Exhibit 10.7

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of November 13,
2015, is by and among Neurotrope, Inc., a Nevada corporation (the “Company”),
and each of the buyers identified on the attached Exhibit A (each, a “Buyer,”
and collectively, the “Buyers”).

 

RECITALS

 

A.           In connection with the Securities Purchase Agreement by and among
the parties hereto, dated as of November 13, 2015 (the “Securities Purchase
Agreement”), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to each Buyer
(i) the Series B Shares (as defined in the Securities Purchase Agreement) which
will be convertible into Underlying Series B Shares (as defined in the
Securities Purchase Agreement) in accordance with the terms of the Series B
Shares and (ii) the Warrants (as defined in the Securities Purchase Agreement)
which will be exercisable to purchase Warrant Shares (as defined in the
Securities Purchase Agreement) in accordance with the terms of the Warrants.

 

B.           To induce the Buyers to consummate the transactions contemplated by
the Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
“1933 Act”), and applicable state securities laws.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
hereby agree as follows:

 

1.          Definitions.

 

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement. As used in
this Agreement, the following terms shall have the following meanings:

 

(a)          “Business Day” means any day other than Saturday, Sunday or any
other day on which commercial banks in New York, New York are authorized or
required by law to remain closed.

 

(b)          “Broker” means the holder(s) of the Broker Warrant Shares.

 

(c)          “Broker Warrants” shall have the meaning set forth in Section 3(g)
of the Disclosure Schedule to the Securities Purchase Agreement, as further set
out in the Engagement Letter.

 

(d)          “Broker Warrant Shares” means the shares of Common Stock issuable
upon exercise of the Broker Warrants.

 

 

 

 

(e)          “Closing Date” shall have the meaning set forth in the Securities
Purchase Agreement.

 

(f)          “Effective Date” means the date that the applicable Registration
Statement has been declared effective by the SEC.

 

(g)          “Effectiveness Deadline” means (i) with respect to the initial
Registration Statement required to be filed pursuant to Section 2(a), the
earlier of the (A) 90th calendar day after the Closing Date or, in the event
that the SEC or the Staff (as defined below) cause a delay in the effectiveness
of such Registration Statement due to comments regarding the number of shares
being registered, then the 120th calendar day after the Closing Date and (B) 2nd
Business Day after the date the Company is notified (orally or in writing,
whichever is earlier) by the SEC that such Registration Statement will not be
reviewed or will not be subject to further review and (ii) with respect to any
additional Registration Statements that may be required to be filed by the
Company pursuant to this Agreement, the earlier of the (A) 90th calendar day
following the date on which the Company was required to file such additional
Registration Statement or, in the event that the SEC or the Staff (as defined
below) cause a delay in the effectiveness of such Registration Statement due to
comments regarding the number of shares being registered, then the 120th
calendar day after the Closing Date and (B) 2nd Business Day after the date the
Company is notified (orally or in writing, whichever is earlier) by the SEC that
such Registration Statement will not be reviewed or will not be subject to
further review; provided, however, if such day is not a Business Day, the
“Effectiveness Deadline” means the first Business Day thereafter.

 

(h)          “Engagement Letter” means the Engagement Letter, dated April 9,
2015, by and between the Company, Katalyst Securities LLC (“Katalyst”) and Trout
Capital LLC, as amended on August 25, 2015, and as further amended by and
between the Company and Katalyst on November 2, 2015.

 

(i)          “Filing Deadline” means (i) with respect to the initial
Registration Statement required to be filed pursuant to Section 2(a), the 30th
calendar day after the Closing Date and (ii) with respect to any additional
Registration Statements that may be required to be filed by the Company pursuant
to this Agreement, the date on which the Company was required to file such
additional Registration Statement pursuant to the terms of this Agreement;
provided, however, if such day is not a Business Day, the “Effectiveness
Deadline” means the first Business Day thereafter.

 

(j)          “Holder” means the Investors and the Broker.

 

(k)          “Investor” means a Buyer or any transferee or assignee of any
Registrable Securities, Series B Shares or Warrants, as applicable, to whom a
Buyer assigns its rights under this Agreement and who agrees to become bound by
the provisions of this Agreement in accordance with Section 9 and any transferee
or assignee thereof to whom a transferee or assignee of any Registrable
Securities, Series B Shares or Warrants, as applicable, assigns its rights under
this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9.

 

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(l)          “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization or a government or any department or agency thereof.

 

(m)          “register,” “registered,” and “registration” refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 and the
declaration of effectiveness of such Registration Statement(s) by the SEC.

 

(n)          “Registrable Securities” means (i) the Broker Warrant Shares, (ii)
the Underlying Series B Shares, (iii) the Warrant Shares and (iv) any capital
stock of the Company issued or issuable with respect to the Underlying Series B
Shares, the Warrant Shares, the Series B Shares or the Warrants, including,
without limitation, (1) as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise and (2) shares of
capital stock of the Company into which the shares of Common Stock are converted
or exchanged and shares of capital stock of a Successor Entity (as defined in
the Warrants) into which the shares of Common Stock are converted or exchanged,
in each case, without regard to any limitations on conversion of the Series B
Shares or exercise of the Warrants; provided, however, that the term
“Registrable Securities” shall not include any underlying Series B Shares,
Warrant Shares or any capital stock of the Company issued or issuable with
respect to the Underlying Series B Shares, the Warrant Shares, the Series B
Shares or the Warrants that are sold pursuant to a registration statement that
has been declared effective under the Securities Act by the SEC.

 

(o)          “Registration Statement” means a registration statement or
registration statements of the Company filed under the 1933 Act covering
Registrable Securities.

 

(p)          “Required Registration Amount” means 150% of the sum of (i) the
maximum number of Underlying Series B Shares issued and issuable pursuant to the
Series B Shares, (ii) the maximum number of Warrant Shares issued and issuable
pursuant to the Warrants, and (iii) the maximum number of Broker Warrant Shares
issued and issuable pursuant to the Broker Warrants, in each case, as of the
Trading Day (as defined in the Warrants) immediately preceding the applicable
date of determination (without taking into account any limitations on the
conversion of the Series B Shares or the exercise of the Warrants set forth
therein), all subject to adjustment as provided in Section 2(d).

 

(q)          “Rule 144” means Rule 144 promulgated by the SEC under the 1933
Act, as such rule may be amended from time to time, or any other similar or
successor rule or regulation of the SEC that may at any time permit the Holders
to sell securities of the Company to the public without registration.

 

(r)          “Rule 415” means Rule 415 promulgated by the SEC under the 1933
Act, as such rule may be amended from time to time, or any other similar or
successor rule or regulation of the SEC providing for offering securities on a
continuous or delayed basis.

 

(s)          “SEC” means the United States Securities and Exchange Commission or
any successor thereto.

 

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2.          Registration.

 

(a)          Mandatory Registration. The Company shall prepare and, as soon as
practicable, but in no event later than the Filing Deadline, file with the SEC
an initial Registration Statement on Form S-3 (or equivalent) or, if the Company
is not eligible to use Form S-3, Form S-1 (or equivalent) covering the resale of
all of the Registrable Securities, provided that such initial Registration
Statement shall (subject to reduction pursuant to Section 2(f) below) register
for resale at least the number of shares of Common Stock equal to the Required
Registration Amount as of the date such Registration Statement is initially
filed with the SEC. Such initial Registration Statement, and each other
Registration Statement required to be filed pursuant to the terms of this
Agreement, shall contain (except if otherwise directed by each of the Buyers or
the SEC) the “Selling Stockholders” and “Plan of Distribution” sections in
substantially the form attached hereto as Exhibit C. The Company shall use its
best efforts to have such initial Registration Statement, and each other
Registration Statement required to filed pursuant to the terms of this
Agreement, declared effective by the SEC as soon as practicable, but in no event
later than the applicable Effectiveness Deadline for such Registration
Statement.

