[EXHIBIT 10.17]
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as
of March 30, 2005, by and among Med Gen, Inc., a Nevada
corporation with its headquarters located at 0000 X. Xxxxxxxx
Xxxx Xxxx, Xxxxx 000, Xxxx Xxxxx, XX 00000 (the "Company"), and
each of the undersigned (together with their respective
affiliates and any assignee or transferee of all of their
respective rights hereunder, the "Initial Investors").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and
among the parties hereto of even date herewith (the "Securities
Purchase Agreement"), the Company has agreed, upon the terms and
subject to the conditions contained therein, to issue and sell to
the Initial Investors (i) secured convertible notes in the
aggregate principal amount of up to One Million Five Hundred
Forty Thousand Dollars ($1,540,000) (the "Notes") that are
convertible into shares of the Company's common stock (the
"Common Stock"), upon the terms and subject to the limitations
and conditions set forth in such Notes and (ii) warrants (the
"Warrants") to acquire an aggregate of 1,540,000 shares of Common
Stock, upon the terms and conditions and subject to the
limitations and conditions set forth in the Warrants; and
B. To induce the Initial Investors to execute and deliver 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;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each of the Initial Investors
hereby agree as follows:
1. DEFINITIONS.
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a. As used in this Agreement, the following terms
shall have the following meanings:
(i) "Investors" means the Initial Investors and
any transferee or assignee who agrees to become bound by the provisions
of this Agreement in accordance with Section 9 hereof.
(ii) "register," "registered," and "registration"
refer to a registration effected by preparing and filing a Registration
Statement or Statements in compliance with the 1933 Act and
pursuant to Rule 415 under the 1933 Act or any successor rule
providing for offering securities on a continuous basis ("Rule
415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and
Exchange Commission (the "SEC").
(iii) "Registrable Securities" means the Conversion
Shares issued or issuable upon conversion or otherwise pursuant to the
Notes and Additional Notes (as defined in the Securities Purchase
Agreement) including, without limitation, Damages Shares (as
defined in the Notes) issued or issuable pursuant to the Notes,
shares of Common Stock issued or issuable in payment of the
Standard Liquidated Damages Amount (as defined in the Securities
Purchase Agreement), shares issued or issuable in respect of
interest or in redemption of the Notes in accordance with the
terms thereof) and Warrant Shares issuable, upon exercise or
otherwise pursuant to the Warrants and Additional Warrants (as
defined in the Securities Purchase Agreement), and any shares of
capital stock issued or issuable as a dividend on or in exchange
for or otherwise with respect to any of the foregoing.
(iv) "Registration Statement" means a registration
statement of the Company under the 0000 Xxx.
b. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the
Securities Purchase Agreement or the Convertible Note.
2. REGISTRATION.
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a. Mandatory Registration. The Company shall prepare,
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and, on or prior to sixty (60) days from the date of Closing (as defined
in the Securities Purchase Agreement) (the "Filing Date"), file
with the SEC a Registration Statement on Form S-3 (or, if Form S-
3 is not then available, on such form of Registration Statement
as is then available to effect a registration of the Registrable
Securities, subject to the consent of the Initial Investors,
which consent will not be unreasonably withheld) covering the
resale of the Registrable Securities underlying the Notes and
Warrants issued or issuable pursuant to the Securities Purchase
Agreement, which Registration Statement, to the extent allowable
under the 1933 Act and the rules and regulations promulgated
thereunder (including Rule 416), shall state that such
Registration Statement also covers such indeterminate number of
additional shares of Common Stock as may become issuable upon
conversion of or otherwise pursuant to the Notes and exercise of
the Warrants to prevent dilution resulting from stock splits,
stock dividends or similar transactions. The number of shares of
Common Stock initially included in such Registration Statement
shall be no less than an amount equal to two (2) times the sum of
the number of Conversion Shares that are then issuable upon
conversion of the Notes and Additional Notes (based on the
Variable Conversion Price as would then be in effect and assuming
the Variable Conversion Price is the Conversion Price at such
time), and the number of Warrant Shares that are then issuable
upon exercise of the Warrants, without regard to any limitation
on the Investor's ability to convert the Notes or exercise the
Warrants. The Company acknowledges that the number of shares
initially included in the Registration Statement represents a
good faith estimate of the maximum number of shares issuable upon
conversion of the Notes and upon exercise of the Warrants.
