EXHIBIT 10.62
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement"), dated as of January
9, 2004, is made by and between IMAGING DIAGNOSTIC SYSTEMS, INC., a Florida
corporation ("Company"), and CHARLTON AVENUE LLC, a Cayman Islands LLC (the
"Subscriber").
RECITALS
WHEREAS, upon the terms and subject to the conditions of the Fourth
Private Equity Credit Agreement ("Purchase Agreement"), between the Subscriber
and the Company, the Company has agreed to issue and sell to the Subscriber up
to Fifteen Million dollars ($15,000,000) of the common stock of the Company
("Subscribed Shares"), no par value per share (the "Common Stock"), and
WHEREAS, to induce the Subscriber to execute and deliver the Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, "Securities Act"),
and applicable state securities laws with respect to the Subscribed Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Subscriber hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the
following meaning:
(i) "Potential Material Event" means any of the following: (a) thee
possession by the Company of material information not ripe for disclosure in a
Registration Statement, which shall be evidenced by determinations in good faith
by the Board of Directors of the Company that disclosure of such information in
the Registration Statement would be detrimental to the business and affairs of
the Company, or (b) any material engagement or activity by the Company which
would, in the good faith determination of the Board of Directors of the Company,
be adversely affected by disclosure in a Registration Statement at such time,
which determination shall be accompanied by a good faith determination by the
Board of Directors of the Company that the Registration Statement would be
materially misleading absent the inclusion of such information.
(ii) "Subscription Date" means the date of this Agreement.
(iii) "Subscriber", has the meaning set forth in the preamble to this
Agreement.
(iv) "Register", "registered" and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
delayed or continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement by the United States Securities and
Exchange Commission (the "SEC").
(v) "Registrable Securities" means the Subscribed Shares.
(vi) "Registration Statement" means a registration statement of the
Company under the Securities Act.
(b) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Purchase Agreement.
2. Registration.
(a) Mandatory Registration. The Company shall prepare and file with the
SEC, no later than fifteen (15) business days after the Subscription Date, a
Registration Statement on Form S-2 ("Registration Statement"), or such other
appropriate Registration Statement, pursuant to Rule 457(o) of the Securities
Act, no less than (a) 112% of the Minimum Commitment Amount. Such Registration
Statement shall state that, in accordance with the Securities Act, it also
covers such indeterminate number of additional shares of Common Stock as may
become issuable to prevent dilution resulting from stock splits, or stock
dividends. If at any time the number of Subscribed Shares exceeds the aggregate
number of shares of Common Stock then registered, the Company shall, within ten
(10) business days after receipt of written notice from the Subscriber, file
with the SEC an additional Registration Statement on Form S-2 or any other
applicable registration statement, to register the Subscribed Shares that exceed
the aggregate number of shares of Common Stock already registered.
(b) Termination. If the Registration Statement covering the Registrable
Securities required to be filed by the Company pursuant to Section 2(a) hereof
is not declared effective within one hundred and fifty (150) days from the
Subscription Date, then the commitment contained in the Common Stock Purchase
Agreement and in this Agreement (the "Commitment") shall, at the option of the
Investor, terminate and the Subscriber shall be entitled to the sums set forth
in Section 2.1(b) of the Private Equity Credit Agreement.
The Company acknowledges that its failure to have the Registration
Statement declared effective within one hundred (150) days from the Subscription
Date (for any reason other than the requirement by the SEC of modifications to
the structure of the transactions contemplated hereby that are unacceptable to
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the Company or the Subscriber) shall cause the Subscriber to suffer damages in
an amount that shall be difficult to ascertain. Accordingly, the parties agree
that it is appropriate to include in the Private Equity Credit Agreement a
provision for liquidated damages. The parties acknowledge and agree that the
liquidated damages provision set forth in this section represents the parties'
good faith effort to quantify such damages and, as such, agree that the form and
amount of such liquidated damages are reasonable and will not constitute a
penalty. The payment of liquidated damages shall not relieve the Company from
its obligations to register the Common Stock and deliver the Common Stock
pursuant to the terms of this Agreement, the Purchase Agreement and the
Subscribed Shares.