 

(b)          Legal Counsel. Subject to Section 5 hereof, each of Iroquois Master
Fund Ltd. (“Iroquois”) and Katalyst shall have the right to select one (1) legal
counsel to review and oversee any registration pursuant to this Section 2
(“Legal Counsel”), which, for Iroquois, shall be Sanders Ortoli Vaughn-Flam
Rosenstadt LLP or such other counsel as thereafter designated by Iroquois, and,
for Katalyst, shall be Barbara Glenns or such other counsel as thereafter
designated by Katalyst.

 

(c)          Use of Form S-3. The Company shall undertake to register the resale
of all the Registrable Securities on Form S-3 as soon as such form is available,
provided that the Company shall maintain the effectiveness of all Registration
Statements then in effect until such time as a Registration Statement on Form
S-3 covering the resale of all the Registrable Securities has been declared
effective by the SEC and the prospectus contained therein is available for use.

 

(d)          Sufficient Number of Shares Registered. In the event the number of
shares available under any Registration Statement is insufficient to cover all
of the Registrable Securities required to be covered by such Registration
Statement or a Holder’s allocated portion of the Registrable Securities pursuant
to Section 2(h), the Company shall amend such Registration Statement (if
permissible), or file with the SEC a new Registration Statement (on the short
form available therefor, if applicable), or both, so as to cover at least the
Required Registration Amount as of the Trading Day immediately preceding the
date of the filing of such amendment or new Registration Statement, in each
case, as soon as practicable, but in any event not later than fifteen (15)
Business Days after the necessity therefor arises (but taking account of any
Staff position with respect to the date on which the Staff will permit such
amendment to the Registration Statement and/or such new Registration Statement
(as the case may be) to be filed with the SEC). The Company shall use its best
efforts to cause such amendment to such Registration Statement and/or such new
Registration Statement (as the case may be) to become effective as soon as
practicable following the filing thereof with the SEC, but in no event later
than the applicable Effectiveness Deadline for such Registration Statement. For
purposes of the foregoing provision, the number of shares available under a
Registration Statement shall be deemed “insufficient to cover all of the
Registrable Securities” if at any time the number of shares of Common Stock
available for resale under the applicable Registration Statement is less than
the product determined by multiplying (i) the Required Registration Amount as of
such time by (ii) 0.90. The calculation set forth in the foregoing sentence
shall be made without regard to any limitations on (i) conversion of the Series
B Shares (and such calculation shall assume that the Series B Shares are then
fully convertible into shares of Common Stock at the then-prevailing applicable
Conversion Price) and (ii) exercise of the Warrants (and such calculation shall
assume that the Warrants are then fully exercisable for shares of Common Stock
at the then-prevailing applicable Exercise Price).

 

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(e)          Effect of Failure to File and Obtain and Maintain Effectiveness of
any Registration Statement. If (i) a Registration Statement covering the resale
of all of the Registrable Securities required to be covered thereby
(disregarding any reduction pursuant to Section 2(f) but subject to reduction
pursuant to 2(f)) and required to be filed by the Company pursuant to this
Agreement is (A) not filed with the SEC on or before the Filing Deadline for
such Registration Statement (a “Filing Failure”) (it being understood that if
the Company files a Registration Statement without affording Legal Counsel the
opportunity to review and comment on the same as required by Section 3(c)
hereof, the Company shall be deemed to not have satisfied this clause (i)(A) and
such event shall be deemed to be a Filing Failure) or (B) not declared effective
by the SEC on or before the Effectiveness Deadline for such Registration
Statement (an “Effectiveness Failure”) (it being understood that if on the
Business Day immediately following the Effective Date for such Registration
Statement the Company shall not have filed a “final” prospectus for such
Registration Statement with the SEC under Rule 424(b) in accordance with Section
3(b) (whether or not such a prospectus is technically required by such rule),
the Company shall be deemed to not have satisfied this clause (i)(B) and such
event shall be deemed to be an Effectiveness Failure), (ii) other than during an
Allowable Grace Period (as defined below), on any day after the Effective Date
of a Registration Statement sales of all of the Registrable Securities required
to be included on such Registration Statement (disregarding any reduction
pursuant to Section 2(f) but subject to reduction pursuant to 2(f)) cannot be
made pursuant to such Registration Statement (including, without limitation,
because of a failure to keep such Registration Statement effective, a failure to
disclose such information as is necessary for sales to be made pursuant to such
Registration Statement, a suspension or delisting of (or a failure to timely
list) the shares of Common Stock on the Principal Market, or a failure to
register a sufficient number of shares of Common Stock or by reason of a stop
order) or the prospectus contained therein is not available for use for any
reason (a “Maintenance Failure”), or (iii) if a Registration Statement is not
effective for any reason or the prospectus contained therein is not available
for use for any reason, the Company fails to file with the SEC any required
reports under Section 13 or 15(d) of the 1934 Act such that it is not in
compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable) (a “Current
Public Information Failure”) as a result of which any of the Investors are
unable to sell Registrable Securities without restriction under Rule 144
(including, without limitation, volume restrictions), 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 underlying shares of Common Stock (which remedy shall
not be exclusive of any other remedies available at law or in equity), the
Company shall pay to each holder of Registrable Securities (excluding the
Broker) relating to such Registration Statement an amount in cash equal to one
percent (1%) of such Investor’s Stated Value (as defined in the certificate of
designations, preferences and rights for the Series B Stock (1) on the date of
such Filing Failure, Effectiveness Failure, Maintenance Failure or Current
Public Information Failure, as applicable, and (2) two percent (2%) of such
Investor’s Stated Value on every thirty (30) day anniversary of (I) a Filing
Failure until such Filing Failure is cured; (II) an Effectiveness Failure until
such Effectiveness Failure is cured; (III) a Maintenance Failure until such
Maintenance Failure is cured; and (IV) a Current Public Information Failure
until the earlier of (i) the date such Current Public Information Failure is
cured and (ii) such time that such public information is no longer required
pursuant to Rule 144 (in each case, pro-rated for periods totaling less than
thirty (30) days). The payments to which a holder of Registrable Securities
shall be entitled pursuant to this Section 2(e) are referred to herein as
“Registration Delay Payments.” Following the initial Registration Delay Payment
for any particular event or failure (which shall be paid on the first (1st)
Business Day immediately following the date of such event or failure, as set
forth above), without limiting the foregoing, if an event or failure giving rise
to the Registration Delay Payments is cured prior to any thirty (30) day
anniversary of such event or failure, then such Registration Delay Payment shall
be made on the third (3rd) Business Day after such cure. In the event the
Company fails to make Registration Delay Payments in a timely manner in
accordance with the foregoing, such Registration Delay Payments shall bear
interest at the rate of one and one-half percent (1.5%) per month (prorated for
partial months), or the maximum rate of interest allowable under applicable law,
until paid in full. Notwithstanding the foregoing, no Registration Delay
Payments shall be owed to an Investor (other than with respect to a Maintenance
Failure resulting from a suspension or delisting of (or a failure to timely
list) the shares of Common Stock on the Principal Market) with respect to any
period during which all of such Investor’s Registrable Securities may be sold by
such Investor without restriction under Rule 144 (including, without limitation,
volume restrictions) and without the need for current public information
required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable). Furthermore,
notwithstanding the foregoing, no Registration Delay Payment shall be required
with respect to any delay or limitation resulting from any subject matter
described in Section 2(f) below.