b. Underwritten Offering. If any offering pursuant
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to a Registration Statement pursuant to Section 2(a) hereof involves
an underwritten offering, the Investors who hold a majority in
interest of the Registrable Securities subject to such
underwritten offering, with the consent of a majority-in-interest
of the Initial Investors, shall have the right to select one
legal counsel and an investment banker or bankers and manager or
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managers to administer the offering, which investment banker or
bankers or manager or managers shall be reasonably satisfactory
to the Company.
c. Payments by the Company. The Company shall use
its best efforts to obtain effectiveness of the Registration Statement
as soon as practicable. If (i) the Registration Statement(s)
covering the Registrable Securities required to be filed by the
Company pursuant to Section 2(a) hereof is not filed by the
Filing Date or declared effective by the SEC on or prior to one
hundred and five (105) days from the date of Closing (as defined
in the Securities Purchase Agreement), or (ii) after the
Registration Statement has been declared effective by the SEC,
sales of all of the Registrable Securities cannot be made
pursuant to the Registration Statement, or (iii) the Common Stock
is not listed or included for quotation on the Nasdaq National
Market ("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq
SmallCap"), the New York Stock Exchange (the "NYSE") or the
American Stock Exchange (the "AMEX") after being so listed or
included for quotation, or (iv) the Common Stock ceases to be
traded on the Over-the-Counter Bulletin Board (the "OTCBB") or
any equivalent replacement exchange prior to being listed or
included for quotation on one of the aforementioned markets, then
the Company will make payments to the Investors in such amounts
and at such times as shall be determined pursuant to this Section
2(c) as partial relief for the damages to the Investors by reason
of any such delay in or reduction of their ability to sell the
Registrable Securities (which remedy shall not be exclusive of
any other remedies available at law or in equity). The Company
shall pay to each holder of the Notes or Registrable Securities
an amount equal to the then outstanding principal amount of the
Notes (and, in the case of holders of Registrable Securities, the
principal amount of Notes from which such Registrable Securities
were converted) ("Outstanding Principal Amount"), multiplied by
the Applicable Percentage (as defined below) times the sum of:
(i) the number of months (prorated for partial months) after the
Filing Date or the end of the aforementioned one hundred and five
(105) day period and prior to the date the Registration Statement
is declared effective by the SEC, provided, however, that there
shall be excluded from such period any delays which are solely
attributable to changes required by the Investors in the
Registration Statement with respect to information relating to
the Investors, including, without limitation, changes to the plan
of distribution, or to the failure of the Investors to conduct
their review of the Registration Statement pursuant to Section
3(h) below in a reasonably prompt manner; (ii) the number of
months (prorated for partial months) that sales of all of the
Registrable Securities cannot be made pursuant to the
Registration Statement after the Registration Statement has been
declared effective (including, without limitation, when sales
cannot be made by reason of the Company's failure to properly
supplement or amend the prospectus included therein in accordance
with the terms of this Agreement, but excluding any days during
an Allowed Delay (as defined in Section 3(f)); and (iii) the
number of months (prorated for partial months) that the Common
Stock is not listed or included for quotation on the OTCBB,
Nasdaq, Nasdaq SmallCap, NYSE or AMEX or that trading thereon is
halted after the Registration Statement has been declared
effective. The term "Applicable Percentage" means two hundredths
(.02). (For example, if the Registration Statement becomes
effective one (1) month after the end of such one hundred and
five (105) day period, the Company would pay $5,000 for each
$250,000 of Outstanding Principal Amount. If thereafter, sales
could not be made pursuant to the Registration Statement for an
additional period of one (1) month, the Company would pay an
additional $5,000 for each $250,000 of Outstanding Principal
Amount.) Such amounts shall be paid in cash or, at the Company's
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option, in shares of Common Stock priced at the Conversion Price
(as defined in the Notes) on such payment date.
