Exhibit 10.2

 

Execution Version

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of November 28,
2017, is by and among Skyline Medical Inc., a Delaware corporation (the
“Company”), and the undersigned buyer (the “Buyer”).

 

RECITALS

 

A. In connection with the Securities Purchase Agreement by and between the
parties hereto, dated as of November 28, 2017 (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 the Buyer
(i) the Series C Preferred Shares (as defined in the Securities Purchase
Agreement), which will be convertible into Conversion Shares (as defined in the
Securities Purchase Agreement) in accordance with the terms of the Certificate
of Designation (as defined in the Securities Purchase Agreement) and (ii) the
Warrants (as defined in the Securities Purchase Agreement), which will be
exercisable or exchangeable to purchase Warrant Shares (as defined in the
Securities Purchase Agreement) in accordance with the terms of the Warrants.

 

B. To induce the Buyer 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 the Buyer 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 (i) Saturday, Sunday
or any other day on which commercial banks in New York, New York are authorized
or required by law to remain closed or , (ii) with respect to dates on which
filings are required to be made with the SEC, any day on which the SEC is not
open and available to accept filings.

 

(b)                 “Closing Date” shall have the meaning set forth in the
Securities Purchase Agreement with respect to the Closing (as defined in the
Securities Purchase Agreement).

 

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

 

(d)                 “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) 45th calendar day after the Closing Date and (B) 5th
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) 45th calendar day
following the date on which the Company was required to file such additional
Registration Statement and (B) 5th 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.

 

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(e)                 “Filing Deadline” means (i) with respect to the Initial
Registration Statement required to be filed pursuant to Section 2(a), the 15th
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.
Notwithstanding the foregoing or anything to the contrary herein, if the Filing
Deadline falls on a weekend or Federal holiday, the Filing Deadline shall be on
the next succeeding Business Day.

 

(f)                  “Investor” means the Buyer or any transferee or assignee of
any Registrable Securities, Series C Preferred Shares or Warrants, as
applicable, to whom the 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 C Preferred 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.

 

(g)                 “Initial Required Registration Amount” means of the sum of
(i) the number of Conversion Shares equal to the 19.9% Limitation Amount (as
defined in the Certificate of Designation and adjusted from time to time
pursuant to the terms therein) as if such Conversion Shares were issued and
outstanding, and (ii) 100% of the initial number of Warrant Shares issued and
issuable pursuant to the Warrants (or the number of Warrant Shares so issued and
issuable as of the filing of the Initial Registration Statement, if more).

 

(h)                 “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, or any other entity of any kind or
nature whatsoever, a trust, an unincorporated organization or a government or
any department or agency or portion thereof.

 

(i)                   “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.

 

(j)                  “Registrable Securities” means (i) the Conversion Shares,
(ii) the Warrant Shares and (iii) any capital stock of the Company issued or
issuable with respect to the Series C Preferred Shares, the Conversion Shares,
the Warrants or the Warrant Shares, 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 to the Company into which the shares of Common Stock are converted
or exchanged, in each case, without regard to any limitations on conversion of
the Series C Preferred Shares or exercise or exchange of the Warrants.

 

(k)                 “Registration Statement” means a registration statement or
registration statements of the Company filed under the 1933 Act covering
Registrable Securities (and the term “Initial Registration Statement” shall mean
the first Registration Statement filed pursuant to this Agreement).

 

(l)                   “Required Holders” means the Buyer.

 

(m)               “Required Registration Amount” means the sum of the maximum
number of Conversion Shares issued and issuable pursuant to the Series C
Preferred Shares and the maximum number of Warrant Shares issued and issuable
pursuant to the Warrants, in each case, as of the Trading Day (as defined in the
Warrants) immediately preceding the applicable date of determination (taking
into account the 19.9% Limitation Amount restriction on conversion of the Series
A Preferred Shares (as defined in the Certificate of Designation and adjusted
from time to time pursuant to the terms therein), but without taking into
account any other limitations on the conversion of the Series C Preferred Shares
or the exercise or exchange of the Warrants set forth therein).

 

(n)                 “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
Investors to sell securities of the Company to the public without registration.

 

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(o)                 “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.

