REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.2
EXHIBIT
B
This
Registration Rights Agreement (the “Agreement”) is made and entered into as of
this 28th day of September, 2007, by and among Applied NeuroSolutions, Inc.,
a
Delaware corporation (the “Company”), and SF Capital Partners Ltd., a British
Virgin Islands corporation (the “Investor”).
The
parties hereby agree as follows:
1. Certain
Definitions.
As
used
in this Agreement, the following terms shall have the following
meanings:
“Affiliate”
means,
with respect to any person, any other person which directly or indirectly
controls, is controlled by, or is under common control with, such
person.
“Business
Day”
means
a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.
“Common
Stock”
shall
mean the Company’s common stock, par value $0.0025 per share, and any securities
into which such shares may hereinafter be reclassified.
“Effectiveness
Period”
shall
have the meaning set forth in Section 3(a).
“Effectiveness
Deadline”
means,
with respect to the initial Registration Statement required to be filed
hereunder, the 120th
calendar
day after the Closing (150th
calendar
day if the SEC reviews the registration statement) and, with respect to any
additional Registration Statements which may be required pursuant to Section
3(e), the 120th
calendar
day following the date on which an additional Registration Statement is required
to be filed hereunder.
“Filing
Deadline”
means,
with respect to the initial Registration Statement required hereunder, the
45th
calendar
day following the Closing (as defined in the Purchase Agreement) and, with
respect to any additional Registration Statements which may be required pursuant
to Section 3(e), the earliest practical date on which the Company is permitted
by SEC Guidance to file such additional Registration Statement related to the
Registrable Securities.
“Investor”
shall
mean the Investor and any Affiliate or permitted transferee of any Investor
who
is a subsequent holder of any Warrants or Registrable Securities covered by
this
Registration Rights Agreement.
“Prospectus”
shall
mean the prospectus included in any Registration Statement, as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated
by
reference in such prospectus.
“Purchase
Agreement”
shall
mean the purchase agreement entered into among the Company and the
Investor.
“Register,”
“registered”
and
“registration”
refer
to a registration made by preparing and filing a Registration Statement or
similar document in compliance with the 1933 Act (as defined below), and the
declaration or ordering of effectiveness of such Registration Statement or
document.
“Registrable
Securities”
shall
mean the Shares and the shares of Common Stock issuable (i) upon the exercise
of
the Warrants, if any, and (ii) any other securities issued or issuable with
respect to or in exchange for Registrable Securities; provided, that, a security
shall cease to be a Registrable Security upon (A) sale pursuant to a
Registration Statement or Rule 144 under the 1933 Act, or (B) such security
becoming eligible for sale by the Investor pursuant to Rule 144(k).
“Registration
Statement”
shall
mean any registration statement of the Company filed under the 1933 Act that
covers the resale of any of the Registrable Securities pursuant to the
provisions of this Agreement, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.
“SEC”
means
the U.S. Securities and Exchange Commission.
“SEC
Guidance”
means
(i) any publicly available written or oral guidance, comments, requirements
or
requests of the Commission staff and (ii) the Securities Act.
“Shares”
means
the shares of Common Stock issued pursuant to the Purchase
Agreements.
“1933
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“1934
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Warrants”
means,
the warrants to purchase shares of Common Stock issued to the Investor pursuant
to the Purchase Agreement.
“Warrant
Shares”
means
the shares of Common Stock issuable upon the exercise of the
Warrants.
2. Registration.
(a) Registration
Statements.
On or
prior to each Filing Deadline, the Company shall prepare and file with the
SEC
one Registration Statement on Form SB-2, covering the resale of all or such
portion of the Registrable Securities as permitted by SEC Guidance (provided
that the Company shall use diligent efforts to advocate with the Commission
for
the registration of all of the Registrable Securities in accordance with the
SEC
Guidance, including without limitation, the Manual of Publicly Available
Telephone Interpretations D.29) that are not then registered on an effective
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415. Such Registration Statement shall include the plan of distribution
attached hereto as Appendix
A.