d. Piggy-Back Registrations. Subject to the last sentence
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of this Section 2(d), if at any time prior to the expiration of the
Registration Period (as hereinafter defined) the Company shall
determine to 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 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 stock option or other bona fide, employee benefit
plans), the Company shall send to each Investor who is entitled
to registration rights under this Section 2(d) written notice of
such determination and, if within fifteen (15) days after the
effective date of such notice, such Investor shall so request in
writing, the Company shall include in such Registration Statement
all or any part of the Registrable Securities such Investor
requests to be registered, except that if, in connection with any
underwritten public offering for the account of the Company the
managing underwriter(s) thereof shall impose a limitation on the
number of shares of Common Stock which may be included in the
Registration Statement because, in such underwriter(s)' judgment,
marketing or other factors dictate such limitation is necessary
to facilitate public distribution, then the Company shall be
obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to
which such Investor has requested inclusion hereunder as the
underwriter shall permit. Any exclusion of Registrable Securities
shall be made pro rata among the Investors seeking to include
Registrable Securities in proportion to the number of Registrable
Securities sought to be included by such Investors; provided,
however, that the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding
securities, the holders of which are not entitled to inclusion of
such securities in such Registration Statement or are not
entitled to pro rata inclusion with the Registrable Securities;
and provided, further, however, that, after giving effect to the
immediately preceding proviso, any exclusion of Registrable
Securities shall be made pro rata with holders of other
securities having the right to include such securities in the
Registration Statement other than holders of securities entitled
to inclusion of their securities in such Registration Statement
by reason of demand registration rights. No right to
registration of Registrable Securities under this Section 2(d)
shall be construed to limit any registration required under
Section 2(a) hereof. If an offering in connection with which an
Investor is entitled to registration under this Section 2(d) is
an underwritten offering, then each Investor whose Registrable
Securities are included in such Registration Statement shall,
unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of
this Agreement, on the same terms and conditions as other shares
of Common Stock included in such underwritten offering.
Notwithstanding anything to the contrary set forth herein, the
registration rights of the Investors pursuant to this Section
2(d) shall only be available in the event the Company fails to
timely file, obtain effectiveness or maintain effectiveness of
any Registration Statement to be filed pursuant to Section 2(a)
in accordance with the terms of this Agreement.
e. Eligibility for Form X-0, XX-0 or S-1; Conversion to
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Form S-3. The Company represents and warrants that it meets the
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requirements for the use of Form X-0, XX-0 or S-1 for
registration of the sale by the Initial Investors and any other
Investors of the Registrable Securities. The Company agrees to
file all reports required to be filed by the Company with the SEC
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in a timely manner so as to remain eligible or become eligible,
as the case may be, and thereafter to maintain its eligibility,
for the use of Form S-3. If the Company is not currently
eligible to use Form S-3, not later than five (5) business days
after the Company first meets the registration eligibility and
transaction requirements for the use of Form S-3 (or any
successor form) for registration of the offer and sale by the
Initial Investors and any other Investors of Registrable
Securities, the Company shall file a Registration Statement on
Form S-3 (or such successor form) with respect to the Registrable
Securities covered by the Registration Statement on Form SB-2 or
Form S-1, whichever is applicable, filed pursuant to Section 2(a)
(and include in such Registration Statement on Form S-3 the
information required by Rule 429 under the 0000 Xxx) or convert
the Registration Statement on Form SB-2 or Form S-1, whichever is
applicable, filed pursuant to Section 2(a) to a Form S-3 pursuant
to Rule 429 under the 1933 Act and cause such Registration
Statement (or such amendment) to be declared effective no later
than sixty (60) days after filing. In the event of a breach by
the Company of the provisions of this Section 2(e), the Company
will be required to make payments pursuant to Section 2(c)
hereof.
3. OBLIGATIONS OF THE COMPANY.
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In connection with the registration of the Registrable
Securities, the Company shall have the following obligations:
a. The Company shall prepare promptly, and file
with the SEC not later than the Filing Date, a Registration Statement
with respect to the number of Registrable Securities provided in
Section 2(a), and thereafter use its best efforts to cause such
Registration Statement relating to Registrable Securities to
become effective as soon as possible after such filing but in no
event later than one hundred and five (105) days from the date of
Closing), and keep the Registration Statement effective pursuant
to Rule 415 at all times until such date as is the earlier of (i)
the date on which all of the Registrable Securities have been
sold and (ii) the date on which the Registrable Securities (in
the opinion of counsel to the Initial Investors) may be
immediately sold to the public without registration or
restriction (including, without limitation, as to volume by each
holder thereof) under the 1933 Act (the "Registration Period"),
which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) 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 not misleading.