 

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(f)          Offering. Notwithstanding anything to the contrary contained in
this Agreement, in the event the staff of the SEC (the “Staff”) or the SEC seeks
to characterize any offering pursuant to a Registration Statement filed pursuant
to this Agreement as constituting an offering of securities by, or on behalf of,
the Company, or in any other manner, such that the Staff or the SEC do
not permit such Registration Statement to become effective and used for resales
in a manner that does not constitute such an offering and that permits the
continuous resale at the market by the Holders participating therein (or as
otherwise may be acceptable to Legal Counsel) without being named therein as an
“underwriter,” then the Company shall reduce the number of shares to be included
in such Registration Statement by all Holders until such time as the Staff and
the SEC shall so permit such Registration Statement to become effective as
aforesaid. In making such reduction, the Company shall reduce the number of
shares to be included by all Holders on a pro rata basis (based upon the number
of Registrable Securities otherwise required to be included for each Holder)
unless the inclusion of shares by a particular Holder or a particular set of
Holders are resulting in the Staff or the SEC’s “by or on behalf of the Company”
offering position, in which event the shares held by such Holder or set of
Holders shall be the only shares subject to reduction (and if by a set of
Holders on a pro rata basis by such Holders or on such other basis as would
result in the exclusion of the least number of shares by all such Holders),
provided that in the event of any such pro rata reduction,

 

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(i)The number of Broker Warrant Shares shall first be reduced until all Broker
Warrant Shares have been eliminated from such Registration Statement (if so
required),

 

(ii)the number of Series E Warrant Shares shall first be reduced until all
Series E Warrant Shares have been eliminated from such Registration Statement
(if so required),

 

(iii)then the number of Series D Warrant Shares shall first be reduced until all
Series D Warrant Shares have been eliminated from such Registration Statement
(if so required),

 

(iv)then the number of Series C Warrant Shares shall first be reduced until all
Series C Warrant Shares have been eliminated from such Registration Statement
(if so required),

 

(v)then the number of Series A Warrant Shares shall be reduced until all Series
B Warrant Shares have been eliminated from such Registration Statement (if so
required),

 

(vi)then the number of Series B Warrant Shares shall be reduced until all Series
A Warrant Shares have been eliminated from such Registration Statement (if so
required), and

 

(vii)then the number of Underlying Series B Shares shall be reduced until all
Underlying Series B Shares have been eliminated from such Registration Statement
(if so required).

 

In addition, in the event that the Staff or the SEC requires any Holder seeking
to sell securities under a Registration Statement filed pursuant to this
Agreement to be specifically identified as an “underwriter” in order to permit
such Registration Statement to become effective, and such Holder does not
consent to being so named as an underwriter in such Registration
Statement, then, in each such case, the Company shall reduce the total number of
Registrable Securities to be registered on behalf of such Holder, until such
time as the Staff or the SEC does not require such identification or until such
Holder accepts such identification and the manner thereof. Any reduction
pursuant to this paragraph will first reduce all Registrable Securities other
than those issued pursuant to the Securities Purchase Agreement. In the event of
any reduction in Registrable Securities pursuant to this paragraph, an affected
Investor shall have the right to require, upon delivery of a written request to
the Company signed by such Investor, the Company to file a registration
statement within six (6) months of such request (subject to any restrictions
imposed by Rule 415 or required by the Staff or the SEC) for resale by such
Investor in a manner acceptable to such Investor, and the Company shall
following such request cause to be and keep effective such registration
statement in the same manner as otherwise contemplated in this Agreement
for registration statements hereunder, in each case until such time as: (i) all
Registrable Securities held by such Investor have been registered and sold
pursuant to an effective Registration Statement in a manner acceptable to such
Investor or (ii) all Registrable Securities may be resold by such
Investor without restriction (including, without limitation, volume limitations)
pursuant to Rule 144 (taking account of any Staff position with respect to
“affiliate” status) and without the need for current public information required
by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (iii) such Investor
agrees to be named as an underwriter in any such Registration Statement in a
manner acceptable to such Investor as to all Registrable Securities held by such
Investor and that have not theretofore been included in a Registration Statement
under this Agreement (it being understood that the special demand right under
this sentence may be exercised by an Investor multiple times and with respect to
limited amounts of Registrable Securities in order to permit the resale thereof
by such Investor as contemplated above).

 

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(g)          Piggyback Registrations. Without limiting any obligation of the
Company hereunder or under the Securities Purchase Agreement, if there is not an
effective Registration Statement covering all of the Registrable Securities or
the prospectus contained therein is not available for use and the Company shall
determine to prepare and file with the SEC a registration statement relating to
an offering for its own account or the account of others under the 1933 Act of
any of its equity securities (other than on Form S-4 or Form S-8 (each as
promulgated under the 1933 Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with the Company’s stock
option or other employee benefit plans, or any (post-effective) amendments or
supplements on form S-3 or other form to SEC Registration No. 333- 333-200664),
then the Company shall deliver to each Investor a written notice of such
determination and, if within fifteen (15) days after the date of the delivery of
such notice, any such Investor shall so request in writing, the Company shall
include in such registration statement all or any part of such Registrable
Securities such Investor requests to be registered; provided, however, the
Company shall not be required to register any Registrable Securities pursuant to
this Section 2(g) that are eligible for resale pursuant to Rule 144 without
restriction (including, without limitation, volume restrictions) and without the
need for current public information required by Rule 144(c)(1) (or Rule
144(i)(2), if applicable) or that are the subject of a then-effective
Registration Statement.

 

(h)          Allocation of Registrable Securities. The initial number of
Registrable Securities included in any Registration Statement and any increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Holders based on the number of Registrable Securities held by
each Holder at the time such Registration Statement covering such initial number
of Registrable Securities or increase thereof is declared effective by the SEC.
In the event that a Holder sells or otherwise transfers any of such Holder’s
Registrable Securities, each transferee or assignee (as the case may be) that
becomes a Holder shall be allocated a pro rata portion of the then-remaining
number of Registrable Securities included in such Registration Statement for
such transferor or assignee (as the case may be). Any shares of Common Stock
included in a Registration Statement and which remain allocated to any Person
which ceases to hold any Registrable Securities covered by such Registration
Statement shall be allocated to the remaining Holders, pro rata based on the
number of Registrable Securities then held by such Holders which are covered by
such Registration Statement.

 

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(i)          No Inclusion of Other Securities. In no event shall the Company
include any securities other than Registrable Securities on any Registration
Statement without the prior written consent of (i) the Investors holding a
majority of the Registrable Securities at that time and (ii) Iroquois Master
Fund Ltd. (or any “affiliate” (as defined in Rule 405 promulgated under the U.S.
Securities Act of 1933, as amended to which it has transferred Registrable
Securities) as long as Iroquois Master Fund Ltd. (or such affiliate) is a holder
of Registrable Securities on the applicable date. Except as disclosed in the
Securities Purchase Agreement, including the Disclosure Schedule related
thereto, until the Applicable Date, the Company shall not enter into any
agreement providing any registration rights to any of its security holders.

 

3.          Related Obligations.

 

The Company shall use its best efforts to effect the registration of the
Registrable Securities in accordance with the intended method of disposition
thereof, and, pursuant thereto, the Company shall have the following
obligations:

 

(a)          The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to all the Registrable Securities (but in no
event later than the applicable Filing Deadline but subject to reduction
pursuant to 2(f)) and use its best efforts to cause such Registration Statement
to become effective as soon as practicable after such filing (but in no event
later than the Effectiveness Deadline). Subject to Allowable Grace Periods, the
Company shall keep each Registration Statement effective (and the prospectus
contained therein available for use) pursuant to Rule 415 for resales by the
Holders on a delayed or continuous basis at then-prevailing market prices (and
not fixed prices) at all times until the earlier of (i) the date as of which all
of the Holders may sell all of the Registrable Securities required to be covered
by such Registration Statement (disregarding any reduction pursuant to Section
2(f)) without restriction pursuant to Rule 144 (including, without limitation,
volume restrictions) and without the need for current public information
required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (ii) the date
on which the Holders shall have sold all of the Registrable Securities covered
by such Registration Statement (the “Registration Period”). Notwithstanding
anything to the contrary contained in this Agreement, the Company shall ensure
that, when filed and at all times while effective, each Registration Statement
(including, without limitation, all amendments and supplements thereto) and the
prospectus (including, without limitation, all amendments and supplements
thereto) used in connection with such Registration Statement (1) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein (in
the case of prospectuses, in the light of the circumstances in which they were
made) not misleading and (2) will disclose (whether directly or through
incorporation by reference to other SEC filings to the extent permitted) all
material information regarding the Company and its securities. The Company shall
submit to the SEC, within one (1) Business Day after the later of the date that
(i) the Company learns that no review of a particular Registration Statement
will be made by the Staff or that the Staff has no further comments on a
particular Registration Statement (as the case may be) and (ii) the consent of
Legal Counsel is obtained pursuant to Section 3(c) (which consent shall be
immediately sought), a request for acceleration of effectiveness of such
Registration Statement to a time and date not later than the earlier of (i) 5:00
p.m. on the date two Business Days after the submission of such request, and
(ii) forty-eight (48) hours after the submission of such request.

