STEMCELLS, INC.
10,000,000 SHARES
CONTROLLED EQUITY
OFFERING SM
CANTOR
FITZGERALD & CO.
110 East 59th Street
New York, NY 10022
STEMCELLS, INC., a
Delaware corporation (the “ Company ”),
confirms its agreement (this “ Agreement
”) with Cantor Fitzgerald & Co. (“
CF&Co ”), as follows:
1.
Issuance and Sale of Shares . The Company agrees that, from
time to time during the term of this Agreement, on the terms and
subject to the conditions set forth herein, it may issue and sell
through CF&Co, acting as agent and/or principal, up to
10,000,000 shares of the Company’s common stock, par value
$.01 per share (the “ Common Stock ” or
the “ Shares ”). The issuance and sale of
Shares through CF&Co will be effected pursuant to the
Registration Statement (as defined below) filed by the Company and
declared effective by the Securities and Exchange Commission (the
“ Commission ”), although nothing in this
Agreement shall be construed as requiring the Company to use the
Registration Statement to issue Common Stock.
The Company has
filed, in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations thereunder
(collectively, the “ Securities Act ”),
with the Commission a registration statement on Form S-3 (File
No. 333-128797), including a base prospectus, with respect to
equity offerings, including the Shares, and which incorporates by
reference documents that the Company has filed or will file in
accordance with the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder
(collectively, the “ Exchange Act ”). The
Company has prepared a prospectus supplement (the “
Prospectus Supplement ”) to the base prospectus
included as part of such registration statement. The Company will
furnish to CF&Co, for use by CF&Co, copies of one or more
prospectuses included as part of such registration statement, as
supplemented by the Prospectus Supplement, relating to the Shares.
Except where the context otherwise requires, such registration
statement, as amended when it became effective, including all
documents filed as part thereof or incorporated by reference
therein, and including any information contained in a Prospectus
(as defined below) subsequently filed with the Commission pursuant
to Rule 424(b) under the Securities Act, collectively, are herein
called the “ Registration Statement ,”
and the base prospectus, including all documents incorporated
therein by reference, included in the Registration Statement, as it
may be supplemented by the Prospectus Supplement, in the form filed
by the Company with the Commission pursuant to Rule 424(b) under
the Securities Act is herein called the “
Prospectus .” Any reference herein to the
Registration Statement, the
Prospectus or
any amendment or supplement thereto shall be deemed to refer to and
include the documents incorporated by reference therein, and any
reference herein to the terms “amend,”
“amendment” or “supplement” with respect to
the Registration Statement or the Prospectus shall be deemed to
refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference
therein. For purposes of this Agreement, all references to the
Registration Statement, the Prospectus or to any amendment or
supplement thereto shall be deemed to include any copy filed with
the Commission pursuant to its Electronic Data Gathering Analysis
and Retrieval System (“ EDGAR
”).
2.
Placements . Each time that the Company wishes to issue and
sell Shares hereunder (each, a “ Placement
”), it will notify CF&Co by email notice (or other method
mutually agreed to in writing by the parties) containing the
parameters in accordance with which it desires the Shares to be
sold, which shall at a minimum include the number of Shares to be
issued (the “ Placement Shares ”), the
time period during which sales are requested to be made, any
limitation on the number of Shares that may be sold in any one day
and any minimum price below which sales may not be made (a “
Placement Notice ”), a form of which containing
such minimum sales parameters necessary is attached hereto as
Schedule 1 . The Placement Notice shall
originate from any of the individuals from the Company set forth on
Schedule 2 (with a copy to each of the other
individuals from the Company listed on such schedule), and shall be
addressed to each of the individuals from CF&Co set forth on
Schedule 2 , as such
Schedule 2 may be amended from time to time. The
Placement Notice shall be effective upon receipt by CF&Co
unless and until (i) in accordance with the notice
requirements set forth in Section 4 , CF&Co
declines to accept the terms contained therein for any reason, in
its sole discretion, (ii) the entire amount of the Placement Shares
have been sold, (iii) in accordance with the notice
requirements set forth in Section 4 , the Company
suspends or terminates the Placement Notice, (iv) the Company
issues a subsequent Placement Notice with parameters superseding
those on the earlier dated Placement Notice, or (iv) the
Agreement has been terminated under the provisions of
Section 11 . The amount of any discount, commission or
other compensation to be paid by the Company to CF&Co in
connection with the sale of the Placement Shares shall be
calculated in accordance with the terms set forth in
Schedule 3 . It is expressly acknowledged and
agreed that neither the Company nor CF&Co will have any
obligation whatsoever with respect to a Placement or any Placement
Shares unless and until the Company delivers a Placement Notice to
CF&Co and CF&Co does not decline such Placement Notice
pursuant to the terms set forth above, and then only upon the terms
specified therein and herein. In the event of a conflict between
the terms of this Agreement and the terms of a Placement Notice,
the terms of the Placement Notice will control.
