EXHIBIT 4.2
COMMON STOCK WARRANT
To Purchase 10,500
Shares of Common Stock of
Vascular Solutions, Inc.
February 14, 1997
THIS CERTIFIES THAT, for payment to Vascular Solutions, Inc. (the
"Company"), a Minnesota corporation, and for other good and valuable
consideration received, David Johnson or her registered assigns is entitled to
subscribe for and purchase from the Company at any time after the date hereof to
and including February 14, 2007, Ten Thousand Five Hundred (10,500) fully paid
and nonassessable shares of the Company's Common Stock, $.01 par value, at a
price of $1.50 per share:
This Warrant is subject to the following provisions, terms and conditions:
1. Exercise; Transferability. The rights represented by this Warrant
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may be exercised by the holder hereof, in whole or in part (but not as to a
fractional share of common stock), by written notice of exercise delivered to
the Company and by the surrender of this Warrant (properly endorsed if required)
at the principal office of the Company and upon payment to it by certified or
bank check or wire transfer of the purchase price for such shares.
This Warrant may be transferred subject to the following conditions and
the restrictions contained in Section 7 hereof: (i) during the first year after
the date of this Warrant, it may not be sold, transferred, assigned or
hypothecated except to persons who are (x) both officers and shareholders of
Miller, Johnson and Kuehn Incorporated ("MJK"), or (y) both officers and
employees of MJK, and (ii) after such period, the Warrant shall be transferable
without restriction.
2. Issuance of Shares. The Company agrees that the shares purchased
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hereby shall be and are deemed to be issued to the record holder hereof as of
the close of business on the date on which this Warrant shall have been
exercised by surrender of the Warrant and payment for the shares. Subject to the
provisions of the next succeeding paragraph, certificates for the shares of
stock so purchased shall be delivered to the holder hereof within a reasonable
time, not exceeding ten (10) days after the rights represented by this Warrant
shall have been so exercised, and, unless this Warrant has expired, a new
Warrant representing the number of shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be delivered to the holder
hereof within such time.
Notwithstanding the foregoing, however, the Company shall not be required
to deliver any certificate for shares of stock upon exercise of this Warrant,
except in accordance with the provisions, and subject to the limitations, of
paragraph 7 hereof.
3. Covenants of Company. The Company covenants and agrees that all shares
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which may be issued upon the exercise of the rights represented by this Warrant
will, upon issuance, be duly authorized and issued, fully paid, nonassessable
and free from all taxes, liens and charges with respect to the issue thereof,
and, without limiting the generality of the foregoing, the Company covenants and
agrees that it will from time to time take all such action as may be required to
assure that the par value per share of common stock is at all times equal to or
less than the then effective purchase price per share of the common stock
issuable pursuant to this Warrant. The Company further covenants and agrees
that, during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized, and reserved for
the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant, a sufficient number of shares of its common stock to
provide for the exercise of the rights represented by this Warrant.
4. Anti-Dilution Adjustments. The above provisions are, however, subject
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to the following:
(a) In case the Company shall at any time hereafter subdivide or
combine the outstanding shares of common stock or declare a dividend payable in
common stock, the exercise price of this Warrant in effect immediately prior to
the subdivision, combination or record date for such dividend payable in common
stock shall forthwith be proportionately increased, in the case of combination,
or decreased, in the case of subdivision or dividend payable in common stock.
Upon each adjustment of the exercise price, the holder of this Warrant shall
thereafter be entitled to purchase, at the exercise price resulting from such
adjustment, the number of shares obtained by multiplying the exercise price
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the exercise price resulting from such adjustment.
(b) No fractional shares of common stock are to be issued upon the
exercise of this Warrant, but the Company shall pay a cash adjustment in respect
of any fraction of a share which would otherwise be issuable in an amount equal
to the same fraction of the market price per share of common stock on the day of
exercise as determined in good faith by the Company.
(c) If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of common stock shall
be entitled to receive stock, securities or assets with respect to or in
exchange for common stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made whereby the holder hereof shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions specified
in this Warrant and in lieu of the shares of common stock of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such stock, securities or assets as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
such common stock equal to the number of shares of such stock immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby had such reorganization, reclassification, consolidation,
merger or sale not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of the
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holder of this Warrant to the end that the provisions hereof (including without
limitation provisions for adjustments of the Warrant purchase price and of the
number of shares purchasable upon the exercise of this Warrant) shall thereafter
be applicable, as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise hereof. The
Company shall not effect any such consolidation, merger or sale unless prior to
the consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger, or the corporation purchasing such
assets, shall assume by operation of law or written instrument, the obligation
to deliver to such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase. Notice of such assumption shall be promptly mailed to the registered
holder hereof at the last address of such holder appearing on the books of the
Company.