Such
Registration Statement also shall cover, to the extent allowable under the
1933
Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Registrable
Securities. The Company shall include in a Registration Statement only the
Registrable Securities and those securities set forth in Schedule
2(a)
annexed
hereto (the “Piggyback Shares”). Each Registration Statement (and each amendment
or supplement thereto, and each request for acceleration of effectiveness
thereof) shall be provided in accordance with Section 3(c) to the Investor
and
their counsel prior to its filing or other submission. If the initial
Registration Statement covering the Registrable Securities is not filed with
the
SEC on or prior to the initial Filing Deadline, the Company will make payments
to the Investor, as liquidated damages and not as a penalty, in an amount equal
to 1.0% of the aggregate purchase price paid by the Investor pursuant to the
Purchase Agreement for each 30-day period or pro rata for any portion thereof
following the date by which such Registration Statement should have been filed
for which no Registration Statement is filed with respect to the Registrable
Securities (subject to the cap set forth in Section 2(c)(i) hereof). Such
payments shall constitute the Investor’s exclusive remedy for such events;
provided, however, that the Investor shall retain the right to pursue any
equitable remedies available to it with respect to such events. Such payments
shall be made to the Investor in cash. Notwithstanding
any other provision of this Agreement, if any SEC Guidance sets forth a
limitation on the number of Registrable Securities permitted to be registered
on
a particular Registration Statement (and notwithstanding that the Company used
diligent efforts to advocate with the Commission for the registration of all
or
a greater number of Registrable Securities), unless otherwise directed in
writing by the Investor as to its Registrable Securities, the number of
Registrable Securities to be registered on such Registration Statement will
first be reduced by Registrable Securities represented by Warrant Shares, and
second by Registrable Securities represented by Shares.
If
any SEC
Guidance sets forth a limitation on the number of both Registrable Securities
and Piggyback Shares permitted to be registered on a particular Registration
Statement (and notwithstanding that the Company used diligent efforts to
advocate with the Commission for the registration of all or a greater number
of
Registrable Securities and Piggyback Shares), the number of Registrable
Securities and Piggyback Shares to be registered on such Registration Statement
will reduced first by the Piggyback Shares, second by Registrable Securities
represented by Warrant Shares and third by Registrable Securities represented
by
Shares.
Promptly
following the date (the “Qualification
Date”)
upon
which the Company becomes eligible to use a registration statement on Form
S-3
to register the Registrable Securities for resale, but in no event more than
thirty (30) days after the Qualification Date (the “Qualification
Deadline”),
the
Company shall file a registration statement on Form S-3 covering the Registrable
Securities (or a post-effective amendment on Form S-3 to any registration
statement on Form SB-2) (an “S-3
Registration Statement”)
and
shall use best efforts to cause such S-3 Registration Statement to be declared
effective as promptly as practicable thereafter. The Company shall file an
S-3
Registration Statement for any additional Registration Statement required to
be
filed by the Company pursuant to Section 3(e) hereof.
(b) Expenses.
The
Company will pay all expenses associated with each registration, including
filing and printing fees, the Company’s counsel and accounting fees and
expenses, costs associated with clearing the Registrable Securities for sale
under applicable state securities laws, listing fees and the Investor’s
reasonable expenses in connection with the registration, but excluding fees
and
expenses of counsel to the Investor, discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Registrable Securities being
sold.
(c) Effectiveness.
(i) The
Company shall use best efforts to have a Registration Statement declared
effective by the Effectiveness Deadline. The Company shall telephonically
request effectiveness of a Registration Statement as of 5:00 p.m. New York
City
time on a business day. The Company shall immediately notify the Investor via
facsimile or by e-mail delivery of the effectiveness of a Registration Statement
on the same business day that the Company telephonically confirms effectiveness
of a Registration Statement with the SEC, which shall be the date requested
for
effectiveness of such Registration Statement (“Effective Date”). The Company
shall, by 9:30 a.m. New York City time on the business day after the Effective
Date, file a final Prospectus with the Commission as required by Rule 424.