3. Sale
of Placement Shares by CF&Co. Subject to the terms and
conditions herein set forth, upon the Company’s issuance of a
Placement Notice, and unless the sale of the Placement Shares
described therein has been suspended or otherwise terminated in
accordance with the terms of this Agreement, CF&Co will use its
commercially reasonable efforts consistent with its normal trading
and sales practices to sell such Placement Shares up to the amount
specified, and otherwise in accordance with the terms of such
Placement Notice. CF&Co will provide written confirmation to
the Company no later than the opening of the Trading Day (as
defined below) next following the Trading Day on which it has made
sales of Placement Shares hereunder setting forth the number of
Placement Shares sold on such day, the compensation payable by the
Company to CF&Co with respect to such sales pursuant to
Section 2, and the Net Proceeds (as
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defined below)
payable to the Company, with an itemization of deductions made by
CF&Co (as set forth in Section 5(a)) from gross proceeds
for the Placement Shares that it receives from such sales.
CF&Co may sell Placement Shares by any method permitted by law
deemed to be an “at the market” offering as defined in
Rule 415 of the Securities Act, including without limitation
sales made directly on the NASDAQ Global Market (the “
Exchange ”), on any other existing trading
market for the Common Stock or to or through a market maker. With
the prior express written consent of the Company, which may be
provided in its Placement Notice, CF&Co may also sell Placement
Shares in privately negotiated transactions. The Company
acknowledges and agrees that (i) there can be no assurance that
CF&Co will be successful in selling Placement Shares, and
(ii) CF&Co will incur no liability or obligation to the
Company or any other person or entity if it does not sell Placement
Shares for any reason other than a failure by CF&Co to use its
commercially reasonable efforts consistent with its normal trading
and sales practices to sell such Placement Shares as required under
this Section 3 . For the purposes hereof, “
Trading Day ” means any day on which Common
Stock is purchased and sold on the principal market on which the
Common Stock is listed or quoted.
4.
Suspension of Sales . The Company or CF&Co may, upon
notice to the other party in writing (including by email
correspondence to each of the individuals of the other Party set
forth on Schedule 2 , if receipt of such
correspondence is actually acknowledged by any of the individuals
to whom the notice is sent, other than via auto-reply) or by
telephone (confirmed immediately by verifiable facsimile
transmission or email correspondence to each of the individuals of
the other Party set forth on Schedule 2 ),
suspend any sale of Placement Shares; provided, however ,
that such suspension shall not affect or impair either
party’s obligations with respect to any Placement Shares sold
hereunder prior to the receipt of such notice. Each of the Parties
agrees that no such notice under this Section 4 shall
be effective against the other unless it is made to one of the
individuals named on Schedule 2 hereto, as such
Schedule may be amended from time to time.
(a)
Settlement of Placement Shares . Unless otherwise specified
in the applicable Placement Notice, settlement for sales of
Placement Shares will occur on the third (3
rd ) Business Day (or such earlier day as is
industry practice for regular-way trading) following the date on
which such sales are made (each, a “ Settlement
Date ”). The amount of proceeds to be delivered to
the Company on a Settlement Date against receipt of the Placement
Shares sold (the “ Net Proceeds ”) will
be equal to the aggregate sales price received by CF&Co at
which such Placement Shares were sold, after deduction for
(i) CF&Co’s commission, discount or other
compensation for such sales payable by the Company pursuant to
Section 2 hereof, (ii) any other amounts due and
payable by the Company to CF&Co hereunder pursuant to
Section 7(g) (Expenses) hereof, and (iii) any
transaction fees imposed by any governmental or self-regulatory
organization in respect of such sales.
