EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
BETWEEN
STEMCELLS, INC.,
XXXX XXXXX
AND
XXXXXX X. XXXXXXXX, M.D.
APRIL 13, 2000
INDEX OF DEFINED TERMS
AS DEFINED IN
-------------
Act...................................................................................................... 3
Additional Preferred Shares.............................................................................. 2
Agreement................................................................................................ 2
Applicable Percentage.................................................................................... 6
Blue Sky................................................................................................. 5
Certificate.............................................................................................. 2
Closing.................................................................................................. 2
Closing Date............................................................................................. 2
Commission............................................................................................... 2
Common Shares............................................................................................ 2
Common Stock............................................................................................. 2
Company.................................................................................................. 2
Conversion/Exercise Deficiency........................................................................... 9
due diligence............................................................................................ 3
Filing Date.............................................................................................. 2
Holder................................................................................................... 2
Holders.................................................................................................. 2
Indemnified Party........................................................................................15
Indemnifying Party.......................................................................................15
Investors................................................................................................ 2
Mandatory Repurchase Price............................................................................... 7
Monthly Delay Payment.................................................................................... 7
Preferred Shares......................................................................................... 2
Purchase Agreement....................................................................................... 2
register................................................................................................. 3
registered............................................................................................... 3
Registrable Securities................................................................................... 3
registration............................................................................................. 3
Registration Expenses.................................................................................... 3
Registration Statement................................................................................... 3
Regulation D............................................................................................. 3
SEC...................................................................................................... 2
Securities Act........................................................................................... 3
Selling Expenses......................................................................................... 3
Warrants................................................................................................. 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is entered into as of
April 13, 2000, between StemCells, Inc., with offices at 000 Xxx Xxx Xxxxxx,
Xxxxx X, Xxxxxxxxx, Xxxxxxxxxx 00000 (the "Company"), and Xxxx Xxxxx and Xxxxxx
X. Xxxxxxxx, M.D. (each, an "Investor," and collectively, the "Investors").
i
W I T N E S S E T H:
WHEREAS, pursuant to that certain Securities Purchase Agreement, dated on
or about the date hereof, by and between the Company and the Investors (the
"Purchase Agreement"), the Company has agreed to sell and issue to the
Investors, and the Investors have agreed to purchase from the Company, an
aggregate of 1,500 shares (750 per Investor), Liquidation Preference $1,000
each, of the Company's Series 6% Convertible Preferred Stock (the "Preferred
Shares") subject to the terms and conditions set forth therein, and 75,000
Warrants (37,500 per Investor) (the "Warrants") to purchase shares of the
Company's Common Stock, par value $0.01 per share (the "Common Stock") subject
to the terms and conditions set forth therein; and
WHEREAS, the Purchase Agreement provides each Investor an option under
certain circumstances to purchase up to 563 additional Preferred Shares (the
"Additional Preferred Shares"), on the terms and conditions set forth therein;
and
WHEREAS, the Purchase Agreement contemplates that the Preferred Shares
(including Additional Preferred Shares) will be convertible into shares (the
"Common Shares") of Common Stock pursuant to the terms and conditions set forth
in the Certificate of Designations for the Preferred Shares (the "Certificate");
and
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in the Purchase Agreement and
this Agreement, the Company and the Investors agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used herein and not
otherwise defined shall have the meaning ascribed thereto in the Purchase
Agreement or the Certificate. As used in this Agreement, the following terms
shall have the following respective meanings:
"Closing" and "Closing Date" shall have the meanings ascribed to such
terms in the Purchase Agreement; provided that they shall refer to the initial
Closing and Closing Date scheduled under the Purchase Agreement.
"Commission" or "SEC" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Filing Date" shall mean the earliest of (i) 30 days after receipt of a
written request from either of the Investors; (ii) the filing of any
registration statement with the Commission pursuant to Rule 415 under the
Securities Act; or (iii) the date 10 business days after becoming eligible to
file a registration statement Form S-3 under the Securities Act, regardless of
whether the Company has actually filed a registration statement on or before
such date.
