As
filed with the Securities and Exchange Commission on October 8,
2010
Registration
No. 333-[•]
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT
Under
THE
SECURITIES ACT OF 1933
NEURALSTEM,
INC.
(Exact
name of Registrant as specified in its charter)
Delaware
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52-2007292
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
Number)
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Neuralstem,
Inc.
9700
Great Seneca Highway
Rockville,
Maryland 20850
(301)366-4841
(Address,
including zip code, and telephone number, including area code, of Registrant’s
principal executive offices)
Paracorp,
Inc.
40
E. Division Street Suite A
Dover,
DE 19901
(888)
372-7273
(Name,
address, including zip code, and telephone number, including area code, of agent
for service)
Copies
to:
Raul
Silvestre, Esq
Silvestre
Law Group, P.C.
31200
Via Colinas, Suite 200
Westlake
Village, Ca 91362
(818)
597-7552
Approximate date of commencement of
proposed sale to the public:
From time to time, after
the effective date of this Registration Statement.
If the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following
box.
¨
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.
x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
¨
If this
Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box.
¨
If this
Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box.
¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated filer
¨
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Accelerated filer
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¨
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Non-accelerated filer
¨
(Do not check if smaller reporting company)
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Smaller reporting company
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x
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CALCULATION
OF REGISTRATION FEE
Title
of
Each
Class
of
Securities
to
be
Registered
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Amount
To
Be
Registered(1)
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Proposed
Maximum
Offering Price
per Unit or Share
(1)(2)
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Proposed
Maximum
Aggregate
Offering Price
(1)(2)
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Amount
of
Registration Fee
(3)
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Shares
being Registered by Registrant via Shelf Registration
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Common
Stock, $0.01 par value per share (“Common Stock”) (4)
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Preferred
Stock, $0.01 par value per share (4)
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—
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—
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—
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—
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Warrants
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—
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—
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—
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—
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Units
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—
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—
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—
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—
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Total
(5)
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$
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50,000,000
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—
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$
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50,000,000
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$
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3,565.00
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Shares
being Registered for Selling Shareholders
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Common
Stock, par value $0.01(6)(7)(9)
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200,000
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$
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3.17
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$
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634,000
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$
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45.20
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Common
Stock, par value $0.01(6)(8)(9)
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100,000
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$
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2.44
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$
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244,000
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$
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17.40
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Total
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300,000
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$
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878,000
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$
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62.60
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(1)
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With
regard to the Shares being Registered by Registrant via Shelf
Registration, there are being registered hereunder such indeterminate
number of shares of common stock and preferred stock, such, such
indeterminate number of warrants to purchase common stock, and such
indeterminate number of units consisting of a combination of the forgoing
securities, which together shall have an aggregate initial offering price
not to exceed $50,000,000.
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(2)
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With
regard to the Shares being Registered by Registration via Shelf
Registration, the proposed maximum per unit and aggregate offering prices
per class of securities will be determined from time to time by the
registrant in connection with the issuance by the registrant of the
securities registered under this registration statement and is not
specified as to each class of security pursuant to General Instruction
II.D of Form S-3 under the Securities Act of 1933, as amended (the
“Securities Act”).
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(3)
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Calculated
pursuant to Rule 457(o) under the Securities
Act.
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(4)
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In
addition to any securities that may be registered hereunder, we are also
registering an indeterminate number of shares of common stock or preferred
stock as may be issued upon conversion, exercise or exchange of the
securities issued directly
hereunder.
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(5)
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Any
securities registered hereunder may be sold separately or as units with
other securities registered hereunder. The proposed maximum offering price
per unit will be determined by us in connection with the issuance of the
securities. In no event will the aggregate offering price of all
securities issued by the registrant from time to time pursuant to this
Registration Statement exceed $50,000,000 or if any securities are issued
in an amount denominated in a foreign currency or composite currency, such
amount as shall result in an aggregate initial offering price equivalent
thereto in United States dollars at the time of initial
offering.
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(6)
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Fee
based on exercise price of applicable to shares issuable upon exercise of
warrants in accordance with Rule
457(g)
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(7)
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Represents
common shares issuable upon the exercise (at a price of $3.17 per share)
of outstanding warrants.
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(8)
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Represents
common shares issuable upon the exercise (at a price of $2.44 per share)
of outstanding warrants.
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(9)
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Pursuant
to SEC Rule 416, also covers additional common shares that may be offered
to prevent dilution as a result of stock splits, or stock
dividends.
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The
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
Explanatory
Note
This
Registration Statement contains two prospectuses, as set forth
below.
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Shelf
Offering
Prospectus.
A prospectus to be used for the public
offering by the Registrant of up $50,000,000 of Registrants securities as
further described in the prospectus and any prospectus
supplements.
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•
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Resale
Prospectus.
A prospectus to be used for the resale by
the selling stockholders set forth therein of an aggregate of 300,000
shares of the Registrant's common stock issuable upon exercise of warrants
(the "Resale Prospectus").
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The
Resale Prospectus is substantively identical to the Shelf Offering Prospectus,
except for the following principal points:
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they
contain different outside and inside front covers and back
covers;
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the
section entitled “About this Prospectus” is omitted from the Resale
Offering Prospectus
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they
contain different “Use of Proceeds”
sections;
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the
Resale Prospectus includes a section entitled “Determination of Offering
Price”;
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the
section entitled “Description of Securities to be Registered” is omitted
from the Resale Offering
Prospectus;
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a
“Selling Stockholder” section is included in the Resale
Prospectus;
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any
references in the Shelf Offering Prospectus to the Resale Prospectus will
be deleted from the Shelf Offering Prospectus;
and
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they
contain different “Plan of Distribution”
sections.
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The
Registrant has included in this Registration Statement a set of alternate pages
after the back cover page of the Shelf Offering Prospectus (the "Alternate
Pages") to reflect the foregoing differences in the Resale Prospectus as
compared to the Shelf Offering Prospectus. The Shelf Offering Prospectus will
exclude the Alternate Pages and will be used for the public offering by the
Registrant of its securities in connection with a shelf registration process and
the future filing of prospectus supplements in connection with each offering of
securities. The Resale Prospectus will be substantively identical to the Shelf
Offering Prospectus except for the addition or substitution of the Alternate
Pages and will be used for the resale offering by the selling
stockholders.
The
information in this prospectus is not complete and may be changed. We may not
sell the securities until the Registration Statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
these securities and is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED OCTOBER 8, 2010
PROSPECTUS
NEURALSTEM,
INC.
$50,000,000
Common
stock, Preferred stock, Warrants Units
We may
from time to time in one or more offerings, offer and sell one or any
combination of the securities we describe in this prospectus, either
individually or as units comprised of one or more of the offered securities.
This prospectus may not be used
to sell securities unless accompanied by a prospectus supplement, which will
describe the method and the terms of the offering
. We will provide you
with specific amount, price and terms of the applicable offered securities in
one or more supplements to this prospectus. You should read this prospectus and
any supplement carefully before you purchase any of our securities.
These
securities may be offered and sold in the same offering or in separate
offerings; to or through underwriters, dealers, and agents; or directly to
purchasers. The names of any underwriters, dealers, or agents involved in the
sale of our securities, their compensation and any over-allotment options held
by them will be described in the applicable prospectus supplement, see “Plan of
Distribution.”
Our
common stock is listed on the NYSE AMEX under the symbol “CUR.” On October 4,
2010, the closing price of our common stock on the NYSE AMEX was $2.31 per
share. Our principal executive offices are located at 9700 Great Seneca
Highway, Rockville, MD, and our telephone number at that address is
301-366-4841.
Investing
in our securities involves risk. Please carefully read the information under
“
Risk
Factors
”
beginning
on page 3 for information you should consider before investing in our
securities.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.
This
prospectus is dated
,
2010
Table
of Contents
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Page
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About This Prospectrus
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1
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The Company
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2
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Risk Factors
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3
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Forward-Looking Statements
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4
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Use of Proceeds
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4
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Dividend Policy
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4
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Description of Securities to be
Registered
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4
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Description of Capital
Stock
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4
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Description of the Warrants
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6
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Description
of the
Units
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7
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Plan of Distribution
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7
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Legal Matters
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9
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Experts
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9
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Where You Can Find More
Information
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9
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Information Incorporated by
Reference
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9
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ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement on Form S-3 that we filed with
the Securities and Exchange Commission, or SEC, utilizing a “shelf” registration
process. Under this shelf registration statement, we may, from time to time,
sell any combination of the securities referred to herein in one or more
offerings for total gross proceeds of up to $50,000,000. This prospectus
provides you with a general description of the securities we may
offer.
