EQUITY PURCHASE AGREEMENT BY AND BETWEEN AMERICAN SCIENTIFIC RESOURCES, INCORPORATED AND SOUTHRIDGE PARTNERS II, LP Dated February 3, 2011
BY
AND BETWEEN
AMERICAN
SCIENTIFIC RESOURCES, INCORPORATED
AND
SOUTHRIDGE
PARTNERS II, LP
Dated
February
3, 2011
THIS EQUITY PURCHASE AGREEMENT entered
into as of the 3rd day of February, 2011 (this "AGREEMENT"), by and between
SOUTHRIDGE PARTNERS II,
LP, Delaware limited partnership ("INVESTOR"), and AMERICAN SCIENTIFIC RESOURCES,
INCORPORATED, a Nevada corporation (the "COMPANY").
ARTICLE
I
Section
1.1 DEFINED TERMS as used in this Agreement,
the following terms shall have the following meanings specified or indicated
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined)
"AGREEMENT" shall have the meaning
specified in the preamble hereof.
"BLACKOUT NOTICE" shall mean a written
notice from the Company to the Investor with respect to the existence of a
Potential Blackout Event.
“BLACKOUT PERIOD" shall have the
meaning specified in Section 2.6
“BLACKOUT SHARES" shall have the
meaning specified in Section 2.6
"BY-LAWS" shall have the meaning
specified in Section 4.8.
"CERTIFICATE" shall have the meaning
specified in Section 4.8.
"CLAIM NOTICE" shall have the meaning
specified in Section 9.3(a).
"CLOSING" shall mean one of the
closings of a purchase and sale of shares of Common Stock pursuant to Section
2.3.
"CLOSING CERTIFICATE" shall mean the
closing certificate of the Company in the form of Exhibit C hereto.
"CLOSING DATE" shall mean, with respect
to a Closing, the sixth (6th) Trading Day following the Put Date related to such
Closing, or such earlier date as the Company and Investor shall agree, provided
all conditions to such Closing have been satisfied on or before such Trading
Day.
1
“CLOSING PRICE” shall mean the closing
bid price for the Company’s common stock on the Principal Market on a Trading
Day as reported by Bloomberg Finance L.P.
"COMMITMENT PERIOD" shall mean the
period commencing on the Effective Date, and ending on the earlier of (i) the
date on which Investor shall have purchased Put Shares pursuant to this
Agreement for an aggregate Purchase Price of the Maximum Commitment Amount, or
(ii) the date occurring twenty four (24) months from the date of commencement of
the Commitment Period.
"COMMON STOCK" shall mean the Company's
common stock, no par value per share, and any shares of any other class of
common stock whether now or hereafter authorized, having the right to
participate in the distribution of dividends (as and when declared) and assets
(upon liquidation of the Company).
"COMMON STOCK EQUIVALENTS" shall mean
any securities that are convertible into or exchangeable for Common Stock or any
options or other rights to subscribe for or purchase Common Stock or any such
convertible or exchangeable securities.
"COMPANY" shall have the meaning
specified in the preamble to this Agreement.
"CONDITION SATISFACTION DATE" shall
have the meaning specified in Section 7.2.
"DAMAGES" shall mean any loss, claim,
damage, liability, cost and expense (including, without limitation, reasonable
attorneys' fees and disbursements and costs and expenses of expert witnesses and
investigation).
"DISPUTE PERIOD" shall have the meaning
specified in Section 9.3(a).
“DOLLAR VOLUME” shall mean the product
of (a) the Closing Price multiplied by (b) the trading volume on the Principal
Market on a Trading Day.
"DTC" shall have the meaning specified
in Section 2.3.
"DWAC" shall have the meaning specified
in Section 2.3.
"EFFECTIVE DATE" shall mean the date on
which the SEC first declares effective a Registration Statement, or any
amendment thereof, registering the Registrable Securities as set forth in
Section 7.2(a).
"EXCHANGE ACT" shall mean the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder.
2
"FAST" shall have the meaning specified
in Section 2.3.
"FINRA" shall mean the Financial
Industry Regulatory Authority, Inc.
"INDEMNIFIED PARTY" shall have the
meaning specified in Section 9.3(a).
"INDEMNIFYING PARTY" shall have the
meaning specified in Section 9.3(a).
"INDEMNITY NOTICE" shall have the
meaning specified in Section 9.3(b).
