Exhibit 99.5
The following Form of Registration Rights Agreement was entered into with the
following investors and Emerging Growth Equities, Ltd.:
H&Q Healthcare Investors
H&Q Life Sciences Investors
Lancaster Investment Partners
Delta Opportunity Fund, Ltd.
Delta Opportunity Fund (Institutional), LLC
Omicron Partners, LP
Meridian Venture Partners
Meridian Venture Partners II, L.P.
FORM OF REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March____, 2001, among Orthovita, Inc., a Pennsylvania corporation
(the "Company"), each of the purchasers identified on the signature page hereto
(individually, a "Purchaser" and collectively, the "Purchasers"), and Emerging
Growth Equities, Ltd. (the "Placement Agent").
This Agreement is made pursuant to the Subscription Agreements, each dated
as of the date hereof between the Company and each of the Purchasers (the
"Purchase Agreement") and the Warrant to Purchase Common Stock granted by the
Company to the Placement Agent as of the date hereof.
The Company, the Purchasers and the Placement Agent hereby agree as
follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:
"Advice" has the meaning set forth in Section 3(o) hereof.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control", when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "affiliated", controlling" and "controlled" have meanings
correlative to the foregoing.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the
Commonwealth of Pennsylvania generally are authorized or required by law or
other government action to close.
"Closing" shall mean the Closing as defined in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value $0.01 per share.
"Effectiveness Date" means the date on which the Commission declares the
Registration Statement effective.
"Effectiveness Period" has the meaning set forth in Section 2(a) hereof.
"Event" has the meaning set forth in Section 2(b) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Filing Date" means as soon as practicable after the Closing but in no
event later than May 15, 2001.
"Holder" or "Holders" means the holder or holders, as the case may be, from
time to time of Registrable Securities.
"Indemnified Party" has the meaning set forth in Section 5(c) hereof.
"Indemnifying Party" has the meaning set forth in Section 5(c) hereof.
"Initial Registration Statement" has the meaning set forth in Section 2(a)
hereof.
"Losses" has the meaning set forth in Section 5(a) hereof.
"Majority Holders" means the Holders of at least fifty percent (50%) of the
Registrable Securities.
"National Market" means the NASDAQ National Market, the NASDAQ SmallCap
Market, the New York Stock Exchange or the American Stock Exchange.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, arbitration, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities
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covered by the Registration Statement, and all other amendments and supplements
to the Prospectus, including post-effective amendments, and all material
incorporated by reference in such Prospectus.
"Registrable Securities" means the shares of Common Stock (i) issued or
issuable with respect to the Purchase Agreement or (ii) issuable upon exercise
of or with respect to the Warrants and shall include any shares of the Company's
capital stock issued with respect to the Warrants as a result of any stock
split, stock dividend, recapitalization, exchange or similar event or otherwise;
provided, however, that all Registrable Securities shall cease to be Registrable
Securities once they have been sold pursuant to a Registration Statement or may
be sold without regard to any volume limitations under Rule 144.
"Registration Delay Payment" has the meaning set forth in Section 2(b)
hereof.
"Registration Statement" means the Initial Registration Statement and any
additional registration statements contemplated herein, including (in each case)
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means one special counsel to the Holders.
"Trading Day" means a day on which the National Market on which the Common
Stock is then listed is open for trading.
"Warrants" means the warrants issuable to the Placement Agent pursuant to
the Subscription Agreement.
2. Registration Requirements.
(a) Filing and Effectiveness Obligations. On or prior to the Filing Date,
the Company shall prepare and file with the Commission a Registration Statement
(the "Initial Registration Statement") which shall cover all Registrable
Securities for an offering to be made
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on a continuous basis pursuant to a "Shelf" registration statement under Rule
415. The Initial Registration Statement shall be on Form S-3 or any successor
form (except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
Form S-1 or any successor form). The Company shall use its best efforts to cause
the Initial Registration Statement to be declared effective under the Securities
Act as promptly as possible after the filing thereof, and to keep such Initial
Registration Statement continuously effective under the Securities Act (subject
to Section 3(r)) from the Effectiveness Date until the date when all Registrable
Securities covered by such Initial Registration Statement have been sold or may
be sold without volume restrictions pursuant to Rule 144 as determined by
counsel to the Company pursuant to a written opinion letter, addressed to the
Holders and the Company's transfer agent to such effect (the "Effectiveness
Period"). The number of shares of Common Stock initially included in the Initial
Registration Statement shall be no less than 100% of the sum of the number of
shares of Common Stock that are issued at the Closing pursuant to the Purchase
Agreement and issuable pursuant to the exercise of the Warrants, without regard
to any limitation on the Holder's ability to exercise the Warrants. The Company
may register the resale of securities in the Registration Statement on behalf of
shareholders other than the Holders.