 

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

 

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 covering the resale of all
of the Registrable Securities, provided that such Initial Registration Statement
shall register for resale at least the number of shares of Common Stock equal to
the Initial Required Registration Amount as of the date such Registration
Statement is initially filed with the SEC (together with such other number of
shares of Common Stock constituting Registrable Securities as may be registered
thereunder pursuant to Rule 416 or otherwise), provided further that if Form S-3
is unavailable for such a registration, the Company shall use such other form as
is required by Section 2(c). 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 the Required Holders)
the “Selling Stockholder” and “Plan of Distribution” sections in substantially
the form attached hereto as Exhibit B. The Company shall use its commercially
reasonable efforts to have such Initial Registration Statement, and each other
Registration Statement required to be 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, Esousa Holdings
LLC (“Esousa”) shall have the right to select one (1) legal counsel to review
and oversee, solely on its behalf and at its cost and expense, any registration
pursuant to this Section 2 (“Legal Counsel”), which shall be McDermott Will &
Emery LLP or such other counsel as thereafter designated by Esousa.

 

(c)                 Ineligibility to Use Form S-3. In the event that Form S-3 is
not available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the Required
Holders and (ii) undertake to register the resale of 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 and the
availability for use of each prospectus contained therein 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 or, if sooner, the expiration of the Registration
Period.

 

(d)                 Sufficient Number of Shares Registered. In the event the
number of shares available under any Registration Statement is insufficient to
cover from time to time the Required Registration Amount, 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) days after the necessity therefor arises (but taking
account of the position of the staff of the SEC (the “Staff”) 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 commercially reasonable 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 Required Registration Amount as of such time.

 

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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 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 each Investor 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) 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 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 (as defined in the
Securities Purchase Agreement), 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 properly available for use for any reason (a “Maintenance
Failure”), or (iii) a Registration Statement is not effective for any reason or
the prospectus contained therein is not properly 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 relating to such Registration Statement an
amount in cash or stock equal to one-and-one-half percent (1.5%) of such
Investor’s total committed purchase price for Series C Preferred Shares pursuant
to the Securities Purchase Agreement (i.e., 1.5% of $1,300,000, or $19,500) (1)
on the date of such Filing Failure, Effectiveness Failure, Maintenance Failure
or Current Public Information Failure, as applicable, and (2) 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); provided that the maximum number of
monthly payments pursuant to a Filing Failure, an Effectiveness Failure or a
Maintenance Failure made by the Company pursuant to this sentence shall be six
(6) payments (each in an amount equal to one-and-one-half percent (1.5%) of such
Investor’s total committed purchase price for Series C Preferred Shares pursuant
to the Securities Purchase Agreement). 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 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 percent
(1%) per month (prorated for partial months) until paid in full. Notwithstanding
the foregoing, no Registration Delay Payments shall be owed to an Investor: (i)
with respect to a Filing Failure, an Effectiveness Failure, a Maintenance
Failure or a Current Public Information Failure, for any period after the date
on which Buyer may conduct a resale of all of its Registrable Securities in
reliance on a valid exemption from registration in accordance with Rule 144 and
(ii) with respect to any Registrable Securities excluded from a Registration
Statement by election of an Investor.

 

(f)                  Offering. Notwithstanding anything to the contrary
contained in this Agreement, the Company agrees with Buyer that each
Registration Statement required to become effective hereunder shall become
effective and be used for resales by the Investors such that it does not
constitute and is not deemed to constitute an offering of securities by, or on
behalf of, the Company, and that permits the continuous resale at the market by
the Investors participating therein (or as otherwise may be acceptable to each
Investor) without being named therein as an “underwriter” (except to the extent
provided in a “Plan of Distribution” section of a Registration Statement in
substantially the form attached hereto as Exhibit B).

 

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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),
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)                 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 the Required
Holders. Until the Applicable Date (as defined in the Securities Purchase
Agreement), the Company shall not enter into any agreement providing any
registration rights to any of its security holders and the Company shall not
file any other registration statement until such time.

 

3.Related Obligations.