(b)
Delivery of Placement Shares . On or before each Settlement
Date, the Company will, or will cause its transfer agent to,
electronically transfer the Placement Shares being sold by
crediting CF&Co’s or its designee’s (
provided CF&Co shall have given the Company written
notice of such designee at least one Business Day prior to the
Settlement Date) account at The Depository Trust Company through
its Deposit and Withdrawal at Custodian System or by such other
means of delivery as may be mutually agreed upon by the parties
hereto and, upon receipt
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of such
Placement Shares, which in all cases shall be freely tradable,
transferable, registered shares in good deliverable form, CF&Co
will deliver the related Net Proceeds in same day funds to an
account designated by the Company prior to the Settlement Date. If
the Company defaults in its obligation to deliver Placement Shares
on a Settlement Date, the Company agrees that in addition to and in
no way limiting the rights and obligations set forth in Section
9(a) (Indemnification) hereto, it will (i) hold CF&Co
harmless against any loss, claim, damage, or expense (including
reasonable legal fees and expenses), as incurred, arising out of or
in connection with such default by the Company and (ii) pay to
CF&Co any commission, discount, or other compensation to which
it would otherwise have been entitled absent such
default.
6.
Representations and Warranties of the Company . The Company
represents and warrants to, and agrees with, CF&Co that as of
the date of this Agreement and as of each Representation Date (as
defined in Section 7(m) below) on which a certificate
is required to be delivered pursuant to Section 7(m) of this
Agreement, as the case may be:
(a)
Registration Statement and Prospectus . The Company meets
the requirements for use of Form S-3 under the Securities Act. The
Registration Statement has been filed with the Commission and has
been declared effective under the Securities Act. The Registration
Statement has named CF&Co as an underwriter, acting as
principal and/or agent that the Company might engage in the section
entitled “Plan of Distribution.” The Company has not
received, and has no notice of, any order of the Commission
preventing or suspending the use of the Registration Statement, or
threatening or instituting proceedings for that purpose. Any
statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
have been so described or filed. Copies of the Registration
Statement, the Prospectus, and any such amendments or supplements
and all documents incorporated by reference therein that were filed
with the Commission on or prior to the date of this Agreement have
been delivered, or made available through EDGAR, to CF&Co and
their counsel. The Company has not distributed and will not
distribute any offering material in connection with the offering or
sale of the Placement Shares other than the Registration Statement
and the Prospectus. The Common Stock is currently listed on the
NASDAQ Global Market under the trading symbol
“STEM.”
(b)
No Misstatement or Omission . The Registration Statement and
the Prospectus conform in all material respects with the
requirements of the Securities Act. At each Settlement Date, the
Registration Statement and the Prospectus, as of such date, will
conform in all material respects with the requirements of the
Securities Act. The Registration Statement does not contain an
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 not misleading. The Prospectus does not include
an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
foregoing shall not apply to statements in, or omissions from, any
such document made in reliance upon, and in conformity with,
information furnished to the Company by CF&Co specifically for
use in the preparation thereof.
(c)
Conformity with Securities Act and Exchange Act . The
documents incorporated by reference in the Registration Statement,
the Prospectus or any amendment or supplement thereto, when such
documents were or are filed with the Commission under the
Securities Act or the Exchange Act or became or become effective
under the Securities Act, as the case may be,
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conformed or
will conform in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable.
