EXHIBIT 10.48
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of July 31, 2000 (this
"Agreement"), is made by and between STEMCELLS, INC., a Delaware corporation
(the "Company"), and the entity named on the signature page hereto (the "Initial
Investor" or "Holder").
W I T N E S S E T H:
WHEREAS, in connection with the Subscription Agreement, dated as of July
31, 2000, between the Initial Investor and the Company (the "Subscription
Agreement"), the Company has agreed, upon the terms and subject to the
conditions of the Subscription Agreement, to issue and sell to the Initial
Investor shares (the "Common Shares") of Common Stock, $.01 par value (the
"Common Stock"), of the Company, and to issue a Callable Warrant (the "Callable
Warrant") and a Common Stock Purchase Warrant, Class A (the "Class A Warrant")
(collectively, the "Warrants") to purchase shares (the "Warrant Shares") of
Common Stock; and
WHEREAS, to induce the Initial Investor to execute and deliver the
Subscription Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 Act"), and applicable state securities laws with respect to the Common
Shares and the Warrant Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investor hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
"Investor" or "Investors" means the Initial Investor and any
transferee or assignee who agrees to become bound by the provisions of this
Agreement, or a similar agreement relating to Common Shares, Callable Warrants,
Class A Warrants or Warrant Shares, in accordance with Section 9 hereof.
"Majority Holders" means those Investors who hold a majority in
interest of the Registrable Securities.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Permitted Transferee" means any person (1) who is an "accredited
investor" as defined in Regulation D under the 1933 Act, and (2) who,
immediately following the assignment of rights under this Agreement holds (x) at
least 50,000 shares of Common Stock or (y) Warrants which at the time of such
transfer are exercisable for at least 50,000 shares of Common Stock, or any
combination thereof (the 50,000 share amounts referred to in this definition
being subject to equitable adjustment from time to time on terms reasonably
acceptable to the Majority Holders
for (i) stock splits, (ii) stock dividends, (iii) combinations, (iv) capital
reorganizations, (v) issuance to all holders of Common Stock of rights or
warrants to purchase shares of Common Stock and (vi) similar events relating to
the Common Stock, in each such case which occur on or after the Closing Date).
"register," "registered," and "registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous basis ("Rule
415"), and the declaration or ordering of effectiveness of such Registration
Statement by the SEC.
"Registrable Securities" means the Common Shares and the Warrant
Shares, whether held by the Initial Investor or any other Investor. As to any
particular securities, such securities shall cease to be Registrable Securities
when they have been sold pursuant to an effective registration statement or in
compliance with Rule 144 or are eligible to be sold pursuant to subsection (k)
of Rule 144.
"Registration Period" means the period from the Closing Date to the
earlier of (i) the date which is five years after the SEC Effective Date, (ii)
the date on which each Investor may sell all of its Registrable Securities
without registration under the 1933 Act pursuant to subsection (k) of Rule 144,
without restriction on the manner of sale or the volume of securities which may
be sold in any period and without the requirement for the giving of any notice
to, or the making of any filing with, the SEC and (iii) the date on which the
Investors no longer beneficially own any Registrable Securities.
"Registration Statement" means a registration statement of the Company
under the 1933 Act, including any amendment thereto, required to be filed by the
Company pursuant to this Agreement.
"Rule 144" means Rule 144 promulgated under the 1933 Act or any other
similar rule or regulation of the SEC that may at any time permit a holder of
any securities to sell securities of the Company to the public without
registration under the 1933 Act.
"SEC" means the United States Securities and Exchange Commission.
"SEC Effective Date" means the date the Registration Statement is
declared effective by the SEC.
"SEC Filing Date" means the date the Registration Statement is first
filed with the SEC pursuant to Section 2(a).
(b) Capitalized terms defined in the introductory paragraph or the
recitals to this Agreement shall have the respective meanings therein provided.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Subscription Agreement.
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2. REGISTRATION.