Notwithstanding any language to the contrary set forth in this
paragraph 4 (c), if an occurrence or event described herein shall take place in
which the shareholders of the Company receive cash for their shares of common
stock of the Company and a successor corporation or corporation purchasing
assets shall survive the transaction then, at the election of the record holder
hereof, such corporation shall be obligated to purchase this Warrant (or the
unexercised part hereof) from the record holder without requiring the holder to
exercise all or part of the Warrant. If such corporation refuses to so purchase
this Warrant then the Company shall purchase the Warrant for cash. In either
case the purchase price shall be the amount per share that shareholders of the
outstanding common stock of the Company shall receive as a result of the
transaction multiplied by the number of shares covered by the Warrant, minus the
aggregate exercise price of the Warrant. Such purchase shall be closed within 60
days following the election of the holder to sell this Warrant.
(d) Upon any adjustment of the Warrant purchase price, then, and in
each such case, the Company shall give written notice thereof, by first class
mail, postage prepaid, addressed to the registered holder of this Warrant at the
address of such holder as shown on the books of the Company, which notice shall
state the Warrant purchase price resulting from such adjustment and the increase
or decrease, if any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
(e) If any event occurs as to which in the good faith determination of
the Board of Directors of the Company the other provisions of this paragraph 4
are not strictly applicable or if strictly applicable would not fairly protect
the purchase rights of the holder of this Warrant or of common stock in
accordance with the essential intent and principles of such provisions, then the
Board of Directors shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such purchase rights as aforesaid.
5. Common Stock. As used herein, the term "common stock" shall mean
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and include the Company's presently authorized shares of common stock and shall
also include any capital stock of any class of the Company hereafter authorized
which shall not be limited to fixed sum or percentage in respect of the rights
of the holders thereof to participate in dividends or in the distribution,
dissolution or winding up of the Company; provided that the shares purchasable
pursuant to this Warrant shall include shares designated as common stock of the
Company on the
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date of original issue of this Warrant or, in the case of any reclassification
of the outstanding shares thereof, the stock, securities or assets provided for
in Section 4 above.
6. No Voting Rights. This Warrant shall not entitle the holder hereof to
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any voting rights or other rights as a stockholder of the Company.
7. Transfer of Warrant or Resale of Shares. In the event the holder
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of this Warrant desires to transfer this Warrant, or any common stock issued
upon the exercise hereof, the holder shall provide the Company with a written
notice describing the manner of such transfer and an opinion of counsel
(reasonably acceptable to the Company) that the proposed transfer may be
effected without registration or qualification (under any Federal or State law),
whereupon such holder shall be entitled to transfer this Warrant or to dispose
of shares of common stock received upon the previous exercise hereof in
accordance with the notice delivered by such holder to the Company; provided,
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that an appropriate legend may be endorsed on this Warrant or the certificates
for such shares respecting restrictions upon transfer thereof necessary or
advisable in the opinion of counsel satisfactory to the Company to prevent
further transfers which would be in violation of Section 5 of the Securities Act
of 1933.
