants, or of such
convertible or exchangeable securities applicable to one share of Common Stock,
and of which the denominator shall be the Current Market Price per share of
Common Stock on such record date. Such adjustment shall be made whenever any
such distribution is made, and shall
-4-
<PAGE>
become effective immediately after the record date for the determination of
Stockholders entitled to receive such distribution.
4.5 Additional Adjustment of Purchase Price. Whenever the Number of
---------------------------------------
Shares purchasable upon the exercise of this Warrant is adjusted, as provided
herein, the Purchase Price payable upon exercise of this Warrant shall be
adjusted by multiplying such Purchase Price immediately prior to such adjustment
by a fraction, of which the numerator shall be the Number of Shares purchasable
upon the exercise of this Warrant immediately prior to such adjustment, and of
which the denominator shall be the Number of Shares so purchasable immediately
thereafter.
4.6 No De Minimis Adjustments. No adjustment in the Purchase Price shall
-------------------------
be required unless such adjustment would require an increase or decrease of at
least 1% in such price; provided, however, that any adjustments which by reason
of this Section 4.6 are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 4.6 shall be made to the nearest one-twentieth of a cent or to the
nearest one-hundredth of a share, as the case may be.
4.7 Treasury Shares. For the purpose of Section 4, shares of Common Stock
---------------
or other securities held in the treasury of the Company shall not be deemed to
be outstanding, and the sale or other deposition of any shares of Common Stock
or other securities held in the treasury of the Company shall be deemed an
issuance thereof.
4.8 Corporate Action. Before taking any action which would cause an
----------------
adjustment reducing the Purchase Price below the then par value, if any, of the
shares of Common Stock issuable upon exercise of this Warrant, the Company shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted Purchase Price.
4.9 Independent Public Accountants. The certificate of a "Big Six" firm
------------------------------
of independent public accountants selected by the Board of Directors of the
Company shall be conclusive evidence of the correctness of any computation made
under Section 4.
4.10 Notice of Certain Events. In case at any time prior to the expiration
------------------------
date of this Warrant:
(i) the Company shall authorize the granting to all the holders of
Common Stock of rights to subscribe for or purchase any shares
of stock of any class or of any other rights;
-5-
<PAGE>
(ii) there shall be any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its
outstanding Common Stock);
(iii) there shall be any capital reorganization by the Company;
(iv) there shall be a consolidation or merger involving the Company
or sale of all or substantially all of the Company's property
and assets (except a merger or other reorganization in which
the Company shall be the surviving corporation or a
consolidation, merger or sale with a wholly-owned subsidiary);
or
(v) there shall be voluntary or involuntary dissolution,
liquidation and winding up by the Company or dividend or
distribution to holders of Common Stock (other than the
Company's customary cash and stock dividends);
then in any one or more of said cases, the Company shall cause to be delivered
to the Holder, at the earliest practicable time (and, in any event, not less
than 25 days before any record date or other date set for definitive action),
notice of the date on which the books of the Company shall close or a record
shall be taken for such dividend, distribution or subscription rights or such
reorganization, sale, consolidation, merger, dissolution, liquidation or winding
up shall take place, as the case may be. Such notice shall also set forth such
facts as shall indicate the effect of such action (to the extent such effect may
be known at the date of such notice) on the Purchase Price and the kind and
amount of the shares of stock and other securities and property deliverable upon
exercise of the Warrants. Such notice shall also specify the date, if known, as
of which the holders of record of the Common Stock shall participate in said
dividend, distribution or subscription rights or shall be entitled to exchange
their shares of the Common Stock for securities or other property (including
cash) deliverable upon such reorganization, sale, consolidation, merger,
dissolution, liquidation or winding up, as the case may be (on which date, in
the event of voluntary or involuntary dissolution, liquidation, or winding up of
the Company, other than dissolution, liquidation or winding up following a
consolidation or merger of the Company with or into, or sale of substantially
all of its assets to, another corporation, the rights to exercise this Warrant
shall terminate).
4.11 Other Securities Adjustments. If as a result of Section 4, a Holder
----------------------------
is entitled to receive any securities other than Common Stock upon exercise of
this Warrant, the number and purchase price of such securities shall thereafter
be adjusted from time to time in the same manner as provided pursuant to Section
4 for Common Stock. The allocation of purchase price between various securities
shall be made in writing by the Board of Directors of the Company in good faith
at
-6-
<PAGE>
the time of the event by which the holder became entitled to receive new
securities, and a copy sent to the Holder.