 

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(b)          Subject to Section 3(r) of this Agreement, the Company shall
prepare and file with the SEC such amendments (including, without limitation,
post-effective amendments) and supplements to each Registration Statement and
the prospectus used in connection with each such Registration Statement, which
prospectus (including any supplement thereto) is to be filed pursuant to Rule
424 promulgated under the 1933 Act, as may be necessary to keep each such
Registration Statement effective at all times during the Registration Period for
such Registration Statement, and, during such period, comply with the provisions
of the 1933 Act with respect to the disposition of all Registrable Securities of
the Company required to be covered by such Registration Statement until such
time as all of such Registrable Securities shall have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in such Registration Statement; provided, however, by 8:30
a.m. (New York time) on the Business Day immediately following each Effective
Date, the Company shall file with the SEC in accordance with Rule 424(b) under
the 1933 Act the final prospectus to be used in connection with sales pursuant
to the applicable Registration Statement (whether or not such a prospectus is
technically required by such rule). In the case of amendments and supplements to
any Registration Statement which are required to be filed pursuant to this
Agreement (including, without limitation, pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 10-Q or Form 10-K or any analogous
report under the Securities Exchange Act of 1934, as amended (the “1934 Act”),
the Company shall have incorporated such report by reference into such
Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is filed
which created the requirement for the Company to amend or supplement such
Registration Statement.

 

(c)          The Company shall (A) permit Legal Counsel to review and comment
upon (i) each Registration Statement at least five (5) Business Days prior to
its filing with the SEC and (ii) all amendments and supplements to each
Registration Statement (including, without limitation, the prospectus contained
therein) (except for Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K, and any similar or successor reports) within
a reasonable number of days prior to their filing with the SEC, and (B) not file
any Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel reasonably objects. The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment
or supplement thereto or to any prospectus contained therein without the prior
consent of Legal Counsel, which consent shall not be unreasonably withheld. The
Company shall promptly furnish to Legal Counsel, without charge, (i) copies of
any correspondence from the SEC or the Staff to the Company or its
representatives relating to each Registration Statement, provided that such
correspondence shall not contain any material, non-public information regarding
the Company or any of its Subsidiaries, (ii) after the same is prepared and
filed with the SEC, one (1) copy of each Registration Statement and any
amendment(s) and supplement(s) thereto, including, without limitation, financial
statements and schedules, all documents incorporated therein by reference, if
requested by a Holder, and all exhibits and (iii) upon the effectiveness of each
Registration Statement, one (1) copy of the prospectus included in such
Registration Statement and all amendments and supplements thereto, if requested
by a Holder. The Company shall reasonably cooperate with Legal Counsel in
performing the Company’s obligations pursuant to this Section 3.

 

 10 

 

 

(d)          The Company shall promptly furnish to each Holder whose Registrable
Securities are included in any Registration Statement, without charge, (i) after
the same is prepared and filed with the SEC, at least one (1) copy of each
Registration Statement and any amendment(s) and supplement(s) thereto,
including, without limitation, financial statements and schedules, all documents
incorporated therein by reference, if requested by a Holder, all exhibits and
each preliminary prospectus, (ii) upon the effectiveness of each Registration
Statement, ten (10) copies of the prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number of
copies as such Holder may reasonably request from time to time), if requested by
a Holder and (iii) such other documents (including, without limitation, copies
of any preliminary or final prospectus) as such Holder may reasonably request
from time to time in order to facilitate the disposition of the Registrable
Securities owned by such Holder.

 

(e)          The Company shall use its best efforts to (i) register and qualify,
unless an exemption from registration and qualification applies, the resale by
Holders of the Registrable Securities covered by a Registration Statement under
such other securities or “blue sky” laws of all applicable jurisdictions in the
United States, (ii) prepare and file in those jurisdictions, such amendments
(including, without limitation, post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(e), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify Legal Counsel and each Holder of
the receipt by the Company of any notification with respect to the suspension of
the registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.

 

(f)          The Company shall notify Legal Counsel and each Holder in writing
of the happening of any event, as promptly as practicable after becoming aware
of such event, as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (provided that in no event shall such notice contain
any material, non-public information regarding the Company or any of its
Subsidiaries), and, subject to Section 3(r), promptly prepare a supplement or
amendment to such Registration Statement and such prospectus contained therein
to correct such untrue statement or omission and deliver ten (10) copies of such
supplement or amendment to Legal Counsel and each Holder (or such other number
of copies as Legal Counsel and each Holder may reasonably request). The Company
shall also promptly notify Legal Counsel and each Holder in writing (i) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to Legal
Counsel and each Holder by e-mail on the same day of such effectiveness and by
overnight mail), and when the Company receives written notice from the SEC that
a Registration Statement or any post-effective amendment will be reviewed by the
SEC, (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information, (iii) of
the Company’s reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate; and (iv) of the receipt of any
request by the SEC or any other federal or state governmental authority for any
additional information relating to the Registration Statement or any amendment
or supplement thereto or any related prospectus. The Company shall respond as
promptly as practicable to any comments received from the SEC with respect to
each Registration Statement or any amendment thereto. The Company shall respond
as promptly as practicable to any comments received from the SEC with respect to
each Registration Statement or any amendment thereto (it being understood and
agreed that the Company’s response to any such comments shall be delivered to
the SEC no later than ten (10) Business Days after the receipt thereof).

 

 11 

 

 

(g)          The Company shall (i) use its best efforts to prevent the issuance
of any stop order or other suspension of effectiveness of each Registration
Statement or the use of any prospectus contained therein, or the suspension of
the qualification, or the loss of an exemption from qualification, of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and (ii) notify Legal Counsel and each Holder who
holds Registrable Securities of the issuance of such order and the resolution
thereof or its receipt of actual notice of the initiation or threat of any
proceeding for such purpose.

 

(h)          If any Holder or the Broker may be required under applicable
securities law to be described in any Registration Statement as an underwriter
and such Holder consents to so being named an underwriter, at the request of any
such Holder, the Company shall furnish to such Holder, on the date of the
effectiveness of such Registration Statement and thereafter from time to time on
such dates as such Holder may reasonably request (i) a letter, dated such date,
from the Company’s independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the Holders, and
(ii) an opinion, dated as of such date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given (by Company counsel) in an underwritten public offering,
addressed to such Holder.

 

(i)          If any Holder may be required under applicable securities law to be
described in any Registration Statement as an underwriter and such Holder
consents to so being named an underwriter, upon the written request of such
Holder, the Company shall make available for inspection by (i) such Holder, (ii)
legal counsel for such Holder and (iii) one (1) firm of accountants or other
agents retained by such Holder (collectively, the “Inspectors”), all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the “Records”), as shall be reasonably deemed
necessary by each Inspector, and cause the Company’s officers, directors and
employees to supply all information which any Inspector may reasonably request;
provided, however, each Inspector shall agree in writing to hold in strict
confidence and not to make any disclosure (except to such Holder) or use of any
Records or other information which the Company’s executive officers or board of
directors determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (1) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (2) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (3) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this Agreement, any other Transaction
Document or other agreement between the Company and such Holder, if any. Such
Holder agrees that it shall, upon learning that disclosure of such Records is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the Company, at
its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, the Records deemed confidential. Nothing herein
(or in any other confidentiality agreement between the Company and such Holder,
if any) shall be deemed to limit any Holder’s ability to sell Registrable
Securities in a manner which is otherwise consistent with applicable laws and
regulations.