"Holder" and "Holders" shall include the Investors and any transferee or
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transferees of the Preferred Shares, Additional Preferred Shares, Warrants,
Common Shares or Registrable Securities which have not been sold to the public,
to whom the registration rights conferred by this Agreement have been
transferred in compliance with this Agreement and the Purchase Agreement.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" shall mean: (i) the Common Shares or other
securities issued or issuable to each Holder or its permitted transferee or
designee upon conversion of the Preferred Shares or Additional Preferred Shares
or exercise of the Warrants; (ii) securities issued or issuable upon any stock
split, stock dividend, recapitalization or similar event with respect to such
Common Shares; and (iii) any other security issued as a dividend or other
distribution with respect to, in exchange for or in replacement of the
securities referred to in the preceding clauses.
"Registration Expenses" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents, and the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company).
"Registration Statement" shall have the meaning set forth in Section 2(a)
herein.
"Regulation D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for Holders not included within "Registration
Expenses."
2. REGISTRATION REQUIREMENTS. The Company shall use its best efforts
to effect the registration of the Registrable Securities (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as would permit or facilitate the sale or distribution of all
the Registrable Securities in the manner (including manner of sale) and in all
states reasonably requested by the Holder. Such best efforts by the
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Company shall include, without limitation, the following:
(a) The Company shall, no later than the Filing Date:
(i) Prepare and file a registration statement with the
Commission pursuant to Rule 415 under the Securities Act on such form
as the Company is then eligible to use under the Securities Act
covering resales by the Holders of the Registrable Securities
("Registration Statement"), which Registration Statement, to the
extent allowable under the Securities Act and the rules promulgated
thereunder (including Rule 416), shall state that such Registration
Statement also covers such indeterminate number of additional shares
of Common Stock as may become issuable upon conversion of the
Preferred Shares and Additional Preferred Shares and exercise of the
Warrants. The number of shares of Common Stock initially included in
such Registration Statement shall be no less than the sum of two times
the number of Common Shares that are then issuable upon conversion of
the Preferred Shares and Additional Preferred Shares and exercise of
the Warrants (assuming full conversion or exercise, respectively, at
the then applicable Conversion Price (as defined in the Certificate)
or Exercise Price (as defined in the Warrant) plus such number of
shares of Common Stock other than the Registrable Securities as the
Company may in its sole discretion include in such registration
statement. Nothing in the preceding sentence will limit the Company's
obligations to reserve shares of Common Stock pursuant to Section 3.7
of the Purchase Agreement. Thereafter the Company shall use its best
efforts to cause such Registration Statement and other filings to be
declared effective as soon as possible, and in any event prior to 90
days following the Filing Date. Without limiting the foregoing, the
Company will promptly respond to all SEC comments, inquiries and
requests, and shall request acceleration of effectiveness at the
earliest possible date. The Company shall provide the Holders upon
request reasonable opportunity to review any such Registration
Statement or amendment or supplement thereto prior to filing.
(ii) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection with such Registration Statement as may be necessary to
comply with the provisions of the Act with respect to the disposition
of all securities covered by such Registration Statement and notify
the Holders of the filing and effectiveness of such Registration
Statement and any amendments or supplements.
(iii) Furnish to each Holder such numbers of copies of a
current prospectus conforming with the requirements of the Act, copies
of the Registration Statement, any amendment or supplement thereto and
any documents incorporated by reference therein and such other
documents as
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such Holder may reasonably require in order to facilitate the
disposition of Registrable Securities owned by such Holder.
(iv) Register and qualify the securities covered by such
Registration Statement under the securities or "Blue Sky" laws of all
domestic jurisdictions; provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of process in
any such states or jurisdictions.
(v) Notify each Holder immediately of the happening of any
event (but not the substance or details of any such events unless
specifically requested by a Holder) as a result of which the
prospectus (including any supplements thereto or thereof) included in
such Registration Statement, as then in effect, includes an untrue
statement of material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and use its
best efforts to promptly update and/or correct such prospectus.
(vi) Notify each Holder immediately of the issuance by the
Commission or any state securities commission or agency of any stop
order suspending the effectiveness of the Registration Statement or
the threat or initiation of any proceedings for that purpose. The
Company shall use its best efforts to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting thereof
at the earliest possible time.
(vii) Permit counsel to the Holders to review the Registration
Statement and all amendments and supplements thereto within a
reasonable period of time (but not less than 3 full Trading Days (as
defined in the Certificate)) prior to each filing, and shall not file
any document in a form to which such counsel reasonably objects and
will not request acceleration of the Registration Statement without
prior notice to such counsel.