(a) Mandatory Registration. (1) The Company shall prepare and, on
or prior to the date which is 45 days after the Closing Date, file with the
SEC a Registration Statement on Form S-1 (or Form S-3, if the Company is
eligible to use such form), which, on the date of filing with the SEC, covers
the resale by the Initial Investor of a number of shares of Common Stock at
least equal to the greater of (A) 1,800,000 shares of Common Stock or (B) the
sum of (x) the number of Common Shares PLUS (y) the number of Warrant Shares
issuable upon the exercise in full of the Callable Warrant PLUS (z) the
number of Warrant Shares equal to 175% of the number of shares of Common
Stock issuable upon the exercise of the Class A Warrant, determined as if the
First Adjustment Date (as defined in the Class A Warrant) occurred on the
Closing Date and the Class A Warrant was otherwise exercised in full for cash
in accordance with the terms thereof on the Trading Day prior to the SEC
Filing Date (in each case determined without regard to the limitations on
beneficial ownership contained in the Warrants). If at any time the number of
shares of Common Stock included in the Registration Statement required to be
filed as provided in the first sentence of this Section 2(a) shall be
insufficient to cover all of the number of Warrant Shares issuable upon
exercise of the unexercised portion of the Warrants, then promptly, but in no
event later than 30 days after such insufficiency shall occur (or, if later,
30 days after the date upon which the Company first becomes eligible to file
a Registration Statement therefor if such ineligibility resulted from the
indeterminate number of shares of Common Stock), the Company shall file with
the SEC an additional Registration Statement on Form S-1 (or Form S-3, if the
Company is eligible to use such form) (which shall not constitute a
post-effective amendment to the Registration Statement filed pursuant to the
first sentence of this Section 2(a)), covering such number of shares of
Common Stock as shall be sufficient to permit such exercise. The Company
shall use its best efforts to have such additional Registration Statement
declared effective as soon as possible thereafter, and in any event by the
90th day following notice that such Registration Statement is required. For
all purposes of this Agreement such additional Registration Statement shall
be deemed to be the Registration Statement required to be filed by the
Company pursuant to Section 2(a) of this Agreement, and the Company and the
Investors shall have the same rights and obligations with respect to such
additional Registration Statement as they shall have with respect to the
initial Registration Statement required to be filed by the Company pursuant
to this Section 2(a). Without the written consent of the Majority Holders,
the Registration Statement shall not include securities to be sold for the
account of any selling security holder other than the Investors and the
holders of the registration rights described in Schedule 11(a).
(2) Prior to the SEC Effective Date or during any time subsequent
to the SEC Effective Date when the Registration Statement for any reason is not
available for use by any Investor for the resale of any Registrable Securities
hereunder, the Company shall not file any other registration statement or any
amendment thereto with the SEC under the 1933 Act or request the acceleration of
the effectiveness of any other registration statement previously filed with the
SEC, other than any registration statement registering securities issued (v) to
holders of registration rights described in Schedule 11(a), (w) pursuant to
compensation plans for employees, directors, officers, advisers or consultants
of the Company and in accordance with the terms of such plans, (x) upon exercise
of conversion, exchange, purchase or similar rights issued, granted or given by
the Company and outstanding as of the date of this Agreement and disclosed in
the SEC Reports or the Subscription Agreement, (y) pursuant to a public offering
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underwritten on a firm commitment basis registered under the 1933 Act or (z) as
part of a transaction involving a strategic alliance, acquisition of stock or
assets, merger, collaboration, joint venture, partnership or other similar
arrangement of the Company with another corporation, partnership or other
business entity (A) which is engaged in a business similar, complementary or
related to the business of the Company or (B) pursuant to which the Company
issues securities with the primary purpose to directly or indirectly acquire,
license or otherwise become entitled to use technology relevant to or useful in
the Company's business, so long as in each case of this clause (z) the Board of
Directors of the Company by resolution duly adopted (and a copy of which shall
be furnished to the Investor promptly after adoption) duly approves such
transaction in accordance with its duties under applicable law (each of the
forgoing transactions a "Board Approved Transaction").
(b) Certain Offerings. If any offering pursuant to a Registration
Statement pursuant to Section 2(d) hereof involves an underwritten offering,
Investors who hold a majority in interest of the Registrable Securities subject
to such underwritten offering shall have the right to select one legal counsel.
The Investors who hold the Registrable Securities to be included in such
underwriting shall pay all underwriting discounts and commissions and other fees
and expenses of any investment banker or bankers and manager or managers (other
than fees and expenses relating to registration of Registrable Securities under
federal or state securities laws, which are payable by the Company pursuant to
Section 5 hereof) with respect to their Registrable Securities and the fees and
expenses of such legal counsel so selected by the Investors.