Each time
we offer a type or series of securities under this prospectus, we will provide a
prospectus supplement that will contain more specific information about the
terms of the offered securities. We also may authorize one or more free writing
prospectuses to be provided to you that may contain material information
relating to these offerings. This prospectus, together with applicable
prospectus supplements and any related free writing prospectuses, includes all
material information relating to these offerings. We also may add, update or
change, in the prospectus supplement and in any related free writing prospectus
that we may authorize to be provided to you, any of the information contained in
this prospectus or in the documents that we have incorporated by reference into
this prospectus. We urge you to read carefully this prospectus, any applicable
prospectus supplement and any related free writing prospectus, together with the
information incorporated herein by reference as described under the section
entitled “Where You Can Find Additional Information,” in this prospectus before
buying any of the securities being offered.
THIS PROSPECTUS MAY NOT BE USED TO
CONSUMMATE A SALE OF SECURITIES UNLESS IT IS ACCOMPANIED BY A PROSPECTUS
SUPPLEMENT.
You
should rely only on the information that we have provided or incorporated by
reference in this prospectus, any applicable prospectus supplement and any
related free writing prospectus that we may authorize to be provided to you. We
have not authorized any other person to provide you with different or additional
information. No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus, any
applicable prospectus supplement or any related free writing prospectus that we
may authorize to be provided to you. You must not rely on any unauthorized
information or representation. This prospectus, any applicable supplement to
this prospectus or any related free writing prospectus do not constitute an
offer to sell or the solicitation of an offer to buy any securities other than
the registered securities to which they relate, nor do this prospectus, any
applicable supplement to this prospectus or any related free writing prospectus
constitute an offer to sell or the solicitation of an offer to buy securities in
any jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction.
You
should assume that the information appearing in this prospectus, any applicable
prospectus supplement or any related free writing prospectus is accurate only as
of the date on the front of the document and that any information we have
incorporated by reference is accurate only as of the date of the document
incorporated by reference, regardless of the time of delivery of this
prospectus, any applicable prospectus supplement or any related free writing
prospectus, or any sale of a security. Our business, financial condition,
results of operations and prospectus may have changed since those
dates.
This
prospectus contains and incorporates by reference market data, industry
statistics and other data that have been obtained from, or compiled from,
information made available by third parties. We have not independently verified
their data. This prospectus and the information incorporated herein by reference
includes trademarks, service marks and trade names owned by us or other
companies. All trademarks, service marks and trade names included or
incorporated by reference into this prospectus, any applicable prospectus
supplement or any related free writing prospectus are the property of their
respective owners.
This
prospectus contains summaries of certain provisions contained in some of the
documents described herein, but reference is made to the actual documents for
complete information. All of the summaries are qualified in their entirety by
the actual documents. Copies of some of the documents referred to herein have
been filed, will be filed, or will be incorporated by reference as exhibits to
the registration statement of which this prospectus is a part, and you may
obtain copies of those documents as described below under the section entitled
“Where You Can Find Additional Information.”
You
should read this entire prospectus carefully, including the risks of investing
discussed under “Risk Factors” beginning on page 3, the information to
which we refer you and the information incorporated into this prospectus by
reference, for a complete understanding of our business and this offering.
References in this prospectus to “our company,” “we,” “our,” “Neuralstem” and
“us” refer to Neuralstem, Inc.
THE
COMPANY
Overview
We are
focused on the development and commercialization of treatments based on
transplanting human neural stem cells and small molecule compounds.
We have
developed and maintain a portfolio of patents and patent applications that form
the proprietary base for our research and development efforts in the area of
neural stem cell research. We own or exclusively license fourteen (14) issued
patents and twenty-two (22) patent pending applications in the field of
regenerative medicine and related technologies. We believe our technology base,
in combination with our know-how, and collaborative projects with major research
institutions, provide a competitive advantage and will facilitate the
development and commercialization of products for use in the treatment of a wide
array of neurodegenerative conditions and in regenerative repair of acute
disease.
Regenerative
medicine is a young and emerging field. Regenerative medicine is the process of
creating living, functional tissues to repair or replace tissue or organ
function lost due to age, disease, damage, or congenital defects. There can be
no assurances that our intellectual property portfolio will ultimately produce
viable commercialized products and processes. Even if we are able to produce a
commercially viable product, there are strong competitors in this field and our
products may not be able to successfully compete against them.
All of
our research efforts to date are at the pre-clinical or clinical stage of
development. We are focused on leveraging our key assets, including our
intellectual property, our scientific team and our facilities, to advance our
technologies. In addition, we are pursuing strategic collaborations with members
of academia.
Clinical
Trials
On
December 18, 2008 we filed our first Investigational New Drug Application
(“IND”) with the U.S. Food and Drug Administration (“FDA”) to begin a clinical
trial to treat Amyotrophic Lateral Sclerosis (“ALS” or “Lou Gehrig’s disease”).
On September 21, 2009, the FDA approved our IND. The first patient in our
study was dosed on January 21, 2010 at Emory University in Atlanta Georgia.
In May of 2010, we announced that, after reviewing the safety data from
the first cohort of three patients, the Safety Monitoring Board has approved
moving to the next cohort and transplantation of the fourth patient. The first
cohort of patients received five injections of the Company's spinal cord stem
cells on one side of the spinal cord. The second cohort of three patients will
receive ten injections, five on each side of the cord.
The trial
will ultimately consist of up to 18 ALS patients, who will be examined at
regular intervals post-surgery, with final review of the data to come six months
after the last patient is treated. To date, we
have treated 6 patients. It is still too early in the
trials to make any determination as to its level of success, if
any.
On August 22, 2010, we filed our second IND with the FDA. The IND is
being filed in connection with our proposed Phase I clinical trials for
Chronic Spinal Cord injury. We anticipate the study will be a multi-site
study in the U.S.
Technology
Stem
Cells
Our
technology enables the isolation and large-scale expansion of human neural stem
cells from all areas of the developing human brain and spinal cord, thus
enabling the generation of physiologically relevant human neurons of all types.
Our two issued core patents entitled: (i)
Isolation, Propagation,
and Directed Differentiation of Stem Cells from Embryonic and Adult Central
Nervous System of Mammals
; and (ii)
In Vitro Generation of
Differentiated Neurons from Cultures of Mammalian Multipotential CNS Stem
Cell
contain claims which cover the process of deriving the
cells as well as the cells created from this process.
What
differentiates our stem cell technology from others is that our patented
processes do not require us to direct our cells towards a certain fate by adding
specific growth factors. Our cells actually “become” the type of cell they are
fated to be. This process and the resulting cells comprise a technology platform
that allows for the efficient isolation and production, in commercially
reasonable quantities, of neural stem cells from the human brain and spinal
cord.
To date
we have focused our efforts on applications involving spinal cord stem cells. We
believe we have established “proof of principle” for two important spinal cord
applications: ALS, or Lou Gehrig’s disease, and Ischemic Spastic Paraplegia (a
painful form of spasticity that may arise as a complication of surgery to repair
aortic aneurysms). Of these applications, we have commenced Phase I trials with
regard to ALS.
We intend
to treat both chronic and acute spinal cord injury with the same spinal cord
stem cells, utilizing the same injection devices we are using for
ALS. The treatment for spinal cord injury will, however, likely only
involve a few injections as opposed to the fifteen injection dosage that is
ultimately planned for the ALS trial. We, therefore, add to our
knowledge about the surgical route of entry for both the ALS patients and the
spinal cord injury patients with each patient we treat in the ALS
trial.
Small-molecule
Compounds
We have
performed tests on cultured neural stem cells as well as in animal models in
order to validate the performance of small molecule compounds for
hippocampal neurogenesis. As a result of those tests, we feel that our small
molecule compound may have an application with regard to the treatment of
depression. We expect to file an IND to commence human safety trials
of our lead small molecule compound to treat major depression in early
2011. In anticipation of filing the IND, we have contracted for a
production run of our compound using Good Manufacturing Practice (“GMP”) methods
which will be large enough to complete safety testing and Phase I clinical
trials.
In
July of 2009, the U.S. Patent and Trademark Office (“USPTO”) issued the
patent covered by patent application 12/049,922, entitled “
Use of Fused Nicotinamides to
Promote Neurogenesis
,” which claims four chemical entities and any
pharmaceutical composition including them.
Research
We have
devoted substantial resources to our research programs in order to isolate and
develop a series of neural stem cell banks that we believe can serve as a basis
for our therapeutic products. Our efforts to date have been directed at methods
to identify, isolate and culture large varieties of stem cells of the human
nervous system, and to develop therapies utilizing these stem cells. This
research is conducted internally, through the use of third party laboratories
and consulting companies under our direct supervision, and through collaboration
with academic institutes.
Operating
Strategy
We employ
an outsourcing strategy where we outsource all of our Good Laboratory
Practices (“GLP”) preclinical development activities and GMP manufacturing and
clinical development activities to contract research organizations (“CRO”) and
contract manufacturing organizations (“CMO”) as well as all non critical
corporate functions. Manufacturing is also outsourced to
organizations with approved facilities and manufacturing
practices. This outsource model allows us to better manage cash on
hand and eliminates non-vital expenditures. It also allows for us to
operate with relatively fewer employees and lower fixed costs than that required
by our competitors.