(viii) List the Registrable Securities covered by such
Registration Statement with all securities exchange(s) and/or markets
on which the Common Stock is then listed and prepare and file any
required filings with the Nasdaq National Market or any exchange or
market where the Common Shares are traded.
(ix) Take all steps necessary to enable Holders to avail
themselves of the prospectus delivery mechanism set forth in Rule 153
(or successor thereto) under the Act (if applicable).
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(b) Set forth below in this Section 2(b) are (I) events that may
arise that the Investors consider will interfere with the full enjoyment of
their rights under this Agreement, the Purchase Agreement, the Warrants and the
Certificate (the "Interfering Events"), and (II) certain remedies applicable in
each of these events.
Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Investors if an Interfering Event
occurs and provide that the Investors may require that the Company repurchase
outstanding Preferred Shares and Warrants at a specified price if certain
Interfering Events are not timely cured.
Paragraph (v) provides, inter alia, that if default adjustments
required as the remedy in the case of certain of the Interfering Events are not
provided when due, the Company may be required by the Investors to redeem
outstanding Preferred Shares and Warrants at a specified price.
Paragraph (vi) provides, inter alia, that the Investors have the
right to specific performance.
The preceding paragraphs in this Section 2(b) are meant to serve
only as an introduction to this Section 2(b), are for convenience only, and are
not to be considered in applying, construing or interpreting this Section 2(b).
(i) DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT.
(A) (1) In the event that such Registration Statement has
not been declared effective within 90 days from the Filing Date,
then the Conversion Price (as defined in the Certificate) shall
be permanently reduced so that thereafter (subject to further
adjustment as set forth herein, in the Certificate and in the
other Transaction Documents) it shall be equal to the otherwise
applicable Conversion Price multiplied by the "Applicable
Percentage." The Applicable Percentage shall be 98% in the event
the Registration Statement becomes effective within the first 30
day period after 90 days from the Filing Date. The Applicable
Percentage shall be permanently reduced by an additional 1.5% if
the Registration Statement is not effective within 120 days from
the Filing Date and shall be further reduced an additional 1.5%
during each successive 30 day period. For example, if the
Registration Statement becomes effective on the 160th day
following the Filing Date, the Applicable Percentage shall equal
5%, so that thereafter the Conversion Price shall be 95% of the
otherwise applicable Conversion Price. Any adjustments made
pursuant to the foregoing provisions shall also apply to the
Conversion Price of Additional Preferred Shares.
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In addition to the foregoing, if the Registration Statement
has not been declared effective within 150 days after the Filing
Date, then each Holder shall have the right to sell, at any time
after the 150th day after the Filing Date, any or all of its
Preferred Shares, and Warrants to the Company for consideration
(the "Mandatory Repurchase Price") equal to (I) for the Preferred
Shares, the greater of (x) 120% of the Liquidation Preference of
all such Preferred Shares being sold to the Company, or (y) the
Liquidation Preference for the Preferred Shares being sold to the
Company divided by the then applicable Conversion Price
multiplied by the greater of the last closing price of the Common
Stock on (i) the date a Holder exercises its option pursuant to
this Section 2(b) to require repurchase of Preferred Shares or
(ii) the date on which the event triggering Holder's remedies
under this Section 2(b) first occurred, in each case payable in
cash and (II) for the Warrants 120% of the product of (a) the
difference between the greater of clauses (i) or (ii) above and
the exercise price of the Warrants, multiplied by (b) the number
of Warrants being sold to the Company, payable in cash.
(2) In the event that the Company at any time fails to
issue unlegended Registrable Securities as required by Article VI
of the Purchase Agreement, then the Company shall pay each Holder
a Monthly Delay Payment (as defined below) for each 30 day period
(or portion thereof) that effectiveness of the Registration
Statement is delayed or failure to issue such unlegended
Registrable Securities persists.