(c) Certain Payments. If: (1) the initial Registration Statement is
not filed on or prior to the 45th day following the Closing Date (if the Company
files such Registration Statement without affording the Holder the opportunity
to review and comment on the same as required by Section 3(h) hereof, the
Company shall not be deemed to have satisfied this clause (1)), or (2) the
initial Registration Statement filed hereunder is not declared effective by the
Commission on or prior to the 90th day following the Closing Date (the
"Effectiveness Required Date"), or (3) after a Registration Statement is filed
with and declared effective by the SEC, such Registration Statement ceases to be
effective as to a material portion of the Registrable Securities at any time
prior to the expiration of the Registration Period without being succeeded
within ten business days by an amendment to such Registration Statement or by a
subsequent Registration Statement filed with and declared effective by the SEC,
or (4) the Common Stock shall be delisted or suspended from trading on the
Nasdaq National Market or on any exchange or other principal market for the
Common Stock for more than three (3) business days (which need not be
consecutive days), or (5) the exercise rights of the Holders pursuant to the
Warrants are suspended for any reason, or (6) an amendment to a Registration
Statement is not filed by the Company with the SEC within ten business days of
the SEC's notifying the Company that such amendment is required in order for
such Registration Statement to be declared effective (any such failure or breach
being referred to as an "Event," and for purposes of clauses (1), (2) and (5)
the date on which such Event occurs, for purposes of clauses (3) and (6) the
date upon which such 10 day period is exceeded, or for purposes of clause (4)
the date on which such three business day period is exceeded, being referred to
as "Event Date"), then, on the Event Date and each monthly anniversary thereof
until the applicable Event is cured, the Company shall pay to each Holder 1.5%
of the purchase price paid by such Holder pursuant to the Purchase Agreement, in
cash, ("Delay Payments"). If the Company fails to pay any Delay Payments
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pursuant to this Section in full within seven (7) days after the date payable,
the Company will pay interest thereon at a rate of 18% per annum (or such lesser
maximum amount that is permitted to be paid by applicable law) to the Holder,
accruing daily from the date such Delay Payments are due until such amounts,
plus all such interest thereon, are paid in full. The Delay Payments pursuant to
the terms hereof shall apply on a pro-rata basis for any portion of a month
prior to the cure of an Event. The Delay Payments shall not preclude the Holder
from seeking appropriate additional damages and remedies for any such Events.
(d) Piggy-Back Registrations. If at any time the Company shall
determine to prepare and file with the SEC a registration statement relating to
an offering for its own account or the account of others under the 1933 Act of
any of its equity securities, other than a registration statement registering
securities issued (1) pursuant to compensation plans for employees, directors,
officers, advisers or consultants of the Company and in accordance with the
terms of such plans or (2) as part of a Board Approved Transaction, the Company
shall send to each Investor who is entitled to registration rights under this
Agreement written notice of such determination and, if within five (5) business
days after receipt of such notice, an Investor shall so request in writing, the
Company shall include in such Registration Statement all or any part of the
Registrable Securities the Investor requests to be registered, except that if,
in connection with any underwritten public offering for the account of the
Company, the managing underwriter(s) thereof shall impose a limitation on the
number of shares of Common Stock which may be included in the Registration
Statement because, in such underwriter(s)' judgment, such limitation is
necessary to effect an orderly public distribution, then the Company shall be
obligated to include in such Registration Statement only such limited portion of
the Registrable Securities with respect to which the Investor has requested
inclusion hereunder. Any exclusion of Registrable Securities shall be made pro
rata among the Investors seeking to include Registrable Securities, in
proportion to the number of Registrable Securities sought to be included by such
Investors; provided, however, that the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities the
holders of which are not entitled by right to inclusion of securities in such
Registration Statement; and provided further, however, that, after giving effect
to the immediately preceding proviso, any exclusion of Registrable Securities
shall be made pro rata with holders of other securities having the right to
include such securities in the Registration Statement, based on the number of
securities for which registration is requested except to the extent such pro
rata exclusion of such other securities is prohibited under any written
agreement entered into by the Company with the holder of such other securities
prior to the date of this Agreement, in which case such other securities shall
be excluded, if at all, in accordance with the terms of such agreement. No right
to registration of Registrable Securities under this Section 2(d) shall be
construed to limit any registration required under Section 2(a) hereof. The
obligations of the Company under this Section 2(d) may be waived as to all
Investors by the Majority Holders and as to a particular Investor by such
Investor and shall expire after the Company has afforded the opportunity for the
Investor(s) to exercise registration rights under this Section 2(d) for two
registrations; provided, however, that any Investor who shall have had any
Registrable Securities excluded from any Registration Statement in accordance
with this Section 2(d) shall be entitled to include in an additional
Registration Statement filed by the Company the Registrable Securities so
excluded. Notwithstanding any other provision of this Agreement, if the
Registration Statement required to be filed pursuant to Section 2(a) of this
Agreement shall have been ordered effective by the SEC and the Company shall
have maintained the effectiveness of such Registration Statement as
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required by this Agreement and if the Company shall otherwise have complied in
all material respects with its obligations under this Agreement, then the
Company shall not be obligated to register any Registrable Securities on such
Registration Statement referred to in this Section 2(d).