8. Registration Rights. (a) If the Company proposes to claim an
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exemption under Section 3(b) for a public offering of any of its securities or
to register under the Securities Act of 1933 (the "Securities Act") (except by a
claim of exemption or registration statement on a form that does not permit the
inclusion of shares by its security holders) any of its securities, it will give
written notice to all registered holders of Warrants, and all registered holders
of shares of common stock acquired upon the exercise of Warrants, of its
intention to do so and, on the written request of any such registered holders
given within twenty (20) days after receipt of any such notice (which request
must be made within ten (10) years from the date of this Warrant), the Company
will use its best efforts to cause all such shares, the registered holders of
which shall have requested the registration or qualification thereof, to be
included in such notification or registration statement proposed to be filed by
the Company; provided, however, that (i) the Company shall not be required to
include any such shares of Common Stock in any such registration for any holder
who is able to sell all shares of Common Stock owned by such holder (or issuable
to such holder upon exercise of this Warrant), and which benefit from the
registration rights granted hereunder, during the three-month period beginning
on the date such notice is received by such holder, without compliance with the
registration requirements of the Securities Act pursuant to Rule 144(k) under
the Securities Act; (ii) the Company shall not be required to give such notice
with respect to, or to include such Warrant or Common Stock in, any such
registration which is primarily (A) a registration of a stock option plan or
other employee benefit plan or of securities issued or issuable pursuant to any
such plan such as a registration on Form S-8, or (B) a registration of
securities proposed to be issued in exchange for securities or assets of, or in
connection with a merger or consolidation with, another corporation such as a
registration on Form S-4; (iii) the Company may, in its sole discretion,
withdraw any such registration statement and abandon the proposed offering in
which any such holder had requested to participate; (iv) if the offering to
which the registration statement relates is to be distributed by or through an
underwriter, each such holder shall agree, as a condition to the inclusion of
such holder's securities in such registration, to sell the securities held by
such holder through such underwriter on the same terms and conditions as the
underwriter agrees to sell securities on behalf of the Company and not to sell,
transfer, pledge, assign or otherwise dispose of
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any shares of Common Stock not sold by such holder in such offering for such
period (up to (90) days after the effective date of the registration statement)
as may be required by the underwriter; and (v) if the offering to which the
registration statement relates is to be distributed by or through an underwriter
and a greater number of securities is offered for participation in the proposed
underwriting then, in the opinion of the Company's underwriter, can be
accommodated without significantly adversely affecting the proposed
underwriting, the amount of such securities otherwise to be included in the
underwritten offering on behalf of all persons other than the Company may be
reduced pro rata, in accordance with the number of shares of Common Stock
proposed to be sold by each such holder, or may be eliminated entirely from such
underwritten public offering. The costs and expenses of such offering, including
but not limited to legal fees, special audit fees, printing expenses, filing
fees, fees and expenses relating to qualifications under state securities or
blue sky laws and the premiums for insurance, if any, incurred by the Company in
connection with any registration made pursuant to this Section 8(a) shall be
borne entirely by the Company; provided, however, that any holders participating
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in such registration shall bear their own underwriting discounts and commissions
and the fees and expenses of their own counsel or accountants in connection with
any such registration. The foregoing provisions of this Section 8(a) shall not
apply to the Company's initial public offering, provided that MJK is the
underwriter or a co-managing underwriter of such offering.
(b) Further, on one occasion only, at any time during the period
beginning on the closing of the Company's initial public offering and ending ten
(10) years from the date hereof, upon request by the holders of Warrants and/or
the holders of shares issued upon the exercise of the Warrants who collectively
(i) have the right to purchase at least 50% of the shares subject to the
Warrants, (ii) hold directly at least 50% of the shares purchased hereunder, or
(iii) have the right to purchase or hold directly an aggregate of at least 50%
of the shares purchasable or purchased hereunder, the Company will promptly take
all necessary steps, at the option of such holders, to register or qualify the
sale of the Warrants or such shares by the holders thereof, or to register the
issuance by the Company of shares upon the exercise of Warrants, under the
Securities Act of 1933 (and, upon the request of such holders, under Rule 415
thereunder) and such state laws as such holders may reasonably request;
provided, however, that (i) the Company shall not be required to include any
such shares of Common Stock in any such registration for any holder who is able
to sell all shares of Common Stock owned by such holder (or issuable to such
holder upon exercise of this Warrant), and which benefit from the registration
rights granted hereunder, during the three-month period beginning on the date
such registration is requested by such holder, without compliance with the
registration requirements of the Securities Act pursuant to Rule 144(k) under
the Securities Act; and (ii) the Company may, on not more than one occasion,
delay the filing of any registration statement requested pursuant to this
Section 8(b) to a date not more than 90 days following the date of such request
if in the reasonable opinion of the Company at the time of such request such a
delay is necessary in order not to significantly adversely affect financing
efforts then underway at the Company (in which case the expiration date of this
Section 8(b) shall be extended by a period equal to the period of such delay).
The costs and expenses directly related to any registration requested pursuant
to this section, including but not limited to legal fees of the Company's
counsel, audit fees, printing expense, filing fees and fees and expenses
relating to qualifications under state securities or blue sky laws incurred by
the Company shall be borne entirely by the Company; provided, however, that the
persons for whose account the securities covered by such registration are sold
shall bear the underwriting commissions applicable to their
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shares and fees of their legal counsel. If the holders of Warrants and the
holders of shares of Common Stock underlying the Warrants are the only persons
whose shares are included in the registration pursuant to this section, such
holders shall bear the expense of inclusion of audited financial statements in
the registration statement which are not dated as of the Company's normal fiscal
year or are not otherwise prepared by the Company for its own business purposes.