(B) As used in this Agreement, a "Monthly Delay Payment"
shall be a cash payment equal to 1% of the Liquidation Preference
of the Preferred Shares held by a Holder for the first 30 day
period (or portion thereof) that the specified condition in this
Section 2(b) has not been fulfilled or the specified deficiency
has not been remedied, 2% of such Liquidation Preference for the
next 30 day period (or portion thereof) that the specified
condition in this Section 2(b) has not been fulfilled or the
specified deficiency has not been remedied, and 3% of such
Liquidation Preference thereafter for each subsequent 30 day
period (or portion thereof) that the specified condition in this
Section 2(b) has not been fulfilled or the specified deficiency
has not been remedied. Payment of the Monthly Delay Payments and
Mandatory Repurchase Price shall be due and payable from the
Company to such Holder within 5 business days of demand therefor.
Without limiting the foregoing, if cash payment of the Mandatory
Repurchase Price is not made within such 5 business day period,
the Holder may revoke and withdraw its election to cause the
Company to make such mandatory purchase at any time prior to its
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receipt of such cash. At the option of the Holder, Monthly Delay
Payments may be added to the Liquidation Preference of the
Preferred Shares held by it.
(ii) NO LISTING; PREMIUM PRICE REDEMPTION FOR DELISTING OF CLASS OF
SHARES.
(A) In the event that the Company fails, refuses or for any
other reason is unable to cause the Registrable Securities to be
listed with Nasdaq National Market or one of the other Approved
Markets (as defined in the Purchase Agreement) at all times
during the period ("Listing Period") from the earlier of the
effectiveness of the Registration Statement and the 90th day
following the Filing Date until such time as the registration
period specified in Section 5 terminates, then the Company shall
provide to each Holder a Monthly Delay Payment, for each 30 day
period or portion thereof during which such listing is not in
effect. In addition to the foregoing, following the 10th day that
such listing is not in effect, each Holder shall have the right
to sell to the Company any or all of its Preferred Shares and
Warrants at the Mandatory Repurchase Price. The provisions of
Section 2(b)(i)(B) shall apply to this Section 2(b)(ii)(A).
(B) In the event that shares of Common Stock of the Company
are not listed on any of the Approved Markets at all times
following the Filing Date, or are otherwise suspended from
trading and remain unlisted or suspended for 3 consecutive days,
then the Company shall provide to each Holder a Monthly Delay
Payment for each 30 day period or portion thereof during which
such listing is not in effect. In addition to the foregoing,
following the 5th day that the shares are not so listed or are
otherwise suspended, at the option of each Holder and to the
extent such Holder so elects, each Holder shall have the right to
sell to the Company the Preferred Shares and the Warrants held by
such Holder, in whole or in part, for the Mandatory Repurchase
Price on the terms set forth in Section 2(b)(i)(B) above.
(iii) BLACKOUT PERIODS. In the event that any Holder's ability to sell
Registrable Securities under the Registration Statement is
suspended for more than (i) five (5) consecutive days or (ii)
twenty (20) days in any calendar year ("Suspension Grace
Period"), including without limitation by reason of any
suspension or stop order with respect to the Registration
Statement or the fact that an event has occurred as a result of
which the prospectus (including any supplements thereto) included
in such Registration Statement then in effect includes an untrue
statement of material fact or omits
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to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances then existing (a "Blackout"), then the
Company shall provide to each Holder a Monthly Delay Payment for
each 30 day period or portion thereof from and after the
expiration of the Suspension Grace Period, on the terms set forth
in Section 2(b)(i)(B) above. In addition, at any time following
the expiration of the Suspension Grace Period if the Blackout
continues for more than five (5) additional consecutive days, a
Holder shall have the right to sell to the Company its Preferred
Shares and/or Warrants in whole or in part for the Mandatory
Repurchase Price on the terms set forth in Section 2(b)(i)(B)
above.
(iv) REDEMPTION FOR CONVERSION DEFICIENCY. In the event that the
Company does not have a sufficient number of Common Shares
available to satisfy the Company's obligations to any Holder upon
receipt of a Conversion Notice (as defined in the Certificate) or
exercise of the Warrants or the Company is otherwise unable or
unwilling for any reason to issue such Common Shares (other than
failure of the Holder to comply with the conversion notice and
delivery requirements of Section 5 of the Certificate) (each, a
"Conversion/Exercise Deficiency") in accordance with the terms of
the Certificate, Purchase Agreement and Warrants for any reason
after receipt of a Conversion Notice or exercise notice from any
Holder, then:
(A) The Company shall provide to each Holder a Monthly Delay
Payment for each 30 day period or portion thereof following the
Conversion/Exercise Deficiency on all outstanding Preferred
Shares and Warrants, on the terms set forth in Section 2(b)(i)(B)
above.