b. The Company shall prepare and file with the SEC
such amendments (including post-effective amendments) and supplements
to the Registration Statements and the prospectus used in
connection with the Registration Statements as may be necessary
to keep the Registration Statements effective at all times during
the Registration Period, and, during such period, comply with the
provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration
Statements until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the
Registration Statements. In the event the number of shares
available under a Registration Statement filed pursuant to this
Agreement is insufficient to cover all of the Registrable
Securities issued or issuable upon conversion of the Notes and
exercise of the Warrants, the Company shall amend the
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Registration Statement, or file a new Registration Statement (on
the short form available therefor, if applicable), or both, so as
to cover all of the Registrable Securities, in each case, as soon
as practicable, but in any event within fifteen (15) days after
the necessity therefor arises (based on the market price of the
Common Stock and other relevant factors on which the Company
reasonably elects to rely). The Company shall use its best
efforts to cause such amendment and/or new Registration Statement
to become effective as soon as practicable following the filing
thereof, but in any event within thirty (30) days after the date
on which the Company reasonably first determines (or reasonably
should have determined) the need therefor. The provisions of
Section 2(c) above shall be applicable with respect to such
obligation, with the one hundred and five (105) days running from
the day the Company reasonably first determines (or reasonably
should have determined) the need therefor.
c. The Company shall furnish to each Investor whose
Registrable Securities are included in a Registration Statement and
its legal counsel (i) promptly (but in no event more than two (2)
business days) after the same is prepared and publicly distributed,
filed with the SEC, or received by the Company, one copy of each
Registration Statement and any amendment thereto, each
preliminary prospectus and prospectus and each amendment or
supplement thereto, and, in the case of the Registration
Statement referred to in Section 2(a), each letter written by or
on behalf of the Company to the SEC or the staff of the SEC, and
each item of correspondence from the SEC or the staff of the SEC,
in each case relating to such Registration Statement (other than
any portion of any thereof which contains information for which
the Company has sought confidential treatment), and (ii) promptly
(but in no event more than two (2) business days) after the
Registration Statement is declared effective by the SEC, such
number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order
to facilitate the disposition of the Registrable Securities owned
by such Investor. The Company will immediately notify each
Investor by facsimile of the effectiveness of each Registration
Statement or any post-effective amendment. The Company will
promptly (but in no event more than five (5) business days)
respond to any and all comments received from the SEC (which
comments shall promptly be made available to the Investors upon
request), with a view towards causing each Registration Statement
or any amendment thereto to be declared effective by the SEC as
soon as practicable, shall promptly file an acceleration request
as soon as practicable (but in no event more than two (2)
business days) following the resolution or clearance of all SEC
comments or, if applicable, following notification by the SEC
that any such Registration Statement or any amendment thereto
will not be subject to review and shall promptly file with the
SEC a final prospectus as soon as practicable (but in no event
more than two (2) business days) following receipt by the Company
from the SEC of an order declaring the Registration Statement
effective. In the event of a breach by the Company of the
provisions of this Section 3(c), the Company will be required to
make payments pursuant to Section 2(c) hereof.
d. The Company shall use reasonable efforts to
(i) register and qualify the Registrable Securities covered by the
Registration Statements under such other securities or "blue sky"
laws of such jurisdictions in the United States as the Investors who
hold a majority in interest of the Registrable Securities being
offered reasonably request, (ii) prepare and file in those
jurisdictions such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be
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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, that the Company shall not be required in
connection therewith or as a condition thereto to (a) qualify to
do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (b) subject itself
to general taxation in any such jurisdiction, (c) file a general
consent to service of process in any such jurisdiction,
(d) provide any undertakings that cause the Company undue expense
or burden, or (e) make any change in its charter or bylaws, which
in each case the Board of Directors of the Company determines to
be contrary to the best interests of the Company and its
shareholders.
e. In the event Investors who hold a majority-in-
interest of the Registrable Securities being offered in the offering
(with the approval of a majority-in-interest of the Initial Investors)
select underwriters for the offering, the Company shall enter
into and perform its obligations under an underwriting agreement,
in usual and customary form, including, without limitation,
customary indemnification and contribution obligations, with the
underwriters of such offering.