 

The Company shall use its commercially reasonable 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) and use its commercially
reasonable 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). The Company shall keep each Registration Statement
effective (and the prospectus contained therein available for use) pursuant to
Rule 415 for resales by the Investors 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 Investors may sell all of the
Registrable Securities required to be covered by such Registration Statement
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
Investors 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 promptly sought), a request for
acceleration of effectiveness of such Registration Statement to a time and date
not later than forty-eight (48) hours after the submission of such request.

 

(b)                 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 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 20-F or any
similar or successor 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.

 

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(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 20-F, Report of Foreign Private
Issuer on Form 6-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 (as defined in the Securities Purchase
Agreement), (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 an Investor, 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. The Company shall reasonably cooperate with Legal Counsel
in performing the Company’s obligations pursuant to this Section 3.

 

(d)                 The Company shall promptly furnish to each Investor whose
Registrable Securities are included in any Registration Statement, without
charge and if requested by an Investor, (i) 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, all exhibits and
each preliminary prospectus, (ii) upon the effectiveness of each Registration
Statement, one (1) copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number of
copies as such Investor may reasonably request from time to time) and (iii) such
other documents, including, without limitation, copies of any preliminary or
final prospectus, as such Investor may reasonably request from time to time in
order to facilitate the disposition of the Registrable Securities owned by such
Investor; provided, that the Company shall have no obligation to provide any
document pursuant to this clause that is available on the SEC’s EDGAR system.

 

(e)                 The Company shall use its commercially reasonable efforts to
(i) register and qualify, unless an exemption from registration and
qualification applies, the resale by Investors 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 (y) qualify to do business in any jurisdiction where
it would not otherwise be required to qualify but for this Section 3(e) or (z)
subject itself to general taxation in any such jurisdiction. The Company shall
promptly notify Legal Counsel and each Investor who holds Registrable Securities
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.

 

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(f)                  The Company shall notify Legal Counsel and each Investor 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 promptly prepare a supplement or amendment to such
Registration Statement and such prospectus contained therein to correct such
untrue statement or omission and deliver such number of copies of such
supplement or amendment to Legal Counsel and each Investor as Legal Counsel,
legal counsel for each other Investor or such Investor may reasonably request.
The Company shall also promptly notify Legal Counsel and each Investor 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 Investor by facsimile or 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 (it being understood and agreed that the Company’s response to
any such comments shall be delivered to the SEC no later than five (5) days
after the receipt thereof).

 

(g)                 The Company shall (i) use its commercially reasonable
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 Investor 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)                 The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws or delivered to the Company for the purpose of inclusion in a
Registration Statement, (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 an Investor is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt written notice to such Investor and allow such Investor, at
such Investor’s expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, such information.

 

(i)                   Without limiting any obligation of the Company under the
Securities Purchase Agreement, the Company shall use its commercially reasonable
efforts either to 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, or (ii) if, despite the Company’s commercially
reasonable efforts to satisfy the preceding clause (i) the Company is
unsuccessful in satisfying the preceding clause (i), without limiting the
generality of the foregoing, to use its commercially reasonable 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.

 

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(j)                  The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, facilitate
the timely preparation and 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 Investors may reasonably request from
time to time and registered in such names as the Investors may request.

 

(k)                 If requested by an Investor, the Company shall as soon as
practicable after receipt of notice from such Investor and, (i) incorporate in a
prospectus supplement or post-effective amendment such information as an
Investor 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 an Investor holding any Registrable Securities.

 

(l)                   The Company shall use its commercially reasonable 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.

 

(m)               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.

 

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

 

(o)                 Within one (1) Business Day after a Registration Statement
which covers Registrable Securities is declared effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver,
to the transfer agent for such Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.

 

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

 

4.Obligations of the Investors.