Employees
As of
June 30, 2010, we had 9 full-time employees and 11 full time independent
contractors. Of these employees, 4 work on research and development
and 5 in administration. We also use the services of numerous outside
consultants in business and scientific matters.
Corporate
Information
We were
incorporated in 1997 in the state of Maryland and re-incorporated in the state
of Delaware in 2001. Our principal executive offices are located at
9700 Great Seneca Highway, Rockville, MD, and our telephone number at that
address is 301-366-4841.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. The prospectus
supplement applicable to each offering of our securities will contain a
discussion of the risks applicable to an investment in our securities. Prior to
making a decision about investing in our securities, you should carefully
consider the specific factors discussed under the heading “Risk Factors” in the
applicable prospectus supplement, together with all of the other information
contained or incorporated by reference in the prospectus supplement or appearing
or incorporated by reference in this prospectus. You should also consider the
risks, uncertainties and assumptions discussed under Item 1A, “Risk
Factors,” in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2009 (as updated in our Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2010) which are incorporated herein by
reference, and may be amended, supplemented or superseded from time to time by
other reports we file with the SEC in the future and any prospectus supplement
related to a particular offering. The risks and uncertainties we have described
are not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also affect our
operations.
FORWARD-LOOKING
STATEMENTS
This
prospectus and the registration statement of which it forms a part, any
prospectus supplement, any related issuer free writing prospectus and the
documents incorporated by reference into these documents contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934, as amended, or the
Exchange Act. Forward-looking statements deal with our current plans,
intentions, beliefs and expectations and statements of future economic
performance. Statements containing terms such as “believe,” “do not believe,”
“plan,” “expect,” “intend,” “estimate,” “anticipate” and other phrases of
similar meaning are considered to contain uncertainty and are forward-looking
statements. In addition, from time to time we or our representatives have made
or will make forward-looking statements orally or in writing. Furthermore, such
forward-looking statements may be included in various filings that we make with
the SEC, or press releases or oral statements made by or with the approval of
one of our authorized executive officers. These forward-looking statements are
subject to certain known and unknown risks and uncertainties, as well as
assumptions that could cause actual results to differ materially from those
reflected in these forward-looking statements. Factors that might cause actual
results to differ include, but are not limited to, those set forth under
Item 1A, “Risk Factors,” and Item 7, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” in our most recent
Annual Report on Form 10-K, the corresponding sections in our most recent
Quarterly Report on Form 10-Q and in our future filings made with the SEC.
Readers are cautioned not to place undue reliance on any forward-looking
statements contained in this prospectus, any prospectus supplement or any
related issuer free writing prospectus, which reflect management’s opinions only
as of their respective dates. Except as required by law, we undertake no
obligation to revise or publicly release the results of any revisions to any
forward-looking statements. You are advised, however, to consult any additional
disclosures we have made or will make in our reports to the SEC on Forms 10-K,
10-Q and 8-K, and any amendments thereto. All subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by the cautionary statements contained
in this prospectus, any prospectus supplement or any related issuer free writing
prospectus.
USE
OF PROCEEDS
Except as
otherwise provided in the applicable prospectus supplement, we intend to use the
net proceeds from the sale of the securities covered by this prospectus for
general corporate purposes, which may include working capital, capital
expenditures, research and development expenditures, clinical trial
expenditures, acquisitions of new technologies or businesses, and investments.
Additional information on the use of net proceeds from the sale of securities
covered by this prospectus may be set forth in the prospectus supplement
relating to the specific offering.
DIVIDEND
POLICY
We have
never paid cash dividends on our common stock. Moreover, we do not anticipate
paying periodic cash dividends on our common stock for the foreseeable future.
We intend to use all available cash and liquid assets in the operation and
growth of our business. Any future determination about the payment of dividends
will be made at the discretion of our board of directors and will depend upon
our earnings, if any, capital requirements, operating and financial conditions
and on such other factors as our board of directors deems relevant.
DESCRIPTION
OF SECURITIES TO BE REGISTERED
Description
of the Capital Stock
As of the
date of this prospectus, our authorized capital stock consists of 150,000,000
shares designated as common stock, $0.01 par value, and 7,000,000 shares
designated as preferred stock, $0.01 par value. The only equity securities
currently outstanding are shares of common stock. As of October 5
,
2010, there were
46,182,178
shares
of common stock issued and outstanding.
The
following is a summary of the material provisions of the common stock and
preferred stock provided for in our certificate of incorporation and bylaws. For
additional detail about our capital stock, please refer to our certificate of
incorporation and bylaws, each as amended, copies of which are incorporated by
reference into the registration statement to which this prospectus
relates.
Common
stock
The
holders of common stock are entitled to one vote per share on all matters to be
voted upon by the stockholders and there are no cumulative rights. Subject to
preferences that may be applicable to any outstanding preferred stock, the
holders of common stock are entitled to receive ratably any dividends that may
be declared from time to time by the board of directors out of funds legally
available for that purpose. However, we are not currently paying any dividends.
In the event of our liquidation, dissolution or winding up, the holders of
common stock are entitled to share ratably in all assets remaining after payment
of liabilities, subject to prior distribution rights of preferred stock then
outstanding. The common stock has no preemptive or conversion rights or other
subscription rights. There are no redemption or sinking fund provisions
applicable to the common stock. The outstanding shares of common stock are fully
paid and non-assessable, and any shares of common stock to be issued upon an
offering pursuant to this prospectus and the related prospectus supplement will
be fully paid and nonassessable upon issuance.
The
transfer agent and registrar for our common stock is American Stock Transfer and
Trust Company. Our common stock is listed for quotation on the NYSE
AMEX under the symbol “CUR.”
Preferred
stock
The
following description of preferred stock and the description of the terms of any
particular series of preferred stock that we choose to issue hereunder and that
will be set forth in the related prospectus supplement are not complete. These
descriptions are qualified in their entirety by reference to our certificate of
incorporation and the certificate of designation relating to that series. The
rights, preferences, privileges and restrictions of the preferred stock of each
series will be fixed by the certificate of designation relating to that series.
The prospectus supplement also will contain a description of certain U.S.
federal income tax consequences relating to the purchase and ownership of the
series of preferred stock that is described in the prospectus
supplement.
We
currently have no shares of preferred stock outstanding. Our board of directors
has the authority, without further action by the stockholders, to issue up to
7,000,000 shares of preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions granted to or imposed upon the
preferred stock. Any or all of these rights may be greater than the rights of
the common stock.
The board
of directors, without stockholder approval, can issue preferred stock with
voting, conversion or other rights that could negatively affect the voting power
and other rights of the holders of common stock. Preferred stock could thus be
issued quickly with terms calculated to delay or prevent a change in control of
us or make it more difficult to remove our management. Additionally, the
issuance of preferred stock may have the effect of decreasing the market price
of the common stock.
The
prospectus supplement for a series of preferred stock will specify:
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the
price of and maximum number of
shares;
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the
designation of the shares;
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the
annual dividend rate, if any, whether the dividend rate is fixed or
variable, the date or dates on which dividends will accrue, the dividend
payment dates, and whether dividends will be
cumulative;
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the
price and the terms and conditions for redemption, if any, including
redemption at our option or at the option of the holders, including the
time period for redemption, and any accumulated dividends or
premiums;
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the
liquidation preference, if any, and any accumulated dividends upon the
liquidation, dissolution or winding up of our
affairs;
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any
sinking fund or similar provision, and, if so, the terms and provisions
relating to the purpose and operation of the
fund;
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the
terms and conditions, if any, for conversion or exchange of shares of any
other class or classes of our capital stock or any series of any other
class or classes, or of any other series of the same class, or any other
securities or assets, including the price or the rate of conversion or
exchange and the method, if any, of
adjustment;
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any
or all other preferences and relative, participating, optional or other
special rights, privileges or qualifications, limitations or
restrictions.
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Preferred
stock will be fully paid and nonassessable upon issuance.
Anti-Takeover
Effects of Some Provisions of Delaware Law
Provisions
of Delaware law could make the acquisition of our company through a tender
offer, a proxy contest or other means more difficult and could make the removal
of incumbent officers and directors more difficult. We expect these provisions
to discourage coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control of our company to first negotiate
with our board of directors. We believe that the benefits provided by our
ability to negotiate with the proponent of an unfriendly or unsolicited proposal
outweigh the disadvantages of discouraging these proposals. We believe the
negotiation of an unfriendly or unsolicited proposal could result in an
improvement of its terms.