(e) Eligibility for Form S-3. The Company shall file all reports
required to be filed by the Company with the SEC in a timely manner so as to
obtain eligibility for the use of Form S-3.
3. OBLIGATIONS OF THE COMPANY. In connection with the registration of the
Registrable Securities, the Company shall:
(a) prepare promptly, and file with the SEC not later than 45 days
after the Closing Date, a Registration Statement with respect to the number of
Registrable Securities provided in Section 2(a), and thereafter to use its best
efforts to cause each Registration Statement relating to Registrable Securities
to become effective as soon as possible after such filing but in any event on or
prior to the Effectiveness Required Date, and keep the Registration Statement
effective pursuant to Rule 415 at all times during the Registration Period;
submit to the SEC, within three Business Days after the Company learns that no
review of the Registration Statement will be made by the staff of the SEC or
that the staff of the SEC has no further comments on the Registration Statement,
as the case may be, a request for acceleration of effectiveness of the
Registration Statement to a time and date not later than 48 hours after the
submission of such request; notify the Investors of the effectiveness of the
Registration Statement on the date the Registration Statement is declared
effective; and the Company represents and warrants to, and covenants and agrees
with, the Investors that the Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein), at the time it is first
filed with the SEC, at the time it is ordered effective by the SEC and at all
times during which it is required to be effective hereunder other than any
period after which the Company notifies the Investors pursuant to Section 3(f)
until the time when the Investors may again sell Registrable Securities pursuant
to the Registration Statement (and each such amendment and supplement at the
time it is filed with the SEC and at all times during which it is available for
use in connection with the offer and sale of the Registrable Securities) shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the 1933 Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement until such time
as all of such Registrable Securities have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof as set
forth in the Registration Statement;
(c) furnish to each Investor whose Registrable Securities are included
in the Registration Statement and its legal counsel, (1) promptly after the same
is prepared and publicly distributed, filed with the SEC or received by the
Company, one copy of the Registration
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Statement and any amendment thereto, each preliminary prospectus and prospectus
and each amendment or supplement thereto, each letter written by or on behalf of
the Company to the SEC or the staff of the SEC and each item of correspondence
from the SEC or the staff of the SEC relating to such Registration Statement,
and (2) such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents,
as such Investor may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such Investor; notwithstanding the
foregoing, prior to such disclosure and review, the Company shall notify the
Holders if any portion of such documents contains material non-public
information, in which case the Holders may decline to review such documents or
portions thereof (the "Right to Decline Review");
(d) use commercially reasonable efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement under such
securities or blue sky laws of such jurisdictions as the Investors who hold a
majority in interest of the Registrable Securities being offered reasonably
request, (ii) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof at all
times until the end of the Registration Period, (iii) take such other actions as
may be necessary to maintain such registrations and qualifications in effect at
all times during the Registration Period and (iv) take all other actions
reasonably necessary or advisable to qualify the Registrable Securities for sale
in such jurisdictions; provided, however, that the Company shall not be required
in connection therewith or as a condition thereto (I) to qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (II) to subject itself to general taxation in any such
jurisdiction, (III) to file a general consent to service of process in any such
jurisdiction, (IV) to provide any undertakings that cause more than nominal
expense or burden to the Company or (V) to make any change in its Certificate of
Incorporation or by-laws, which in each case the Board of Directors of the
Company determines in good faith to be contrary to the best interests of the
Company and its stockholders;
(e) in the event that the Registrable Securities are being offered in
an underwritten offering pursuant to Section 2(d), enter into and perform its
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriters of such offering;
(f) as promptly as practicable after becoming aware of such event or
circumstance, notify each Investor of any event or circumstance of which the
Company has knowledge, as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and use its commercially reasonable
efforts promptly to prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission, file such supplement or
amendment with the SEC at such time as shall permit the Investors to sell
Registrable Securities pursuant to the Registration Statement as promptly as
practicable, and deliver a number of copies of such supplement or amendment to
each Investor as such Investor may reasonably request;
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(g) as promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the SEC of any stop order or other suspension of effectiveness of the
Registration Statement at the earliest possible time;
(h) not less than five Business Days prior to the filing of the
Registration Statement or any related prospectus or any amendment or supplement
thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), the Company shall, (i) furnish to the
Holders and their counsel copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the review of such Holders and their counsel
(subject to the Right to Decline Review), and (ii) cause its officers and
directors, counsel and independent certified public accountants to respond to
such inquiries as shall be necessary, in the reasonable opinion of respective
counsel to such to conduct a reasonable investigation within the meaning of the
1933 Act. The Company shall not file the Registration Statement or any such
prospectus or any amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities and their counsel shall reasonably object
in good faith.