"INVESTMENT AMOUNT" shall mean the
dollar amount to be invested by Investor to purchase Put Shares with respect to
any Put as notified by the Company to Investor in accordance with Section
2.2.
"INVESTOR" shall have the meaning
specified in the preamble to this Agreement.
"LEGEND" shall have the meaning
specified in Section 8.1.
"MARKET PRICE" shall mean the average
of the lowest two (2) daily Closing Prices during the Valuation
Period.
"MATERIAL ADVERSE EFFECT" shall mean
any effect on the business, operations, properties, or financial condition of
the Company that is material and adverse to the Company and/or any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to enter into and perform its obligations under
any of (a) this Agreement and (b) the Registration Rights
Agreement.
"MAXIMUM COMMITMENT AMOUNT" shall mean
Ten Million Dollars ($10,000,000).
“MAXIMUM PUT AMOUNT” shall mean the
lesser of (b) Five Hundred Thousand Dollars ($500,000), or (b) Two Hundred Fifty
(250%) percent of the average of the Dollar Volume for the twenty (20) Trading
Days immediately preceding the Put Date.
"NEW PRICE" shall have the meaning
specified in Section 2.6.
"OLD PRICE" shall have the meaning
specified in Section 2.6.
"PERSON" shall mean an individual, a
corporation, a partnership, an association, a trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
3
"POTENTIAL BLACKOUT EVENT" shall mean
any of the following: (a) the possession by the Company of material information
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 is required,, (b)
receipt by the Company of any request by the SEC or any other federal or state
governmental authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or related
prospectus; (c) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;
(d) 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; or (e) the happening of any event that, in the good
faith determination of the Board of Directors of the Company, makes any
statement made in such Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any amendment or
supplement in the Registration Statement, related prospectus or documents so
that, in the case of a Registration Statement, 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 not misleading, and
that in the case of the related prospectus, 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.
"PRINCIPAL MARKET" shall mean any of
the national exchanges (i.e. NYSE, AMEX, Nasdaq), the OTC Bulletin Board, OTC
Markets (or Pink Sheets), or other principal exchange which is at the time the
principal trading exchange or market for the Common Stock.
"PURCHASE PRICE" shall mean 92% of the
Market Price on such date on which the Purchase Price is calculated in
accordance with the terms and conditions of this Agreement.
"PUT" shall mean the right of the
Company to require the Investor to purchase shares of Common Stock, subject to
the terms and conditions of this Agreement.
"PUT DATE" shall mean any Trading Day
during the Commitment Period that a Put Notice is deemed delivered pursuant to
Section 2.2(b).
"PUT NOTICE" shall mean a written
notice, substantially in the form of Exhibit B hereto, to Investor setting forth
the Investment Amount with respect to which the Company intends to require
Investor to purchase shares of Common Stock pursuant to the terms of this
Agreement.
"PUT SHARES" shall mean all shares of
Common Stock issued or issuable pursuant to a Put that has been exercised or may
be exercised in accordance with the terms and conditions of this
Agreement.
4
"REGISTRABLE SECURITIES" shall mean the
(a) Put Shares, (b) the Blackout Shares, and (c) any securities issued or
issuable with respect to any of the foregoing by way of exchange, stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (i) a Registration Statement has been declared
effective by the SEC and such Registrable Securities have been disposed of
pursuant to a Registration Statement, (ii) such Registrable Securities may be or
have been sold under circumstances under which all of the applicable conditions
of Rule 144 are met, (iii) such time as such Registrable Securities have been
otherwise transferred to holders who may trade such shares without restriction
under the Securities Act or (iv) in the opinion of counsel to the Company, which
counsel shall be reasonably acceptable to Investor, such Registrable Securities
may be sold pursuant to Rule 144(b)(i) (or any similar provision then in effect)
under the Securities Act.
"REGISTRATION RIGHTS AGREEMENT" shall
mean the registration rights agreement in the form of Exhibit A
hereto.
"REGISTRATION STATEMENT" shall mean a
registration statement on such form promulgated by the SEC for which the Company
then qualifies and which counsel for the Company shall deem appropriate and
which form shall be available for the resale of the Registrable Securities to be
registered thereunder in accordance with the provisions of this Agreement and
the Registration Rights Agreement and in accordance with the intended method of
distribution of such securities, for the registration of the resale by Investor
of the Registrable Securities under the Securities Act.