f. As promptly as practicable after becoming aware of
such event, the Company shall notify each Investor of the happening of
any event, of which the Company has knowledge, as a result of
which the prospectus included in any 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 not
misleading, and use its best efforts promptly to prepare a
supplement or amendment to any Registration Statement to correct
such untrue statement or omission, and deliver such number of
copies of such supplement or amendment to each Investor as such
Investor may reasonably request; provided that, for not more than
ten (10) consecutive trading days (or a total of not more than
twenty (20) trading days in any twelve (12) month period), the
Company may delay the disclosure of material non-public
information concerning the Company (as well as prospectus or
Registration Statement updating) the disclosure of which at the
time is not, in the good faith opinion of the Company, in the
best interests of the Company (an "Allowed Delay"); provided,
further, that the Company shall promptly (i) notify the Investors
in writing of the existence of (but in no event, without the
prior written consent of an Investor, shall the Company disclose
to such investor any of the facts or circumstances regarding)
material non-public information giving rise to an Allowed Delay
and (ii) advise the Investors in writing to cease all sales under
such Registration Statement until the end of the Allowed Delay.
Upon expiration of the Allowed Delay, the Company shall again be
bound by the first sentence of this Section 3(f) with respect to
the information giving rise thereto.
g. The Company shall use its best efforts to prevent
the issuance of any stop order or other suspension of effectiveness
of any Registration Statement, and, if such an order is issued,
to obtain the withdrawal of such order at the earliest possible
moment and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten
offering, the managing underwriters) of the issuance of such
order and the resolution thereof.
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h. The Company shall permit a single firm of counsel
designated by the Initial Investors to review such Registration
Statement and all amendments and supplements thereto (as well as all
requests for acceleration or effectiveness thereof) a reasonable
period of time prior to their filing with the SEC, and not file
any document in a form to which such counsel reasonably objects
and will not request acceleration of such Registration Statement
without prior notice to such counsel. The sections of such
Registration Statement covering information with respect to the
Investors, the Investor's beneficial ownership of securities of
the Company or the Investors intended method of disposition of
Registrable Securities shall conform to the information provided
to the Company by each of the Investors.
i. The Company shall make generally available to its
security holders as soon as practicable, but not later than ninety (90)
days after the close of the period covered thereby, an earnings
statement (in form complying with the provisions of Rule 158
under the 0000 Xxx) covering a twelve-month period beginning not
later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement.
j. At the request of any Investor, the Company shall
furnish, on the date that Registrable Securities are delivered to an
underwriter, if any, for sale in connection with any Registration
Statement or, if such securities are not being sold by an
underwriter, on the date of effectiveness thereof (i) an opinion,
dated as of such date, from counsel representing the Company for
purposes of such Registration Statement, in form, scope and
substance as is customarily given in an underwritten public
offering, addressed to the underwriters, if any, and the
Investors and (ii) a letter, dated such date, from the Company's
independent certified public accountants in form and substance as
is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to
the underwriters, if any, and the Investors.
k. The Company shall make available for inspection by
(i) any Investor, (ii) any underwriter participating in any disposition
pursuant to a Registration Statement, (iii) one firm of attorneys
and one firm of accountants or other agents retained by the
Initial Investors, (iv) one firm of attorneys and one firm of
accountants or other agents retained by all other Investors, and
(v) one firm of attorneys retained by all such underwriters
(collectively, the "Inspectors") all pertinent financial and
other records, and pertinent corporate documents and properties
of the Company, including without limitation, records of
conversions by other holders of convertible securities issued by
the Company and the issuance of stock to such holders pursuant to
the conversions (collectively, the "Records"), as shall be
reasonably deemed necessary by each Inspector to enable each
Inspector to exercise its due diligence responsibility, and cause
the Company's officers, directors and employees to supply all
information which any Inspector may reasonably request for
purposes of such due diligence; provided, however, that each
Inspector shall hold in confidence and shall not make any
disclosure (except to an Investor) of any Record or other
information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary
to avoid or correct a misstatement or omission in any
Registration Statement, (b) the release of such Records is
ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction, or (c) the information
in such Records has been made generally available to the public
other than by disclosure in violation of this or any other
agreement. The Company shall not be required to disclose any
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confidential information in such Records to any Inspector until
and unless such Inspector shall have entered into confidentiality
agreements (in form and substance satisfactory to the Company)
with the Company with respect thereto, substantially in the form
of this Section 3(k). Each Investor agrees that it shall, upon
learning that disclosure of such Records is sought in or by a
court or governmental body of competent jurisdiction or through
other means, give prompt notice to the Company and allow the
Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the
Records deemed confidential. Nothing herein (or in any other
confidentiality agreement between the Company and any Investor)
shall be deemed to limit the Investor's ability to sell
Registrable Securities in a manner which is otherwise consistent
with applicable laws and regulations.