 

(a)                 At least five (5) Business Days prior to the first
anticipated filing date of each Registration Statement, the Company shall notify
each Investor in writing of the information the Company seeks from each such
Investor 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 Investor (including any determination of the occurrence of a Filing
Failure, Effectiveness Failure or Maintenance Failure) that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required, in the good faith
judgment of such Investor, to effect and maintain the effectiveness of the
registration of such Registrable Securities

 

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

 

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(c)                 Each Investor 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, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, FINRA filing fees (if any)
and fees and disbursements of counsel for the Company shall be paid by the
Company. If the Company receives more than one round of SEC comments with
respect to the Initial Registration Statement, the Company shall pay to Buyer a
non-refundable amount equal to $15,000 in respect of the review to be conducted
by Legal Counsel of such Registration Statement. From time to time thereafter,
the Company shall also reimburse Buyer (within 10 business days of request by B)
for further fees and disbursements of Legal Counsel in connection with such SEC
review and clearance of such Registration Statement and any additional
registration, filing or qualification pursuant to Sections 2 and 3 of this
Agreement or otherwise for expenses of counsel in connection with the matters
covered by this Agreement (which amount of $15,000 shall be credited against any
such fees and disbursements to be so reimbursed).

 

6.Indemnification.

 

(a)                 To the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend each Investor and each of
its directors, officers, managers, 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 Investor
within the meaning of the 1933 Act or the 1934 Act and each of the directors,
officers, managers, 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”) unless such Violations are based primarily upon a breach of
Investor’s representations, warranties, or covenants under the Transaction
Documents or any violations by Investor of state or federal securities laws or
any conduct by Investor which constitutes fraud, gross negligence or willful
misconduct. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. 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 Investor to the extent such Claim is based on a failure of such
Investor 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 Investors
pursuant to Section 9.

 

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(b)                 In connection with any Registration Statement in which an
Investor is participating, such Investor 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 Investor 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 Investor 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 Investor, which consent shall not be unreasonably
withheld or delayed, provided further that such Investor 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 Investor 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 Investors 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.
Notwithstanding anything to the contrary contained above or otherwise in this
Agreement, Buyer shall be entitled, as to itself and any of its related
Indemnified Parties, including without limitation its agents and
representatives, maintain the control of the defense of any action for which it
(or they) may seek indemnification hereunder, and the Company and its counsel
shall fully cooperate in such defense as Buyer and its counsel may request, all
at the cost and expense of the Company, including without limitation, the
attorneys’ fees and other costs and expenses of Buyer’s and its related
Indemnified Parties’ legal counsel. Any amounts for which Company is responsible
pursuant to the immediately preceding sentence shall be paid promptly to, or as
directed by, Buyer from time to time, and may be offset by Buyer, at its
discretion, against any amounts from time to time owed by Buyer to the Company
under the Transaction Documents.

 

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(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 Investor shall be required to contribute, in
the aggregate, any amount in excess of the amount by which the net proceeds
actually received by such Investor from the applicable sale of the Registrable
Securities subject to the Claim exceeds the amount of any damages that such
Investor 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.

 

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8.Reports Under the 1934 Act.

 

With a view to making available to the Investors 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 Investor so long as such Investor 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 Investors 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 Investor to any transferee or assignee (as the case may be)
of all or any portion of such Investor’s Registrable Securities, Series C
Preferred Shares or Warrants if: (i) such Investor 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 C
Preferred Shares and the 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.

 

10.Amendment of Registration Rights.

 

Provisions of this Agreement may be amended only with the written consent of the
Company and the Required Holders. 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)                 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.

 

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(b)                 Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); (iii) with respect to Section 3(c), by
e-mail (provided confirmation of transmission is electronically generated and
kept on file by the sending party); or (iv) one (1) Business Day after deposit
with a nationally recognized overnight delivery service with next day delivery
specified, in each case, properly addressed to the party to receive the same.
The addresses, facsimile numbers and e-mail addresses for such communications
shall be:

 

If to the Company:

 

Skyline Medical Inc.

2915 Commers Drive

Suite 900

Eagan, MN 55121

Telephone: (651) 389-4800

Facsimile:

Attention: Bob Myers, CFO

 

With a copy (for informational purposes only) to:

 

Maslon LLP

3300 Wells Fargo Center

90 South Seventh Street

Minneapolis, MN 55402

Telephone: (612) 672-8200

Facsimile: (612) 672-8397

Email: martin.rosenbaum@maslon.com

Attention: Martin R. Rosenbaum, Esq.

 

If to the Transfer Agent:

 

Corporate Stock Transfer, Inc.