(d)
Financial Information . The financial statements of the
Company and the Subsidiary (as defined below), together with the
related schedules and notes thereto, set forth or included or
incorporated by reference in the Registration Statement and the
Prospectus fairly present, in all material respects, the financial
condition of the Company and the Subsidiary as of and at the dates
indicated and the results of operations, changes in financial
position, stockholders’ equity and cash flows for the periods
therein specified. Such financial statements, schedules, and notes
are in conformity with generally accepted accounting principles as
consistently applied in the United States throughout the periods
involved (except as otherwise stated therein). The selected
financial data included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the
information shown therein and, to the extent based upon or derived
from the financial statements, have been complied on a basis
consistent with the financial statements presented therein. Any pro
forma financial statements of the Company and the Subsidiary, and
the related notes thereto, included or incorporated by reference in
the Registration Statement and the Prospectus present fairly the
information shown therein, have been prepared in accordance with
the Commission’s rules and guidelines with respect to pro
forma financial statements and have been properly compiled on the
basis described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and
circumstances referred to therein. The Company and, to the
Company’s knowledge, the Subsidiary (as defined below) do not
have any material liabilities or obligations, direct or contingent
(including any off-balance sheet obligations), not disclosed in the
Registration Statement and the Prospectus. No other financial
statements are required to be set forth or to be incorporated by
reference in the Registration Statement or the Prospectus under the
Securities Act.
(e)
Conformity with EDGAR Filing . The Prospectus delivered to
CF&Co for use in connection with the sale of the Placement
Shares pursuant to this Agreement will be identical to the versions
of the Prospectus created to be transmitted to the Commission for
filing via EDGAR, except to the extent permitted by
Regulation S-T.
(f)
Organization . The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the state of Delaware with full corporate power and authority
necessary to own, hold, lease and/or operate its assets and
properties and to conduct the business in which it is engaged and
as described in the Registration Statement and Prospectus; and the
Company is duly qualified as a foreign entity to transact business
and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure, individually or in the aggregate, to be so qualified and
be in good standing would not have a material adverse effect on
(i) the consolidated business, operations, assets, properties,
financial condition, reputation, prospects, or results of
operations of the Company and the Subsidiary (as defined herein)
taken as a whole, (ii) the transactions contemplated hereby,
or (iii) the ability of the Company to perform its obligation
under this Agreement (collectively, a “ Material
Adverse Effect ”). The Company has full corporate
power and authority necessary to enter into and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby. The Company is in compliance with the laws,
orders, rules, regulations and directives
-5-
applicable to
it, except for any noncompliance that, individually, or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect. Complete and correct copies of the articles of
incorporation and of the bylaws of the Company and all amendments
thereto have been delivered to CF&Co.
(g)
Subsidiary . (1) The Company has no “significant
subsidiaries” (as such term is defined in Rule 1-02 of
Regulation S-X promulgated under the Securities Act) other
than StemCells California, Inc. (the “
Subsidiary ”). The Subsidiary has been duly
formed and incorporated and is validly existing as a corporation in
good standing under the laws of the State of California, is duly
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or assets or the conduct of its business requires such
qualification, except where the failure to so qualify, individually
or in the aggregate, would not have a Material Adverse Effect, and
has full corporate power and authority necessary to own, hold,
lease and/or operate its assets and properties, to conduct the
business in which it is engaged and as described in the Prospectus.
The Subsidiary is in compliance with the laws, orders, rules,
regulations and directives necessary to conduct its business except
for any noncompliance that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect. A
complete and correct copy of the certificate of incorporation and
of the bylaws of the Subsidiary and all amendments thereto have
been delivered to CF&Co.
(2) Other
than the capital stock of the Subsidiary, the Company does not own,
directly or indirectly, any shares of stock or any other equity
interests or long-term debt securities of any corporation, firm,
partnership, joint venture, association or other entity, other than
the Company’s equity interest in ReNeuron Group plc, as
disclosed in the Registration Statement and the Prospectus. All of
the outstanding shares of capital stock of the Subsidiary have been
duly authorized and validly issued, are fully paid and
non-assessable, and are wholly owned by the Company, free and clear
of any security interest, mortgage, pledge, lien, encumbrance,
claim or other equity or adverse claims except for any security
interest, mortgage, pledge, lien, encumbrance, or claims as would
not reasonably be expected to have a Material Adverse Effect. No
options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligation into
shares of capital stock or ownership interests in the Subsidiary
are outstanding.