 

 12 

 

 

(j)          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 or is otherwise required
to be disclosed in such Registration Statement pursuant to the 1933 Act, (iii)
the release of such information is ordered pursuant to a subpoena or other
final, non-appealable 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
Transaction Document. 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
written notice to such Holder and allow such Holder, at such Holder’s expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, such information.

 

(k)          Without limiting any obligation of the Company under the Securities
Purchase Agreement, the Company shall use its best efforts either to (i) cause
all of the Registrable Securities covered by each Registration Statement to be
listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, (ii)
secure designation and quotation of all of the Registrable Securities covered by
each Registration Statement on the Principal Market, on which securities of the
same class or series issued by the Company are then designated, if any, if the
designation of such Registrable Securities is then permitted and required under
the rules of such exchange, or (iii) if, despite the Company’s best efforts to
satisfy the preceding clauses (i) or (ii) the Company is unsuccessful in
satisfying the preceding clauses (i) or (ii), without limiting the generality of
the foregoing, to use its best efforts to arrange for at least two market makers
to register with the Financial Industry Regulatory Authority (“FINRA”) as such
with respect to such Registrable Securities. In addition, the Company shall
cooperate with each Holder and any broker or dealer through which any such
Holder proposes to sell its Registrable Securities in effecting a filing with
FINRA pursuant to FINRA Rule 5110 as requested by such Holder. The Company shall
pay all fees and expenses in connection with satisfying its obligations under
this Section 3(k).

 

 13 

 

 

(l)          The Company shall cooperate with the Holders who hold Registrable
Securities being offered and, to the extent applicable, facilitate the timely
(i) credit of such number of Registrable Securities to the Holder’s or its
designee’s balance account with DTC through its Deposit/Withdrawal At Custodian
system preparation, provided the Transfer Agent is participating in the DTC Fast
Automated Securities Transfer Program and (ii) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, delivery of
certificates (not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts (as the case may be) as the
Holders may reasonably request from time to time and registered in such names as
the Holders may request.

 

(m)          If requested by a Holder, the Company shall as soon as practicable
after receipt of notice from such Holder and subject to Section 3(r) hereof, (i)
incorporate in a prospectus supplement or post-effective amendment such
information as a Holder reasonably requests to be included therein relating to
the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) supplement or make
amendments to any Registration Statement or prospectus contained therein if
reasonably requested by a Holder holding any Registrable Securities.

 

(n)          The Company shall use its best efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities in the United States.

 

(o)          To the extent required by the 1933 Act, the Company shall make
generally available to its security holders as soon as practical, but not later
than ninety (90) days after the close of the period covered thereby, an earnings
statement (in form complying with, and in the manner provided by, the provisions
of Rule 158 under the 1933 Act) covering a twelve-month period beginning not
later than the first day of the Company’s fiscal quarter next following the
applicable Effective Date of each Registration Statement.

 

(p)          The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.

 

(q)          Within one (1) Business Day after a Registration Statement which
covers Registrable Securities is declared effective by the SEC, the Company
shall 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 SEC in substantially the form attached hereto as
Exhibit B, provided that if the transfer agent shall require reasonable changes
to such letter (including an opinion of legal counsel as to the removal of any
restrictive legends following any sale of the Registrable Securities pursuant to
such Registration Statement), the Company shall make such changes or cause its
legal counsel to make such changes and provide such a letter.

 

 14 

 

 

(r)          Notwithstanding anything to the contrary herein (but subject to the
last sentence of this Section 3(r)), at any time after the Effective Date of a
particular Registration Statement, the Company may delay the disclosure of
material, non-public information concerning the Company or any of its
Subsidiaries the disclosure of which at the time is not, in the good faith
opinion of the board of directors of the Company, in the best interest of the
Company and, in the opinion of counsel to the Company, otherwise required (a
“Grace Period”), provided that the Company shall promptly notify the Holders in
writing of the (i) existence of material, non-public information giving rise to
a Grace Period (provided that in each such notice the Company shall not disclose
the content of such material, non-public information to any of the Holders) and
the date on which such Grace Period will begin and (ii) date on which such Grace
Period ends, provided further that (I) no Grace Period shall exceed ten (10)
consecutive days and during any three hundred sixty five (365) day period all
such Grace Periods shall not exceed an aggregate of thirty (30) days, (II) the
first day of any Grace Period must be at least five (5) Trading Days after the
last day of any prior Grace Period and (III) no Grace Period may exist during
the sixty (60) Trading Day period immediately following the Effective Date of
such Registration Statement (provided that such sixty (60) Trading Day period
shall be extended by the number of Trading Days during such period and any
extension thereof contemplated by this proviso during which such Registration
Statement is not effective or the prospectus contained therein is not available
for use) (each, an “Allowable Grace Period”). For purposes of determining the
length of a Grace Period above, such Grace Period shall begin on and include the
date the Holders receive the notice referred to in clause (i) above and shall
end on and include the later of the date the Holders receive the notice referred
to in clause (ii) above and the date referred to in such notice. The provisions
of Section 3(f) hereof shall not be applicable during the period of any
Allowable Grace Period. Upon expiration of each Grace Period, the Company shall
again be bound by the first sentence of Section 3(f) with respect to the
information giving rise thereto unless such material, non-public information is
no longer applicable. Notwithstanding anything to the contrary contained in this
Section 3(r), the Company shall cause its transfer agent to deliver shares of
Common Stock to a transferee of a Holder in accordance with the terms of the
Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which such Holder has entered into a contract for
sale, and delivered a copy of the prospectus included as part of the particular
Registration Statement to the extent applicable, prior to such Holder’s receipt
of the notice of a Grace Period and for which the Holder has not yet settled.

 

(s)          The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by each Holders of its Registrable
Securities pursuant to each Registration Statement.

 

4.          Obligations of the Holders.

 

(a)          At least five (5) Business Days prior to the first anticipated
filing date of each Registration Statement, the Company shall notify each Holder
in writing of the information the Company requires from each such Holder with
respect to such Registration Statement. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Holder that
such Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it, as shall be reasonably required to effect and
maintain the effectiveness of the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request.

 

 15 

 

 

(b)          Each Holder, by such Holder’s acceptance of the Registrable
Securities (as the case may be), agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation and
filing of each Registration Statement hereunder, unless such Holder has notified
the Company in writing of such Holder’s election to exclude all of such Holder’s
Registrable Securities from such Registration Statement.

 

(c)          Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f) or
the first sentence of Section 3(f), such Holder will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until the earliest to occur of (i) such
Holder’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) or the first sentence of Section 3(f), (ii) the
Company’s filing of the supplemented or amended prospectus contemplated by
Section 3(f) or the first sentence of Section 3(f) with the SEC and (iii)
receipt of notice that no supplement or amendment is required. Notwithstanding
anything to the contrary in this Section 4(c), the Company shall cause its
transfer agent to deliver shares of Common Stock to a transferee of a Holder in
accordance with the terms of the Securities Purchase Agreement in connection
with any sale of Registrable Securities with respect to which such Holder has
entered into a contract for sale prior to the Holder’s receipt of a notice from
the Company of the happening of any event of the kind described in Section 3(f)
or the first sentence of Section 3(f) and for which such Holder has not yet
settled.

 

(d)          Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the 1933 Act as applicable to it in
connection with sales of Registrable Securities pursuant to a Registration
Statement.

 

5.          Expenses of Registration.

 

All reasonable expenses incurred by the Company (other than underwriting
discounts and commissions) in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees,
FINRA filing fees (if any) and fees and disbursements of counsel for the Company
shall be paid by the Company. The Company shall also reimburse Iroquois for the
fees and disbursements of Legal Counsel in connection with registration, filing
or qualification pursuant to Sections 2 and 3 of this Agreement, which amount
shall be limited to $5,000.