3200 Cherry Creek South Drive

Suite 430

Denver, CO 80209

Telephone: (303) 282-4800

Facsimile:

Email: knaughton@corporatestock.com

Attention: Karen Naughton

 

If to Buyer, to its address, facsimile number or e-mail address set forth below:

 

Esousa Holdings LLC

211 East 43rd Street

Suite 402

New York, NY 10017

Telephone: (646) 278-6785

Facsimile: (212) 732-1131

Email: Amy@credecg.com

Attention: Amy Talizabadeh

 

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If to Legal Counsel:

McDermott Will & Emery LLP
340 Madison Avenue
New York, NY 10017
Telephone: (212) 547-5885

Facsimile: (212) 547-5444

Attention: Robert Cohen, Esq.

 

If to a Buyer, to its address, facsimile number or e-mail address (as the case
may be) set forth on the Buyer Schedule attached to the Securities Purchase
Agreement, with copies to such Buyer’s representatives as set forth on the Buyer
Schedule, or to such other address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change, provided that Legal Counsel shall only be provided notices sent to
Esousa. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine or e-mail
transmission containing the time, date and recipient facsimile number or e-mail
address or (C) provided by a courier or overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.

 

(c)                 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 Investor
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.

 

(d)                 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, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than 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 be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. 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 HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(e)                 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 Investor has entered into with, or any
instrument that any Investor received from, the Company prior to the date hereof
with respect to any prior investment made by such Investor in the Company, (ii)
waive, alter, modify or amend in any respect any obligations of the Company or
any rights of or benefits to any Investor or any other Person in any agreement
entered into prior to the date hereof between or among the Company and any
Investor or any instrument that any Investor received prior to the date hereof
from the Company and all such agreements and instruments shall continue in full
force and effect or (iii) limit any obligations of the Company under any of the
other Transaction Documents.

 

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(f)                  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)                 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.

 

(h)                 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)                   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)                  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 Investor.

 

(k)                 All consents and other determinations required to be made by
the Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by the Required Holders.

 

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(l)                   The obligations of each Investor under this Agreement and
the other Transaction Documents are several and not joint with the obligations
of any other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor under this Agreement or any
other Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Investor pursuant hereto or thereto, shall
be deemed to constitute the Investors as, and the Company acknowledges that the
Investors 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 Investors
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 Investors 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 Investor 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 Investor 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
Investor, and was done solely for the convenience of the Company and not because
it was required or requested to do so by any Investor. It is expressly
understood and agreed that each provision contained in this Agreement and in
each other Transaction Document is between the Company and an Investor, solely,
and not between the Company and the Investors collectively and not between and
among Investors.

 

[signature pages follow]

 

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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

      SKYLINE MEDICAL INC.    

 

By: /s/ Bob Myers     Name: Bob Myers     Title: Chief Financial Officer

 

 

 

 

 

 

[Signature page to Registration Rights Agreement]

 

 

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.

 

BUYER:

      ESOUSA HOLDINGS LLC    

 

By: /s/ Rachel Glicksman     Name: Rachel Glicksman     Title: Managing Member

 

 

 

 

 

[Signature page to Registration Rights Agreement]

 

 

 

EXHIBIT A

 

FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT

 

_______________________

 

_______________________

 

_______________________

 

Attention: _____________

 

Re:Skyline Medical Inc.

 

Ladies and Gentlemen:

 

[We are][I am] counsel to Skyline Medical Inc., a company organized under the
laws of the State of Delaware (the “Company”), and have represented the Company
in connection with that certain Securities Purchase Agreement (the “Securities
Purchase Agreement”) entered into by and among the Company and Esousa Holdings
LLC (the “Holder”) pursuant to which the Company issued to the Holder (i) Series
C Preferred Shares (the “Series C Preferred Shares”) convertible into shares of
common stock of the Company (the “Common Stock”) and (ii) warrants exercisable
or exchangeable 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 Holder (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 C Preferred Shares
and exercise or exchange of the Warrants, 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, after telephonic inquiry of a member of the SEC’s staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.

 

This letter shall serve as our standing opinion to you that the shares of Common
Stock underlying the Series C Preferred Shares and the Warrants are freely
transferable by the Holders pursuant to the Registration Statement. 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 _________ __, 20__.