(h)
No Violation or Default . Neither the Company nor its
Subsidiary is (i) in violation of any provision of its charter
or bylaws or similar organizational documents, (ii) is in
default in any respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default,
in the due performance or observance of any term, covenant, or
condition of any indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which it is a
party or by which it is bound or to which any of its property or
assets is subject, or (iii) is in violation in any respect of
any statute, law, rule, regulation, ordinance, judgment, order or
decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having
jurisdiction over the Company, its Subsidiary or any of its
properties, as applicable (including, without limitation, those
administered by the Food and Drug Administration of the U.S.
Department of Health and Human Services (the “ FDA
” ) or by any foreign, federal, state or local
governmental or regulatory authority performing functions similar
to those performed by the FDA), except, with respect to clauses
(ii) and (iii), any violations or defaults which,
-6-
singularly or
in the aggregate, would not reasonably be expected to result in a
Material Adverse Effect. To the knowledge of the Company, no other
party under any contract or other agreement to which the Company or
the Subsidiary is a party is in default in any respect thereunder,
except for any default that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
The execution, delivery and performance of this Agreement, the
issuance and sale of the Placement Shares and the consummation of
the transactions contemplated hereby will not conflict with, or
result in any breach of or constitute a default under (nor
constitute any event which with notice, lapse of time or both would
result in any breach of, or constitute a default under),
(i) any provision of the charter, bylaws or organizational
documents, as the case may be, of the Company or the Subsidiary,
(ii) any provision of any contract, license, repurchase
agreement, management agreement, indenture, mortgage, deed of
trust, bank loan or credit agreement, note, lease or other evidence
of indebtedness, or any lease, contract or other agreement or
instrument to which the Company or the Subsidiary is a party or by
which the Company or the Subsidiary, or any of their respective
assets or properties may be bound or affected, except for any
breach or default that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect or
(iii) any federal, state, local or foreign law, regulation or
rule or any decree, judgment or order applicable to the Company or
the Subsidiary, except for any breach or default that, individually
or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
(i)
Capitalization . As of December 31, 2005, the Company
had an authorized, issued and outstanding capitalization as set
forth on its balance sheet included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2005. All
of the issued and outstanding shares of capital stock of the
Company have been duly and validly authorized and issued and are
fully paid and nonassessable, have been issued in compliance with
all federal and state securities laws and were not issued in
violation of any preemptive right, resale right, right of first
refusal or similar right.
(j)
Authorization; Enforceability . This Agreement has been duly
authorized, executed and delivered by the Company and is a legal,
valid and binding agreement of the Company enforceable in
accordance with its terms, except to the extent that
(i) enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable
principles and (ii) the indemnification and contribution
provisions of Section 9 hereof may be limited by federal or
state securities laws and public policy considerations in respect
thereof.
(k)
Capital Stock and Placement Shares in Proper Form . The
capital stock of the Company, including the Placement Shares,
conforms in all material respects to the description thereof
contained in the Registration Statement and the Prospectus. The
form of certificates for the Placement Shares are in due and proper
form and the holders of the Shares will not be subject to personal
liability under the Delaware General Corporation Law by reason of
being such holders.
(l)
Authorization of Placement Shares . The Placement Shares,
when issued and delivered pursuant to the terms approved by the
Board of Directors or a duly designated committee thereof, against
payment therefor as provided herein, will be duly and validly
authorized and issued and fully paid and nonassessable, free and
clear of any pledge, lien, encumbrance, security interest
or
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other claim,
including any statutory or contractual preemptive rights, resale
rights, rights of first refusal or other similar rights, and will
be registered pursuant to Section 12 of the Exchange
Act.