We are
subject to Section 203 of the Delaware General Corporation Law, an
anti-takeover law. In general, Section 203 prohibits a publicly held
Delaware corporation from engaging in a “business combination” with an
“interested stockholder” for a period of three years following the date the
person became an interested stockholder, unless:
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Prior
to the date of the transaction, the board of directors of the corporation
approved either the business combination or the transaction which resulted
in the stockholder becoming an interested
stockholder;
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The
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes
of determining the number of shares outstanding (a) shares owned by
persons who are directors and also officers, and (b) shares owned by
employee stock plans in which employee participants do not have the right
to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer;
or
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On
or subsequent to the date of the transaction, the business combination is
approved by the board and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least two-thirds of the outstanding voting stock that is not owned by the
interested stockholder.
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Generally,
a “business combination” includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested stockholder. An
“interested stockholder” is a person who, together with affiliates and
associates, owns or, within three years prior to the determination of interested
stockholder status, did own 15% or more of a corporation’s outstanding voting
securities. We expect the existence of this provision to have an anti-takeover
effect with respect to transactions our board of directors does not approve in
advance. We also anticipate that Section 203 may also discourage attempts
that might result in a premium over the market price for the shares of common
stock held by stockholders.
Anti-Takeover
Effects of Provisions of Our Charter Documents
Our
amended and restated bylaws provides for our board of directors to be divided
into three classes serving staggered terms. Approximately one-third of the board
of directors will be elected each year. The provision for a classified board
could prevent a party who acquires control of a majority of the outstanding
voting stock from obtaining control of the board of directors until the second
annual stockholders meeting or longer, following the date the acquirer obtains
the controlling stock interest. The classified board provision could discourage
a potential acquirer from making a tender offer or otherwise attempting to
obtain control of our company and could increase the likelihood that incumbent
directors will retain their positions. Our amended and restated bylaws provides
any director or the entire Board may be removed from office at any time, with or
without cause, by the affirmative vote of the holders of at least a majority of
the voting power of the issued and outstanding shares of capital stock of the
corporation then entitled to vote in the election of directors.
Our
amended and restated bylaws establish an advance notice procedure for
stockholder proposals to be brought before an annual meeting of our
stockholders, including proposed nominations of persons for election to the
board of directors. At an annual meeting, stockholders may only consider
proposals or nominations specified in the notice of meeting or brought before
the meeting by or at the direction of the board of directors. Stockholders may
also consider a proposal or nomination by a person who was a stockholder of
record on the record date for the meeting, who is entitled to vote at the
meeting and who has given to our Secretary timely written notice, in proper
form, of his or her intention to bring that business before the meeting. The
amended and restated bylaws do not give the board of directors the power to
approve or disapprove stockholder nominations of candidates or proposals
regarding other business to be conducted at a special or annual meeting of the
stockholders. However, our bylaws may have the effect of precluding the conduct
of business at a meeting if the proper procedures are not followed. These
provisions may also discourage or deter a potential acquirer from conducting a
solicitation of proxies to elect the acquirer’s own slate of directors or
otherwise attempting to obtain control of our company.
Our
amended and restated bylaws provide that only our board of directors, the
chairperson of the board or the chief executive officer (or president, in the
absence of a chief executive officer) or holders of more than twenty percent
(20%) of the total voting power of the outstanding shares of capital stock may
call a special meeting of stockholders. The restriction on the
ability of stockholders to call a special meeting means that a proposal to
replace the board also could be delayed until the next annual
meeting.
Description
of the Warrants
We may
issue warrants for the purchase of our preferred stock or common stock, or any
combination thereof. Warrants may be issued independently or together with our
preferred stock or common stock and may be attached to, or separate from, any
offered securities. Each series of warrants will be issued under a separate
warrant agreement to be entered into between us and the warrant holder or a bank
or trust company, as warrant agent. In the event we engage a warrant agent, the
warrant agent will act solely as our agent in connection with the warrants. The
warrant agent will not have any obligation or relationship of agency or trust
for or with any holders or beneficial owners of warrants. This summary of
certain provisions of the warrants is not complete. For the terms of a
particular series of warrants, you should refer to the prospectus supplement and
the warrant agreement for that particular series.
The
prospectus supplement relating to a particular series of warrants to purchase
our common stock or preferred stock will describe the terms of the warrants,
including the following:
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the
title of the warrants;
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the
exercise price of the warrants;
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the
offering price for the warrants, if
any;
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the
aggregate number of warrants;
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the
designation and terms of the common stock or preferred stock that may be
purchased upon exercise of the
warrants;
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if
applicable, the designation and terms of the securities with which the
warrants are issued and the number of warrants issued with each
security;
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if
applicable, the date from and after which the warrants and any securities
issued with the warrants will be separately
transferable;
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the
number of shares of common stock or preferred stock that may be purchased
upon exercise of a warrant and the exercise price for the
warrants;
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the
dates on which the right to exercise the warrants shall commence and
expire;
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if
applicable, the minimum or maximum amount of the warrants that may be
exercised at any one time;
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the
currency or currency units in which the offering price, if any, and the
exercise price are payable;
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if
applicable, a discussion of material U.S. federal income tax
considerations;
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the
antidilution provisions of the warrants, if
any;
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the
redemption or call provisions, if any, applicable to the
warrants;
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any
provisions with respect to the holder’s right to require us to repurchase
the warrants upon a change in control or similar event;
and
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any
additional terms of the warrants, including procedures, and limitations
relating to the exchange, exercise and settlement of the
warrants.
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Holders
of equity warrants will not be entitled:
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to
vote, consent or receive dividends;
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receive
notice as stockholders with respect to any meeting of stockholders for the
election of our directors or any other matter;
or
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exercise
any rights of our stockholders.
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Description
of the Units
We may
issue units comprised of one or more of the other classes of securities
described in this prospectus in any combination. Each unit will be issued so
that the holder of the unit is also the holder of each security included in the
unit. Thus, the holder of a unit will have the rights and obligations of a
holder of each included security. The prospectus supplement will
describe:
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the
designation and terms of the units and of the securities comprising the
units, including whether and under what circumstances the securities
comprising the units may be held or transferred
separately;
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a
description of the terms of any agreement governing the
units;
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a
description of the provisions for the payment, settlement, transfer or
exchange of the units; and
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a
discussion of material federal income tax considerations, if
applicable; and
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The
descriptions of the units in this prospectus and in any prospectus supplement
are summaries of the material provisions of the applicable agreements. These
descriptions do not restate those agreements in their entirety and may not
contain all the information that you may find useful. We urge you to read the
applicable agreements because they, and not the summaries, define your rights as
holders of the units.
PLAN
OF DISTRIBUTION
We may
sell the offered securities in any of the ways described below or in any
combination or any other way set forth in an applicable prospectus supplement
from time to time:
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to or through underwriters or
dealers;
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through one or more agents;
or
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directly to purchasers or to a
single purchaser.
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The
distribution of the securities may be effected from time to time in one or more
transactions:
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at a fixed price, or prices,
which may be changed from time to
time;
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at market prices prevailing at
the time of sale;
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at prices related to such
prevailing market prices; or
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Each
prospectus supplement will describe the method of distribution of the securities
and any applicable restrictions.
The
prospectus supplement with respect to the securities of a particular series will
describe the terms of the offering of the securities, including the
following:
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the
name or names of any underwriters, dealers or agents and the amounts of
securities underwritten or purchased by each of
them;
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the public offering price of the
securities and the proceeds to us and any discounts, commissions or
concessions allowed or reallowed or paid to dealers;
and
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any exchanges on which the
securities may be listed.
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Any
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
Only the
agents or underwriters named in each prospectus supplement are agents or
underwriters in connection with the securities being offered
thereby.
We may
authorize underwriters, dealers or other persons acting as our agents to solicit
offers by certain institutions to purchase securities from us pursuant to
delayed delivery contracts providing for payment and delivery on the date stated
in each applicable prospectus supplement. Each contract will be for an amount
not less than, and the aggregate amount of securities sold pursuant to such
contracts shall not be less nor more than, the respective amounts stated in each
applicable prospectus supplement. Institutions with whom the contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and other institutions, but shall in all cases be subject to our
approval. Delayed delivery contracts will be subject only to those conditions
set forth in each applicable prospectus supplement, and each prospectus
supplement will set forth any commissions we pay for solicitation of these
contracts.
Agents,
underwriters and other third parties described above may be entitled to
indemnification by us against certain civil liabilities, including liabilities
under the Securities Act of 1933, or to contribution from us with respect to
payments that the agents, underwriters or other third parties may be required to
make in respect of these civil liabilities. Agents, underwriters and such other
third parties may be customers of, engage in transactions with, or perform
services for us in the ordinary course of business.
One or
more firms, referred to as “remarketing firms,” may also offer or sell the
securities, if a prospectus supplement so indicates, in connection with a
remarketing arrangement upon their purchase. Remarketing firms will act as
principals for their own accounts or as our agents. These remarketing firms will
offer or sell the securities in accordance with the terms of the securities.