(B) At any time five days after the commencement of the
running of the first 30-day period described above in clause (A)
of this paragraph (iv), at the request of any Holder, the Company
promptly shall purchase from such Holder, for the Mandatory
Repurchase Price and on the terms set forth in Section 2(b)(i)(B)
above, any and all outstanding Preferred Shares and/or Warrants,
if the failure to issue Common Shares results from the lack of a
sufficient number thereof and shall purchase all of such Holder's
Preferred Shares and/or Warrants (or such portion requested by
such Holder) for such consideration and on such terms if the
failure to issue Common Shares results from any other cause, or
is without cause.
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(v) MANDATORY PURCHASE PRICE FOR DEFAULTS.
(A) The Company acknowledges that any failure, refusal or
inability by the Company to perform the obligations described in
the foregoing paragraphs (i) through (iv) will cause the Holders
to suffer damages in an amount that will be difficult to
ascertain, including without limitation damages resulting from
the loss of liquidity in the Registrable Securities and the
additional investment risk in holding the Preferred Shares,
Warrants and Registrable Securities. Accordingly, the parties
agree, after consulting with counsel, that it is appropriate to
include in this Agreement the foregoing provisions for Monthly
Delay Payments and mandatory redemptions in order to compensate
the Holders for such damages. The parties acknowledge and agree
that the Monthly Delay Payments and mandatory redemptions set
forth above represent the parties' good faith effort to quantify
such damages and, as such, agree that the form and amount of such
payments and mandatory redemptions are reasonable and will not
constitute a penalty.
(B) In the event that the Company fails to pay any Monthly Delay
Payment within 5 business days of demand therefor, each Holder
shall have the right to sell to the Company any or all of its
Preferred Shares and/or Warrants at the Mandatory Repurchase
Price on the terms set forth in Section 2(b)(i)(B) above.
(C) The Holder shall have the right to withdraw any request for
redemption hereunder at any time prior to its receipt of the
Mandatory Repurchase Price.
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(vi) CUMULATIVE REMEDIES. The Monthly Delay Payments and mandatory
purchases provided for above are in addition to and not in lieu
or limitation of any other rights the Holders may have at law, in
equity or under the terms of the Certificate, the Purchase
Agreement, the Warrants and this Agreement, including without
limitation the right to monetary contract damages and specific
performance. Each Holder shall be entitled to specific
performance of any and all obligations of the Company in
connection with the registration rights of the Holders hereunder.
Each Monthly Delay Payment provided for herein in the foregoing
clauses shall be in addition to each other Monthly Delay Payment;
PROVIDED, HOWEVER, that in no event shall the Company be
obligated to pay to any holder an aggregate amount greater than
three percent (3%) of the Liquidation Preference for the
Preferred Shares held by such holder for any 30-day period,
provided, that this sentence shall not in any way affect the
Company's mandatory purchase obligations hereunder.
(vii) REMEDIES FOR REGISTRABLE SECURITIES. In any case in which a
Holder of Preferred Shares and/or Warrants has the right to cause
the purchase of its securities under this Section 2(b), it shall
also have the right to cause the Company to purchase the
Registrable Securities that such Holder owns, in whole or in part
at the Holder's option, at a purchase price equal to 120% of the
product of (a) the greater of the last closing price of the
Common Stock on (i) the date a Holder exercises its option
pursuant to this Section 2(b) or (ii) the date on which the event
triggering Holder's remedies under this Section 2(b) first
occurred, multiplied by (b) the number of Registrable Securities
being sold to the Company, payable in cash.
In the case in which a Holder of Preferred Shares or Warrants
would have the right to receive Monthly Delay Payments with
respect to Preferred Shares or Warrants under Section 2(b), it
shall also have the right to receive payments with respect to
Registrable Securities owned by it in an amount at the rate of
the Monthly Delay Payments that would have applied to the
Preferred Shares or Warrants converted into or exercised for
Common Shares had such Preferred Shares or Warrants not been
converted or exercised.