(m)
Consents and Permits . (1) The Company and its
Subsidiary have made all filings, applications and submissions
required by, and possesses all approvals, licenses, certificates,
certifications, clearances, consents, exemptions, marks,
notifications, orders, permits and other authorizations issued by,
the appropriate federal, state or foreign regulatory authorities
(including, without limitation, the FDA, and any other foreign,
federal, state or local government or regulatory authorities
performing functions similar to those performed by the FDA)
necessary for the ownership or lease of their respective properties
or to conduct its businesses as described in the Registration
Statement and the Prospectus (collectively, “
Permits ”), except for such Permits the failure
of which to possess, obtain or make the same would not reasonably
be expected to have a Material Adverse Effect; and neither the
Company nor its Subsidiary has received any written notice of
proceedings relating to the limitation, revocation, cancellation,
suspension, modification or non-renewal of any such Permit which,
singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect,
and has any reason to believe that any such license, certificate,
permit or authorization will not be renewed in the ordinary course.
(2) No approval, authorization, consent or order of or filing
with any national, state or local governmental or regulatory
commission, board, body, authority or agency is required in
connection with the issuance and sale of the Placement Shares or
the consummation by the Company of the transactions contemplated
hereby other than (i) registration of the Placement Shares
under the Securities Act, (ii) any necessary qualification
under the securities or blue sky laws of the various jurisdictions
in which the Placement Shares are being offered by CF&Co, (iii)
filing of any reports under the Exchange Act, (iv) such
approvals obtained or to be obtained in connection with the
approval of the listing of the Placement Shares on the Exchange, or
(v) such approvals as may be required by the rules of the
National Association of Securities Dealers (“
NASD ”).
(n)
No Preferential Rights . Except as set forth in the
Registration Statement and the Prospectus, (i) no person, as
such term is defined in Rule 1-02 of Regulation S-X
promulgated under the Securities Act (each, a “
Person ”), has the right, contractual or
otherwise, to cause the Company to issue or sell to such Person any
shares of Common Stock or shares of any other capital stock or
other securities of the Company, (ii) no Person has any
preemptive rights, resale rights, rights of first refusal, or any
other rights (whether pursuant to a “poison pill”
provision or otherwise) to purchase any shares of Common Stock or
shares of any other capital stock or other securities of the
Company, (iii) except as disclosed to CF&Co or its agents
in connection with the transactions contemplated hereby, no Person
has the right to act as an underwriter or as a financial advisor to
the Company in connection with the offer and sale of the Shares,
and (iv) no Person has the right, contractual or otherwise, to
require the Company to register under the Securities Act any shares
of Common Stock or shares of any other capital stock or other
securities of the Company, or to include any such shares or other
securities in the Registration Statement or the offering
contemplated thereby, whether as a result of the filing or
effectiveness of the Registration Statement or the sale of the
Placement Shares as contemplated thereby or otherwise.
(o)
Independent Public Accountant . Grant Thornton LLP (
“ Grant Thornton ” ), whose report on the
consolidated financial statements of the Company is filed with the
Commission as
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part of the
Registration Statement and the Prospectus, are and, during the
periods covered by their report, were independent public
accountants within the meaning of the Securities Act and the Public
Accounting Oversight Board (United States).
(p)
Enforceability of Agreements . To the knowledge of the
Company, all agreements between the Company and third parties
expressly referenced in the Prospectus are legal, valid and binding
obligations of the Company enforceable in accordance with their
respective terms, except to the extent that (i) enforceability
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights
generally and by general equitable principles and (ii) the
indemnification provisions of certain agreements may be limited be
federal or state securities laws or public policy considerations in
respect thereof and except for any unenforceability that,
individually or in the aggregate, would not unreasonably be
expected to have a Material Adverse Effect.
(q)
No Litigation . Except as disclosed in the Registration
Statement and the Prospectus, there are no actions, suits, claims,
investigations, inquiries or proceedings pending or, to the best of
the Company’s knowledge, threatened to which either the
Company or, to the Company’s knowledge, the Subsidiary, nor
any of their respective officers or directors is a party or of
which any of their respective properties or other assets is subject
at law or in equity, or before or by any federal, state, local or
foreign governmental or regulatory commission, board, body,
authority or agency that could reasonably be expected to result in
a judgment, decree or order having individually or in the aggregate
a Material Adverse Effect.