Each prospectus supplement will identify and describe any remarketing firm and
the terms of its agreement, if any, with us and will describe the remarketing
firm’s compensation. Remarketing firms may be deemed to be underwriters in
connection with the securities they remarket. Remarketing firms may be entitled
under agreements that may be entered into with us to indemnification by us
against certain civil liabilities, including liabilities under the Securities
Act of 1933, and may be customers of, engage in transactions with, or perform
services for, us in the ordinary course of business.
Certain
underwriters may use this prospectus and any accompanying prospectus supplement
for offers and sales related to market-making transactions in the securities.
These underwriters may act as principal or agent in these transactions, and the
sales will be made at prices related to prevailing market prices at the time of
sale.
The
securities we offer may be new issues of securities and may have no established
trading market. The securities may or may not be listed on a securities
exchange. Underwriters may make a market in these securities, but will not be
obligated to do so and may discontinue any market making at any time without
notice. We can make no assurance as to the liquidity of, or the existence of
trading markets for, any of the securities.
Certain
persons participating in an offering may engage in overallotment, stabilizing
transactions, short covering transactions and penalty bids in accordance with
rules and regulations under the Securities Exchange Act of 1934. Overallotment
involves sales in excess of the offering size, which create a short position.
Stabilizing transactions permit bids to purchase the underlying security so long
as the stabilizing bids do not exceed a specified maximum. Short covering
transactions involve purchases of the securities in the open market after the
distribution is completed to cover short positions. Penalty bids permit the
underwriters to reclaim a selling concession from a dealer when the securities
originally sold by the dealer are purchased in a short covering transaction to
cover short positions. Those activities may cause the price of the securities to
be higher than it would otherwise be. If commenced, the underwriters may
discontinue any of the activities at any time.
We also
may sell any of the securities through agents designated by us from time to
time. We will name any agent involved in the offer or sale of these securities
and will list commissions payable by us to these agents in the applicable
prospectus supplement. These agents will be acting on a best efforts basis to
solicit purchases for the period of its appointment, unless stated otherwise in
the applicable prospectuses.
LEGAL
MATTERS
The
validity of the securities offered by this prospectus will be passed upon by
Silvestre Law Group, P.C., Westlake Village, California.
EXPERTS
Stegman
& Company, our independent registered public accounting firm, has audited
our consolidated financial statements included in our Annual Report on
Form 10-K for the years ended December 31, 2009 and 2008, as set forth
in their report, which is incorporated by reference in this prospectus and
elsewhere in the registration statement. Our financial statements are, and
audited financial statements to be included in subsequently filed documents will
be, incorporated by reference in reliance on Stegman & Company’s report (to
the extent covered by consents filed with the Securities and Exchange
Commission), given on their authority as experts in accounting and
auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We have
filed with the SEC a registration statement to register the securities offered
by this prospectus under the Securities Act. This prospectus is part of that
registration statement, but omits certain information contained in the
registration statement, as permitted by SEC rules. For further information with
respect to our Company and this offering, reference is made to the registration
statement and the exhibits and any schedules filed with the registration
statement. Statements contained in this prospectus as to the contents of any
document referred to are not necessarily complete and in each instance, if the
document is filed as an exhibit, reference is made to the copy of the document
filed as an exhibit to the registration statement, each statement being
qualified in all respects by that reference. You may obtain copies of the
registration statement, including exhibits, as noted in the paragraph below or
by writing or telephoning us at:
NEURALSTEM,
INC
9700
Great Seneca Highway,
Rockville,
Maryland 20850
Attn:
Chief Financial Officer
Tel :
(301) 366-4841
We file
annual, quarterly and other reports, proxy statements and other information with
the SEC. Our SEC filings are available to the public over the Internet at the
SEC’s website at
http://www.sec.gov
. You may also read and copy any document we file at
the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Room. You can also inspect reports, proxy statements and other
information about us at the offices of the National Association of Securities
Dealers, Reports Section, 1735 K Street, N.W., Washington, D.C.
20006.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
We
incorporate information into this prospectus by reference, which means that we
disclose important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is deemed to
be part of this prospectus, except for any such information superseded by
information contained in later-filed documents or directly in this prospectus.
This prospectus incorporates by reference the documents set forth below that we
have previously filed with the SEC (excluding those portions of any
Form 8-K that are not deemed “filed” pursuant to the General Instructions
of Form 8-K). These documents contain important information about us and
our financial condition.
We
incorporate by reference into this prospectus supplement the information
contained in the documents listed below, which is considered to be a part of
this prospectus supplement:
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Our
Annual Report on Form 10-K and 10-K/A filed with the Commission on March
31, 2010, for the year ended December 31, 2009 and as amended on
October 5 2010, respectively;
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Our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2010, filed on May 17, 2010;
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Our
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2010, filed on August 16,
2010;
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Our
Current Reports on Form 8-K filed on June 11, 2010, June
29, 2010, and July 14, 2010 (excluding any information
furnished in such reports under Item 2.02, Item 7.01 or
Item 9.01);
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Our
Definitive Proxy Statement on Form 14A for our 2010 Annual Meeting of
Stockholders, filed with the SEC on March 26, 2010;
and
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The
description of our common stock contained in our Registration Statement on
Form SB-2 (Registration No. 333-142451), as amended (the
"Registration Statement"), filed under the Securities Act of 1933, as
amended, with the Commission on April 30, 2007 and declared effective May
4, 2007.
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All
reports and other documents we subsequently file pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of this
offering, including all such documents we may file with the SEC after the date
of the initial registration statement and prior to the effectiveness of the
registration statement, but excluding any information furnished to, rather than
filed with, the SEC, will also be incorporated by reference into this prospectus
and deemed to be part of this prospectus from the date of the filing of such
reports and documents.
We will
provide without charge to each person, including any beneficial owner, to whom
this prospectus is delivered, upon written or oral request, a copy of any or all
documents that are incorporated by reference into this prospectus, but not
delivered with the prospectus, other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into the documents that this
prospectus incorporates. You should direct written requests to: NEURALSTEM, INC,
9700 Great Seneca Highway, Rockville, Maryland 20850 Attn: Chief Financial
Officer Tel: (301) 366-4841
$50,000,000
NEURALSTEM,
INC.
Common
Stock
Preferred
Stock
Warrants
Units
PROSPECTUS
,
2010
The
information in this prospectus is not complete and may be changed. A
registration statement relating to the securities has been filed with the
Securities and Exchange Commission. We may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED OCTOBER 8
,
2010
PROSPECTUS
NEURALSTEM,
INC.
300,000
Shares of Common Stock
This
prospectus relates to the resale of up to 300,000 shares of our common stock
being offered by the selling shareholders listed on page
[___].
We
will not receive any proceeds from the sale of the shares of common stock by the
selling shareholders.
Our
shares of common stock are quoted on the NYSE: AMEX under the symbol
“CUR.” On October 4 2010, the last reported sales price of our common
stock was, was $2.31
Our
principal executive offices are located at 9700 Great Seneca Highway, Rockville,
MD, telephone number 301-366-4841.
________________________________________________________________
Investing
in our common stock involves a high degree of risk. You are urged to read the
section entitled “Risk Factors” beginning on page 3; of this prospectus, which
describes specific risks and other information that should be considered before
you make an investment decision.
________________________________________________________________
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The Date
of this Prospectus is [__], 2010
USE
OF PROCEEDS
This
prospectus relates to shares of our common stock that may be offered and sold
from time to time by the selling shareholders. There will be no proceeds to us
from the sale of shares of common stock in this offering. In
the event the warrants held by the selling shareholders are exercised for cash,
we will receive approximately $1,027,000. We will use the proceeds received from
the exercise of warrants, if any, for working capital.
DETERMINATION
OF OFFERING PRICE
This
offering is being made solely to allow the selling shareholders to offer and
sell the securities to the public. The selling shareholders may offer for resale
some or all of their securities at the time and price that they choose pursuant
to the Plan of Distribution. On any given day, the price per
Common Share is likely to be based on the market price for our Common Shares, as
quoted on the American Stock Exchange.
SELLING
SHAREHOLDERS
This
prospectus relates to the offering and sale, from time to time, of up to 300,000
common shares issuable upon the exercise of warrants held by the selling
shareholders (“Selling Shareholders”). The warrants were issued to the Selling
Shareholder as compensation for services and reimbursements of
expenses. The Selling Shareholders may exercise their warrants at any
time in their sole discretion. All of the Selling Shareholders named below
acquired their warrants directly from us in private
transactions.
Set forth
below is information, to the extent known to us, setting forth the name of each
Selling Shareholder and the amount and percentage of common stock owned by each
(including shares that can be acquired on the exercise of outstanding warrants)
prior to the offering, the shares to be sold in the offering, and the amount and
percentage of Common Stock to be owned by each (including shares that can be
acquired on the exercise of outstanding warrants) after the offering assuming
all shares are sold. The footnotes provide information about persons
who have voting and dispositive power for the Selling Shareholders and about
transactions between the Selling Shareholders and the Company.