(viii) REMEDIES FOR ADDITIONAL PREFERRED SHARES. All rights and
remedies set forth herein that are stated to apply to Preferred
Shares shall also apply, MUTATIS MUTANDIS, to Additional
Preferred Shares.
(c) If the Holder(s) intend to distribute the Registrable
Securities by means of an underwriting, the Holder(s) shall so advise the
Company. Any
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such underwriting may only be administered by nationally or regionally
recognized investment bankers reasonably satisfactory to the Company.
(d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable
actions reasonably requested by the Holders in connection therewith in order
to expedite or facilitate the disposition of such Registrable Securities.
Whether or not an underwriting agreement is entered into and whether or not
the Registrable Securities are to be sold in an underwritten offering, the
Company shall:
(i) make such representations and warranties to the
Holders and the underwriter or underwriters, if any, in form,
substance and scope as are customarily made by issuers to
underwriters in secondary offerings;
(ii) cause to be delivered to the sellers of Registrable
Securities and the underwriter or underwriters, if any, opinions of
independent counsel to the Company, on and dated as of each effective
day (or in the case of an underwritten offering, dated the date of
delivery of any Registrable Securities sold pursuant thereto) of the
Registration Statement, and within ninety (90) days following the end
of each fiscal year thereafter, which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the Holders
and the underwriter(s), if any, and their counsel and covering,
without limitation, such matters as the due authorization and issuance
of the securities being registered and compliance with securities laws
by the Company in connection with the authorization, issuance and
registration thereof and other matters that are customarily given to
underwriters in underwritten offerings, addressed to the Holders and
each underwriter, if any;
(iii) cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case of an
underwritten offering, at the time of delivery of any Registrable
Securities sold pursuant thereto), and at the beginning of each fiscal
year following a year during which the Company's independent certified
public accountants shall have reviewed any of the Company's books or
records, a "comfort" letter from the Company's independent certified
public accountants addressed to the Holders and each underwriter, if
any, stating that such accountants are independent public accountants
within the meaning of the Securities Act and the applicable published
rules and regulations thereunder, and otherwise in customary form and
covering such financial and accounting matters as are customarily
covered by letters of the independent certified public accountants
delivered in connection with secondary offerings; such accountants
shall have undertaken in each such letter to update the same during
each such fiscal year in which such books
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or records are being reviewed so that each such letter shall remain
current, correct and complete throughout such fiscal year; and each
such letter and update thereof, if any, shall be reasonably
satisfactory to the Holders;
(iv) if an underwriting agreement is entered into, the same
shall include customary indemnification and contribution provisions to
and from the underwriters and procedures for secondary underwritten
offerings; and
(v) deliver such documents and certificates as may be
reasonably requested by the Holders of the Registrable Securities
being sold or the managing underwriter or underwriters, if any, to
evidence compliance with clause (i) above and with any customary
conditions contained in the underwriting agreement, if any.
(e) The Company shall make available for inspection by the
Holders, representative(s) of all the Holders together, any underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney or accountant retained by any Holder or underwriter, all financial and
other records customary for purposes of the Holders' due diligence examination
of the Company and review of any Registration Statement, all SEC Documents (as
defined in the Purchase Agreement) filed subsequent to the Closing, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such representative, underwriter, attorney or accountant in connection
with such Registration Statement, provided that such parties agree to keep such
information confidential.
(f) Subject to Section 2(b) above, the Company may suspend
the use of any prospectus used in connection with the Registration Statement
only in the event, and for such period of time as, such a suspension is required
by the rules and regulations of the Commission. The Company will use its best
efforts to cause such suspension to terminate at the earliest possible date.
(g) The Company shall file a Registration Statement with
respect to any newly authorized and/or reserved (which shall include all shares
required to be reserved) Registrable Securities consisting of Common Shares
described in clause (i) of the definition of Registrable Securities within five
(5) business days of any reservation (or the date reservation was required) or
stockholders meeting authorizing same and shall use its best efforts to cause
such Registration Statement to become effective within forty-five (45) days of
such reservation (or the date reservation was required) or stockholders meeting.