(b) Penalties. If (i) the Initial Registration Statement covering all the
applicable Registrable Securities and required to be filed by the Company
pursuant to this Agreement is not filed with the Commission on or before the
Filing Date, (ii) the Company fails to respond, in a commercially reasonable
manner, to any comments made by the Commission with respect to the Initial
Registration Statement within ten (10) Business Days following the receipt
thereof, or (iii) during the Effectiveness Period (A) sales of all the
Registrable Securities required to be included on a Registration Statement
cannot be made pursuant to the Registration Statement because of a failure to
keep the Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to the Registration Statement, or to
register sufficient shares of Common Stock, but excluding any "black-out
periods" pursuant to Section 3(r) hereof) or (B) the Common Stock is not listed
or included for quotation on a National Market after being so listed or included
for quotation (each such event specified in (i), (ii), and (iii) above, an
"Event"), then, as partial relief for the damages to any Holder by reason of any
such delay in or reduction of its ability to sell the Registrable Securities
(which remedy shall not be exclusive of any other remedies available at law or
in equity), the Company shall pay to each Holder, upon the occurrence of each
such violation, an amount (a "Registration Delay Payment") equal to the product
of (a) the purchase price of such Holder's Common Stock (as set forth in the
Purchase Agreement) then owned beneficially and of record by the Purchaser or an
Affiliate of the Purchaser, (b) (.020) and (c) the number of months (rounded up
to the nearest whole month in the event of partial months) that such Event has
occurred and is continuing, provided, however, that there shall be excluded from
such period any delays which are solely attributable to changes required by the
Holders in the Registration Statement with respect to information relating to
the Holders, or to the failure of the Holders to conduct their review of the
Registration Statement pursuant to Section 3(a), unless the Company has failed
to timely file an amendment to a Registration Statement including such
Registrable Securities in accordance with Section 3(b) hereof. The Company shall
pay such Registration Delay Payments to each Holder in shares of Common Stock on
the last Business Day of each month during which an Event has occurred and is
continuing. For the purposes of this Section 2, the value of the Common Stock
shall equal: (i) the average closing bid price of the Common Stock as reported
on the National
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Market for each of the five Trading Days immediately preceding the date on which
the Registration Delay Payment is due or paid, or (ii) if the Common Stock is
not then publicly traded, the fair market value of a share of Common Stock as
determined by a nationally recognized or major regional investment banking firm
or firm of independent certified public accountants (the "Appraiser") selected
in good faith by the registered owners of a majority of the Registrable
Securities; provided, however, that, after receipt of the determination by such
Appraiser, the Company shall have the right to select, in good faith, an
additional Appraiser, in which case the fair market value shall be equal to the
average of the determinations by each such Appraiser; and provided further that
all determinations of the value of the Common Stock pursuant to this Section 2
shall be appropriately adjusted for any stock dividends, stock splits or other
similar transactions during such period. In the event the Company fails to make
a Registration Delay Payment within ten (10) Business Days of the date such
Registration Delay Payment is due, such Registration Delay Payment shall bear
interest at the rate of 2.0% per month (rounded up to the nearest whole month in
the event of partial months) until paid in full.
3. Registration Procedures.
In connection with the Company's registration obligations hereunder, the
Company shall:
(a) Preparation of Registration Statement. Prepare and file with the
Commission on or prior to the Filing Date a Registration Statement on Form S-3
or its successor form (or, if the Company is not then eligible to register the
resale of the Registrable Securities on Form S-3, the Registration Statement
shall be made on Form S-1 or its successor form) (which shall include a Plan of
Distribution substantially in the form of Exhibit A annexed hereto, and use best
efforts to cause the Registration Statement to become effective and remain
effective as provided herein; provided, however, that not less than three (3)
Business Days prior to the filing of the Registration Statement or any related
Prospectus or any amendment or supplement thereto, the Company shall, if
reasonably practicable (i) furnish to the Holders and their Special Counsel,
copies of all such documents proposed to be filed, which documents will be
subject to the review of such Holders and their Special Counsel, 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
the Special Counsel to such Holders, to conduct a reasonable investigation
within the meaning of the Securities Act. The Company shall not be restricted in
any manner from including within the Registration Statement the distribution,
issuance or resale of any of its or any other securities, on its own behalf or
on behalf of any of the Company's stockholders. The Company shall not file the
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Majority Holders or their Special Counsel shall reasonably
object. The sections of such Registration Statement covering information with
respect to the Holders, the Holders' beneficial ownership of securities of the
Company or the Holders' intended method of disposition of Registrable Securities
shall conform to the information provided to the Company by each of the Holders.