 

 16 

 

 

6.          Indemnification.

 

(a)          In the event any Registrable Securities are included in any
Registration Statement under this Agreement, to the fullest extent permitted by
law, the Company will, and hereby does, indemnify, hold harmless and defend each
Holder and each of its directors, officers, shareholders, members, partners,
employees, agents, advisors, representatives (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding the
lack of such title or any other title) and each Person, if any, who controls
such Holder within the meaning of the 1933 Act or the 1934 Act and each of the
directors, officers, shareholders, members, partners, employees, agents,
advisors, representatives (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding the lack of such title or
any other title) of such controlling Persons (each, an “Indemnified Person”),
against any losses, obligations, claims, damages, liabilities, contingencies,
judgments, fines, penalties, charges, costs (including, without limitation,
court costs, reasonable attorneys’ fees and costs of defense and investigation),
amounts paid in settlement or expenses, joint or several, (collectively,
“Claims”) incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified Damages”), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other “blue sky” laws of any jurisdiction in which Registrable Securities are
offered (“Blue Sky Filing”), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
“Violations”). Subject to Section 6(c), the Company shall reimburse the
Indemnified Persons, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified
Person arising out of or based upon a Violation which occurs in reliance upon
and in conformity with information furnished in writing to the Company by such
Indemnified Person for such Indemnified Person expressly for use in connection
with the preparation of such Registration Statement or any such amendment
thereof or supplement thereto and (ii) shall not be available to a particular
Holder to the extent such Claim is based on a failure of such Holder to deliver
or to cause to be delivered the prospectus made available by the Company (to the
extent applicable), including, without limitation, a corrected prospectus, if
such prospectus or corrected prospectus was timely made available by the Company
pursuant to Section 3(d) and then only if, and to the extent that, following the
receipt of the corrected prospectus no grounds for such Claim would have
existed; and (iii) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld or delayed. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Person and shall survive the transfer of any of the
Registrable Securities by any of the Holders pursuant to Section 9.

 

 17 

 

 

(b)          In connection with any Registration Statement in which a Holder is
participating, such Holder agrees to severally and not jointly indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a), the Company, each of its directors, each of its officers who
signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each, an
“Indemnified Party”), against any Claim or Indemnified Damages to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case, to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Holder expressly for use in connection with
such Registration Statement; and, subject to Section 6(c) and the below provisos
in this Section 6(b), such Holder will reimburse an Indemnified Party any legal
or other expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such Claim; provided, however, the indemnity
agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Holder, which consent shall not be unreasonably withheld or
delayed, provided further that such Holder shall be liable under this Section
6(b) for only that amount of a Claim or Indemnified Damages as does not exceed
the net proceeds to such Holder as a result of the applicable sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of any of the
Registrable Securities by any of the Holders pursuant to Section 9.

 

(c)          Promptly after receipt by an Indemnified Person or Indemnified
Party (as the case may be) under this Section 6 of notice of the commencement of
any action or proceeding (including, without limitation, any governmental action
or proceeding) involving a Claim, such Indemnified Person or Indemnified Party
(as the case may be) shall, if a Claim in respect thereof is to be made against
any indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party (as the
case may be); provided, however, an Indemnified Person or Indemnified Party (as
the case may be) shall have the right to retain its own counsel with the fees
and expenses of such counsel to be paid by the indemnifying party if: (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
Claim and to employ counsel reasonably satisfactory to such Indemnified Person
or Indemnified Party (as the case may be) in any such Claim; or (iii) the named
parties to any such Claim (including, without limitation, any impleaded parties)
include both such Indemnified Person or Indemnified Party (as the case may be)
and the indemnifying party, and such Indemnified Person or such Indemnified
Party (as the case may be) shall have been advised by counsel that a conflict of
interest is likely to exist if the same counsel were to represent such
Indemnified Person or such Indemnified Party and the indemnifying party (in
which case, if such Indemnified Person or such Indemnified Party (as the case
may be) notifies the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, then the indemnifying
party shall not have the right to assume the defense thereof and such counsel
shall be at the expense of the Indemnifying Party, provided further that in the
case of clause (iii) above the indemnifying party shall not be responsible for
the reasonable fees and expenses of more than one (1) separate legal counsel for
such Indemnified Person or Indemnified Party (as the case may be). The
Indemnified Party or Indemnified Person (as the case may be) shall reasonably
cooperate with the indemnifying party in connection with any negotiation or
defense of any such action or Claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person (as the case may be) which relates to
such action or Claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person (as the case may be) reasonably apprised at all times as to
the status of the defense or any settlement negotiations with respect thereto.
No indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent; provided, however, the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person (as the case may be), consent to entry
of any judgment or enter into any settlement or other compromise which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person (as the case may be) of a
release from all liability in respect to such Claim or litigation, and such
settlement shall not include any admission as to fault on the part of the
Indemnified Party. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person (as the case may be) with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party (as the case may be) under this Section 6, except to the extent that the
indemnifying party is materially and adversely prejudiced in its ability to
defend such action.

 

 18 

 

 

(d)          No Person involved in the sale of Registrable Securities who is
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) in connection with such sale shall be entitled to indemnification
from any Person involved in such sale of Registrable Securities who is not
guilty of fraudulent misrepresentation.

 

(e)          The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

 

(f)          The indemnity and contribution agreements contained herein shall be
in addition to (i) any cause of action or similar right of the Indemnified Party
or Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

 

7.          Contribution.

 

To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however: (i) no contribution
shall be made under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6 of this
Agreement, (ii) no Person involved in the sale of Registrable Securities which
Person is guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) in connection with such sale shall be entitled to
contribution from any Person involved in such sale of Registrable Securities who
was not guilty of fraudulent misrepresentation; and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the amount of net
proceeds received by such seller from the applicable sale of such Registrable
Securities pursuant to such Registration Statement. Notwithstanding the
provisions of this Section 7, no Holder shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the net proceeds actually
received by such Holder from the applicable sale of the Registrable Securities
subject to the Claim exceeds the amount of any damages that such Holder has
otherwise been required to pay, or would otherwise be required to pay under
Section 6(b), by reason of such untrue or alleged untrue statement or omission
or alleged omission.

 

 19 

 

 

8.          Reports Under the 1934 Act.

 

With a view to making available to the Holders the benefits of Rule 144, the
Company agrees to:

 

(a)          make and keep public information available, as those terms are
understood and defined in Rule 144;

 

(b)          file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood and agreed
that nothing herein shall limit any obligations of the Company under the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and

 

(c)          furnish to each Holder so long as such Holder owns Registrable
Securities, promptly upon request, (i) a written statement by the Company, if
true, that it has complied with the reporting, submission and posting
requirements of Rule 144 and the 1934 Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company with the SEC if such reports are not publicly available via
EDGAR, and (iii) such other information as may be reasonably requested to permit
the Holders to sell such securities pursuant to Rule 144 without registration.

 

9.          Assignment of Registration Rights.

 

All or any portion of the rights under this Agreement shall be automatically
assignable by each Holder to any proper transferee or assignee (as the case may
be) of all or any portion of such Holder’s Series B Shares, Warrants or Broker
Warrants if: (i) such Holder agrees in writing with such transferee or assignee
(as the case may be) to assign all or any portion of such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
transfer or assignment (as the case may be); (ii) the Company is, within a
reasonable time after such transfer or assignment (as the case may be),
furnished with written notice of (a) the name and address of such transferee or
assignee (as the case may be), and (b) the securities with respect to which such
registration rights are being transferred or assigned (as the case may be);
(iii) immediately following such transfer or assignment (as the case may be) the
further disposition of such securities by such transferee or assignee (as the
case may be) is restricted under the 1933 Act or applicable state securities
laws if so required; (iv) at or before the time the Company receives the written
notice contemplated by clause (ii) of this sentence such transferee or assignee
(as the case may be) agrees in writing with the Company to be bound by all of
the provisions contained herein; (v) such transfer or assignment (as the case
may be) shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement, the Series B Shares, the Warrants and the
Broker Warrants (as the case may be); and (vi) such transfer or assignment (as
the case may be) shall have been conducted in accordance with all applicable
federal and state securities laws.