The
Selling Shareholders may sell all or some of the shares of common stock they are
offering, and may sell shares of our common stock otherwise than pursuant to
this prospectus. The table below assumes that each selling stockholder exercises
all of its warrants and sells all of the shares issued upon exercise thereof,
and that each selling stockholder sells all of the shares offered by it in
offerings pursuant to this prospectus, and does not acquire any additional
shares. We are unable to determine the exact number of shares that
will actually be sold or when or if these sales will occur.
The
Selling Shareholders may sell all, some or none of their shares in this
offering. See “Plan of Distribution.” The total number of common
shares sold under this prospectus may be adjusted to reflect adjustments due to
stock dividends, stock distributions, splits, combinations, recapitalizations or
the triggering anti-dilution protective provisions with regard to the common
stock and warrants.
Unless
otherwise stated below in the footnotes, to our knowledge, no Selling
Stockholder nor any affiliate of such stockholder: (i) has held any position or
office with, been employed by or otherwise has had any material relationship
with us or our affiliates during the three years prior to the date of this
prospectus; or (ii) is a broker-dealer, or an affiliate of a
broker-dealer.
The
Selling Shareholders may sell all or some of the shares of common stock they are
offering, and may sell shares of our common stock otherwise than pursuant to
this prospectus. The table below assumes that each Selling Shareholder exercises
all of its warrants and sells all of the shares issued upon exercise thereof,
and that each selling stockholder sells all of the shares offered by it in
offerings pursuant to this prospectus, and does not acquire any additional
shares. We are unable to determine the exact number of shares that will actually
be sold or when or if these sales will occur.
We may
amend or supplement this prospectus from time to time in the future to update or
change this list and shares which may be resold.
|
|
Common Shares Beneficially
Owned Before Sale (1)
|
|
|
|
|
|
Common Shares Owned
After Sale (2)
|
|
|
|
Securities
Owned
|
|
|
% of
class
|
|
|
Shares
being
registered
|
|
|
Amount
|
|
|
% of
Class
|
|
Market
Development Consulting Group, Inc. — 3(i)
|
|
715,000
|
3(ii)
|
|
|
1.55
|
%
|
|
|
175,000
|
|
|
|
540,000
|
|
|
|
1.17
|
%
|
Susan
Rouch
|
|
|
25,000
|
4
|
|
|
*
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
*
|
|
Ridaa
H. Murad
|
|
|
100,000
|
5
|
|
|
*
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
*
|
|
Total
|
|
|
840,000
|
|
|
|
1.82
|
%
|
|
|
300,000
|
|
|
|
540,000
|
|
|
|
1.17
|
%
|
* Less
Than 1%
(1)
|
Pursuant
to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership
includes any common shares as to which a shareholder has sole or shared
voting power or investment power, and also any common shares which the
shareholder has the right to acquire within 60 days, including upon
exercise of common shares purchase options or warrants. There
were
46,182,178
common shares outstanding as of October 5,
2010.
|
(2)
|
Assumes
the sale of all common shares registered pursuant to this registration
statement.
|
(3)
|
(i)
David E. Castaneda has voting and dispositive power with respect to the
securities to be offered for resale. (ii) Includes: (a) 175,000
common share underlying warrants issued as compensation for services which
are being registered, (b) 140,000 common shares which were previously
registered, and (c) 400,000 common shares underlying warrants issued as
compensation for services which were previously registered. The
175,000 warrants of which we are registering the underlying shares have an
exercise price of $3.17 a term of 10 years and are substantially similar
to the consultant warrant issued on January 8,
2010.
|
(4)
|
The
25,000 warrants of which we are registering the underlying shares have an
exercise price of $3.17 a term of 10 years and are substantially similar
to the consultant warrant issued on January 8,
2010.
|
(5)
|
Includes
100,000 shares underlying warrants issued as compensation for
services. The warrants have an exercise price of $2.44 (issued on October
1, 2010), and a term of 10 years from the issuance
date.
|
PLAN
OF DISTRIBUTION
Each
Selling Shareholder of the common stock and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on the NYSE: AMEX or any stock exchange, market or trading
facility on which the shares are traded or in private transactions. These sales
may be at fixed or negotiated prices. A Selling Shareholders may use any one or
more of the following methods when selling shares:
|
·
|
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;
|
|
·
|
settlement of short sales entered
into after the effective date of the registration statement of which this
prospectus is a part;
|
|
·
|
broker-dealers may agree with the
Selling Shareholder to sell a specified number of such shares at a
stipulated price per share;
|
|
·
|
through the writing or settlement
of options or other hedging transactions, whether through an options
exchange or otherwise;
|
|
·
|
a combination of any such methods
of sale; or
|
|
·
|
any other method permitted
pursuant to applicable law.
|
The
Selling Shareholder may also sell shares under Rule 144 under the Securities Act
of 1933, as amended (the “Securities Act”), if available, rather than under this
prospectus.
Broker-dealers
engaged by the Selling Shareholder may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Shareholder (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this Prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in compliance with
FINRA Rules.
In
connection with the sale of the common stock or interests therein, the Selling
Shareholders 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
Shareholders may also sell shares of the 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
Shareholders 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
Selling Shareholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Shareholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common
Stock.
The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares. The Company has agreed to indemnify
the Selling Shareholder against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.
Because
Selling Shareholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. In addition, any securities
covered by this prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this prospectus.
There is no underwriter or coordinating broker acting in connection with the
proposed sale of the resale shares by the Selling Shareholders.
Under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Shareholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).
Part
II
Information
Not Required in the Prospectus
Item 14. Other
Expenses of Issuance and Distribution
The
aggregate estimated (other than the registration fee) expenses payable by the
Company in connection with a distribution of securities registered hereby are as
follows:
Securities
and Exchange Commission registration fee
|
|
$
|
3,560.00
|
|
Accounting
fees and expenses
|
|
|
50,000.00
|
|
Legal
fees and expenses
|
|
|
50,000.00
|
|
Printing
and engraving expenses
|
|
|
15,000.00
|
|
Transfer
agent fees and expenses
|
|
|
10,000.00
|
|
Miscellaneous
|
|
|
35,000.00
|
|
|
|
|
|
|
Total
|
|
$
|
163,565.00
|
|
Item 15. Indemnification
of Directors and Officers
Our
amended and restated certificate of incorporation contains provisions that
eliminate, to the maximum extent permitted by the General Corporation Law of the
State of Delaware, the personal liability of directors and executive officers
for monetary damages for breach of their fiduciary duties as a director or
officer. Our amended and restated certificate of incorporation and bylaws
provide that we shall indemnify our directors and executive officers and may
indemnify our employees and other agents to the fullest extent permitted by the
General Corporation Law of the State of Delaware.
Sections 145
and 102(b)(7) of the General Corporation Law of the State of Delaware provide
that a corporation may indemnify any person made a party to an action by reason
of the fact that he or she was a director, executive officer, employee or agent
of the corporation or is or was serving at the request of the corporation
against expenses (including attorneys’ fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her in connection with
such action if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful, except that, in the
case of an action by or in right of the corporation, no indemnification may
generally be made in respect of any claim as to which such person is adjudged to
be liable to the corporation.
We have
purchased and intend to maintain insurance on behalf of any person who is or was
a director or officer of our company against any loss arising from any claim
asserted against him or her and incurred by him or her in any such capacity,
subject to certain exclusions.
See also
the undertakings set out in our response to Item 17 herein.
Item 16. Exhibits
A list of
exhibits filed herewith is contained in the exhibit index that immediately
precedes such exhibits and is incorporated herein by reference.
Item 17. Undertakings
(a) The
undersigned Registrant hereby undertakes:
(1)
to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to
include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) to
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective
registration statement; and
(iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement;
provided, however
, that
paragraphs (i), (ii) and (iii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in this registration statement, or is
contained in a form of prospectus filed pursuant to Rule 424(b) that is
part of the registration statement;
(2) That,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof;
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering;
(4) That,
for the purpose of determining liability under the Securities Act of 1933 to any
purchaser:
(i) If
the registrant is relying on Rule 430B,
(A) Each
prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be
deemed to be part of the registration statement as of the date the filed
prospectus was deemed part of and included in the registration statement;
and
(B) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or
(b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or
(x) for the purpose of providing the information required by
Section 10(a) of the Securities Act of 1933 shall be deemed to be part of
and included in the registration statement as of the earlier of the date such
form of prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in prospectus. As
provided in Rule 430B, for liability purposes of the issuer and any person
that is at that date an underwriter, such date shall be deemed to be a new
effective date of the registration statement relating to the securities in the
registration statement to which the prospectus relates, and the offering of such
securities at that time shall be deemed to be the initial
bona fide
offering
thereof.