(b) Amendments. (i) Prepare and file with the Commission, in accordance
with the requirements and in the time periods set forth in the Securities Act,
such amendments, including post-effective amendments, to the Registration
Statement as may be necessary to keep the Registration Statement continuously
effective for the Effectiveness Period and prepare and
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file with the Commission such additional Registration Statements as are required
to be filed hereunder in order to register for resale under the Securities Act
all of the Registrable Securities, (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424 (or any similar
provisions then in force) promulgated under the Securities Act, (iii) respond as
promptly as possible to any comments received from the Commission with respect
to the Registration Statement or any amendment thereto and as promptly as
practicable, but in no event later than ten (10) Business Days after receipt
thereof, and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented. In the event the number of shares available under
a Registration Statement filed pursuant to this Agreement is insufficient to
cover 100% of the Registrable Securities issued or issuable upon exercise of the
Warrants, the Company shall amend the Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover 100% of the Registrable Securities, in each case as soon as
practicable, but in any event within twenty (20) Business Days after the
necessity therefor arises. The Company shall use its best efforts to cause such
amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof.
(c) Notifications. Notify the Holders of Registrable Securities to be sold
and their Special Counsel, as promptly as possible (and, in the case of (i)(A)
below, not less than five (5) days prior to such filing and, in the case of
(i)(C) below, not later than the first Business Day after effectiveness)
following the day (i) (A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed,
(B) when the Commission notifies the Company whether there will be a "review" of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement and (C) with respect to the Registration Statement
or any post-effective amendment, when the same has become effective, (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose, (iv) any of the representations and warranties of the Company contained
in any agreement (including any underwriting agreement) contemplated hereby
ceases to be true and correct in all material respects, (v) of the receipt by
the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose, (vi) of the occurrence of any event that makes any
statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration Statement
or the Prospectus, as the case may be, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements
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therein, in light of the circumstances under which they were made, not
misleading and (vii) the beginning and end of a black-out period pursuant to
Section 3(r).
(d) Confirmation of Effectiveness. Within two (2) Business Days after a
Registration Statement which covers applicable Registrable Securities is ordered
effective by the Commission, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Holders whose Registrable Securities are included
in such Registration Statement) confirmation that such Registration Statement
has been declared effective by the Commission in the form attached hereto as
Exhibit B.
(e) Supplements and Post-Effective Amendments. If requested by the Holders
of a majority in interest of the Registrable Securities to be sold, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the Company reasonably agrees should
be included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; provided, however, that the
Company shall not be required to take any action pursuant to this Section 3(e)
that would, in the written opinion of counsel for the Company (addressed to the
Holder's Special Counsel), violate applicable law.
(f) Copies of Registration Statement. Furnish to each Holder and their
Special Counsel, without charge, at least one conformed copy of each
Registration Statement and each amendment thereto, including financial
statements and schedules, to the extent requested by such Person promptly after
the filing of such documents with the Commission.
(g) Copies of Prospectus. Promptly deliver to each Holder and their Special
Counsel without charge, as many copies of the Prospectus or Prospectuses
(including each form of prospectus) and each amendment or supplement thereto as
such Persons may reasonably request; and the Company hereby consents to the use
of such Prospectus and each amendment or supplement thereto by each of the
selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto.
(h) Blue Sky. Prior to any public offering of Registrable Securities, use
its best efforts to register or qualify or cooperate with the selling Holders
and their Special Counsel in connection with the registration or qualification
(or exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; provided, however,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any action that
would subject it to general service of process in any such jurisdiction where it
is not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
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(i) Certificates. Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to a Registration Statement, which certificates shall be free,
to the extent permitted by applicable law and the Purchase Agreement, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such managing underwriters or
Holders may request at least two (2) Business Days prior to any sale of
Registrable Securities.