l. 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, (ii) the disclosure
of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or
other order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of
this or any other agreement. 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 notice
to such Investor prior to making such disclosure, and allow the
Investor, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such
information.
m. The Company shall (i) cause all the Registrable
Securities covered by the Registration Statement to be listed on each
national 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) to the extent the
securities of the same class or series are not then listed on a
national securities exchange, secure the designation and
quotation, of all the Registrable Securities covered by the
Registration Statement on Nasdaq or, if not eligible for Nasdaq,
on Nasdaq SmallCap or, if not eligible for Nasdaq or Nasdaq
SmallCap, on the OTCBB and, without limiting the generality of
the foregoing, to arrange for at least two market makers to
register with the National Association of Securities Dealers,
Inc. ("NASD") as such with respect to such Registrable
Securities.
n. The Company shall provide a transfer agent and
registrar, which may be a single entity, for the Registrable Securities
not later than the effective date of the Registration Statement.
o. The Company shall cooperate with the Investors who
hold Registrable Securities being offered and the managing underwriter
or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends)
representing 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 managing
underwriter or underwriters, if any, or the Investors may
reasonably request and registered in such names as the managing
underwriter or underwriters, if any, or the Investors may
request, and, within three (3) business days after a Registration
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Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause
legal counsel selected by the Company to deliver, to the transfer
agent for the Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such
Registration Statement) an instruction in the form attached
hereto as Exhibit 1 and an opinion of such counsel in the form
attached hereto as Exhibit 2.
p. At the request of the holders of a majority-in-
interest of the Registrable Securities, the Company shall prepare and
file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and any
prospectus used in connection with the Registration Statement as
may be necessary in order to change the plan of distribution set
forth in such Registration Statement.
q. From and after the date of this Agreement, the
Company shall not, and shall not agree to, allow the holders of any
securities of the Company to include any of their securities in any
Registration Statement under Section 2(a) hereof or any amendment
or supplement thereto under Section 3(b) hereof without the
consent of the holders of a majority-in-interest of the
Registrable Securities.
r. The Company shall take all other reasonable actions
necessary to expedite and facilitate disposition by the Investors
of Registrable Securities pursuant to a Registration Statement.
4. OBLIGATIONS OF THE INVESTORS.
----------------------------
In connection with the registration of the Registrable
Securities, the Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations
of the Company to complete the registration pursuant to this Agreement
with respect to the Registrable Securities of a particular
Investor that such Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by
it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect
the registration of such Registrable Securities and shall execute
such documents in connection with such registration as the
Company may reasonably request. At least three (3) business days
prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Investor of the
information the Company requires from each such Investor.
b. Each Investor, by such Investor's acceptance of
the Registrable Securities, agrees to cooperate with the Company as
reasonably requested by the Company in connection with the
preparation and filing of the Registration Statements hereunder,
unless such Investor has notified the Company in writing of such
Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statements.
c. In the event Investors holding a majority-in-
interest of the Registrable Securities being registered (with the
approval of the Initial Investors) determine to engage the services
of an underwriter, each Investor agrees to enter into and perform such
Investor's obligations under an underwriting agreement, in usual
and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing
10
underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor
has notified the Company in writing of such Investor's election
to exclude all of such Investor's Registrable Securities from
such Registration Statement.
d. Each Investor agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 3(f) or 3(g), such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until
such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or 3(g) and, if
so directed by the Company, such Investor shall deliver to the
Company (at the expense of the Company) or destroy (and deliver
to the Company a certificate of destruction) all copies in such
Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such
notice.
e. No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements in usual and customary form entered into
by the Company, (ii) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other
documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions and any
expenses in excess of those payable by the Company pursuant to
Section 5 below.