The Company shall keep effective and maintain any registration, qualification,
notification or approval specified in this paragraph for such period as may be
necessary for the holders of the Warrants and such common stock to dispose of
such securities and, from time to time shall amend or supplement, at the
holder's expense, the prospectus or offering circular used in connection
therewith to the extent necessary in order to comply with applicable law.
If, at the time any written request for registration is received by
the Company pursuant to this Section 8(b), the Company has determined to proceed
with the actual preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale for cash of any of
its securities by it or any of its security holders, such written request shall
be deemed to have been given pursuant to Section 8(a) hereof rather than this
Section 8(b), and the rights of the holders of Warrants and or shares issued
upon the exercise of the Warrants covered by such written request shall be
governed by Section 8(a) hereof.
The managing underwriter of an offering registered pursuant to this
Section 8(b), if any, shall be selected by the holders of a majority of the
Warrants and/or shares issued upon the exercise of the Warrants for which
registration has been requested and shall be reasonably acceptable to the
Company. Without the written consent of the holders of a majority of the
Warrants and/or shares issued upon the exercise of the Warrants for which
registration has been requested pursuant to this Section 8(b), neither the
Company nor any other holder of securities of the Company may include securities
in such registration if in the good faith judgment of the managing underwriter
of such public offering the inclusion of such securities would interfere with
the successful marketing of the Warrants and/or shares issued upon the exercise
of the Warrants or require the exclusion of any portion of the Warrants and/or
shares issued upon the exercise of the Warrants to be registered. Subject to the
preceding sentence, shares to be excluded from an underwritten public offering
shall be selected in the manner provided in Section 8(a) hereof.
(c) If and whenever the Company is required by the provisions of
Sections 8(a) or 8(b) hereof to effect the registration of Warrants and/or
shares issued upon the exercise of the Warrants under the Securities Act, the
Company will:
(i) prepare and file with the Commission a registration statement
with respect to such securities, and use its best efforts to cause
such registration statement to become and remain effective for such
period as may be reasonably necessary to effect the sale of such
securities;
(ii) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained
therein as may be necessary to keep such registration statement
effective for such period as may be reasonably necessary to effect the
sale of such securities;
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(iii) furnish to the security holders participating in such
registration and to the underwriters of the securities being
registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other
documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(iv) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as such participating holders may
reasonably request in writing within 30 days following the original
filing of such registration statement, except that the Company shall
not for any purpose be required to execute a general consent to
service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(v) notify the security holders participating in such
registration, promptly after it shall receive notice thereof, of the
time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration
statement has been filed;
(vi) notify such holders promptly of any request by the
Commission for the amending or supplementing of such registration
statement or prospectus or for additional information;
(vii) prepare and file with the Commission, promptly upon the
request of any such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel
for such holders (and concurred in by counsel for the Company), is
required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of the Warrants or
shares by such holder;
(viii) prepare and promptly file with the Commission and promptly
notify such holders of the filing of such amendment or supplement to
such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a prospectus
relating to such securities is required to be delivered under the
Securities Act, any event shall have occurred as the 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, in the light
of the circumstances in which they were made, not misleading;
(ix) advise such holders, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order
by the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for that
purpose and promptly use its best efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such stop order should
be issued;
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(x) not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of such
holders shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects with
the requirements of the Securities Act or the rules and regulations
thereunder, after having been furnished with a copy thereof at least
five business days prior to the filing thereof, unless in the opinion
of counsel for the Company the filing of such amendment or supplement
is reasonably necessary to protect the Company from any liabilities
under any applicable federal or state law and such filing will not
violate applicable law; and
(xi) at the request of any such holder, furnish on the effective
date of the registration statement and, if such registration includes
an underwritten public offering, at the closing provided for in the
underwriting agreement: (i) opinions, dated such respective dates, of
the counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to the holder
or holders making such request, covering such matters as such
underwriters and holder or holders may reasonably request; and (ii)
letters, dated such respective dates, from the independent certified
public accountants of the Company, addressed to the underwriters, if
any, and to the holder or holders making such request, covering such
matters as such underwriters and holder or holders may reasonably
request, in which letter such accountants shall state (without
limiting the generality of the foregoing) that they are independent
certified public accountants within the meaning of the Securities Act
and that in the opinion of such accountants the financial statements
and other financial data of the Company included in the registration
statement or the prospectus or any amendment or supplement thereto
comply in all material respects with the applicable accounting
requirements of the Securities Act.