(j) Certain Revisions. Upon the occurrence of any event contemplated by
Section 3(c)(vi), as promptly as possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will 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, in light of the circumstances under which they were made,
not misleading.
(k) Listing. Prior to filing the Registration Statement, cause all
Registrable Securities relating to such Registration Statement to be listed on a
National Market on which similar securities issued by the Company are then
listed or quoted.
(l) Due Diligence. Make available for inspection by the selling Holders,
any representative of such Holders, and any attorney or accountant retained by
such selling Holders, at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate documents
and properties of the Company and its subsidiaries, and cause the officers,
directors, agents and employees of the Company and its subsidiaries to supply
all information in each case reasonably requested by any such Holder,
representative, attorney or accountant in connection with the Registration
Statement; provided, however, that if any information is determined in good
faith by the Company (in writing) to be of a confidential nature at the time of
delivery of such information, then prior to delivery of such information, the
Company and the Holders shall enter into a confidentiality agreement reasonably
acceptable to the Company and the Holders providing that such information shall
be kept confidential, unless (i) disclosure of such information is required by
court or administrative order or is necessary to respond to inquiries of
regulatory authorities (provided, however, that the Company shall be given
notice of any such pending disclosure so that the Company may seek a protective
order), (ii) disclosure of such information, in the opinion of counsel to such
Person, is required by law, (iii) such information becomes generally available
to the public other than as a result of a disclosure or failure to safeguard by
such Person, or (iv) such information becomes available to such Person from a
source other than the Company and such source is not bound by a confidentiality
agreement with the Company.
(m) During any period in which the Company is not subject to Section 13 or
15(d) of the Exchange Act, the Company shall make available information required
to be provided by Rule 144A(d)(4), within a reasonable amount of time after
requested by a Holder that proposes to resell Registrable Securities in
accordance with Rule 144A of the Securities Act.
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(n) Intentionally omitted.
(o) Information. The Company may require each selling Holder to furnish to
the Company information regarding such Holder and the distribution of such
Registrable Securities as is required by law to be disclosed in the Registration
Statement, and the Company may exclude from such registration the Registrable
Securities of any such Holder who unreasonably fails to furnish such information
within a reasonable time after receiving such request.
The Company shall hold in confidence and not make any disclosure of
information concerning a Holder provided to the Company unless (i) disclosure of
such information is necessary to comply with federal or state securities laws,
(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 Agreement or any other agreement. The Company agrees that it
shall, upon learning that disclosure of such information concerning a Holder is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Holder prior to making such
disclosure, and allow the Holder, at its expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information.
If the Registration Statement refers to any Holder by name or otherwise as
the holder of any securities of the Company, then such Holder shall have the
right to require (if such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force) the
deletion of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Each Holder agrees by its acquisition of such Registrable Securities that,
upon receipt of a notice from the Company of the occurrence of any event of the
kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or
3(c)(vii), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement.
(p) Responses to the Commission. The Company agrees to respond fully and
completely to any and all comments on a Registration Statement received from the
Commission staff as promptly as possible but, in no event later than ten (10)
Business Days of the receipt of such comments, regardless of whether such
comments are in oral or written form.
(q) Suspensions. Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
the Registration Statement
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or (ii) any suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.
(r) Black-out Periods. Subject to the last sentence of this Section 3(r),
the Company may by written notice require that the Holders immediately cease
sales of Registrable Securities (for a period not to exceed twenty (20)
consecutive days in any one instance and for a period not to exceed fifty (50)
calendar days in any twelve-month period) pursuant to a Registration Statement
at any time that (i) the Company becomes engaged in a business activity or
negotiation which is not disclosed in a Registration Statement (or the
prospectus included therein) which the Company reasonably believes must be
disclosed therein under applicable law and which the Company desires to keep
confidential for business purposes, (ii) the Company determines that a
particular disclosure so determined to be required to be disclosed therein would
be premature or would adversely affect the Company or its business or prospects
or (iii) the Registration Statement can no longer be used under the existing
rules and regulations promulgated under the Securities Act (each of (i), (ii) or
(iii), a "Material Condition"). The Company shall not be required to disclose to
the Holders which of the reasons specified in (i), (ii) or (iii) above is the
basis for requiring a suspension of sales due to the occurrence of a Material
Condition. The Company will use its commercially reasonable best efforts to
ensure that the use of the Registration Statement (and the prospectus included
therein) may be resumed as soon as it is practicable. The Company may not
suspend sales of Registrable Securities under a Registration Statement pursuant
to this Section 3(r) more than four (4) times during any twelve-month period.