If
(A) a Registration Statement covering the Registrable Securities is not declared
effective by the SEC by the applicable Effectiveness Deadline, (B) the Company
fails to so notify the Investor within two (2) business days of the Effective
Date, (C) the Company fails to file a final Prospectus within two (2) business
days of the Effective Date
or (D)
after a Registration Statement has been declared effective by the SEC, sales
cannot be made pursuant to such Registration Statement for any reason (including
without limitation by reason of a stop order, or the Company’s failure to update
the Registration Statement), but excluding (x) the inability of any Investor
to
sell the Registrable Securities covered thereby due to market conditions, (y)
an
Allowed Delay (as defined below in Section 2(c)(ii) hereof) and (z) the
45
day
period following the date on which the Company files its annual report on Form
10-KSB and during which the Company’s post effective amendment to such
Registration Statement
has
not yet
been declared effective, then
the
Company will make payments to the Investor, as liquidated damages and not as
a
penalty, in an amount equal to 1.0%, of the aggregate purchase price paid by
the
Investor pursuant to the Purchase Agreement for each 30- day period or pro
rata
for any portion thereof following the date by which such Registration Statement
should have been effective (the “Blackout Period”). Such payments shall
constitute the Investor’s exclusive remedy for such events; provided,
however, that the Investor shall retain the right to pursue any equitable
remedies available to it with respect to such events. The amounts payable as
liquidated damages pursuant to this paragraph shall be paid monthly within
three
(3) Business Days of the last day of each month following the commencement
of
the Blackout Period until the termination of the Blackout Period. Such payments
shall be made to the Investor in cash. The maximum aggregate liquidated damages
payable to the Investor under this Agreement shall be 10.0% of the aggregate
purchase price paid by the Investor pursuant to the Purchase
Agreement.
(ii) For
not
more than twenty (20) consecutive days or for a total of not more than
forty-five (45) days in any twelve (12) month period, the Company may delay
the
disclosure of material non-public information concerning the Company, by
suspending the use of any Prospectus included in any registration contemplated
by this Section containing such information, 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, that the Company shall promptly (a)
notify the Investor in writing of the existence of (but in no event, without
the
prior written consent of the Investor, shall the Company disclose to the
Investor any of the facts or circumstances regarding) material non-public
information giving rise to an Allowed Delay, (b) advise the Investor in writing
to cease all sales under the Registration Statement until the end of the Allowed
Delay and (c) use best efforts to terminate an Allowed Delay as promptly as
practicable.
(d) Underwritten
Offering.
If any
offering pursuant to a Registration Statement pursuant to Section 2(a) hereof
involves an underwritten offering, the Company shall have the right to select
an
investment banker and manager to administer the offering, which investment
banker or manager shall be reasonably satisfactory to the Investor.
(e) Piggyback
Registration.
If (and
on each occasion that) the Company proposes to register any of its securities
under the 1933 Act, either for the Company’s own account or for the account of
any of its security holders (each such registration not withdrawn or abandoned
prior to the effective date thereof, a “Piggyback
Registration”),
the
Company will give written notice to the Investor of such proposal not later
than
30 days prior to the anticipated filing date of such Piggyback Registration.
Notwithstanding the foregoing, the Company will not be obligated to give notice
to the Investor as to or to include any Registrable Securities in any
registration on Form S-8 or similar limited-purpose form of registration
statement effected solely to implement an employee benefit plan or any
registration on Form S-4 or similar limited-purpose form of registration
statement effected solely to implement an acquisition.
(i)
Subject to the provisions contained in subparagraphs (ii) and (iii) of this
Section 2(e) and in the last sentence of this subparagraph (i): (A) the Company
will be obligated to include in each Piggyback Registration all Registrable
Securities with respect to which the Company receives, within 20 days after
the
date on which the Company gives written notice of such Piggyback Registration
to
the Investor pursuant to Section 2(e), the written requests of the Investor
for
inclusion in such Piggyback Registration, and (B) the Company will use
commercially reasonable efforts to effect promptly the registration of all
such
Registrable Securities. The Investor will be permitted to withdraw all or any
part of their Registrable Securities from any Piggyback Registration at any
time
prior to the effective date of such Piggyback Registration. The Company and
its
underwriters will be permitted, on any registration initiated by the Company,
to
terminate or withdraw such registration or to reduce the total number of shares
proposed to be registered thereunder.
(ii)
If a
Piggyback Registration is an underwritten registration, and the managing
underwriters thereof give written advice to the Company that the total amount
of
securities, including Registrable Securities and other securities to be
registered pursuant to the Piggyback Registration exceeds the amount of
securities that the underwriters reasonably believe compatible with the success
of the offering (the “Underwriters’
Maximum Number”),
then:
(A) If
such
registration was initiated by the Company, (x) the Company will be entitled
to
include in such registration that number of securities that the Company proposes
to offer and sell for its own account in such registration and which does not
exceed the Underwriters’ Maximum Number and (y) the Company will be obligated to
include in such registration that number of securities of the Company that
are
requested by the Investor and by other persons and which does not exceed the
difference between the Underwriters’ Maximum Number and the number of securities
of the Company that the Company is entitled under clause (x) above to include
in
such registration, and such number of securities of the Company will be
allocated pro
rata among
the
Investor and other persons in proportion to the number of securities of the
Company held by the Investor or each such other person.