(i) make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the 0000 Xxx) covering a twelve-month period beginning not later
than the first day of the Company's fiscal quarter next following the effective
date of the Registration Statement;
(j) [Omitted];
(k) make available for inspection by any Investor, and any attorney,
accountant or other agent retained by any such Investor (collectively, the
"Inspectors"), all pertinent financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably necessary to enable each Investor to exercise its due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information which any Inspector may reasonably request for purposes
of such due diligence; provided, however, that each Inspector shall hold in
confidence and shall not make any disclosure (except to an Investor) of any
Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction or (iii) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall not be required
to disclose any confidential information in such Records to any Inspector until
and unless such Inspector shall have entered into confidentiality agreements (in
form and substance satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 3(k). Each Investor agrees
that it shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at the Company's own
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, the
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Records deemed confidential. The Company shall hold in confidence and shall not
make any disclosure of information concerning an Investor provided to the
Company pursuant to Section 4(e) hereof unless (i) disclosure of such
information is necessary to comply with federal or state securities laws or
applicable rules and regulations of Nasdaq or other market or exchange, (ii) the
disclosure of such information is necessary to avoid or correct a misstatement
or omission in any Registration Statement, (iii) the release of such information
is ordered pursuant to a subpoena or other order from a court or governmental
body of competent jurisdiction or (iv) such information has been made generally
available to the public other than by disclosure in violation of this or, to the
knowledge of the Company, any other agreement. Each party agrees that it shall,
upon learning that disclosure of such information concerning another party is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such other party and allow such other
party, at such other party's own expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such information;
(l) use its commercially reasonable efforts (i) to cause all the
Registrable Securities covered by the Registration Statement to be listed on the
Nasdaq National Market or such other principal securities market on which
securities of the same class or series issued by the Company are then listed or
traded or (ii) if securities of the same class or series as the Registrable
Securities are not then listed on the Nasdaq National Market or any such other
securities market, to cause all of the Registrable Securities covered by the
Registration Statement to be listed on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq SmallCap Market;
(m) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(n) cooperate with the Investors who hold Registrable Securities being
offered to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates to
be in such denominations or amounts, as the case may be, as the Investors may
reasonably request and registered in such names as the Investors may request;
and, within three Business Days after a Registration Statement which includes
Registrable Securities is ordered effective by the SEC, the Company shall
deliver to the transfer agent for the Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) an instruction substantially in the form attached hereto as EXHIBIT 1
and shall cause legal counsel selected by the Company to deliver to the
Investors an opinion of such counsel in the form attached hereto as EXHIBIT 2
(with a copy to the Company's transfer agent);
(o) during the period the Company is required to maintain
effectiveness of the Registration Statement pursuant to Section 3(a), the
Company shall not bid for or purchase any Common Stock or any right to purchase
Common Stock or attempt to induce any person to purchase any such security or
right if such bid, purchase or attempt would in any way limit the right of the
Investors to sell Registrable Securities by reason of the limitations set forth
in Regulation M under the 1934 Act; and
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(p) take all other reasonable actions requested by the Majority
Holders necessary to expedite and facilitate disposition by the Investors of the
Registrable Securities pursuant to the Registration Statement.
4. OBLIGATIONS OF THE INVESTORS. In connection with the registration of the
Registrable Securities, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities.
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement;
(c) In the event Investors holding a majority in interest of the
Registrable Securities being registered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement;
(d) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f) or
3(g), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or 3(g) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession of the prospectus covering such
Registrable Securities current at the time of receipt of such notice;
(e) No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Investors entitled hereunder to approve such arrangements, (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions and other fees and expenses of investment
bankers and any manager or
10
managers of such underwriting and legal expenses of the underwriters applicable
with respect to its Registrable Securities, in each case to the extent not
payable by the Company pursuant to the terms of this Agreement; and
(f) Each Investor agrees to take all reasonable actions necessary to
comply with the prospectus delivery requirements of the 1933 Act applicable to
its sales of Registrable Securities and to assist the Company in carrying out
its obligations hereunder.