4. Registration Expenses.
All fees and expenses incident to the performance of or compliance with
this Agreement by the Company shall be borne by the Company, whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
National Market and each other securities exchange or market on which
Registrable Securities are required hereunder to be listed or quoted and (B) in
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel for the Holders in
connection with Blue Sky qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as the Holders of a majority of Registrable
Securities may designate)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is requested by the
Holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) reasonable
fees and disbursements of counsel for the Company and Special Counsel for the
Holders, up to an aggregate $25,000 (the "Fee Cap"), (v) Securities Act
liability insurance, if the Company so desires such insurance, and (vi) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. In addition,
the Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
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officers and employees performing legal or accounting duties), the expense of
any annual audit, and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange, system or
market as required hereunder. The Holders shall pay the fees and expenses of the
Special Counsel retained by them in excess of the Fee Cap.
5. Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents (including any underwriters retained by such Holder
in connection with the offer and sale of Registrable Securities), brokers
(including brokers who offer and sell Registrable Securities as principal as a
result of a pledge or any failure to perform under a margin call of Common
Stock), investment advisors and employees of each such Holder, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all joint or several losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and reasonable attorneys' fees) and expenses (collectively, together with
Proceedings by any regulatory or self-regulatory organization, whether commenced
or threatened, "Losses"), as incurred, arising out of or relating to (i) any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary Prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or amendment or supplement thereto, in
light of the circumstances under which they were made) not misleading, except to
the extent, but only to the extent, that such untrue statements or omissions are
based solely upon and in conformity with information regarding such Holder
furnished in writing to the Company by such Holder expressly for use therein,
which information was reasonably relied on by the Company for use therein or to
the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the
Registration Statement, such Prospectus or such form of prospectus or in any
amendment or supplement thereto (provided that the Company amended any
disclosure with respect to the method of distribution upon written notice from
the Holders that such section of the Prospectus should be revised in any way) or
(ii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of Registrable Securities. The Company shall not, however, be liable to any
Holder for any Losses with respect to any untrue or alleged untrue statement of
material fact or omission or alleged omission of material fact if such statement
or omission was made in a preliminary Prospectus and such Holder did not receive
a copy of the final Prospectus (or any amendment or supplement thereto) at or
prior to the confirmation of the sale of the Registrable Securities in any case
where such delivery is required by the Securities Act and the untrue or alleged
untrue statement of material fact or omission or alleged omission of material
fact contained in such preliminary Prospectus was corrected in the final
Prospectus (or any amendment or supplement thereto), unless the failure to
deliver such final Prospectus (as amended or supplemented) was a result of
11
noncompliance by the Company with Section 3(g) of this Agreement. The Company
shall notify the Holders promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its officers, directors,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
officers, directors, agents and employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue statement of a
material fact contained in the Registration Statement, any Prospectus, or any
form of prospectus, or arising solely out of or based solely upon any omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent, but only to the extent, that
such untrue statement or omission is contained in any information so furnished
in writing by such Holder to the Company specifically for inclusion in the
Registration Statement or such Prospectus and that such information was
reasonably relied upon by the Company for use in the Registration Statement,
such Prospectus or such form of prospectus or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of prospectus; provided, however, that the indemnity
agreement contained in this Section 5(b) shall not apply to amounts paid in
settlement of any Losses if such settlement is effected without the prior
written consent of such Holder, which consent shall not be unreasonably
withheld. In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the gross proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
reasonable fees and expenses incurred in connection with defense thereof;
provided, however, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any
such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Indemnified Parties unless: (i) the Indemnifying Party has agreed in writing to
pay such fees and expenses; (ii) the Indemnifying Party shall have failed
promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or
(iii) the named parties to any such Proceeding (including any impleaded parties)
include both such
12
Indemnified Party and the Indemnifying Party, and such Indemnified Party shall
have been advised by counsel that a conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and such counsel shall be at the reasonable expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All reasonable fees and expenses of the Indemnified Party (including fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
Business Days of written notice thereof to the Indemnifying Party, which notice
shall be delivered no more frequently than on a monthly basis (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 5(a) or 5(b)
is unavailable to an Indemnified Party because of a failure or refusal of a
court of competent jurisdiction to enforce such indemnification in accordance
with its terms (by reason of public policy or otherwise), then each Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms. In no
event shall any selling Holder be required to contribute an amount under this
Section 5(d) in excess of the gross proceeds received by such Holder upon sale
of the Registrable Securities pursuant to the Registration Statement giving rise
to such contribution obligation.