(B) If
such
registration was initiated by a person other than the Company or the Investor,
(w) the Company will be obligated to include in such registration that number
of
securities that are requested by the person(s) initiating such registration
and
which is not more than the Underwriters’ Maximum Number, and such number of
securities will be allocated pro
rata among
such other person(s) in proportion to the number of securities of the Company
held by each such other person; (x) the Company will be entitled to include
in
such registration that number of securities that the Company proposes to offer
and sell for its own account in such registration and which does not exceed
the
difference between the Underwriters’ Maximum Number and the number of securities
that the Company is required under clause (w) above to include in such
registration; (y) and thereafter the Company will be obligated to include in
such registration that number of securities that are requested by the Investor
and which is not more than the Underwriters’ Maximum Number; and (z) if the
Underwriters’ Maximum Number exceeds the sum of the number of securities that
the Company is obligated to include in such registration for the account of
other persons pursuant to clause (w) above and the number of securities that
the
Company proposes to offer and sell for its own account in such registration,
then the Company may include in such registration that number of other
securities that persons referred to in clause (w) above have requested be
included in such registration and which is not greater than such
excess.
For
purposes of this Section 2(e), the numbers of securities of the Company held
by
the Investor or any other person will be calculated on a fully diluted basis
assuming the full exercise, conversion, or exchange of all outstanding
securities that are exercisable, convertible or exchangeable for shares of
the
Company’s Common Stock.
(iii)
In any
Piggyback Registration, the Company will select, in its sole discretion, the
investment bankers and managing underwriters in such registration.
(iv)
The
Investor, if the Company or the managing underwriters so request of the Investor
in connection with such registration, will not, without the prior written
consent of the Company or such underwriters, effect any sale or other
distribution of any equity securities of the Company, including any sale
pursuant to Rule 144, during the seven days prior to and during the 180-day
period commencing on the effective date of such underwritten registration,
except pursuant to such underwritten registration.
3. Company
Obligations.
The
Company will use best efforts to effect the registration of the Registrable
Securities in accordance with the terms hereof, and pursuant thereto the Company
will, as expeditiously as possible:
(a) use
best
efforts to cause such Registration Statement to become effective and to remain
continuously effective for a period that will terminate upon the earliest of
(i)
five years from the initial effectiveness date of the Registration Statement,
(ii) the date on which all Registrable Securities covered by such Registration
Statement as amended from time to time, have been sold, and (iii) the date
on
which all Registrable Securities covered by such Registration Statement may
be
sold pursuant to Rule 144(k) (the “Effectiveness Period”) and advise the
Investor in writing when the Effectiveness Period has expired;
(b) prepare
and file with the SEC such amendments and post-effective amendments to a
Registration Statement and the Prospectus as may be necessary to keep such
Registration Statement effective for the period specified in Section 3(a) and
to
comply with the provisions of the 1933 Act and the 1934 Act with respect to
the
distribution of all of the Registrable Securities covered thereby;
(c) provide
copies to and permit counsel designated by the Investor to review each
Registration Statement and all amendments and supplements thereto no fewer
than
two (2) days prior to their filing with the SEC;
(d) furnish
to the Investor and their legal counsel (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company (but
not later than two (2) Business Days after the filing date, receipt date or
sending date, as the case may be) one (1) copy of any Registration Statement
and
any amendment thereto, each preliminary prospectus and Prospectus and each
amendment or supplement thereto, and 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) such number
of
copies of a Prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as the Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by the Investor that are covered by the related Registration
Statement;
(e)
if
during
the Effectiveness Period, the number of Registrable Securities at any time
exceeds 100% of the number of shares of Common Stock then registered in a
Registration Statement, then the Company shall file as soon as reasonably
practicable, but in any case prior to the applicable Filing Date, an additional
Registration Statement covering the resale by the Holders of not less than
the
number of such Registrable Securities, subject to any limitations pursuant
to
SEC Guidance.