5. EXPENSES OF REGISTRATION. All reasonable expenses (other than
underwriting discounts and commissions and other fees and expenses of investment
bankers engaged by Investors and other than brokerage commissions), incurred in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees and the fees and disbursements
of counsel for the Company and one legal counsel for the Investors (in addition
to the payment of the Initial Investor's expenses to the extent provided in the
Subscription Agreement), shall be borne by the Company.
6. INDEMNIFICATION. In the event any Registrable Securities are included in
a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of the 1933
Act or the 1934 Act, any underwriter (as defined in the 0000 Xxx) for the
Investors, the directors, if any, of such underwriter and the officers, if any,
of such underwriter, and each person, if any, who controls any such underwriter
within the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified
Person"), against any losses, claims, damages, liabilities or expenses (joint or
several) incurred (collectively, "Claims") to which any of them may become
subject under the 1933 Act, the 1934 Act or otherwise, insofar as such Claims
(or actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any of the following statements or omissions in
or violations with respect to the Registration Statement, or any post-effective
amendment thereof, or any prospectus included therein: (i) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any state securities law
or any rule or regulation under the 1933 Act, the 1934 Act or any state
securities law (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to the restrictions set forth in Section
6(d) with respect to the number of legal counsel, the Company shall reimburse
the Investors and the other Indemnified Persons, promptly as such expenses are
incurred and are due and payable, for any legal fees or
11
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (I) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by any Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement, the prospectus or any such amendment thereof or supplement thereto,
if such prospectus was timely made available by the Company pursuant to Section
3(c) hereof; (II) with respect to any preliminary prospectus shall not inure to
the benefit of any Indemnified Person if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected in the
prospectus, as then amended or supplemented, if such prospectus was timely made
available by the Company pursuant to Section 3(c) hereof; and (III) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
(b) In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees to indemnify and hold harmless, to
the same extent and in the same manner set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
the 1933 Act or the 1934 Act, any underwriter and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder or underwriter within the
meaning of the 1933 Act or the 1934 Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement or any
post-effective amendment thereof, or any prospectus included therein; and such
Investor will reimburse any legal or other expenses reasonably incurred by any
Indemnified Party, promptly as such expenses are incurred and are due and
payable, in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld; provided, further, however, that the Investor shall be
liable under this Section 6(b) for only that amount of a Claim as does not
exceed the amount of the proceeds to such Investor from the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9. Notwithstanding anything to
the contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented.
12
(c) The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information so furnished in writing by such persons
expressly for inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel selected by the indemnifying party
but reasonably acceptable to the Indemnified Person or the Indemnified Party, as
the case may be; provided, however, that an Indemnified Person or Indemnified
Party shall have the right to retain its own counsel with the fees and expenses
to be paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. In such event, the Company shall pay for only one
separate legal counsel for the Investors; such legal counsel shall be selected
by the Investors holding a majority in interest of the Registrable Securities
included in the Registration Statement to which the Claim relates. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action shall not relieve such indemnifying party of
any liability to the Indemnified Person or Indemnified Party under this Section
6, except to the extent that the indemnifying party is prejudiced in its ability
to defend such action. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
7. CONTRIBUTION. To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6, (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any seller of Registrable Securities
who was not guilty of such fraudulent misrepresentation and (c) contribution by
any seller of Registrable Securities shall be limited in amount to the amount by
which the net amount of proceeds received by such seller from the sale of such
Registrable Securities exceeds the purchase price paid by such seller for such
Registrable Securities.
8. REPORTS UNDER 1934 ACT. With a view to making available to the Investors
the benefits of Rule 144, the Company agrees to:
13
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144 and the 1934 Act or
describing any failure to so comply, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to any Permitted Transferee only if: (a)
the Investor agrees in writing with such Permitted Transferee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (b) except as otherwise provided in the
Subscription Agreement, the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (i) the name and
address of such Permitted Transferee and (ii) the securities with respect to
which such registration rights are being transferred or assigned, (c)
immediately following such transfer or assignment the further disposition of
such securities by such Permitted Transferee is restricted under the 1933 Act
and applicable state securities laws, and (d) at or before the time the Company
receives the written notice contemplated by clause (b) of this sentence (or such
later time within ten Business Days after the Company approves a Proposed
Transferee pursuant to the Subscription Agreement) such Permitted Transferee
agrees in writing with the Company to be bound by all of the provisions
contained herein and in the Subscription Agreement. In connection with any such
transfer the Company shall, at the cost and expense of the Permitted Transferee,
promptly after such assignment take such actions as shall be reasonably
acceptable to the Initial Investor and such Permitted Transferee to assure that
the Registration Statement and related prospectus are available for use by such
Permitted Transferee for sales of the Registrable Securities in respect of which
the rights to registration have been so assigned; provided, however, that the
Company shall not be required to breach any other obligation hereunder in taking
such actions. In connection with any such assignment, each Investor shall have
the right to assign to such Permitted Transferee such Investor's rights under
the Subscription Agreement by notice of such assignment to the Company.