If the Holders become entitled, pursuant to an event described in clause (ii),
(iii) and (iv) of the definition of Registrable Securities, to receive any
securities in respect of Registrable Securities that were already included in a
Registration Statement, subsequent to the date such Registration Statement is
declared effective, and the Company is unable under the securities laws to add
such securities to the then effective Registration Statement, the Company shall
promptly file, in accordance
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with the procedures set forth herein, an additional Registration Statement with
respect to such newly Registrable Securities. The Company shall use its best
efforts to (i) cause any such additional Registration Statement, when filed, to
become effective under the Securities Act, and (ii) keep such additional
Registration Statement effective during the period described in Section 5 below
and cause such Registration Statement to become effective within 45 days of that
date that the need to file the Registration Statement arose. All of the
registration rights and remedies under this Agreement shall apply to the
registration of such newly reserved shares and such new Registrable Securities,
including without limitation the provisions providing for default payments and
mandatory redemptions contained herein.
3. EXPENSES OF REGISTRATION. All Registration Expenses in connection
with any registration, qualification or compliance with registration pursuant to
this Agreement shall be borne by the Company, and all Selling Expenses of a
Holder shall be borne by such Holder.
4. REGISTRATION ON FORM S-3. The Company shall use its best efforts to
become qualified for registration on Form S-3 or any comparable or successor
form or forms and to remain qualified for registration on such form as the
Company is eligible to use under the Securities Act.
5. REGISTRATION PERIOD. In the case of the registration effected by
the Company pursuant to this Agreement, the Company shall keep such registration
effective until the later of (a) the date on which all the Holders have
completed the sales or distribution described in the Registration Statement
relating thereto or, if earlier, until such Registrable Securities may be sold
by the Holders under Rule 144(k) (provided that the Company's transfer agent has
accepted an instruction from the Company to such effect), and (b) the fifth
(5th) anniversary of the Filing Date.
6. INDEMNIFICATION.
(a) COMPANY INDEMNITY. The Company will indemnify each Holder,
each of its officers, directors, agents and partners, and each person
controlling each of the foregoing, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls, within
the meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, any underwriter, against all claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they were made, or any violation by the Company of the Securities Act or any
state securities law or in either case, any rule or regulation
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thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification or
compliance, and will reimburse each Holder, each of its officers, directors,
agents and partners, and each person controlling each of the foregoing, each
such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to a Holder to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission based upon written information
furnished to the Company by such Holder or the underwriter (if any) therefor and
stated to be specifically for use therein. The indemnity agreement contained in
this Section 6(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent will not be unreasonably withheld).
(b) HOLDER INDEMNITY. Each Holder will, severally and not
jointly, if Registrable Securities held by it are included in the securities as
to which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, agents and partners, and
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder, each other Holder (if any), and each of their officers,
directors and partners, and each person controlling such other Holder(s) against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statement therein not misleading in light of the circumstances under which
they were made, and will reimburse the Company and such other Holder(s) and
their directors, officers and partners, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection with investigating
and defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by such Holder
and stated to be specifically for use therein, and provided that the maximum
amount for which such Holder shall be liable under this indemnity shall not
exceed the net proceeds received by such Holder from the sale of the Registrable
Securities pursuant to the registration statement in question. The indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any such claims, losses, damages or liabilities if such settlement
is effected without the consent of such Holder (which consent shall not be
unreasonably withheld).
(c) PROCEDURE. Each party entitled to indemnification under this
Section 6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has
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actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim in any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld), and the Indemnified Party may participate in such
defense at its own expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 6 except to the extent
that the Indemnifying Party is materially and adversely affected by such failure
to provide notice. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the 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. Each Indemnified Party shall furnish such non-privileged information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.
7. CONTRIBUTION. If the indemnification provided for in Section 6
herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such 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 or
liabilities as between the Company on the one hand and any Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
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Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities pursuant to the registration statement in question or
(ii) in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such Holder or
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. 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.
8. SURVIVAL. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Purchase Agreement or
any underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation
of the sale or successive resales of the Registrable Securities.
9. INFORMATION BY HOLDERS. Each Holder shall furnish to the Company
such information regarding such Holder and the distribution and/or sale proposed
by such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement. The intended method or methods of
disposition and/or sale (Plan of Distribution) of such securities as so provided
by such Investor shall be included without alteration in the Registration
Statement covering the Registrable Securities and shall not be changed without
written consent of such Holder.