4.12 Notices of Adjustments. When any adjustment is required to be made
----------------------
under Section 4, the Company shall promptly (a) determine such adjustments, (b)
prepare and retain on file a statement describing in reasonable detail the
method used in arriving at the adjustment; and (c) cause copy of such statement,
together with any agreement required by Section 6.5, to be mailed to the Holder
within 10 days after the date on which the circumstances giving rise to such
adjustment occurred.
4.13 Computations and Adjustments. Upon each computation of an adjustment
----------------------------
under this Section 4, the Purchase Price shall be computed to the nearest cent
and the Number of Shares shall be calculated to the next highest whole share.
However, the fractional amount shall be used in calculating any future
adjustments. No fractional shares of Common Stock shall be issued in connection
with the exercise of this Warrant, but the Company shall, in the case of the
final exercise under this Warrant, make a cash payment for any fractional shares
based on the Current Market Price of the Common Stock on the date of exercise.
Notwithstanding any changes in the Purchase Price or the Number of Shares, this
Warrant, and any Warrants issued in replacement or upon transfer thereof, may
continue to state the initial Purchase Price and the Number of Shares.
Alternatively, the Company may elect to issue a new Warrant or Warrants of like
tenor for the additional shares of Common Stock purchasable hereunder or, upon
surrender of the existing Warrant, to issue a replacement Warrant evidencing all
the Warrants to which the Holder is entitled after such adjustments.
4.14 Exercise Before Payment Date. In the event that this Warrant is
----------------------------
exercised after the record date for any event requiring an adjustment, but prior
to the actual event, the Company may elect to defer payment of the adjusted
amount to the Holder until the actual event occurs; provided, however, that the
Company shall deliver a due bill or other appropriate instrument to the Holder
transferrable to the same extent as the other Securities issuable on exercise
evidencing the Holder's right to receive such additional amount upon the
occurrence of the event requiring such adjustment.
4.15 Current Market Price. "Current Market Price" for the Common Stock on
--------------------
any given date means (a) the closing price on the previous trading day for the
Common Stock on the principal stock exchange on which the Common Stock is traded
(or, in the case of issuances of stock options with an exercise price equal to
fair market value on the date of grant pursuant to the terms of a plan, such
date) or (b) if not so traded, the closing price (or, if no closing price is
available, the average of the bid and asked prices) for such date on the NASDAQ
if the Common Stock is listed on the NASDAQ or (c) if not listed on any exchange
or quoted on the NASDAQ,
-7-
<PAGE>
such value as may be determined in good faith by the Company's Board of
Directors, which determination shall be conclusively binding on the parties.
5. Redemption.
----------
5.1 Redemption at Company's Option. At any time following July 30, 1997,
------------------------------
if and to the extent that the Common Stock underlying the Warrants is covered by
an effective registration statement under the Securities Act, the Company may,
upon 30 days prior written notice (the "Redemption Notice") to the Holder,
redeem all, but not less than all of the Warrants granted hereunder at a
redemption price of $0.05 per Warrant (the "Redemption Price"), so long as the
Current Market Price (as defined in Section 4.15(a) and 4.15(b) above) at the
time the Redemption Notice is given is equal to or greater than the following
prices (the "Target Prices"):
<TABLE>
<CAPTION>
Time Period Minimum Current Market Price
----------- ----------------------------
<S> <C>
First consecutive 12 month period
following the date hereof $7.0625/share
Second consecutive 12 month period
following the date hereof $8.50/share
Third consecutive 12 month period
following the date hereof $9.00/share
Fourth consecutive 12 month period
following the date hereof $9.50/share
Fifth consecutive 12 month period
following the date hereof $10.00/share
</TABLE>
All warrants issued to the Purchasers in connection with the transactions
contemplated by the Purchase Agreement must be redeemed if any such warrants are
redeemed. The date fixed for redemption of the Warrant is referred to herein as
the "Redemption Date."
5.2 Redemption Notice. The Redemption Notice shall specify (a) the
-----------------
Redemption Price, (b) the Redemption Date, (c) the place where this Warrant
shall be delivered and the Redemption Price paid, and (d) that the right to
exercise the Warrant shall terminate at 5:00 p.m. (Minneapolis time) on the
business day immediately preceding the Redemption Date. No failure to mail such
notice nor any defect therein or in the mailing thereof shall affect the
validity of the proceedings for such redemption except as to a Holder (i) to
whom notice was not mailed (ii) whose notice was defective.
-8-
<PAGE>
5.3 Failure to Exercise. Any right to exercise this Warrant shall
-------------------
terminate at 5:00 p.m. (Minneapolis time) on the business day immediately
preceding the Redemption Date. On and after the Redemption Date, the Holder
shall have no further rights except to receive, upon surrender of this Warrant,
the Redemption Price.