3. Obligation of the Company. In connection with the registration of
the Registrable Securities, the Company shall do each of the following:
(a) Prepare promptly, and file with the SEC within twenty (20)
days of the Subscription Date, a Registration Statement with respect to not less
than the number of Registrable Securities provided in Section 2(a) above, and,
thereafter, use all diligent efforts to cause the Registration Statement
relating to the Registrable Securities to become effective the earlier of (a)
five (5) business days after notice from the Securities and Exchange Commission
that the Registration Statement may be declared effective, or (b) one hundred
fifty (150) days after the Subscription Date, and keep the Registration
Statement effective at all times until the earliest of (i) the date that is one
year after the completion of the last Closing Date under the Purchase Agreement,
(ii) the date when the Subscriber may sell all Registrable Securities under Rule
144 without volume limitations, or (iii) the date the Subscriber no longer owns
any of the Registrable Securities (collectively, the "Registration Period"),
which Registration Statement (including any amendments or supplements, thereto
and prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until the expiration of the Registration Period.
(c) Permit a single firm of counsel designated by Subscriber
to review the Registration Statement and all amendments and supplements thereto
a reasonable period of time (but not less than three (3) Business Day) prior to
their filing with the SEC, and not file any document in a form to which such
counsel reasonably objects.
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(d) Notify Subscriber and Subscriber's legal counsel
identified to the Company (which, until further notice, shall be deemed to be
Xxxxxxx & Xxxxxx, LLP, ATTN: Xxxxxx Xxxxxxx, Esq.; "Subscriber's Counsel") (and,
in the case of (i)(A) below, not less than one (1) Business Day prior to such
filing) and (if requested by any such person) confirm such notice in writing no
later than one (1) Business Day following the day (i): (A) when a prospectus or
any prospectus supplement or post-effective amendment to the Registration
Statement is proposed to be filed; (B) whenever the SEC notifies the Company
whether there will be a "review" of such Registration Statement; (C) whenever
the Company receives (or a representative of the Company receives on its behalf)
any oral or written comments from the SEC respect of a Registration Statement
(copies or, in the case of oral comments, written or oral summaries of such
comments shall be promptly furnished by the Company to Subscriber's Counsel);
and (D) with respect to the Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any request by the SEC or
any other Federal or state governmental authority for amendments or supplements
to the Registration Statement or the prospectus or for additional information;
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of the Registration Statement covering any or all of the Registrable Securities
or the initiation of any proceedings for that purpose; (iv) if at any time any
of the representations or warranties of the Company contained in any agreement
(including any securities purchase agreement) contemplated hereby ceases to be
true and correct in all material respects; (v) of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any proceeding for such
purpose; and (vi) of the occurrence of any event that to the knowledge of the
Company makes any statement made in the Registration Statement or the prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, the prospectus or other documents so that, in the case
of the Registration Statement or the prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading. In
addition, the Company shall furnish Subscriber's Counsel with copies of all
intended written responses to the comments contemplated in clause (C) of this
Section not later than one (1) Business Day in advance of the filing of such
responses with the SEC so that Subscriber shall have the opportunity to comment
thereon.
(e) Furnish to Subscriber, (i) promptly after the same is
prepared and publicly distributed, filed with the SEC, or received by the
Company, one (1) copy of the Registration Statement, each preliminary prospectus
and the prospectus, and each amendment or supplement thereto, and (ii) such
number of copies of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents, as the Subscriber
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by the Subscriber;
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(f) Use all diligent efforts to (i) register and/or qualify
the Registrable Securities covered by the Registration Statement under such
other securities or blue sky laws of such jurisdictions as the Subscriber may
reasonably request and in which significant volumes of shares of Common Stock
are traded, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof at all
times during the Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualification in effect at all
times during the Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions: provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (A) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(f), (B) subject itself to general taxation in any such
jurisdiction, (C) file a general consent to service of process in any such
jurisdiction, (D) provide any undertakings that cause more than nominal expense
or burden to the Company or (E) make any change in its charter or by-laws or any
then existing contracts, which in each case the Board of Directors of the
Company determines to be contrary to the best interests of the Company and its
stockholders;
(g) As promptly as practicable after becoming aware of such
event, notify the Subscriber of the happening of any event of which the Company
has knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading ("Registration Default"), and uses all diligent
efforts to promptly prepare a supplement or amendment to the Registration
Statement or other appropriate filing with the SEC to correct such untrue
statement or omission, and any other necessary steps to cure the Registration
Default, and deliver a number of copies of such supplement or amendment to the
Subscriber as the Subscriber may reasonably request. Failure to cure the
Registration Default within ten (10) business days shall result in the Company
including liquidated damages of 2% of the cost of all common stock then held by
the investor for each10 day period or portion thereof, beginning on the date of
suspension.