10. REPLACEMENT CERTIFICATES. The certificate(s) representing the
Preferred Shares, Additional Preferred Shares and/or Common Shares held by any
Investor (or then Holder) may be exchanged by such Investor (or such Holder) at
any time and from time to time for certificates with different denominations
representing an equal aggregate number of Preferred Shares, Additional Preferred
Shares and/or Common Shares, as reasonably requested by such Investor (or such
Holder) upon surrendering the same. No service charge will be made for such
registration or transfer or exchange. Upon receipt by the Corporation of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of any certificate representing the Preferred Shares, Additional
Preferred Shares or the Warrants, or the underlying Common Shares of any of the
foregoing, and, in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it, or upon surrender and cancellation of such
certificate if mutilated, the Corporation will make and deliver a new
certificate of like tenor and dated as of such cancellation at no charge to the
holder.
11. TRANSFER OR ASSIGNMENT. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their
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successors and permitted assigns. The rights granted to the Investors by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Preferred Shares, Additional Preferred Shares, Warrants or
Registrable Securities, and all other rights granted to the Investors by the
Company hereunder may be transferred or assigned to any transferee or assignee
of any Preferred Shares, Additional Preferred Shares, Warrants or Registrable
Securities; provided in each case that the Company must be given written notice
by the such Investor at the time of or within a reasonable time after said
transfer or assignment, stating the name and address of said transferee or
assignee and identifying the securities with respect to which such registration
rights are being transferred or assigned; and provided further that the
transferee or assignee of such rights agrees in writing to be bound by the
registration provisions of this Agreement.
12. MISCELLANEOUS.
(a) REMEDIES. The Company and the Investors acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which any of
them may be entitled by law or equity.
(b) JURISDICTION. The Company and each Investor (i) hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court, the California State courts and other courts of the United States sitting
in the Northern District of California for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement and (ii) hereby waives,
and agrees not to assert in any such suit action or proceeding, any claim that
it is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. The Company and the Investors
consent to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this paragraph
shall affect or limit any right to serve process in any other manner permitted
by law.
(c) NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing by facsimile, mail or
personal delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
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to the Company:
StemCells, Inc.
000 Xxx Xxx Xxxxxx, Xxxxx X
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq.
to Xxxx Xxxxx:
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with a copy to:
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to Xxxxxx X. Xxxxxxxx, M.D.:
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with a copy to:
----------------------
----------------------
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Any party hereto may from time to time change its address for notices by giving
at least five days' written notice of such changed address to the other parties
hereto.
(d) INDEMNITY. Each party shall indemnify each other party
against any loss, cost or damages (including reasonable attorney's fees)
incurred as a
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result of such parties' breach of any representation, warranty, covenant or
agreement in this Agreement, including, without limitation, any enforcement of
this indemnity.
(e) WAIVERS. No waiver by any party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter. The representations and warranties and the agreements
and covenants of the Company and each Investor contained herein shall survive
the Closing.
(f) EXECUTION IN COUNTERPART. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement, it being understood that all parties need not sign the same
counterpart.
(g) SIGNATURES. Facsimile signatures shall be valid and binding
on each party submitting the same.
(h) ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with
the Purchase Agreement, the Certificate, the Warrants and the agreements and
documents contemplated hereby and thereby, contains the entire understanding and
agreement of the parties, and may not be amended, modified or terminated except
by a written agreement signed by the Company plus the Holders of 75% of the
Preferred Shares issued under the Purchase Agreement to that date; provided that
for the purposes of this Section 12(h)) the Holders of Common Shares still
entitled to registration rights under this Agreement will be deemed to still be
Holders of that number of Preferred Shares which were converted into such number
of Common Shares issued upon conversion which are still held by them.
(i) GOVERNING LAW. This Agreement and the validity and
performance of the terms hereof shall be governed by and construed in accordance
with the laws of the State of California applicable to contracts executed and to
be performed entirely within such state, except to the extent that the law of
the State of Delaware regulates the Company's issuance of securities.
(j) JURY TRIAL. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY
JURY.
(k) TITLES. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
(l) NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
STEMCELLS, INC.
By:
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Name: Xxxxxx X. Xxxxxx, Xx.
Title: Acting President and CEO
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Xxxx Xxxxx
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Xxxxxx X. Xxxxxxxx, M.D.
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