Provided,
however
, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such effective date;
(ii) If
the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after effectiveness.
Provided, however
, that
no statement made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed incorporated
by reference into the registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of contract of sale
prior to such first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration statement
or made in any such document immediately prior to such date of first use;
and
(5) That,
for the purpose of determining liability of the Registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the securities, the
undersigned Registrant undertakes that in a primary offering of securities of
the undersigned Registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned Registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) any
preliminary prospectus or prospectus of the undersigned Registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) any
free writing prospectus relating to the offering prepared by or on behalf of the
undersigned Registrant or used or referred to by the undersigned
Registrant;
(iii) the
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned Registrant or its securities provided
by or on behalf of an undersigned Registrant; and
(iv) any
other communication that is an offer in the offering made by the undersigned
Registrant to the purchaser.
(b) The
undersigned Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of Registrant’s annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c)
The undersigned registrant hereby undertakes that: (i) for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of the registration statement
in reliance upon Rule 430A and contained in the form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of the registration statement as of the time it
was declared effective; and (ii) for the purpose of determining any
liability under the Securities Act, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial
bona fide
offering
thereof.
(d)
If and when applicable, the undersigned Registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the Securities and
Exchange Commission under Section 305(b)(2) of the Act.
(e) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions described under Item 15 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Rockville, State of Maryland, on October 8, 2010.
NEURALSTEM,
INC
|
By:
|
/s/
I. Richard
Garr
|
I.
Richard Garr, President, Chief Executive Officer and
Director
|
KNOW ALL
MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints I Richard Garr and John Conron and each of them, his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including pre-and post-effective
amendments) to this registration statement and any additional registration
statement pursuant to Rule 462(b) under the Securities Act of 1933, and to file
the same with all exhibits thereto, and other documents in connection therewith,
with the SEC, granting unto said attorneys-in-fact and agents and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that each of
said attorneys-in-fact and agents or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated:
REGISTRANT’S
OFFICERS AND DIRECTORS
|
|
Title
|
|
Date
|
|
|
President,
Chief Executive Officer and Director
|
|
October
8, 2010
|
I.
Richard Garr
|
|
(Principal
executive officer)
|
|
|
|
|
|
|
|
|
|
Chief
Financial Officer (Principal financial and
|
|
|
John
Conron
|
|
accounting
officer)
|
|
|
|
|
|
|
|
|
|
Chairman
of the Board and Director
|
|
|
Karl
Johe
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
William
Oldaker
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
Scott
Ogilvie
|
|
|
|
|
INDEX
TO EXHIBITS
|
|
|
|
|
|
Incorporated by
Reference
|
Exhibit
No.
|
|
Description
|
|
Filed
Herewith
|
|
Form
|
|
Exhibit
No.
|
|
File No.
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.01(i)
|
|
Amended
and Restated Certificate of Incorporation of Neuralstem, Inc. filed on
9/29/05
|
|
|
|
10-K
|
|
3.01(i)
|
|
001-33672
|
|
3/31/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.02(i)
|
|
Certificate
of Amendment to Certificate of Incorporation of Neuralstem, Inc. filed on
5/29/08
|
|
|
|
DEF
14A
|
|
Appendix
I
|
|
001-33672
|
|
4/24/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.03(ii)
|
|
Amended
and Restated Bylaws of Neuralstem, Inc. adopted on July 16,
2007
|
|
|
|
10-QSB
|
|
3.2(i)
|
|
333-132923
|
|
8/14/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.01
|
|
For
of Certificate of Designation**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.02
|
|
Form
of Preferred Stock Certificate, if any**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.03
|
|
Form
of Warrant Agreement**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.04
|
|
Form
of Warrant Certificate, if any**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.05
|
|
Form
of Unit Agreement, if any**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.06
|
|
Form
of Consultant Warrant Issued January 8, 2010
|
|
|
|
10-K
|
|
4.20
|
|
001-33672
|
|
3/31/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.07
|
|
Form
of Consultant Warrant Issued October 1, 2009 and 2010
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5.01
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Opinion
of Silvestre Law Group, P.C.
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23.1
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Consent
of Independent Registered Audit Public Audit Firm
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23.2
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Consent
of Silvestre Law Group, P.C. (included in Exhibit 5.1)
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24.1
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Power of Attorney
(see page 18
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To
be filed by amendment or as an exhibit to a report pursuant to Section
13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, and
incorporated herein by reference.
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NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON
STOCK PURCHASE WARRANT
NEURALSTEM,
INC.
Warrant
Shares: ______
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Initial
Exercise Date:
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__________
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THIS
COMMON STOCK PURCHASE WARRANT (the “
Warrant
”) certifies
that, for value received, __________ (the “
Holder
”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the “
Initial Exercise
Date
”) and on or prior to the close of business on the ten year
anniversary of the Initial Exercise Date (the “
Termination Date
”)
but not thereafter, to subscribe for and purchase from Neuralstem, Inc., a
Delaware corporation (the “
Company
”), up to
________ shares (the “
Warrant Shares
”) of
Common Stock. The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in Section
2(b).
Section
1
.
Definitions
.
“
Affiliate
” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as such terms are
used in and construed under Rule 405 under the Securities Act. With
respect to a Holder, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Holder will be deemed
to be an Affiliate of such Holder.
“
Board of Directors
”
means the board of directors of the Company.
“
Business Day
” means
any day except any Saturday, any Sunday, any day which is a federal legal
holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.
“
Commission
” means the
Securities and Exchange Commission.
“
Common Stock
” means
the common stock of the Company, par value $0.001 per share, and any other class
of securities into which such securities may hereafter be reclassified or
changed into.
“
Exchange Act
” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“
Market Price
” means:
(a) the closing price reported on the Company’s Trading Market on the Trading
Day immediately preceding any applicable measuring date, (b) if no trading
occurs on the Trading Day immediately preceding any applicable measurement date,
then the closing bid price reported on such Trading Market, (c) if the Company’s
Common Shares are not then listed on a Trading Market, the price offered by any
acquirer in a Fundamental Transaction, or (d) in all other cases, the fair
market value of a share of Common Stock as determined in good faith by the
Company’s Board of Directors at their sole and absolute discretion.
“
Rule 144
” means Rule
144 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.
“
Securities Act
” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“
Trading Day
” means a
day on which the New York Stock Exchange is open for trading.
“
Trading Market
” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the American Stock Exchange, the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange, and the OTC Bulletin Board.
“
Transfer Agent
” means
American Stock Transfer and Trust Company, the current transfer agent of the
Company with a mailing address of 59 Maiden Lane, New York, New York 10038 and a
facsimile number of (718) 921-8336, and any successor transfer agent of the
Company.
Section
2
.
Exercise
.
a)
Exercise
of Warrant
. Exercise of the purchase rights represented by
this Warrant may be made, in whole or in part, at any time or times on or after
the Initial Exercise Date and on or before the Termination Date by delivery to
the Company (or such other office or agency of the Company as it may designate
by notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto; and, within 3 Business Days of the date
said Notice of Exercise is delivered to the Company, the Company shall have
received payment of the aggregate Exercise Price of the shares
thereby purchased by wire transfer or cashier’s check drawn on a United States
bank. Notwithstanding anything herein to the contrary, the Holder
shall not be required to physically surrender this Warrant to the Company until
the Holder has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall surrender
this Warrant to the Company for cancellation within 3 Business Days of the date
the final Notice of Exercise is delivered to the Company. Partial
exercises of this Warrant resulting in purchases of a portion of the total
number of Warrant Shares available hereunder shall have the effect of lowering
the outstanding number of Warrant Shares purchasable hereunder in an amount
equal to the applicable number of Warrant Shares purchased. The
Holder and the Company shall maintain records showing the number of Warrant
Shares purchased and the date of such purchases. The Company shall
deliver any objection to any Notice of Exercise Form within 1 Business Day of
receipt of such notice. In the event of any dispute or discrepancy,
the records of the Company shall be controlling and determinative in the absence
of manifest error.
The Holder
and any assignee, by acceptance of this Warrant, acknowledge and agree that, by
reason of the provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares available for
purchase hereunder at any given time may be less than the amount stated on the
face hereof.
b)
Exercise
Price
. The exercise price per share of the Common Stock under
this Warrant shall be $______
,
subject to adjustment hereunder (the “
Exercise
Price
”).
c)
Cashless
Exercise
. At any time after the Initial Exercise Date, subject
to any restrictions on exercisability contained herein, this Warrant may also be
exercised at such time by means of a “cashless exercise” in which the Holder
shall be entitled to receive a certificate for the number of Warrant Shares
equal to the quotient obtained by dividing [(A-B) (X)] by (A),
where:
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(A)
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=
the Market Price on the Business Day immediately preceding the date of
such election;
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(B)
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=
the Exercise Price of this Warrant, as adjusted;
and
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(X)
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=
the number of Warrant Shares issuable upon exercise of this Warrant in
accordance with the terms of this Warrant by means of a cash exercise
rather than a cashless
exercise.