5.4 Surrender of Warrant. From and after the Redemption Date, the Company
--------------------
shall, at the place specified in the Redemption Notice, upon presentation and
surrender to the Company by or on behalf of the Holder of the Warrant to be
redeemed, deliver or cause to be delivered to or upon the written order of the
Holder a sum in cash equal to the Redemption Price of the Warrant. From and
after the Redemption Date and upon the deposit or setting aside by the Company
of a sum sufficient to redeem all the warrants issued pursuant to the Purchase
Agreement called for redemption, such warrants shall expire and become void and
all rights hereunder, except the right to receive payment of the Redemption
Price, shall cease.
5.5 Adjustments. If the shares of Common Stock are subdivided or combined
-----------
into a greater or smaller number of shares of Common Stock, the Target Prices
shall be proportionally adjusted by the ratio which the total number of shares
of Common Stock outstanding immediately prior to such event bears to the total
number of shares of Common Stock to be outstanding immediately after such event.
6. Covenants. The Company agrees that:
---------
6.1 Reservation of Stock. During the period in which this Warrant may be
--------------------
exercised, the Company will reserve sufficient authorized but unissued
securities to enable it to satisfy its obligations on exercise of this Warrant
and shall use its reasonable best efforts to cause all shares of Common Stock
issued upon the exercise of this Warrant to be listed on any exchanges on which
the Common Stock is then listed. If at any time the Company's authorized
securities shall not be sufficient to allow the exercise of this Warrant, the
Company shall take such corporate action as may be necessary to increase its
authorized but unissued securities to be sufficient for such purpose;
6.2 No Liens, etc. All securities that may be issued upon exercise of
-------------
this Warrant will, upon issuance, be validly issued, fully paid, nonassessable
and free from all taxes, liens and charges with respect to the issue thereof,
and shall be listed on any exchanges on which that class of securities is
listed;
6.3 Furnish Information. During the term of this Warrant, the Company
-------------------
will promptly deliver to the Holder copies of all financial statements, reports
and proxy statements which the Company shall have sent to its stockholders
generally;
-9-
<PAGE>
6.4 Stock and Warrant Transfer Books. Except upon dissolution,
--------------------------------
liquidation or winding up or for ordinary holidays and weekends, the Company
will not at any time close its stock or warrant transfer books so as to result
in preventing or delaying the exercise or transfer of this Warrant; and
6.5 Merger; Consolidation or Sale of Assets of the Company. Except in the
------------------------------------------------------
case of a merger or consolidation where the consideration is payable entirely in
cash or obligations, the Company will not merge or consolidate with or into any
Person, or sell or otherwise transfer its property, assets and business
substantially as an entirety to a successor Person, unless the Person resulting
from such merger or consolidation (if not the Company), or such successor
Person, shall expressly assume, by supplemental agreement reasonably
satisfactory in form to the then Majority Holders (as defined below) and
executed and delivered to the Holders, the due and punctual performance and
observance of each and every covenant and condition of this Agreement to be
performed and observed by the Company. "Majority Holders", as of any date,
shall mean holders of warrants issued pursuant to the Stock Purchase Agreement
dated as of the date hereof (the "Purchase Agreement"), between the Company and
the purchasers signatories thereto (the "Purchasers") (pursuant to which this
Warrant was issued) which are exercisable for a majority of the shares then
purchasable under all warrants issued pursuant to the Stock Purchase Agreement.
7. Status of Holder.
----------------
7.1 Not a Stockholder. Unless the Holder exercises this Warrant in
-----------------
writing, the Holder shall not be entitled to any rights (a) as a stockholder of
the Company with respect to the shares as to which the Warrant is exercisable
including, without limitation, the right to vote or receive dividends or other
distributions, or (b) to receive any notice of any proceedings of the Company
except as otherwise provided in this Warrant.
7.2 Limitation of Liability. Unless the Holder exercises this Warrant in
-----------------------
writing, the Holder's rights and privileges hereunder shall not give rise to any
liability for the Purchase Price or as a stockholder of the Company, whether to
the Company or its creditors.
8. Registration Rights. The shares purchasable upon exercisable of this
-------------------
Warrant shall be Registerable Securities as defined in that certain Registration
Rights Agreement between the Company and the Purchasers dated as of even date
herewith (the "Registration Rights Agreement").
-10-
<PAGE>
9. General Provisions.
------------------
9.1 Complete Agreement; Modifications. This Warrant and any documents
---------------------------------
referred to herein or executed contemporaneously herewith constitute the
parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. The Warrant may not be amended, altered or modified except by a writing
signed by the parties.