Following such notice of assignment of rights under the Subscription Agreement,
the Company shall be obligated to such Permitted Transferee to perform all of
its covenants under the Subscription Agreement as if such Permitted Transferee
were the Buyer under the Subscription Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement may
be amended only with the written consent of the Majority Holders and the Company
and, subject to the penultimate sentence of Section 2(d), the observance by the
Company of any provision of this Agreement may be waived (either generally or in
a particular instance and either retroactively or prospectively) only with the
written consent of the Majority Holders. Any
14
amendment or waiver effected in accordance with this Section 10 shall be binding
upon each Investor and the Company.
11. MISCELLANEOUS.
(a) Neither the Company nor any of its subsidiaries has entered, as of
the date hereof, nor shall the Company or any of its subsidiaries, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Except as and to
the extent specified in Schedule 11(a) hereto, neither the Company nor any of
its subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person.
(b) Except as and to the extent specified in Schedule 11(a) hereto and
except with the written consent of the Majority Holders, neither the Company nor
any of its security holders (other than the Holders in such capacity pursuant
hereto) may include securities of the Company in the Registration Statement
other than the Registrable Securities, and the Company shall not after the date
hereof enter into any agreement providing any such right to be so included to
any of its security holders.
(c) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(d) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
(by hand, by courier, by telephone line facsimile transmission (with answer back
confirmation) or other means) (i) if to the Company, at 000 Xxx Xxx Xxxxxx,
Xxxxx X, Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Chief Executive Officer,
facsimile number (000) 000-0000 with a copy to Ropes & Xxxx, Xxx Xxxxxxxxxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000, Attention: Xxxxxxxx X. Xxxxx, Esq.,
(facsimile number (000) 000-0000), (ii) if to the Initial Investor, at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile number (000) 000-0000, and (iii) if
to any other Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes by
notice given in accordance with this Section 11(b), and shall be effective upon
receipt.
(e) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(f) This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely within such State. In the event that any provision
of this Agreement is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform
15
with such statute or rule of law. Any provision hereof which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability
of any other provision hereof. Each party hereby consents to the exclusive
jurisdiction and venue of the federal and state courts located in New York, New
York in any action or proceeding arising hereunder and to service of process by
certified mail, return receipt requested (which shall constitute "personal
service").
(g) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
(h) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
(i) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(j) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(k) [Omitted]
(l) Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(m) The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.
(n) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
16
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed by their respective officers thereunto duly
authorized as of day and year first above written.
STEMCELLS, INC.
By:
----------------------------------
Name:
Title:
THE INITIAL INVESTOR: MILLENNIUM PARTNERS, L.P.
By:
----------------------------------
Name:
Title:
17
EXHIBIT 1
TO
REGISTRATION
RIGHTS AGREEMENT
[Company Letterhead]
[Date]
[TRANSFER AGENT'S NAME AND ADDRESS]
Ladies and Gentlemen:
This letter shall serve as our irrevocable authorization and direction to
you (1) to transfer or re-register the certificates for the shares of Common
Stock, $.01 par value (the "Common Stock"), of STEMCELLS, INC., a Delaware
corporation (the "Company"), represented by certificate numbers _______ and
_______ for an aggregate of _______ shares (the "Outstanding Shares") of Common
Stock presently registered in the name of [Name of Investors] upon surrender of
such certificate(s) to you, notwithstanding the legend appearing on such
certificates, and (2) to issue shares (the "Warrant Shares") of Common Stock to
or upon the order of the holder from time to time on exercise of the Callable
Warrant, Common Stock Purchase Warrants, Class A (collectively, the "Warrants")
exercisable for Common Stock issued by the Company upon receipt by you of a
subscription form from such holder in the form enclosed herewith. The transfer
or re-registration of the certificates for the Outstanding Shares by you should
be made at such time as you are requested to do so by the record holder of the
Outstanding Shares. The certificate issued upon such transfer or re-registration
should be registered in such name as requested by the holder of record of the
certificate surrendered to you and should not bear any legend which would
restrict the transfer of the shares represented thereby. In addition, you are
hereby directed to remove any stop-transfer instruction relating to the
Outstanding Shares. Certificates for the Warrant Shares should not bear any
restrictive legend and should not be subject to any stop-transfer restriction.