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Notwithstanding
anything herein to the contrary, and provided this Warrant is then in the money,
on the Termination Date this Warrant shall be automatically exercised via
cashless exercise pursuant to this Section 2(c).
d)
Exercise
Limitations
.
i. The
Company shall not effect any exercise of this Warrant, and a Holder shall not
have the right to exercise any portion of this Warrant, pursuant to Section 2 or
otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together
with the Holder’s Affiliates, and any other person or entity acting as a group
together with the Holder or any of the Holder’s Affiliates), would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below).
For purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which such determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (A) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by the Holder or any of
its Affiliates and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without limitation,
any other Common Stock Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its affiliates. Except as set forth in the
preceding sentence, for purposes of this Section 2(d), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder, it being acknowledged by the
Holder that the Company is not representing to the Holder that such calculation
is in compliance with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance
therewith. To the extent that the limitation contained in this
Section 2(d) applies, the determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable shall be in the
sole discretion of the Holder, and the submission of a Notice of Exercise shall
be deemed to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder together with
any Affiliates) and of which portion of this Warrant is exercisable, in each
case subject to the Beneficial Ownership Limitation, and the Company shall have
no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 2(d), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company’s most recent
periodic or annual report, as the case may be, (y) a more recent public
announcement by the Company or (z) any other notice by the Company or the
Transfer Agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder, the Company
shall within two Trading Days confirm orally and in writing to the Holder the
number of shares of Common Stock then outstanding. In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Warrant,
by the Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The “
Beneficial Ownership
Limitation
” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The Holder, upon not
less than 61 days’ prior notice to the Company, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 2(d), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2(d) shall continue to
apply. Any such increase or decrease will not be effective until the
61
st
day after such notice is delivered to the Company. The provisions of
this paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 2(c) to correct this paragraph
(or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of
this Warrant.
ii. The
Company shall not effect any exercise of this Warrant, and a Holder shall not
have the right to exercise any portion of this Warrant, pursuant to Section 2 or
otherwise, until such time as the Company receives approval from its primary
Trading Market for the listing of the Warrant Shares.
e)
Mechanics of
Exercise
.
i.
Delivery of Certificates
Upon Exercise
. Certificates for shares purchased hereunder
shall be by physical delivery to the address specified by the Holder in the
Notice of Exercise within 15 Business Days from the delivery to the Company of
the Notice of Exercise Form, surrender of this Warrant (if required) and payment
of the aggregate Exercise Price as set forth above (the “
Warrant Share Delivery
Date
”). This Warrant shall be deemed to have been exercised on
the date the Exercise Price is received by the Company. The Warrant
Shares shall be deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a holder of record
of such shares for all purposes, as of the date the Warrant has been exercised
by payment to the Company of the Exercise Price (or by cashless exercise, if
permitted) and all taxes required to be paid by the Holder, if any, pursuant to
Section 2(e)(v) prior to the issuance of such shares, have been
paid.
ii.
Delivery of New Warrants
Upon Exercise
. If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.
iii.
Rescission
Rights
. If the Company fails to cause the transfer agent of
the Company to transmit to the Holder a certificate or the certificates
representing the Warrant Shares pursuant to Section 2(e)(i) by the Warrant Share
Delivery Date, then, the Holder will have the right to rescind such
exercise.
iv.
No Fractional Shares or
Scrip
. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall, at its election, either pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
v.
Charges, Taxes and
Expenses
. Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder;
provided
,
however
, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
vi.
Closing of
Books
. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
Section
3
.
Certain
Adjustments
.
a)
Stock Dividends
and Splits
. If the Company, at any time while this Warrant is
outstanding: (i) pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company upon
exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares
or (iv) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event and the number of shares issuable
upon exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.
b)
Calculations
.
All calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.
c)
Notice to
Holder
.
i.
Adjustment to Exercise
Price
. Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly mail to the Holder a notice
setting forth the Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. Notwithstanding the
forgoing, in the event the Company makes a public disclosure with regard to the
Exercise Price adjustment, such disclosure shall be deemed notice to the
Holders.
ii.
Notice to Allow Exercise by
Holder
. If (A) the Company shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. The Holder is
entitled to exercise this Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such notice.
Notwithstanding the forgoing, in the event the Company makes a public disclosure
with regard to the subject matter of this Section 3(d)(ii), such disclosure
shall be deemed notice to the Holders.
Section
4
.
Transfer of
Warrant
.
a)
Transferability
. Subject
to compliance with any applicable securities laws and the conditions set forth
in Section 4(d) hereof, this Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in
part, upon surrender of this Warrant at the principal office of the Company or
its designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or its
agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and, if required,
such payment, the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees, as applicable, and in the denomination or
denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. The Warrant, if
properly assigned, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued. Notwithstanding the
foregoing, upon request by Holder, the Company will issue a new Warrant or
Warrants in the names of any assignee(s) of Holder at no charge to Holder or the
assignee(s).
b)
New
Warrants
. This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject
to compliance with Section 4(a) and 4(d), as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or
exchanges shall be dated the original Issue Date and shall be identical with
this Warrant except as to the number of Warrant Shares issuable pursuant
thereto.
c)
Warrant
Register
. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “
Warrant Register
”),
in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.
d)
Transfer
Restrictions
.
If
, at the
time of the surrender of this Warrant in connection with
any transfer of this Warrant, the transfer of this Warrant shall not be
eligible for resale without volume or
manner-of-sale restrictions pursuant to Rule 144
, the Company may require, as a condition of allowing
such transfer
, that
the Holder or transferee of this Warrant,
as the case may be,
may be required by the Company to provide an opinion of
counsel with regard to such assignment or transfer.
Section
5.
Miscellaneous
.
a)
No Rights as
Stockholder Until Exercise
. This Warrant does not entitle the
Holder to any voting rights or other rights as a stockholder of the Company
prior to the exercise hereof as set forth in Section 2(e)(i).
b)
Loss, Theft,
Destruction or Mutilation of Warrant
. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate
relating to the Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock
certificate.
c)
Saturdays,
Sundays, Holidays, etc
. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then, such action may be taken or such right may be
exercised on the next succeeding Business Day.
d)
Authorized
Shares
.
The
Company covenants that, during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will
take all such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of the Trading Market upon which the
Common Stock may be listed. The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not
by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (ii) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be,
necessary to enable the Company to perform its obligations under this
Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
e)
Governing Law and
Venue
. All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware, without
regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Warrant (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the state of Maryland. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the state of Maryland for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by law. If either party shall commence
an action or proceeding to enforce any provisions of this Warrant, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its reasonable attorneys’ fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceedings or questions concerning the construction, validity, enforcement and
interpretation of this Warrant.
f)
Restrictions
. The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.
g)
Nonwaiver and
Expenses
. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date. If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
h)
Notices
. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile prior to 5:30 p.m. (New York City time)
on a Trading Day, (b) the date of transmission, if such notice or communication
is delivered via electronic mail prior to 5:30 p.m. (New York City time) on a
Trading Day, (c) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile or electronic mail on a day
that is not a Trading Day or later than 5:30 p.m. (New York City time) on any
Trading Day, the date of the public disclosure if such notice is communicated
via public disclosure (d) the second Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service, or (e) upon
actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications
shall be: (i) if to Holder, at its address of records as contained in
the Warrant Register, and (ii) if to Company, at its corporate
headquarters.
i)
Limitation of
Liability
. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
j)
Remedies
. The
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law
would be adequate.
k)
Successors and
Assigns
. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment
. This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and Holder.
m)
Severability
. Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.
n)
Headings
. The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature
Pages Follow)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above
indicated.
NEURALSTEM,
INC.
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By:
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Name:
|
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Title:
|
NOTICE
OF EXERCISE
TO: NEURALSTEM,
INC.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
¨
in
lawful money of the United States; or
¨
the
cancellation of such number of Warrant Shares as is necessary, in accordance
with the formula set forth in subsection 2(c), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection 2(c).
(3) Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered by the physical delivery of a certificate
to:
_______________________________
_______________________________
_______________________________
(4) [If required by
applicable regulations]
Accredited
Investor
. The undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
_______________________________________________________________________________
Signature of Authorized Signatory of
Investing Entity
:
________________________________________________________
Name of
Authorized Signatory:
__________________________________________________________________________
Title of
Authorized Signatory:
___________________________________________________________________________
Date:
_______________________________________________________________________________________________
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this form
and supply required information.
Do not
use this form to exercise the warrant.)
FOR VALUE
RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________,
_______
Holder’s
Signature: _____________________________
Holder’s
Address: _____________________________
_____________________________
Signature
Guaranteed: ___________________________________________
NOTE: The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.