 

 

  Very truly yours,       [ISSUER’S COUNSEL]    

 

By:

 

CC: [LIST NAMES OF HOLDERS]

 

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EXHIBIT B

 

SELLING STOCKHOLDER

 

The shares of common stock being offered by the selling stockholder are those
issuable to the selling stockholder upon conversion of the Series C Preferred
Shares and exercise or exchange of the warrants. For additional information
regarding the issuance of the common stock, the Series C Preferred Shares and
the warrants, see “Private Placement of Common Stock, Series C Preferred Shares
and Warrants” above. We are registering the shares of common stock in order to
permit the selling stockholder to offer the shares for resale from time to time.
Except for the ownership of the Series C Preferred Shares and the warrants
issued pursuant to the Securities Purchase Agreement, the selling stockholder
has not had any material relationship with us within the past three years.

 

The table below lists the selling stockholder 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 stockholder. The second
column lists the number of shares of common stock beneficially owned by the
selling stockholder, based on its respective ownership of shares of common
stock, Series C Preferred Shares and warrants, as of ________, 2017, assuming
conversion of the Series C Preferred Shares and exercise or exchange of the
warrants held by such selling stockholder on that date but taking account of any
limitations on conversion and exercise or exchange set forth therein.

 

The third column lists the shares of common stock being offered by this
prospectus by the selling stockholder and does not take into account any
limitations on (i) conversion of the Series C Preferred Shares set forth therein
(other than a restriction that limits the aggregate number of shares of common
stock issuable upon conversion of the Series C Preferred Shares to 1,250,269
shares) or (ii) exercise or exchange of the warrants set forth therein.

 

In accordance with the terms of a registration rights agreement with the holders
of the Series C Preferred Shares and the warrants issued pursuant to the
Securities Purchase Agreement, this prospectus generally covers the resale of
the (i[_________] shares of common stock issued or issuable upon conversion of
the Series C Preferred Shares at the conversion price thereunder and (ii) 100%
of the initial number of shares issued and issuable pursuant to the warrants (or
the number of shares so issued and issuable as of the filing of the registration
statement to which this prospectus relates, if more). This prospectus also or
otherwise covers such other shares of common stock issued or issuable pursuant
to the certificate of designation of the Series C Preferred Shares and/or the
warrants as more fully set forth in this prospectus. Because the conversion
price of the Series C Preferred 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 stockholder
pursuant to this prospectus.

 

Under the terms of the Series C Preferred Shares and the warrants, the selling
stockholder may not convert the Series C Preferred Shares or exercise or
exchange 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 [___]%. In addition, the terms of the
Series C Preferred Shares limits the aggregate number of shares of common stock
issuable upon conversion of the Series C Preferred Shares to 1,250,269 shares,
regardless of the prevailing conversion price. The number of shares in the
second column reflects these limitations. The selling stockholder may sell all,
some or none of its shares in this offering. See “Plan of Distribution.”

 

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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         Esousa Holdings LLC(1)              

 

(1) _____________ has voting and investment control over the shares held by the
selling stockholder.

 

 

 

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PLAN OF DISTRIBUTION

 

We are registering the shares of common stock issuable to the selling
stockholder upon conversion of the Series C Preferred Shares and exercise or
exchange of the warrants to permit the resale of these shares of common stock by
the holders of the common stock, the Series C Preferred 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 stockholder 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 stockholder 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 stockholder 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;

 

·broker-dealers may agree with a selling securityholder 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 stockholder 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 stockholder may transfer
the shares of common stock by other means not described in this prospectus. If
the selling stockholder effects 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 stockholder 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). The selling stockholder may
also loan or pledge shares of common stock to broker-dealers that in turn may
sell such shares.

 

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The selling stockholder may pledge or grant a security interest in some or all
of the Series C Preferred Shares, warrants or shares of common stock owned by it
and, if the selling stockholder defaults in the performance of its 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 stockholder 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 stockholder 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
stockholder 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 the 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 stockholder 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 stockholder 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 stockholder against
liabilities, including some liabilities under the Securities Act in accordance
with the registration rights agreements or the selling stockholder will be
entitled to contribution. We may be indemnified by the selling stockholder
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.

 

 

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