LIMITED STANDSTILL AGREEMENT
Exhibit
10.4
This
AGREEMENT (the “Agreement”) is made as of the 12th
day of
September, 2007, by the signatories hereto (each, a “Holder”), in connection
with his ownership of shares of VirtualScopics, Inc., a Delaware corporation
(the “Company”).
NOW,
THEREFORE, for good and valuable consideration, the sufficiency and receipt
of
which consideration are hereby acknowledged, Holder agrees as
follows:
1. Background.
a.
Holder
is
the beneficial owner of the amount of shares of the Common Stock, par value
$0.001, of the Company (“Common Stock”) designated on the signature page
hereto.
x. Xxxxxx
acknowledges that the Company has entered into or will enter into at or about
the date hereof Securities Purchase Agreements (the “Securities Purchase
Agreements”), dated on or about September 12, 2007, with subscribers (the
“Subscribers”) to up to $5,000,000 of the Company’s Series B Convertible
Preferred Stock (the “Preferred Stock”) and accompanying Warrants (the
“Offering”). Holder understands that, as a condition to proceeding with the
Offering, the Subscribers have required, and the Company has agreed to obtain
on
behalf of the Subscribers an agreement from the Holder to refrain from selling
any securities of the Company from the date of the Securities Purchase Agreement
until the earlier to occur of (i) the date of termination as an employee of
the
Company, if applicable, and (ii) two years after the date hereof (the
“Restriction Period”), except as described below.
2. Share
Restriction.
a. Holder
hereby agrees that during the Restriction Period, the Holder will not sell
or
otherwise dispose of any shares of Common Stock or any options, warrants or
other rights to purchase shares of Common Stock or any other security of the
Company which Holder owns or has a right to acquire as of the date hereof,
other
than in connection with an offer made to all shareholders of the Company in
connection with merger, consolidation or similar transaction involving the
Company. Holder further agrees that the Company is authorized to and the Company
agrees to place “stop orders” on its books to prevent any transfer of shares of
Common Stock or other securities of the Company held by Holder in violation
of
this Agreement. The Company agrees not to allow to occur any transaction
inconsistent with this Agreement.
b. Any
subsequent issuance to and/or acquisition by Holder of Common Stock or options
or instruments convertible into Common Stock will be subject to the provisions
of this Agreement.
c. The
foregoing restrictions notwithstanding, the Insider may sell up to the number
of
shares of Common Stock (the “Insider Stock”) beneficially owned by Insider on
the date hereof or hereafter acquired at
a price
of not less than the lower of Initial Conversion Price of the Preferred Stock,
or the Base Conversion Price in effect at the date of any sale, each as defined
in the Certificate of Designation of Series B Preferred Stock of the Company,
provided that such sales specified in this item (c) shall be subject
the 144-Like Volume Limitations, as that term is defined below, and provided
further that such
sales specified in this item (c) may
not
exceed one-third (1/3) of the 144-Like Volume Restrictions in any thirty (30)
day period during the Restriction Period.
For
purposes hereof,
“144-Like
Volume Limitations” shall mean that, during any 90 day period after the date
hereof throughout
the Restriction Period,
the
Holder may not sell or transfer a number of shares of Common Stock that exceeds
the greater of: (1) 1% of the Company’s total outstanding shares, determined as
of the first business day of such 90 day period, or, (2) the average reported
weekly volume in the Company’s Common Stock for the four weeks immediately
preceding the first business day of the Sales Period.
3. Miscellaneous.
a. At
any
time, and from time to time, after the signing of this Agreement Holder will
execute such additional instruments and take such action as may be reasonably
requested by the Subscribers to carry out the intent and purposes of this
Agreement.
b. This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York without regard to principles of conflicts of laws. Any action
brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of
New
York or in the federal courts located in the state of New York. The parties
to
this Agreement hereby irrevocably waive any objection to jurisdiction and venue
of any action instituted hereunder and shall not assert any defense based on
lack of jurisdiction or venue or based upon forum
non conveniens.
The
parties executing this Agreement and other agreements referred to herein or
delivered in connection herewith agree to submit to the in personam jurisdiction
of such courts and hereby irrevocably waive trial by jury.
The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid
or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any
agreement.
c. The
restrictions on transfer described in this Agreement are in addition to and
cumulative with any other restrictions on transfer otherwise agreed to by the
Holder or to which the Holder is subject to by applicable law.
d. This
Agreement shall be binding upon Holder, its legal representatives, successors
and assigns.
e. This
Agreement may be signed and delivered by facsimile and such facsimile signed
and
delivered shall be enforceable.
f. The
Company agrees not to take any action or allow any act to be taken which would
be inconsistent with this Agreement.
IN
WITNESS WHEREOF, and intending to be legally bound hereby, Holder has executed
this Agreement as of the day and year first above written.
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HOLDER:
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/s/
Xxxxxxx Xxxxxx
_______________________________
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(Signature
of Holder)
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Xxxxxxx
Xxxxxx
_______________________________
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(Print
Name of Holder)
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Number
of Shares of Common Stock
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Beneficially
Owned and as more fully
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described
on an attachment hereto if
not
in the form of shares of Common Stock
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COMPANY:
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By: /s/ Xxxxx Xxxxxxxxx
Print Name: Xxxxx Xxxxxxxxx Title:
Chief
Financial Officer
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ADDRESS:
000
Xxxxxx Xxxx
Xxxxxxxxx,
XX 00000
Phone:
000-000-0000
Fax:
000-000-0000
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