(r)
Regulatory Filings . Neither the Company nor its Subsidiary
has failed to file with the applicable regulatory authorities
(including, without limitation, the FDA or any foreign, federal,
state or local governmental or regulatory authority performing
functions similar to those performed by the FDA) any filing,
declaration, listing, registration, report or submission, except
for such failures that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect; all such
filings, declarations, listings, registrations, reports or
submissions were in compliance with applicable laws when filed and
no deficiencies have been asserted by any applicable regulatory
authority with respect to any such filings, declarations, listings,
registrations, reports or submissions, except for any deficiencies
that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
(s)
Market Capitalization . As of the date of this Agreement,
the aggregate market value of the Company’s voting stock held
by nonaffiliates of the Company was equal to or greater than
$150 million.
(t)
No Material Changes . Subsequent to the respective dates as
of which information is given in, or incorporated by reference
into, the Registration Statement and the Prospectus, there has not
been (i) any change, development, or event that has caused, or
could reasonably be expected to result, individually or in the
aggregate, in, a Material Adverse Effect or (ii) any change in
the number of authorized shares of capital stock.
(u)
No Material Defaults . Neither the Company nor the
Subsidiary has defaulted on any installment on indebtedness for
borrowed money or on any rental on one or more long-term leases,
which defaults, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect. The Company has not
filed a report pursuant to Section 13(a) or 15(d)
-9-
of the Exchange
Act since the filing of its last Annual Report on Form 10-K
indicating that it (i) has failed to pay any dividend or
sinking fund installment on preferred stock or (ii) has
defaulted on any installment on indebtedness for borrowed money or
on any rental on one or more long-term leases, which defaults,
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
(v)
Certain Market Activities . Neither the Company nor, to the
Company’s knowledge, the Subsidiary, nor, to the
Company’s knowledge, any of their respective directors,
officers or controlling persons has taken, directly or indirectly,
any action designed, or that has constituted or might reasonably be
expected to cause or result in, under the Exchange Act or
otherwise, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Placement Shares.
(w)
Broker/Dealer Relationships . Neither the Company nor the
Subsidiary or any related entities (i) is required to register
as a “broker” or “dealer” in accordance
with the provisions of the Exchange Act or (ii) directly or
indirectly through one or more intermediaries, controls or is a
“person associated with a [NASD] member” or
“associated person of a [NASD] member” (within the
meaning of Article I of the Bylaws of the NASD).
(x)
No Reliance . The Company has not relied upon CF&Co or
legal counsel for CF&Co for any legal, tax or accounting advice
in connection with the offering and sale of the Placement
Shares.
(y)
Taxes . The Company and, to the Company’s knowledge,
the Subsidiary has filed on a timely basis (taking into account all
applicable extensions) all necessary federal, state, local and
foreign income and franchise tax returns, if any such returns were
required to be filed, through the date hereof and have paid all
taxes shown as due thereon except for any failure to file or pay
which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. No tax deficiency has
been asserted against the Company or, to the Company’s
knowledge, the Subsidiary, nor does the Company know of any tax
deficiency that is likely to be asserted against any such entity
that, if determined adversely to any such entity, could reasonably
be expected to have a Material Adverse Effect. All tax liabilities,
if any, are adequately provided for on the books of the Company
and, to the Company’s knowledge, the Subsidiary, except for
such tax liabilities that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse
Effect.
(z)
Intellectual Property . Except as set forth in the
Prospectus, the Company and its Subsidiary own, possess, license or
have other rights to use all foreign and domestic patents, patent
applications, trade and service marks, trade and service mark
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, Internet domain names, know-how and other
intellectual property (collectively, the “Intellectual
Property”), necessary for the conduct of their respective
businesses as now conducted or as proposed in the Prospectus to be
conducted except to the extent that the failure to own, possess,
license or otherwise hold adequate rights to use such Intellectual
Property would not, individually or in the aggregate, have a
Material Adverse Effect. Except as set forth in the Prospectus,
(a) there are no rights of third parties to any such
Intellectual Property owned by the Company and its Subsidiary;
(b) to the Company’s knowledge, there is no infringement
by third parties of any such Intellectual Property;
(c)&
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