(d) The Company hereby indemnifies the holder of this Warrant and of
any common stock issued or issuable hereunder, its officers and directors, and
any person who controls such Warrant holder or such holder of common stock
within the meaning of Section 15 of the Securities Act of 1933, against all
losses, claims, damages and liabilities caused by any untrue statement of a
material fact contained in any registration statement, prospectus, notification
or offering circular (and as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary prospectus
or caused by any omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading except
insofar as such losses, claims, damages or liabilities are caused by any untrue
statement or omission contained in information furnished in writing to the
Company by such Warrant holder or such holder of common stock expressly for use
therein, and each such holder by its acceptance hereof severally agrees that it
will indemnify and hold harmless the Company and each of its officers who signs
such registration statement and each of its directors and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
of 1933 with respect to losses, claims, damages or liabilities which are caused
by any untrue statement or omission contained in information furnished in
writing to the Company by such holder expressly for use therein.
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9. Additional Right to Convert Warrant.
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(a) Subject to the provisions of Section 7 hereof, the holder of this
Warrant shall have the right to require the Company to convert this Warrant (the
"Conversion Right") at any time prior to its expiration into shares of Common
Stock as provided for in this Section 9. Upon exercise of the Conversion Right,
the Company shall deliver to the holder (without payment by the holder of any
Exercise Price) that number of shares of Common Stock equal to the quotient
obtained by dividing (x) the value of the Warrant at the time the Conversion
Right is exercised (determined by subtracting the aggregate Exercise Price for
the Warrant Shares in effect immediately prior to the exercise of the Conversion
Right from the aggregate Fair Market Value for the Warrant Shares immediately
prior to the exercise of the Conversion Right) by (y) the Fair Market Value of
one share of Common Stock immediately prior to the exercise of the Conversion
Right.
(b) The Conversion Right may be exercised by the holder, at any time or
from time to time, prior to its expiration, on any business day by delivering a
written notice in the form attached hereto (the "Conversion Notice") to the
Company at the offices of the Company exercising the Conversion Right and
specifying (i) the total number of shares of Stock the Warrantholder will
purchase pursuant to such conversion and (ii) a place and date not less than one
nor more than 20 business days from the date of the Conversion Notice for the
closing of such purchase.
(c) At any closing under Section 9(b) hereof, (i) the holder will
surrender the Warrant and (ii) the Company will deliver to the holder a
certificate or certificates for the number of shares of Common Stock issuable
upon such conversion, together with cash, in lieu of any fraction of a share,
and (iii) the Company will deliver to the holder a new warrant representing the
number of shares, if any, with respect to which the warrant shall not have been
exercised.
(d) "Fair Market Value" means, with respect to the Company's Common
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Stock, as of any date:
(i) if the Common Stock is listed or admitted to unlisted trading
privileges on any national securities exchange or is not so listed or admitted
but transactions in the Common Stock are reported on the Nasdaq National Market
System, the reported closing price of the Common Stock on such exchange or by
the Nasdaq National Market System as of such date (or, if no shares were traded
on such day, as of the next preceding day on which there was such a trade); or
(ii) if the Common Stock is not so listed or admitted to unlisted
trading privileges or reported on the Nasdaq National Market System, and bid and
asked prices therefor in the over-the-counter market are reported by the Nasdaq
system or National Quotation Bureau, Inc. (or any comparable reporting
service), the mean of the closing bid and asked prices as of such date, as so
reported by the Nasdaq System, or, if not so reported thereon, as reported by
National Quotation Bureau, Inc. (or such comparable reporting service); or
(iii) if the Common Stock is not so listed or admitted to unlisted
trading privileges, or reported on the Nasdaq National Market System, and such
bid and asked prices are
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not so reported by the Nasdaq system or National Quotation Bureau, Inc. (or any
comparable reporting service), such price as the Company's Board of Directors
determines in good faith in the exercise of its reasonable discretion.
IN WITNESS WHEREOF, Vascular Solutions, Inc. has caused this Warrant to be
executed by its duly authorized officers and this Warrant to be dated as of
February 14, 1997.
VASCULAR SOLUTIONS, INC.
By /s/ Howard C. Root
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Howard C. Root
Chief Executive Officer
By /s/ Michael P. Nagel
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Michael P. Nagel
Secretary
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