(f) in
the
event the Company selects an underwriter for the offering, the Company shall
enter into and perform its reasonable obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriter of such
offering;
(g) if
required by the underwriter, or if any Investor is described in a Registration
Statement as an underwriter, the Company shall furnish, on the effective date
of
such Registration Statement (except with respect to clause (i) below) and on
the
date that Registrable Securities are delivered to an underwriter, if any, for
sale in connection with the Registration Statement (including any Investor
deemed to be an underwriter), (i) (A) in the case of an underwritten offering,
an opinion, dated as of the closing date of the sale of Registrable Securities
to the underwriters, from independent legal 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 and the Investor participating in such underwritten offering or
(B)
in the case of an “at the market” offering, an opinion, dated as of or promptly
after the effective date of such Registration Statement to the Investor, from
independent legal counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily given
in
a public offering, addressed to the Investor, and (ii) a letter, dated as of
the
effective date of such Registration Statement and confirmed as of the applicable
dates described above, 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 (including any Investor deemed to be an
underwriter);
(h) use
best
efforts to (i) prevent the issuance of any stop order or other suspension of
effectiveness and, (ii) if such order is issued, obtain the withdrawal of any
such order at the earliest possible moment;
(i) prior
to
any public offering of Registrable Securities, use best efforts to register
or
qualify or cooperate with the Investor and their counsel in connection with
the
registration or qualification of such Registrable Securities for offer and
sale
under the securities or blue sky laws of such jurisdictions requested by the
Investor and do any and all other commercially reasonable acts or things
necessary or advisable to enable the distribution in such jurisdictions of
the
Registrable Securities covered by a Registration Statement; provided,
however, that the Company shall not be required in connection therewith or
as a
condition thereto to (i) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(i), (ii)
subject itself to general taxation in any jurisdiction where it would not
otherwise be so subject but for this Section 3(i), or (iii) file a general
consent to service of process in any such jurisdiction;
(j) use
best
efforts to cause all Registrable Securities covered by a Registration Statement
to be listed on each securities exchange, interdealer quotation system or other
market on which similar securities issued by the Company are then
listed;
(k) immediately
notify the Investor, at any time when a Prospectus relating to Registrable
Securities is required to be delivered under the 1933 Act, upon discovery that,
or upon the happening of any event as a result of which, the Prospectus included
in a Registration Statement, as then in effect, includes an untrue statement
of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of
the circumstances then existing, and at the request of any such holder, promptly
prepare and file of a supplement to or an amendment of such Prospectus as may
be
necessary so that, as thereafter delivered to the purchasers of such Registrable
Securities, such Prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances
then
existing; and
(l) otherwise
use best efforts to comply with all applicable rules and regulations of the
SEC
under the 1933 Act and the 1934 Act, take such other actions as may be
reasonably necessary to facilitate the registration of the Registrable
Securities hereunder;
(m) with
a
view to making available to the Investor the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the SEC that may at any
time
permit the Investor to sell shares of Common Stock to the public without
registration, the Company covenants and agrees to: (i) make and keep public
information available, as those terms are understood and defined in Rule 144,
until the earlier of (A) six months after such date as all of the Registrable
Securities may be resold pursuant to Rule 144(k) or any other rule of similar
effect or (B) such date as all of the Registrable Securities shall have been
resold; (ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1934 Act; and (iii) furnish to
the
Investor upon request, as long as the Investor owns any Registrable Securities,
(A) a written statement by the Company that it has complied with the reporting
requirements of the 1934 Act, (B) a copy of the Company’s most recent Annual
Report on Form 10-KSB or Quarterly Report on Form 10-QSB, and (C) such other
information as may be reasonably requested in order to avail the Investor of
any
rule or regulation of the SEC that permits the selling of any such Registrable
Securities without registration.
4. Due
Diligence Review; Information.
The
Company shall make available, during normal business hours, for inspection
and
review by the Investor, advisors to and representatives of the Investor (who
may
or may not be affiliated with the Investor and who are reasonably acceptable
to
the Company), any underwriter participating in any disposition of shares of
Common Stock on behalf of the Investor pursuant to a Registration Statement
or
amendments or supplements thereto or any blue sky, NASD or other filing, all
financial and other records, all SEC Filings (as defined in the Purchase
Agreement) and other filings with the SEC, and all other corporate documents
and
properties of the Company as may be reasonably necessary for the purpose of
such
review, and cause the Company’s officers, directors and employees, within a
reasonable time period, to supply all such information reasonably requested
by
the Investor or any such representative, advisor or underwriter in connection
with such Registration Statement (including, without limitation, in response
to
all questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investor and such
representatives, advisors and underwriters and their respective accountants
and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of such Registration Statement.