13
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a Holder of any
of their obligations under this Agreement, each Holder or the Company, as the
case may be, in addition to being entitled to exercise all rights granted by law
and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of its
subsidiaries has, 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.
This Agreement, together with the Purchase Agreement, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters.
(c) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Majority
Holders; provided, however, that for the purposes of this sentence, Registrable
Securities that are owned, directly or indirectly, by the Company, or an
Affiliate of the Company are not deemed outstanding. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of a Holder and that does not
directly or indirectly affect the rights of any other Holders may be given by
the Holders to which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence. Any
amendment or waiver effected in accordance with this Section shall be binding
upon each Holder, each future Holder, and the Company. Upon effectiveness of
each such amendment or waiver, the Company shall promptly give written notice
thereof to the Holders who have not previously consented thereto in writing.
14
(d) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally, (ii) upon receipt, when sent by facsimile, provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party (if received by or before 5:00 p.m. Eastern
Time where such notice is received) or the first (1st) Business Day following
such delivery (if received after 5:00 p.m. Eastern Time where such notice is
received) or (iii) one (1) Business Day after deposit with a nationally
recognized overnight courier. The addresses for such communications are (A) if
to the Company, to the address set forth on Schedule I hereto, with copies to
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇, (B) if to
any Purchaser, to its address set forth on Schedule I hereto, with copies to
____________________________________, or to such other address as may be
designated in writing hereafter, in the same manner, by such Person, and (C) if
to any Placement Agent, to its address set forth on Schedule I hereto, with
copies to ____________________________________.
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder. The Company may not assign its
rights or obligations hereunder without the prior written consent of the
Majority Holders. Each Holder may assign its rights hereunder in the manner and
to the Persons as permitted under the Purchase Agreement. In addition, the
rights of each Holder hereunder, including the right to have the Company
register for resale Registrable Securities in accordance with the terms of this
Agreement, shall be automatically assignable by each Holder if: (i) the Holder
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (A) the name and
address of such transferee or assignee and (B) the securities with respect to
which such registration rights are being transferred or assigned; (iii)
following such transfer or assignment the further disposition of such securities
by the transferee or assignees is restricted under the Securities Act and
applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions of this Agreement; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Purchase Agreement.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.
(g) Governing Law. The corporate laws of the Commonwealth of Pennsylvania
shall govern all issues concerning the relative rights of the Company and the
Holders as its stockholders. All other questions concerning the construction,
validity,
15
enforcement and interpretation of this Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to principles of conflicts of law. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of Philadelphia, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any
Proceeding any claim that it is not personally subject to the jurisdiction of
any such court, that such Proceeding is improper. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.
(h) Cumulative Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.
(i) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(j) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(k) Shares Held by The Company and its Affiliates. Whenever the consent or
approval of Holders of a specified percentage of Registrable Securities is
required hereunder, Registrable Securities held by the Company or its Affiliates
(other than any Holder or transferees or successors or assigns thereof if such
Holder is deemed to be an Affiliate solely by reason of its holdings of such
Registrable Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.
(l) H&Q Trusts. The name H&Q Healthcare Investors is the designation of the
Trustees for the time being under an Amended and Restated Declaration of Trust
dated April 21, 1987, as amended, and all persons dealing with H&Q Healthcare
Investors must look solely to the trust property for the enforcement of any
claim against H&Q Healthcare Investors, as neither the Trustees, officers nor
shareholders assume any personal liability for the obligations entered into on
behalf of H&Q Healthcare Investors. The name H&Q Life Sciences Investors is the
designation of the Trustees for the time being under a Declaration of Trust
dated February 20, 1992, as amended, and all persons dealing with H&Q Life
Sciences Investors must look solely to the trust property for the enforcement of
any claims against H&Q Life Sciences Investors, as neither the Trustees,
officers nor shareholders assume any personal liability for the obligations
entered into on behalf of H&Q Life Sciences Investors.
[SIGNATURE PAGES FOLLOW]
16
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
ORTHOVITA, INC.
By:
----------------------------------
Name:
----------------------------
Title:
----------------------------
--------------------------------------
By:
----------------------------------
Name:
----------------------------
Title:
----------------------------
Emerging Growth Equities, Ltd.