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
qualification fees, printers and accounting fees, the fees and
disbursements of counsel for the Company, and the reasonable fees
and disbursements of one counsel selected by the Initial
Investors pursuant to Sections 2(b) and 3(h) hereof shall be
borne by the Company.
6. INDEMNIFICATION.
---------------
In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
a. To the extent permitted by law, the Company will
indemnify, hold harmless and defend (i) each Investor who holds such
Registrable Securities, (ii) the directors, officers, partners,
employees, agents and each person who controls any Investor
within the meaning of the 1933 Act or the Securities Exchange Act
of 1934, as amended (the "1934 Act"), if any, (iii) any
underwriter (as defined in the 0000 Xxx) for the Investors, and
(iv) the directors, officers, partners, employees and each person
who controls any such underwriter within the meaning of the 1933
Act or the 1934 Act, if any (each, an "Indemnified Person"),
against any joint or several losses, claims, damages, liabilities
or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization,
11
whether commenced or threatened, in respect thereof, "Claims") to
which any of them may become subject insofar as such Claims arise
out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement
or the omission or alleged omission to state therein a material
fact required to be stated 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 (the matters in the foregoing clauses (i) through
(iii) being, collectively, "Violations"). Subject to the
restrictions set forth in Section 6(c) with respect to the number
of legal counsel, the Company shall reimburse the Indemnified
Person, promptly as such expenses are incurred and are due and
payable, for any reasonable 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
arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to
the Company by any Indemnified Person or underwriter for such
Indemnified Person expressly for use in connection with the
preparation of such Registration Statement or any such amendment
thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(c) hereof; (ii)
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;
and (iii) with respect to any preliminary prospectus, shall not
inure to the benefit of any Indemnified Person if the untrue
statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, such corrected
prospectus was timely made available by the Company pursuant to
Section 3(c) hereof, and the Indemnified Person was promptly
advised in writing not to use the incorrect prospectus prior to
the use giving rise to a Violation and such Indemnified Person,
notwithstanding such advice, used it. Such indemnity shall
remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
b. In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees severally
and not jointly to indemnify, hold harmless and defend, to the
same extent and in the same manner set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs
the Registration Statement, each person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act, any
underwriter and any other shareholder selling securities pursuant
to the Registration Statement or any of its directors or officers
or any person who controls such shareholder or underwriter within
the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "Indemnified Party"),
against any Claim to which any of them may become subject, under
the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
arises out of or is based upon any Violation by such Investor, in
each case to the extent (and only to the extent) that such
12
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) such Investor will reimburse any legal or
other expenses (promptly as such expenses are incurred and are
due and payable) reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6(b) shall
not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such
Investor, which consent shall not be unreasonably withheld;
provided, further, however, that the Investor shall be liable
under this Agreement (including this Section 6(b) and Section 7)
for only that amount as does not exceed the net proceeds to such
Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall
remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registrable Securities by the Investors
pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not
inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented.
c. Promptly after receipt by an Indemnified Person
or Indemnified Party under this Section 6 of notice of the
commencement of any action (including any governmental action),
such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party
under this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified
Party, as the case may be; provided, however, that an Indemnified
Person or Indemnified Party shall have the right to retain its
own counsel with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel
in such proceeding. The indemnifying party shall pay for only
one separate legal counsel for the Indemnified Persons or the
Indemnified Parties, as applicable, and such legal counsel shall
be selected by Investors holding a majority-in-interest of the
Registrable Securities included in the Registration Statement to
which the Claim relates (with the approval of a majority-in-
interest of the Initial Investors), if the Investors are entitled
to indemnification hereunder, or the Company, if the Company is
entitled to indemnification hereunder, as applicable. The
failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action
shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is actually
prejudiced in its ability to defend such action. The
indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
13
7. CONTRIBUTION.
------------
To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party agrees to
make the maximum contribution with respect to any amounts for
which it would otherwise be liable under Section 6 to the fullest
extent permitted by law; provided, however, that (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, (ii) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any seller of Registrable Securities who was
not guilty of such fraudulent misrepresentation, and
(iii)contribution (together with any indemnification or other
obligations under this Agreement) by any seller of Registrable
Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such
Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
--------------------------
With a view to making available to the Investors the
benefits of Rule 144 promulgated under the 1933 Act or any other
similar 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 ("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 that nothing herein shall limit
the Company's obligations under Section 4(c) of 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 that it has complied with the reporting
requirements of Rule 144, the 1933 Act 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, 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.