9.2 Cooperation. Each party hereto agrees to execute any and all further
-----------
documents and writings and to perform such other reasonable actions which may be
or become necessary or expedient to effectuate and carry out this Warrant.
9.3 Notices. All notices under this Warrant shall be in writing and shall
-------
be delivered by personal service or telecopy or certified mail return receipt
requested (if such service is not available, then by first class mail), postage
prepaid, to such address as may be designated from time to time by the relevant
party, and which shall initially be:
(a) If to the Company:
Diametrics Medical, Inc.
2658 Patton Road
Roseville, Minnesota 55113
Attention: Chief Financial Officer
Telecopy: (612) 639-8459
With a copy to:
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, Minnesota 55402
Attention: Kenneth Cutler
Telecopy: (612) 340-8738
(b) If to ____________________:
[to be supplied]
-11-
<PAGE>
With a copy to:
__________________________
Any notice sent by certified mail shall be deemed to have been given three
(3) days after the date on which it is mailed. All other notices shall be
deemed given when received. No objection may be made to the manner of delivery
of any notice actually received in writing by an authorized agent of a party.
9.4 No Third-Party Benefits; Successors and Assigns. None of the
-----------------------------------------------
provisions of this Warrant shall be for the benefit of, or enforceable by, any
third-party beneficiary. Except as provided herein to the contrary, this
Warrant shall be binding upon and inure to the benefit of the parties, their
respective successors and permitted assigns.
9.5 Governing Law. This Warrant concerns a Minnesota corporation, and all
-------------
questions with respect to the Warrant and the rights and liabilities of the
parties will be governed by the laws of Minnesota regardless of the choice of
law provisions of Minnesota or any other jurisdiction. Any and all disputes
between the parties which may arise pursuant to this Warrant not covered by
arbitration will be heard and determined before an appropriate federal or state
court located in Minneapolis, Minnesota. The parties hereto acknowledge that
such courts have the jurisdiction to interpret and enforce the provisions of
this Warrant and the parties waive any and all objections that they may have as
to personal jurisdiction or venue in any of the above courts.
9.6 Waivers Strictly Construed. With regard to any power, remedy or right
--------------------------
provided herein or otherwise available to any party hereunder (a) no waiver or
extension of time shall be effective unless expressly contained in a writing
signed by the waiving party; and (b) no alteration, modification or impairment
shall be implied by reason of any previous waiver, extension of time, delay or
omission in exercise, or other indulgence.
9.7 Severability. The validity, legality or enforceability of the
------------
remainder of this Warrant shall not be affected even if one or more of its
provisions shall be held to be invalid, illegal or unenforceable in any respect.
-12-
<PAGE>
9.8 Attorneys' Fees. Should any litigation or arbitration be commenced
---------------
(including any proceedings in a bankruptcy court) between the parties hereto or
their representatives concerning any provisions of this Warrant or the rights
and duties of any person or entity hereunder the party or parties prevailing in
such proceeding shall be entitled, in addition to such other relief as may be
granted, to the attorneys' fees and court costs incurred by reason of such
litigation.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
effective as of January 30, 1997.
DIAMETRICS MEDICAL, INC.
By:_________________________________________
Title:___________________________________
-13-
<PAGE>
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED, ________________________________ hereby sells, assigns
and transfers to the transferee named below the rights to purchase
______________ of the Number of Shares under this Warrant, together with all
rights, title and interest therein. The rights to purchase the remaining Number
of Shares shall remain the property of the undersigned.
Dated: _____________________
[NAME OF HOLDER]
By__________________________________________
Signature
Name:_______________________________________
(Please Print)
Address:____________________________________
____________________________________________
____________________________________________
Employer Identification Number, Social
Security Number or other identifying number:
____________________________________________
TRANSFEREE:
Name:________________________________
(Please Print)
Address:_____________________________
_____________________________________
_____________________________________
Employer Identification Number,
Social Security Number or other
identifying number:
_____________________________________
-14-
<PAGE>
EXERCISE FORM
-------------
To Be Executed
--------------
Upon Exercise of Warrant
The undersigned hereby exercises the Warrant with regard to ___________
shares of Common Stock and herewith makes payment of the purchase price in full.
The undersigned requests that certificate(s) for such shares and the Warrant for
any unexercised portion of this Warrant be issued to the Holder.
Dated:_______________________________
[NAME OF HOLDER]
By______________________________________
Signature
Name:___________________________________
(Please Print)
Address:________________________________
________________________________________
________________________________________
Employer Identification Number, Social
Security Number or other identifying
number:
_______________________________________
-15-