Contemporaneously with the delivery of this letter, the Company is
delivering to you the following:
(a) a list showing the name and address of each holder of record of
the Warrants and the date of issuance, Warrant number, and, in the case of the
Callable Warrant, the initial fixed number of shares issuable upon exercise
thereof;
(b) the form of subscription relating to the exercise of the Warrants;
and
(c) an opinion of Xxxx Xxxxx, Vice President and General Counsel of
the Company, as to registration of the Outstanding Shares and the Warrant Shares
for resale under the Securities Act of 1933, as amended.
Should you have any questions concerning this matter, please contact me.
Very truly yours,
STEMCELLS, INC.
By:
--------------------------
Name:
Title:
Enclosures
cc: [Names of Investors]
EXHIBIT 2
TO
REGISTRATION
RIGHTS AGREEMENT
[SEC Effective Date]
[Names and Addresses of Investors]
STEMCELLS, INC.
SHARES OF COMMON STOCK
Ladies and Gentlemen:
I am Vice President and General Counsel of STEMCELLS, INC., a Delaware
corporation (the "Company"), and I understand that the Company has sold to
[Names of Investors] (the "Holders") an aggregate of ________ shares (the
"Common Shares") of the Company's Common Stock, $.01 par value (the "Common
Stock"), and issued to the Holders a Callable Warrant, a Common Stock Purchase
Warrant, Class A (collectively, the "Warrants"). The Common Shares were sold,
and the Warrants were issued, to the Holders pursuant to a Subscription
Agreement, dated as of July 31, 2000, by and between Millennium Partners, L.P.
(the "Initial Investor") and the Company (the "Subscription Agreement").
Pursuant to the Registration Rights Agreement, dated as of July 31, 2000, by and
between the Company and the Initial Investor (the "Registration Rights
Agreement") entered into in connection with the purchase by the Initial Investor
of the Common Shares, the Company agreed with each Holder, among other things,
to register for resale (1) the Common Shares and (2) the shares (the "Warrant
Shares") of Common Stock issuable upon exercise of the Warrants under the
Securities Act of 1933, as amended (the "1933 Act"), upon the terms provided in
the Registration Rights Agreement. The Common Shares and the Warrant Shares are
referred to herein collectively as the "Shares." Pursuant to the Registration
Rights Agreement, on _______, _____ the Company filed a Registration Statement
on Form S-1 (File No. __________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") relating to the Shares, which
names the Holders as selling stockholders thereunder.
[Other introductory and scope of examination language to be inserted]
Based on the foregoing, I am of the opinion that:
(1) Since the Closing Date, the Company has timely filed with the SEC all
forms, reports and other documents required to be filed with the SEC under the
Securities 1934 Act of 1934, as amended (the "1934 Act"). All of such forms,
reports and other documents complied,
when filed, in all material respects, with all applicable requirements of the
1933 Act and the 1934 Act;
(2) The Registration Statement and the Prospectus contained therein (other
than the financial statements and financial schedules and other financial and
statistical information contained or incorporated by reference therein, as to
which I have not been requested to and do not express any opinion) comply as to
form in all material respects with the applicable requirements of the 1933 Act
and the rules and regulations promulgated thereunder; and
(3) The Registration Statement has become effective under the 1933 Act, to
the best of my knowledge after due inquiry, no stop order proceedings with
respect thereto have been instituted or threatened by the SEC. The Shares have
been registered under the 1933 Act and may be resold by the respective Holders
pursuant to the Registration Statement.
I have participated in the preparation of the Registration Statement and
the Prospectus, including review and discussions with officers and other
representatives of the Company, representatives of the independent public
accountants for the Company, and your representatives at which the contents of
the Registration Statement and the Prospectus contained therein and related
matters were discussed, and, although I am not passing upon and do not assume
any responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus contained therein, on
the basis of the foregoing, nothing has come to my attention that leads me to
believe either that the Registration Statement at the time the Registration
Statement became effective contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus contained in
the Registration Statement, as of its date, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that I have not
been requested to and do not express any view with respect to the financial
statements and schedules and other financial and statistical data included or
incorporated by reference in the Registration Statement or the Prospectus
contained therein).
Paragraph (3) of this opinion may be relied upon by ____________, Transfer
Agent and Registrar (the "Transfer Agent"), as if addressed to the Transfer
Agent.
Very truly yours,
cc: [TRANSFER AGENT]