The
Company shall not disclose material nonpublic information to the Investor,
or to
advisors to or representatives of the Investor, unless prior to disclosure
of
such information the Company identifies such information as being material
nonpublic information and provides the Investor, such advisors and
representatives with the opportunity to accept or refuse to accept such material
nonpublic information for review and any Investor wishing to obtain such
information enters into an appropriate confidentiality agreement with the
Company with respect thereto.
5. Obligations
of the Investor.
(a) The
Investor shall furnish in writing 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 ten (10) Business Days prior to the first
anticipated filing date of any Registration Statement, the Company shall notify
the Investor of the information the Company requires from the Investor if the
Investor elects to have any of the Registrable Securities included in a
Registration Statement. The Investor shall provide such information to the
Company at least five (5) Business Days prior to the first anticipated filing
date of such Registration Statement if the Investor elects to have any of the
Registrable Securities included in such Registration Statement.
(b) The
Investor, by its 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 a Registration Statement hereunder, unless the
Investor has notified the Company in writing of its election to exclude all
of
its Registrable Securities from such Registration Statement.
(c) In
the
event the Company, at the request of the Investor, determines to engage the
services of an underwriter, the Investor agrees to 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 managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
dispositions of the Registrable Securities.
(d) The
Investor agrees that, upon receipt of any notice from the Company of either
(i)
the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the
happening of an event pursuant to Section 3(k) hereof, the Investor will
immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement covering such Registrable Securities, until the
Investor’s receipt of the copies of the supplemented or amended prospectus filed
with the SEC and until any related post-effective amendment is declared
effective.
(e) The
Investor may not participate in any third party underwritten registration
hereunder unless it (i) agrees to sell the 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.
Notwithstanding the foregoing, the Investor shall not be required to make any
representations to such underwriter, other than those with respect to itself
and
the Registrable Securities owned by it, including its right to sell the
Registrable Securities, and any indemnification in favor of the underwriter
by
the Investor shall be several and not joint and limited in the case of the
Investor, to the proceeds received by the Investor from the sale of its
Registrable Securities. The scope of any such indemnification in favor of an
underwriter shall be limited to the same extent as the indemnity provided in
Section 6(b) hereof.
6. Indemnification.
(a) Indemnification
by the Company.
The
Company will indemnify and hold harmless the Investor and its officers,
directors, employees and agents, successors and assigns, and each other person,
if any, who controls the Investor within the meaning of the 1933 Act, against
any losses, claims, damages or liabilities, joint or several, to which they
may
become subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based
upon: (i) any untrue statement or alleged untrue statement of any material
fact
contained in any Registration Statement, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof; (ii)
any
blue sky application or other document executed by the Company specifically
for
that purpose or based upon written information furnished by the Company filed
in
any state or other jurisdiction in order to qualify any or all of the
Registrable Securities under the securities laws thereof (any such application,
document or information herein called a “Blue
Sky
Application”);
(iii)
the omission or alleged omission to state therein a material fact required
to be
stated therein or necessary to make the statements therein not misleading;
(iv)
any violation by the Company or its agents of any rule or regulation promulgated
under the 1933 Act applicable to the Company or its agents and relating to
action or inaction required of the Company in connection with such registration;
or (v) any failure to register or qualify the Registrable Securities included
in
any such Registration in any state where the Company or its agents has
affirmatively undertaken or agreed in writing that the Company will undertake
such registration or qualification on the Investor’s behalf (the undertaking of
any underwriter chosen by the Company being attributed to the Company) and
will
reimburse the Investor, and each such officer, director and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided,
however,
that
the Company will not be liable in any such case if and to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made
in
conformity with information furnished by the Investor or any such controlling
person in writing specifically for use in such Registration Statement or
Prospectus.
(b) Indemnification
by the Investor.