---------------------------------
The rights under this Agreement shall be automatically
assignable by the Investors to any transferee of all or any
portion of Registrable Securities if: (i) the Investor agrees in
writing with the transferee or assignee to assign such rights,
and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (ii) the Company is,
within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned,
(iii) following such transfer or assignment, the further
disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities
14
laws, (iv) at or before the time the Company receives the written
notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing with the Company to be
bound by all of the provisions contained herein, (v) such
transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement, and (vi) such
transferee shall be an "accredited investor" as that term defined
in Rule 501 of Regulation D promulgated under the 1933 Act.
10. AMENDMENT OF REGISTRATION RIGHTS.
--------------------------------
Provisions of this Agreement may be amended and the
observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively),
only with written consent of the Company, each of the Initial
Investors (to the extent such Initial Investor still owns
Registrable Securities) and Investors who hold a majority
interest of the Registrable Securities. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon
each Investor and the Company.
11. MISCELLANEOUS.
-------------
a. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record
such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable
Securities.
b. Any notices required or permitted to be given
under the terms hereof shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier
(including a recognized overnight delivery service) or by
facsimile and shall be effective five days after being placed in
the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile, in each
case addressed to a party. The addresses for such communications
shall be:
If to the Company:
Med Gen, Inc.
0000 Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
15
With a copy to:
Law Office if Xxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to an Investor: to the address set forth immediately below
such Investor's name on the signature pages to the Securities
Purchase Agreement.
With a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
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.
d. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE
PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
UNITED STATES FEDERAL COURTS LOCATED NEW YORK, NEW YORK WITH
RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES
IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER
AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS
MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING
HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON
16
SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH
DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS AGREEMENT
SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION
WITH SUCH DISPUTE.
e. In the event that any provision of this Agreement
is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent
that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any provision hereof
which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision
hereof.
f. This Agreement, the Notes, the Warrants and the
Securities Purchase Agreement (including all schedules and exhibits
thereto) constitute the entire agreement among the parties hereto 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 and the Securities Purchase Agreement supersede all
prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.
g. Subject to the requirements of Section 9 hereof,
this Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns.
h. The headings in this Agreement are for convenience
of reference only and shall not form part of, or affect the
interpretation of, this Agreement.
i. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered
to the other party. This Agreement, once executed by a party, may
be delivered to the other party hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
j. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments
and documents, as the other party may reasonably request in order
to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
k. Except as otherwise provided herein, all consents
and other determinations to be made by the Investors pursuant to this
Agreement shall be made by Investors holding a majority of the
Registrable Securities, determined as if the all of the Notes
then outstanding have been converted into for Registrable
Securities.
l. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to each
Investor by vitiating the intent and purpose of the transactions
contemplated hereby. Accordingly, the Company acknowledges that
the remedy at law for breach of its obligations under this
Agreement will be inadequate and agrees, in the event of a breach
17
or threatened breach by the Company of any of the provisions
under this Agreement, that each Investor shall be entitled, in
addition to all other available remedies in law or in equity, and
in addition to the penalties assessable herein, to an injunction
or injunctions restraining, preventing or curing any breach of
this Agreement 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.
m. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any
party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
IN WITNESS WHEREOF, the Company and the undersigned Initial
Investors have caused this Agreement to be duly executed as of
the date first above written.
MED GEN, INC.
______________________________________
Xxxx X. Xxxxxxx
Chairman and Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
______________________________________
Xxxxx X. Xxxxxxxx
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
______________________________________
Xxxxx X. Xxxxxxxx
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
______________________________________
Xxxxx X. Xxxxxxxx
Manager
NEW MILLENNIUM CAPITAL PARTNERS, II, LLC
By: First Street Manager II, LLC
______________________________________
Xxxxx X. Xxxxxxxx
Manager
19