 

 20 

 

 

10.         Amendment of Registration Rights.

 

Provisions of this Agreement may be amended only with the written consent of the
Company and holders of at least 66% of the Registrable Securities (other than
the Broker Warrants). No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party. No consideration
shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of this Agreement unless the same consideration
also is offered to all of the parties to this Agreement.

 

11.         Miscellaneous.

 

(a)          Conflict; Record Holder. Solely for purposes of this Agreement, a
Person is deemed to be a holder of Registrable Securities whenever such Person
owns, or is deemed to own, of record such Registrable Securities. If the Company
receives conflicting instructions, notices or elections from two or more Persons
with respect to the same Registrable Securities, the Company shall act upon the
basis of instructions, notice or election received from such record owner of
such Registrable Securities.

 

(b)          Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement shall be
delivered as set forth in the Securities Purchase Agreement.

 

(c)          No Waiver; Injunctions. Failure of any party to exercise any right
or remedy under this Agreement or otherwise, or delay by a party in exercising
such right or remedy, shall not operate as a waiver thereof. The Company and
each Holder acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that each party hereto shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement by
any other party hereto and to enforce specifically the terms and provisions
hereof (without the necessity of showing economic loss and without any bond or
other security being required), this being in addition to any other remedy to
which any party may be entitled by law or equity.

 

 21 

 

 

(d)          Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in The City
of New York, Borough of Manhattan, 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
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall (i) limit
or be deemed to limit in any way any right to serve process in any manner
permitted by law or (ii) operate, or be deemed to operate, to preclude any Buyer
from bringing suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company’s obligations to such Buyer or to enforce
a judgment or other court ruling in favor of such Buyer or (iii) limit, or be
deemed to limit, any provision of the Warrants which is contrary to the above.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

 

(e)          Entire Agreement. This Agreement, the other Transaction Documents,
the schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein constitute the entire agreement among the parties
hereto and thereto solely with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement, the other
Transaction Documents, the schedules and exhibits attached hereto and thereto
and the instruments referenced herein and therein supersede all prior agreements
and understandings among the parties hereto solely with respect to the subject
matter hereof and thereof; provided, however, nothing contained in this
Agreement or any other Transaction Document shall (or shall be deemed to) (i)
have any effect on any agreements any Holder has entered into with the Company
or any of its Subsidiaries prior to the date hereof with respect to any prior
investment made by such Holder in the Company, (ii) waive, alter, modify or
amend in any respect any obligations of the Company or any of its Subsidiaries
or any rights of or benefits to any Holder or any other Person in any agreement
entered into prior to the date hereof between or among the Company and/or any of
its Subsidiaries and any Holder and all such agreements shall continue in full
force and effect or (iii) limit any obligations of the Company under any of the
other Transaction Documents.

 

(f)          Successors and Assigns. Subject to compliance with Section 9 (if
applicable), this Agreement shall inure to the benefit of and be binding upon
the permitted successors and assigns of each of the parties hereto. This
Agreement is not for the benefit of, nor may any provision hereof be enforced
by, any Person, other than the parties hereto, their respective permitted
successors and assigns and the Persons referred to in Sections 6 and 7 hereof.

 

(g)          Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
Unless the context clearly indicates otherwise, each pronoun herein shall be
deemed to include the masculine, feminine, neuter, singular and plural forms
thereof. The terms “including,” “includes,” “include” and words of like import
shall be construed broadly as if followed by the words “without limitation.” The
terms “herein,” “hereunder,” “hereof” and words of like import refer to this
entire Agreement instead of just the provision in which they are found.

 

 22 

 

 

(h)          Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains a portable
document format (.pdf) file of an executed signature page, such signature page
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
signature page were an original thereof.

 

(i)          Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

(j)          No Strict Construction; Default Terms. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent and no rules of strict construction will be applied against
any party. Notwithstanding anything to the contrary set forth in Section 10,
terms used in this Agreement but defined in the other Transaction Documents
shall have the meanings ascribed to such terms on the Closing Date in such other
Transaction Documents unless otherwise consented to in writing by each Holder.

 

(k)          Independent Nature of Holder’s Obligations and Rights. The
obligations of each Holder under this Agreement and the other Transaction
Documents are several and not joint with the obligations of any other Holder,
and no Holder shall be responsible in any way for the performance of the
obligations of any other Holder under this Agreement or any other Transaction
Document. Nothing contained herein or in any other Transaction Document, and no
action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as, and the Company acknowledges that the Holders do not
so constitute, a partnership, an association, a joint venture or any other kind
of group or entity, or create a presumption that the Holders are in any way
acting in concert or as a group or entity with respect to such obligations or
the transactions contemplated by the Transaction Documents or any matters, and
the Company acknowledges that the Holders are not acting in concert or as a
group, and the Company shall not assert any such claim, with respect to such
obligations or the transactions contemplated by this Agreement or any of the
other the Transaction Documents. Each Holder shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights
arising out of this Agreement or out of any other Transaction Documents, and it
shall not be necessary for any other Holder to be joined as an additional party
in any proceeding for such purpose. The use of a single agreement with respect
to the obligations of the Company contained herein was solely in the control of
the Company, not the action or decision of any Holder, and was done solely for
the convenience of the Company and not because it was required or requested to
do so by any Holder. It is expressly understood and agreed that each provision
contained in this Agreement and in each other Transaction Document is between
the Company and a Holder, solely, and not between the Company and the Holders
collectively and not between and among Holders.

 

 23 

 

 

[signature pages follow]

 

 24 

 

 

IN WITNESS WHEREOF, Buyer and the Company have caused their respective signature
page to this Registration Rights Agreement to be duly executed as of the date
first written above.

 

  COMPANY:       NEUROTROPE, INC.       By: /s/ Robert Weinstein     Name:
Robert Weinstein     Title: Chief Financial Officer, Executive Vice
President, Secretary and Treasurer

 

[SEE “NEUROTROPE, INC. OMNIBUS SIGNATURE PAGE TO

SECURITIES PURCHASE AGREEMENT AND

REGISTRATION RIGHTS AGREEMENT”

FOR SIGNATURE PAGES FOR BUYERS.]

 

[Remainder of Page Intentionally Left Blank]

 

 

 

 

EXHIBIT A

 

List of Buyers

 

 

 

  

EXHIBIT B

 

FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT

 

______________________
______________________
______________________
Attention: _____________

 

Re:        Effectiveness of Registration Statement

 

Ladies and Gentlemen:

 

Neurotrope, Inc., a Nevada corporation (the “Company”), is a party to that
certain Securities Purchase Agreement (the “Securities Purchase Agreement”)
entered into by and among the Company and the buyers named therein
(collectively, the “Holders”) pursuant to which the Company issued to the
Holders Series B Shares (the “Series B Shares”) convertible into the Company’s
shares of common stock (the “Common Stock”), and warrants exercisable for shares
of Common Stock (the “Warrants”). Pursuant to the Securities Purchase Agreement,
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 conversion of the Series B Shares the exercise of the Warrants and
the exercise of the Broker Warrants (as defined in the Registration Rights
Agreement), under the Securities Act of 1933, as amended (the “1933 Act”). In
connection with the Company’s obligations under the Registration Rights
Agreement, on ____________ ___, 20__, the Company filed a Registration Statement
on Form S-3 (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][I] advise you that a member of the SEC’s
staff has advised [us][me] 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][I] have no
knowledge 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.

 

As long as the Registration Statement remains effective, upon the receipt of a
prospectus delivery letter from the broker executing the sale, you need not
require further letters from us to effect any future legend-free issuance or
reissuance of such shares of Common Stock to the Holders as contemplated by the
Company’s Irrevocable Transfer Agent Instructions dated November 13, 2015.