(h) As promptly as practicable after becoming aware of such
event, notify the Subscriber (or, in the event of an underwritten offering, the
managing underwriters) of the issuance by the SEC of any notice of effectiveness
or any stop order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time;
(i) Notwithstanding the foregoing, if at any time or from time
to time after the date of effectiveness of the Registration Statement, the
Company notifies Investor in writing of the existence of a Potential Material
Event ("Blackout Notice"), Investor shall not offer or sell any Registrable
Securities, or engage in any other transaction involving or relating to the
Registrable Securities, from the time of the giving of notice with respect to a
Potential Material Event until Investor receives written notice from the Company
that such Potential Material Event either has been disclosed to the public or no
longer constitutes a Potential Material Event; provided, however, that (a) the
Company may not so suspend the right to such holders of Registrable Securities
for more than two ten (10) day periods in the aggregate during any 12-month
period ("Blackout Period") with at least a ten (10) Business Day interval
between such periods, during the periods the Registration Statement is required
to be in effect, or (b) that if such Blackout Period exceeds the permitted ten
(10) day periods, the Company shall pay damages of 2% of the cost of all common
stock then held by the Investor for each ten (10) day period or portion thereof,
beginning on the date of the suspension.
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(j) Use its commercially reasonable efforts, if eligible,
either to (i) cause all the Registrable Securities covered by the Registration
Statement to be listed on a national securities exchange and on each additional
national securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation of all the Registrable Securities covered by the
Registration Statement as a National Association of Securities Dealers Automated
Quotations System ("Nasdaq) "Small Capitalization" within the meaning of Rule
11Aa2-1 of the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the quotation of the Registrable Securities on the Nasdaq
Small Cap Market; or if, despite the Company's commercially reasonable efforts
to satisfy the preceding clause (i) or (ii), the Company is unsuccessful in
doing so, to secure NASD authorization and quotation for such Registrable
Securities on the over-the-counter bulletin board and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register with the National Association of Securities Dealers, Inc. ("NASD") as
such with respect to such registrable securities; provided, however, that the
Subscriber acknowledges that the Company does not currently meet the
requirements for listing on a national securities exchange or the Nasdaq Small
Cap Market pursuant to (i) or (ii) and that nothing in this section shall be
construed to require the Company to pursue such qualification until such time as
the Company satisfies such requirements for a period of not less than forty-five
(45) days:
(k) Provide a transfer agent for the Registrable Securities
not later than the Subscription Date of the Registration Statement;
(l) Cooperate with the Subscriber to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates for
the Registrable Securities to be in such denominations or amounts as the case
may be, as the Subscriber may reasonably request and registration in such names
as the Subscriber may request; and, within five (5) business days after a
Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, to the transfer agent for the Registrable
Securities (with copies to the Subscriber) an appropriate instruction and
opinion of such counsel, if so required by the Company's transfer agent; and
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(m) Take all other reasonable actions necessary to expedite
and facilitate distribution to the Subscriber of the Registrable Securities
pursuant to the Registration Statement.
4. Obligations of the Subscriber. In connection with the registration
of the Registrable Securities, the Subscriber shall have the following
obligations;
(a) It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of the Subscriber that the Subscriber shall timely
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall timely execute such
documents in connection with such registration as the Company may reasonably
request.
(b) The Subscriber by such Subscriber's acceptance of the
Registrable Securities agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder; and
(c) The Subscriber agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
3(g) or 3(h) above, the Subscriber will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until the Subscriber receives the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or 3(h) and, if
so directed by the Company, the Subscriber shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Subscriber's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
5. Expenses of Registration. (a) All reasonable expenses incurred in
connection with Registrations, filings or qualifications pursuant to Section 3,
including, without limitation, all Registration, listing, and qualifications
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company shall be borne by the Comany. A fee for a single counsel for
Investor for the initial Registration Statement and for each Additional
Registration Statement covering the Registrable Securities shall be borne by the
Company.
(b) Except as otherwise provided for in Schedule 5(b) attached
hereto, the Company nor any of its subsidiaries has, as of the date hereof, and
the Company shall not on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to Investor in this Agreement or otherwise conflicts with the provisions
hereof. Except as otherwise provided for in Schedule 5(b), the Company has not
previously entered into any agreement granting any registration rights with
respect to any of its securities to any person. Except as otherwise provided for
in this Section 5, and without limiting the generality of the foregoing, without
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the written consent of Investor, the Company shall not grant to any person the
right to request the Company to Register any securities of the Company under the
Securities Act unless the rights so granted are subject in all respects to the
prior rights in full of Investor set forth herein, and are not otherwise in
conflict or inconsistent with the provisions of this Agreement and the other
Transaction Documents.