In
connection with any registration pursuant to the terms of this Agreement, the
Investor will furnish to the Company in writing such information as the Company
reasonably requests concerning the holders of Registrable Securities or the
proposed manner of distribution for use in connection with any Registration
Statement or Prospectus and agrees to indemnify and hold harmless, to the
fullest extent permitted by law, the Company, its directors, officers, employees
and each person who controls the Company (within the meaning of the 0000 Xxx)
against any losses, claims, damages, liabilities and expense (including
reasonable attorney fees) resulting from any untrue statement of a material
fact
or any omission of a material fact required to be stated in any Registration
Statement or Prospectus or preliminary prospectus or amendment or supplement
thereto or necessary to make the statements therein not misleading, to the
extent, but only to the extent that such untrue statement or omission is
contained in any information furnished in writing by the Investor to the Company
specifically for inclusion in such Registration Statement or Prospectus or
amendment or supplement thereto. In no event shall the liability of the Investor
be greater in amount than the dollar amount of the proceeds (net of all expense
paid by the Investor in connection with any claim relating to this Section
6 and
the amount of any damages the Investor has otherwise been required to pay by
reason of such untrue statement or omission) received by the Investor upon
the
sale of the Registrable Securities included in the Registration Statement giving
rise to such indemnification obligation.
(c) Conduct
of Indemnification Proceedings.
Any
person entitled to indemnification hereunder shall (i) give prompt notice to
the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim
with
counsel reasonably satisfactory to the indemnified party; provided
that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such person unless
(a)
the indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the indemnifying party
with
respect to such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such claim on behalf of such person); and
provided,
further,
that
the failure of any indemnified party to give notice as provided herein shall
not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more
than
one separate firm of attorneys at any time for all such indemnified parties.
No
indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation.
(d) Contribution.
If for
any reason the indemnification provided for in the preceding paragraphs (a)
and
(b) is unavailable to an indemnified party or insufficient to hold it harmless,
other than as expressly specified therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result
of
such loss, claim, damage or liability in such proportion as is appropriate
to
reflect the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations. No person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the 1933
Act
shall be entitled to contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a holder
of
Registrable Securities be greater in amount than the dollar amount of the
proceeds (net of all expenses paid by such holder in connection with any claim
relating to this Section 6 and the amount of any damages such holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the sale of
the
Registrable Securities giving rise to such contribution obligation.
7. Miscellaneous.
(a) Amendments
and Waivers.
This
Agreement may be amended only by a writing signed by the Company and the
Investor. The Company may take any action herein prohibited, or omit to perform
any act herein required to be performed by it, only if the Company shall have
obtained the written consent to such amendment, action or omission to act,
of
the Investor.
(b) Notices.
All
notices and other communications provided for or permitted hereunder shall
be
made as set forth in Section 9.4 of the Purchase Agreement.
(c) Assignments
and Transfers by Investor.
The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the Investor and its successors and assigns. The Investor may transfer or
assign, in whole or from time to time in part, to one or more persons its rights
hereunder in connection with the transfer of Registrable Securities by the
Investor to such person, provided that the Investor complies with all laws
applicable thereto and provides written notice of assignment to the Company
promptly after such assignment is effected.
(d) Assignments
and Transfers by the Company.
This
Agreement may not be assigned by the Company (whether by operation of law or
otherwise) without the prior written consent of the Investor, provided,
however,
that
the Company may assign its rights and delegate its duties hereunder to any
surviving or successor corporation in connection with a merger or consolidation
of the Company with another corporation, or a sale, transfer or other
disposition of all or substantially all of the Company’s assets to another
corporation, without the prior written consent of the Investor, after notice
duly given by the Company to the Investor.
(e) Benefits
of the Agreement.
The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(f) Counterparts;
Faxes.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. This Agreement may also be executed via facsimile, which shall
be
deemed an original.
(g) Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
(h) Severability.
Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law
which
renders any provisions hereof prohibited or unenforceable in any
respect.
(i) Further
Assurances.
The
parties shall execute and deliver all such further instruments and documents
and
take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
(j) Entire
Agreement.
This
Agreement is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
(k) Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial.
This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York
for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served
on
each party hereto anywhere in the world by the same methods as are specified
for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that
any
such suit, action or proceeding brought in any such court has been brought
in an
inconvenient forum. EACH
OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.
--
IN
WITNESS WHEREOF, the parties have executed this Agreement or caused their duly
authorized officers to execute this Agreement as of the date first above
written.
APPLIED
NEUROSOLUTIONS, INC.
By:_________________________
Name:
Xxxxx X. Xxxxxxx
Title:
President & CEO
[INVESTOR’S
SIGNATURE PAGES TO FOLLOW]
SF
CAPITAL PARTNERS LTD.
