[EXHIBIT 10.16.1]
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
February 23, 2006, 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 Six Hundred Thousand Dollars ($600,000) (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 600,000 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 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 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
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prepare, and, on or prior to forty-five (45) 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 managers to administer the
offering, which investment banker or bankers or manager or managers
shall be reasonably satisfactory to the Company.
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c. Payments by the Company. The Company shall use
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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 option, in shares of Common Stock priced at the
Conversion Price (as defined in the Notes) on such payment date.
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d. Piggy-Back Registrations. Subject to the last
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sentence 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
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to 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 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
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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 forty-five (45) 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 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
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(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 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
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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.
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
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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 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
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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 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
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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
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
10
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, whether commenced or threatened, in respect thereof,
"Claims") to which any of them may become subject insofar as such
11
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 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
12
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
14
securities 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 SUCH JUDGMENT OR IN ANY
16
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 or threatened breach by the
Company of any of the provisions under this Agreement, that each
17
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.
/s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
Chairman and Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxx
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxx
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxx
Manager
NEW MILLENNIUM CAPITAL PARTNERS, II, LLC
By: First Street Manager II, LLC
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxx
Manager
19
EXHIBIT 1
to
Registration
Rights
Agreement
[Company Letterhead]
[Date]
[Name and address of Transfer Agent]
Ladies and Gentlemen:
This letter shall serve as our irrevocable authorization
and direction to you (1) to transfer or re-register (or at the holders
request to reissue to the holder thereof without any restrictive
legend) the certificates for the shares of common stock, par value
$.001 per share (the "Common Stock"), of Med Gen, Inc., a Nevada
corporation (the "Company"), represented by certificate numbers
__________ for an aggregate of __________ shares (the "Outstanding
Shares") of Common Stock presently registered in the name of [Name of
Investor] (the "Investor") (which shares were previously issued upon
conversion of the Notes (as hereinafter defined) or exercise of the
Warrants (as hereinafter defined)), upon surrender of such
certificates to you, notwithstanding the legend appearing on such
certificates, (2) to issue shares (the "Conversion Shares") of Common
Stock to or upon the order of the registered holder from time to time
of 8% Callable Secured Convertible Notes of the Company (the "Notes")
upon surrender to you of a properly completed and duly executed Notice
of Conversion and (3) to issue shares (the "Warrant Shares") of Common
Stock to or upon the order of the registered holder from time to time
of the Warrants of the Company (the "Warrants") upon surrender to you
of a properly completed and duly executed Exercise Agreement and such
Warrants notwithstanding the legend appearing on such Warrants. The
transfer or re-registration of the certificates for the Outstanding
Shares by you should be made at such time as you are requested to do
so by the record holder of the Outstanding Shares. The certificate
issued upon such transfer or re-registration should be registered in
such name as requested by the holder of record of the certificate
surrendered to you and should not bear any legend which would restrict
the transfer of the shares represented thereby. In addition, you are
hereby directed to remove any stop-transfer instruction relating to
the Outstanding Shares. Certificates for the Conversion Shares and
Warrant Shares should not bear any restrictive legend and should not
be subject to any stop-transfer restriction.
Pursuant to applicable securities laws or certain
agreements between the Company and the Investor, the Investor may be
prohibited during certain limited periods of time from selling its
Outstanding Shares or other shares of Common Stock issuable upon
conversion of the Notes and exercise of the Warrants under the
20
Registration Statement; provided, however, that such Investor may
continue to sell such securities pursuant to an exemption from
registration under the Securities Act of 1933, as amended (the "1933
Act"). The Company may, during such periods, deliver a notice to you
advising you to refrain from transferring any Outstanding Shares
pursuant to such Registration Statement, provided that such notice
shall not prohibit the transfer of such shares pursuant to an
exemption from registration under the 1933 Act during such periods.
Contemporaneous with the delivery of this letter, the
Company is delivering to you a letter of ___________________ as to
registration of the Outstanding Shares and the Conversion Shares under
the Securities Act of 1933, as amended, which registration was
effective as of __________ __, 2005.
Should you have any questions concerning this matter,
please contact me.
Very truly yours,
MED GEN, INC.
________________________________
[ ]
President
Enclosures
cc: [Name of Investor]
21