6. Indemnification. After Registrable Securities are included in a
Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless, the Subscriber, the directors, if any, of such Subscriber,
the officers, if any, of such Subscriber, each person, if any, who controls the
Subscriber within the meaning of the Securities Act or the Exchange Act (each,
an "Indemnified Person"), against any losses, claims, damages, liabilities or
expenses (joint or several) incurred (collectively, "Claims") to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any post-effective amendment thereof or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the Subscription Date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not misleading or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation under the
Securities Act, the Exchange Act or any state securities law (the matters in the
foregoing clauses (i) through (iii) being collectively referred to as
"Violations"). The Company shall reimburse the Subscriber, promptly as such
expenses are incurred and are due and payable, for any reasonable legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a) shall not
(i) apply to any Claims arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(b) hereof; (ii) with respect to
any preliminary prospectus, inure to the benefit of any such person from whom
the person asserting any such Claim purchased the Registrable Securities that
are the subject thereof (or to the benefit of any person controlling such
person) if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then amended or
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supplemented, if such prospectus was timely made available by the Company
pursuant to Section 3(b) hereof; (iii) be available to the extent such Claim is
based on a failure of the Subscriber to deliver or cause to be delivered the
prospectus made available by the Company; or (iv) apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. The
Subscriber will indemnify the Company, its officers, directors and agents
(including legal counsel) against any claims arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company, by or on behalf of such Subscriber,
expressly for use in connection with the preparation of the Registration
Statement, subject to such limitations and conditions set forth in the previous
sentence. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person or Indemnified
Party.
(b) Promptly after receipt by an Indemnified Person under this
Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person, as
the case may be; provided, however, that an Indemnified Person shall have the
right to retain its own counsel with the reasonable fees and expenses to be paid
by the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person and any other
party represented by such counsel in such proceeding. In such event, the Company
shall pay for only one separate legal counsel for the Subscriber selected by the
Subscriber. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person under
this Section 6, except to the extent that the indemnifying party is prejudiced
in its ability to defend such action. The indemnification required by this
Section 6 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
7. Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation; and (c) contribution by any seller of Registrable Securities
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shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. Reports under Exchange Act. With a view to making available
to the Investor the benefits of Rule 144 promulgated under the Securities Act or
any other similar rule or regulation of the SEC that may at any time permit the
Investor to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to use its reasonable best efforts to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act;
(c) furnish to the Investor so long as the Investor owns
Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the
reporting requirements of Rule 144, the Securities Act and the
Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and
documents so filed by the Company solely if unavailable by
XXXXX, and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities
pursuant to Rule 144 without registration; and
(d) at the request of any Investor of Registrable Securities,
give its Transfer Agent irrevocable instructions (supported by
an opinion of Company counsel, if required or requested by the
Transfer Agent) to the effect that, upon the Transfer Agent's
receipt from such Investor of:
(i) a certificate (a "Rule 144 Certificate") certifying (A)
that such Investor has held the shares of Registrable
Securities which the Investor proposes to sell (the
"Securities Being Sold") for a period of not less than (1)
year and (B) as to such other matters as may be appropriate in
accordance with Rule 144 under the Securities Act, and
(ii) an opinion of counsel acceptable to the Company (for
which purposes it is agreed that the initial Investor's
Counsel shall be deemed acceptable if such opinion is not
given by Company Counsel) that, based on the Rule 144
Certificate, Securities Being Sold may be sold pursuant to the
provisions of Rule 144, even in the absence of an effective
Registration Statement,
the Transfer Agent is to effect the transfer of the Securities Being
Sold and issue to the buyer(s) or transferee(s) thereof one or more stock
certificates representing the transferred Securities Being Sold without any
restrictive legend and without recording any restrictions on the transferability
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of such shares on the Transfer Agent's books and records (except to the extent
any such legend or restriction results from facts other than the identity of the
Investor, as the seller or transferor thereof, or the status, including any
relevant legends or restrictions, of the shares of the Securities Being Sold
while held by the Investor). If the Transfer Agent requires any additional
documentation at the time of the transfer, the Company shall deliver or cause to
be delivered all such reasonable additional documentation as may be necessary to
effectuate the issuance of an unlegended certificate.
9. Miscellaneous.
(a) Registered Owners. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) Rights Cumulative; Waivers. The rights of each of the parties under
this Agreement are cumulative. The rights of each of the parties hereunder shall
not be capable of being waived or varied other than by an express waiver or
variation in writing. Any failure to exercise or any delay in exercising any of
such rights shall not operate as a waiver or variation of that or any other such
right. Any defective or partial exercise of any of such rights shall not
preclude any other or further exercise of that or any other such right. No act
or course of conduct or negotiation on the part of any party shall in any way
preclude such party from exercising any such right or constitute a suspension or
any variation of any such right.