By:_____________________________
Name:
Title:
Appendix
A
Plan
of Distribution
The
selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling shares of common stock
or
interests in shares of common stock received after the date of this prospectus
from a selling stockholder as a gift, pledge, partnership distribution or other
transfer, may, from time to time, sell, transfer or otherwise dispose of any
or
all of their shares of common stock or interests in shares of common stock
on
any stock exchange, market or trading facility on which the shares are traded
or
in private transactions. These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale,
or at
negotiated prices.
The
selling stockholders may use any one or more of the following methods when
disposing of shares or interests therein:
-
ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
-
block
trades in which the broker-dealer will attempt to sell the shares as agent,
but
may position and resell a portion of the block as principal to facilitate the
transaction;
-
purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;
-
an
exchange distribution in accordance with the rules of the applicable
exchange;
-
privately negotiated transactions;
-
short
sales;
-
through
the writing or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;
-
broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;
-
a
combination of any such methods of sale; and
-
any
other method permitted pursuant to applicable law.
The
selling stockholders may, from time to time, pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock, from time to time, under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus. The selling stockholders also
may
transfer the shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
In
connection with the sale of our common stock or interests therein, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
The
aggregate proceeds to the selling stockholders from the sale of the common
stock
offered by them will be the purchase price of the common stock less discounts
or
commissions, if any. Each of the selling stockholders reserves the right to
accept and, together with their agents from time to time, to reject, in whole
or
in part, any proposed purchase of common stock to be made directly or through
agents. We will not receive any of the proceeds from this offering. Upon any
exercise of the warrants by payment of cash, however, we will receive the
exercise price of the warrants.
The
selling stockholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act of 1933,
provided that they meet the criteria and conform to the requirements of that
rule.
The
selling stockholders and any underwriters, broker-dealers or agents that
participate in the sale of the common stock or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are "underwriters" within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements
of
the Securities Act.
To
the
extent required, the shares of our common stock to be sold, the names of the
selling stockholders, the respective purchase prices and public offering prices,
the names of any agents, dealer or underwriter, any applicable commissions
or
discounts with respect to a particular offer will be set forth in an
accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this
prospectus.
In
order
to comply with the securities laws of some states, if applicable, the common
stock may be sold in these jurisdictions only through registered or licensed
brokers or dealers. In addition, in some states the common stock may not be
sold
unless it has been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is complied
with.
We
have
advised the selling stockholders that the anti-manipulation rules of Regulation
M under the Exchange Act may apply to sales of shares in the market and to
the
activities of the selling stockholders and their affiliates. In addition, we
will make copies of this prospectus (as it may be supplemented or amended from
time to time) available to the selling stockholders for the purpose of
satisfying the prospectus delivery requirements of the Securities Act. The
selling stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act.
We
have
agreed to indemnify the selling stockholders against liabilities, including
liabilities under the Securities Act and state securities laws, relating to
the
registration of the shares offered by this prospectus.
We
have
agreed with the selling stockholders to keep the registration statement of
which
this prospectus constitutes a part effective until the earlier of (1) such
time
as all of the shares covered by this prospectus have been disposed of pursuant
to and in accordance with the registration statement or (2) the date on which
the shares may be sold pursuant to Rule 144(k) of the Securities
Act.
Schedule
2(a) Additional Registered Securities
Xxx
Xxxxx
and Company - 1,116,071 shares of Common Stock
Xxxxxxx
Xxxxxxx - 271,845 shares of Common Stock
Xxxxxx
X.
Xxxxxxxxx Profit Sharing Plan - 92,250 shares of Common Stock issuable upon
the
exercise of warrants
Xxxxx
Family Trust - 92,250 shares of Common Stock issuable upon the exercise of
warrants
Xxxxx
X.
Xxxxxx, XXX - 92,250 shares of Common Stock issuable upon the exercise of
warrants
SKAT
Capital - 92,250 shares of Common Stock issuable upon the exercise of
warrants
Xxxxxx
Xxxxxx - 92,250 shares of Common Stock issuable upon the exercise of
warrants
Xxxxxx
and Xxxxxx Xxxxxx Family Foundation - 276,750 shares of Common Stock issuable
upon the exercise of warrants
Irrevocable
Trust FBO Daphna’s Grandchildren - 184,500 shares of Common Stock issuable upon
the exercise of warrants