By:
----------------------------------
Name:
----------------------------
Title:
----------------------------
17
SCHEDULE I
Company
Orthovita, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, CFO
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Purchasers:
--------------------------
--------------------------
Attention:
Facsimile:
Placement Agent:
Emerging Growth Equities, Ltd.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT A
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
security holders. Sales of shares may be made by selling security holders,
including their respective donees, transferees, pledgees or other successors-in-
interest, from time to time on the Nasdaq National Market, any other exchange
upon which our shares may trade in the future, or in the over-the-counter
market, at market prices prevailing at the time of sale, at prices related to
market prices or at negotiated prices. The shares may be sold by one or more of,
or a combination of, the following:
- a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
- ordinary brokerage transactions and transactions in which the broker
solicits purchases;
- through options, swaps or derivatives;
- in privately negotiated transactions;
- in transactions to cover short sales; and
- put or call option transactions relating to the shares.
The selling security holders may effect these transactions by selling
shares directly to purchasers or to or through broker-dealers, which may act as
agents or principals. These broker-dealers may receive compensation in the form
of discounts, concessions or commissions from selling security holders and/or
the purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The selling security
holders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their securities.
The selling security holders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, the broker-dealers or other financial institutions may engage in
short sales of the shares or of securities convertible into or exchangeable for
the shares in the course of hedging positions they assume with selling security
holders. The selling security holders may also enter into options or other
transactions with broker-dealers or other financial institutions which require
the delivery of shares offered by this prospectus to those broker-dealers or
other financial institutions. The broker-dealer or other financial institution
may then resell the shares pursuant to this prospectus (as amended or
supplemented to reflect those transactions).
The selling security holders and any broker-dealers that act in connection
with the sale of shares may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities
Act of 1933, and any commissions received by broker-dealers or any profit on the
resale of the shares sold by them while acting as principals may be deemed to be
underwriting discounts or commissions under the Securities Act. The selling
security holders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares against liabilities,
including liabilities arising under the Securities Act..
Because selling security holders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act of 1933, the selling security
holders will be subject to the prospectus delivery requirements of the
Securities Act of 1933. We have informed the selling security holders that the
anti-manipulative provisions of Regulation M promulgated under the Securities
Exchange Act of 1934 may apply to their sales in the market.
Selling security holders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act of
1933, provided they meet the criteria and conform to the requirements of Rule
144.
Upon being notified by a selling security holder that a material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, we will file a supplement to
this prospectus, if required pursuant to Rule 424(b) under the Securities Act of
1933, disclosing:
- the name of each such selling security holder and of the participating
broker-dealer(s);
- the number of shares involved;
- the initial price at which the shares were sold;
- the commissions paid or discounts or concessions allowed to the broker-
dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and
- other facts material to the transactions.
In addition, we will file a supplement to this prospectus when a selling
security holder notifies us that a donee or pledgee intends to sell more than
500 shares of common stock.
2
EXHIBIT B
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
Attention:
Re: Orthovita, Inc.
Ladies and Gentlemen:
We are counsel to Orthovita, Inc., a Pennsylvania corporation (the
"Company"), and have represented the Company in connection with: (i) certain
Subscription Agreements dated as of March __, 2001 (the "Purchase Agreement")
entered into by and among the Company and the purchasers named therein (the
"Purchasers") pursuant to which the Company issued to the Holders shares of the
Company's common stock, par value $0.01 per share; and (ii) that certain Warrant
to purchase Common Stock (the "Warrant") granted by the Company to Emerging
Growth Equities, Ltd. ("EGE") on March __, 2001 (EGE and the Purchasers are
collectively referred to as the "Holders"). Pursuant to the Purchase Agreement
and the Warrant, the Company also has entered into a Registration Rights
Agreement with the Holders (the "Registration Rights Agreement") pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement), including the
shares of Common Stock issuable upon exercise of the Warrants to purchase the
Company's common stock issued to the Placement Agent, under the Securities Act
of 1933, as amended (the "1933 Act"). In connection with the Company's
obligations under the Registration Rights Agreement, on _______________, 2001,
the Company filed a Registration Statement on Form [S-3/S-1] (File No. 333-
_____________) (the "Registration Statement") with the Securities and Exchange
Commission (the "SEC") relating to the Registrable Securities which names each
of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
cc: [LIST NAMES OF HOLDERS]