(c) Benefit; Successors Bound. This Agreement and the terms, covenants,
conditions, provisions, obligations, undertakings, rights, and benefits hereof,
shall be binding upon, and shall inure to the benefit of, the undersigned
parties and their heirs, executors, administrators, representatives, successors,
and permitted assigns.
(d) Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof. There are no
promises, agreements, conditions, undertakings, understandings, warranties,
covenants or representations, oral or written, express or implied, between them
with respect to this Agreement or the matters described in this Agreement,
except as set forth in this Agreement and in the other documentation relating to
the transactions contemplated by this Agreement. Any such negotiations,
promises, or understandings shall not be used to interpret or constitute this
Agreement.
(e) Assignment. The rights to have the Company register Registrable
Securities pursuant to this Agreement may be assigned by the Subscribers to any
transferee, only if: (a) the assignment relates to not less than one million
dollars ($1,000,000) of Registrable Securities and the Transferee is an
Accredited Investor under Regulation D not in competition with the Company; (b)
the Company receives a legal opinion in form and substance satisfactory to the
Company that the proposed transfer complies with federal and state securities
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laws and does not adversely effect the validity of the transactions executed (or
to be executed) under this Agreement and the Purchase Agreement under federal
and state securities laws; (c) the assignment requires that the Transferee be
bound by all of the provisions contained in this Agreement, and Subscriber, the
Company and the transferee or assignee (the "Transferee") enter into a written
agreement, which shall be enforceable by the Company against the Transferee and
by the Transferee against the Company, to assign such rights; and (d)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act and applicable state securities laws. Prior to the assignment the company
shall have the right to perform its own due diligence regarding the assignee and
have the right to approve the assignment, provided that such approval shall not
be unreasonably withheld. In the event of any delay in filing or effectiveness
of the Registration Statement as a result of such assignment, the Company shall
not be liable for any damages arising from such delay, or the payments set forth
in Section 2(c) hereof.
(f) Amendment. Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company and Subscriber. Any amendment or waiver effected in accordance with this
Section 9 shall be binding upon the Company and any subsequent Transferees.
(g) Severability. Each part of this Agreement is intended to be
severable. In the event that any provision of this Agreement is found by any
court or other authority of competent jurisdiction to be illegal or
unenforceable, such provision shall be severed or modified to the extent
necessary to render it enforceable and as so severed or modified, this Agreement
shall continue in full force and effect.
(h) Notices. Notices required or permitted to be given hereunder shall
be in writing and shall be deemed to be sufficiently given when personally
delivered (by hand, by courier, by telephone line facsimile transmission,
receipt confirmed, or other means) or sent by certified mail, return receipt
requested, properly addressed and with proper postage pre-paid (i) if to the
Company, at its executive office and (ii) if to the Subscriber, at the address
set forth under its name in the Purchase Agreement, with a copy to its
designated attorney, or at such other address as each such party furnishes by
notice given in accordance with this Section 9(a), and shall be effective, when
personally delivered, upon receipt and, when so sent by certified mail, five (5)
business days after deposit with the United States Postal Service.
(i) Governing Law. This Agreement shall be governed by the interpreted
in accordance with the laws of the State of Delaware without reference to its
conflicts of laws rules or principles. Each of the parties consents to the
exclusive jurisdiction of the federal courts of the State of Delaware in
connection with any dispute arising under this Agreement and hereby waives, to
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the maximum extent permitted by law, any objection, including any objection
based on forum non coveniens, to the bringing of any such proceeding in such
jurisdictions.
(j) Consents. The person signing this Agreement on behalf of each party
hereby represents and warrants that he has the necessary power, consent and
authority to execute and deliver this Agreement on behalf of that party.
(k) Further Assurances. In addition to the instruments and documents to
be made, executed and delivered pursuant to this Agreement, the parties hereto
agree to make, execute and deliver or cause to be made, executed and delivered,
to the requesting party such other instruments and to take such other actions as
the requesting party may reasonably require to carry out the terms of this
Agreement and the transactions contemplated hereby.
(l) Section Headings. The Section headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(m) Construction. Unless the context otherwise requires, when used
herein, the singular shall be deemed to include the plural, the plural shall be
deemed to include each of the singular, and pronouns of one or no gender shall
be deemed to include the equivalent pronoun of the other or no gender.
(n) Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement. This Agreement, once executed by a
party, may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement. A facsimile transmission of this signed Agreement
shall be legal and binding on all parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
COMPANY:
IMAGING DIAGNOSTIC SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
SUBSCRIBER:
CHARLTON AVENUE LLC
By: /s/ Xxxxx X. Xxxx
-----------------
Name: Navigator Management Ltd.
Title: Director
Signed by: Xxxxx X. Xxxx
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