 

 

 

 

  Very truly yours,       NEUROTROPE, INC.       By:       Name:     Title:

 

cc: [Iroquois Master Fund Ltd.]     [Representative]  

 

 

 

 

EXHIBIT C

 

SELLING STOCKHOLDERS

 

The shares of common stock being offered by the selling stockholders are those
issuable to the selling stockholders upon conversion of the Series B Shares and
exercise of the warrants. For additional information regarding the issuance of
the Series B Shares and the warrants, see “Private Placement of Series B Shares
and Warrants” above. We are registering the shares of common stock in order to
permit the selling stockholders to offer the shares for resale from time to
time. Except for the ownership of the Series B Shares and the warrants issued
pursuant to the Securities Purchase Agreement and as described below with
respect to certain selling shareholders (including certain officers and
directors of the Company), the selling stockholders have not had any material
relationship with us within the past three years.

 

The table below lists the selling stockholders and other information regarding
the beneficial ownership (as determined under Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder) of
the shares of common stock held by each of the selling stockholders. The second
column lists the number of shares of common stock beneficially owned by the
selling stockholders, based on their respective ownership of shares of common
stock, Series B Shares and warrants, as of ________, 2015, assuming conversion
of the Series B Shares and exercise of the warrants held by each such selling
stockholder on that date but taking account of any limitations on conversion and
exercise set forth therein.

 

The third column lists the shares of common stock being offered by this
prospectus by the selling stockholders and does not take in account any
limitations on (i) conversion of the Series B Shares set forth therein or (ii)
exercise of the warrants set forth therein.

 

In accordance with the terms of a registration rights agreement with the holders
of the Series B Shares and the warrants, this prospectus generally covers the
resale of 150% of the sum of (i) the maximum number of shares of common stock
issuable upon conversion of the Series B Shares and (ii) the maximum number of
shares of common stock issuable upon exercise of the warrants, in each case,
determined as if the outstanding Series B Shares and warrants were converted or
exercised (as the case may be) in full (without regard to any limitations on
conversion or exercise contained therein) as of the trading day immediately
preceding the date this registration statement was initially filed with the SEC.
Because the conversion price of the Series B Shares and the exercise price of
the warrants may be adjusted, the number of shares that will actually be issued
may be more or less than the number of shares being offered by this prospectus.
The fourth column assumes the sale of all of the shares offered by the selling
stockholders pursuant to this prospectus.

 

Under the terms of the Series B Shares and the warrants, a selling stockholder
may not convert the Series B Shares or exercise the warrants to the extent (but
only to the extent) such selling stockholder or any of its affiliates would
beneficially own a number of shares of our common stock which would exceed
9.99%. The number of shares in the second column reflects these limitations. The
selling stockholders may sell all, some or none of their shares in this
offering. See “Plan of Distribution.”

 

 

 

 

Name of Selling Stockholder  Number of Shares
of Common Stock
Owned Prior to
Offering   Maximum Number
of Shares of
Common Stock to
be Sold Pursuant to
this Prospectus   Number of 
Shares of
Common Stock
Owned After
Offering                   Iroquois Master Fund Ltd.               

 

 

 

 

PLAN OF DISTRIBUTION

 

We are registering the shares of common stock issuable upon conversion of the
Series B Shares and exercise of the warrants to permit the resale of these
shares of common stock by the holders of the Series B Shares and warrants from
time to time after the date of this prospectus. We will not receive any of the
proceeds from the sale by the selling stockholders of the shares of common
stock. We will bear all fees and expenses incident to our obligation to register
the shares of common stock.

 

The selling stockholders may sell all or a portion of the shares of common stock
held by them and offered hereby from time to time directly or through one or
more underwriters, broker-dealers or agents. If the shares of common stock are
sold through underwriters or broker-dealers, the selling stockholders will be
responsible for underwriting discounts or commissions or agent’s commissions.
The shares of common stock may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of the sale, at varying prices
determined at the time of sale or at negotiated prices. These sales may be
effected in transactions, which may involve crosses or block transactions,
pursuant to one or more of the following methods:

 

·on any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of sale;

 

·in the over-the-counter market;

 

·in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;

 

·through the writing or settlement of options, whether such options are listed
on an options exchange or otherwise;

 

·ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

 

·block trades in which the broker-dealer 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 the broker-dealer for
its account;

 

·an exchange distribution in accordance with the rules of the applicable
exchange;

 

·privately negotiated transactions;

 

·short sales made after the date the Registration Statement is declared
effective by the SEC;

 

·agreements between broker-dealers and the selling security holders to sell a
specified number of such shares at a stipulated price per share;

 

 

 

 

·a combination of any such methods of sale; and

 

·any other method permitted pursuant to applicable law.

 

The selling stockholders may also sell shares of common stock under Rule 144
promulgated under the Securities Act of 1933, as amended, if available, rather
than under this prospectus. In addition, the selling stockholders may transfer
the shares of common stock by other means not described in this prospectus. If
the selling stockholders effect such transactions by selling shares of common
stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of common stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with sales of
the shares of common stock or otherwise, the selling stockholders may enter into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the shares of common stock in the course of hedging in positions they
assume. The selling stockholders may also sell shares of common stock short and
deliver shares of common stock covered by this prospectus to close out short
positions and to return borrowed shares in connection with such short sales. The
selling stockholders may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares.

 

The selling stockholders may pledge or grant a security interest in some or all
of the Series B Shares, warrants or shares of common stock owned by them and, if
they default in the performance of their secured obligations, the pledgees or
secured parties may offer and sell the shares of common stock from time to time
pursuant to this prospectus or any amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending, if
necessary, the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus.
The selling stockholders also may transfer and donate the shares of common stock
in other circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.

 

To the extent required by the Securities Act and the rules and regulations
thereunder, the selling stockholders and any broker-dealer participating in the
distribution of the shares of common stock may be deemed to be “underwriters”
within the meaning of the Securities Act, and any commission paid, or any
discounts or concessions allowed to, any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. At the time a
particular offering of the shares of common stock is made, a prospectus
supplement, if required, will be distributed, which will set forth the aggregate
amount of shares of common stock being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or re-allowed
or paid to broker-dealers.

 

 

 

 

Under the securities laws of some states, the shares of common stock may be sold
in such states only through registered or licensed brokers or dealers. In
addition, in some states the shares of common stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.

 

There can be no assurance that any selling stockholder will sell any or all of
the shares of common stock registered pursuant to the registration statement, of
which this prospectus forms a part.

 

The selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, including, without
limitation, to the extent applicable, Regulation M of the Exchange Act, which
may limit the timing of purchases and sales of any of the shares of common stock
by the selling stockholders and any other participating person. To the extent
applicable, Regulation M may also restrict the ability of any person engaged in
the distribution of the shares of common stock to engage in market-making
activities with respect to the shares of common stock. All of the foregoing may
affect the marketability of the shares of common stock and the ability of any
person or entity to engage in market-making activities with respect to the
shares of common stock.

 

We will pay all expenses of the registration of the shares of common stock
pursuant to the registration rights agreement, estimated to be $[     ] in
total, including, without limitation, Securities and Exchange Commission filing
fees and expenses of compliance with state securities or “blue sky” laws;
provided, however, a selling stockholder will pay all underwriting discounts and
selling commissions, if any. We will indemnify the selling stockholders against
liabilities, including some liabilities under the Securities Act in accordance
with the registration rights agreements or the selling stockholders will be
entitled to contribution. We may be indemnified by the selling stockholders
against civil liabilities, including liabilities under the Securities Act that
may arise from any written information furnished to us by the selling
stockholder specifically for use in this prospectus, in accordance with the
related registration rights agreements or we may be entitled to contribution.

 

Once sold under the registration statement, of which this prospectus forms a
part, the shares of common stock will be freely tradable in the hands of persons
other than our affiliates.