"REGULATION D" shall mean Regulation D
promulgated under the Securities Act.
"REMAINING PUT SHARES" shall have the
meaning specified in Section 2.6.
"RULE 144" shall mean Rule 144 under
the Securities Act or any similar provision then in force under the Securities
Act.
"SEC" shall mean the Securities and
Exchange Commission.
"SECURITIES ACT" shall have the meaning
specified in the recitals of this Agreement.
"SEC DOCUMENTS" shall mean, as of a
particular date, all reports and other documents filed by the Company with the
SEC or pursuant to Section 13(a) or 15(d) of the Exchange Act.
5
“SHORT SALES” shall mean all “short
sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but
shall not be deemed to include the location and/or reservation of borrowable
shares of Common Stock).
"SUBSCRIPTION DATE" shall mean the date
on which this Agreement is executed and delivered by the Company and
Investor.
"THIRD PARTY CLAIM" shall have the
meaning specified in Section 9.3(a).
“TRADING DAY” shall mean a day on which
the Principal Market shall be open for business.
“TRANSACTION DOCUMENTS” shall mean this
Equity Purchase Agreement and the Registration Rights Agreement.
"TRANSFER AGENT" shall mean the
transfer agent for the Common Stock (and to any substitute or replacement
transfer agent for the Common Stock upon the Company's appointment of any such
substitute or replacement transfer agent).
"UNDERWRITER" shall mean any
underwriter participating in any disposition of the Registrable Securities on
behalf of Investor pursuant to a Registration Statement.
"VALUATION EVENT" shall mean an event
in which the Company at any time during a Valuation Period takes any of the
following actions:
(a) subdivides
or combines the Common Stock;
(b) pays
a dividend in shares of Common Stock or makes any other distribution of shares
of Common Stock, except for dividends paid with respect to any series of
preferred stock authorized by the Company, whether existing now or in the
future;
(c) issues
any options or other rights to subscribe for or purchase shares of Common Stock
other than pursuant to this Agreement and the price per share for which shares
of Common Stock may at any time thereafter be issuable pursuant to such options
or other rights shall be less than the Closing Price in effect immediately prior
to such issuance;
(d) issues
any securities convertible into or exchangeable for shares of Common Stock and
the consideration per share for which shares of Common Stock may at any time
thereafter be issuable pursuant to the terms of such convertible or exchangeable
securities shall be less than the Closing Price in effect immediately
prior to such issuance;
(e) issues
shares of Common Stock otherwise than as provided in the foregoing subsections
(a) through (d), at a price per share less, or for other consideration lower,
than the Closing Price in effect immediately prior to such issuance, or without
consideration; or
6
(f) makes
a distribution of its assets or evidences of indebtedness to the holders of
Common Stock as a dividend in liquidation or by way of return of capital or
other than as a dividend payable out of earnings or surplus legally available
for dividends under applicable law or any distribution to such holders made in
respect of the sale of all or substantially all of the Company's assets (other
than under the circumstances provided for in the foregoing subsections (a)
through (e).
Notwithstanding anything to the
contrary herein, a Valuation Event shall not include the issuance
of (a) shares of Common Stock or options to employees, officers or
directors of the Company pursuant to any stock or option plan duly adopted for
such purpose, by a majority of the non-employee members of the Board of
Directors or a majority of the members of a committee of non-employee directors
established for such purpose, (b) securities upon the exercise or exchange of or
conversion of any securities issued hereunder and/or other securities
exercisable or exchangeable for or convertible into shares of Common
Stock issued and outstanding on the date of this Agreement or issued
or issuable pursuant to agreements outstanding as of the date of this Agreement,
provided that such securities or agreements have not been amended since the date
of this Agreement to increase the number of such securities or to decrease the
exercise, exchange or conversion price of such securities, and (c) securities
issued pursuant to acquisitions or strategic transactions approved by a majority
of the disinterested directors of the Company.
"VALUATION PERIOD" shall mean the
period of five (5) Trading Days immediately following the date on which the
applicable Put Notice is deemed to be delivered and during which the Purchase
Price of the Common Stock is valued; provided, however, that if a Valuation
Event occurs during any Valuation Period, a new Valuation Period shall begin on
the Trading Day immediately after the occurrence of such Valuation Event and end
on the fifth (5th)
Trading Day thereafter.
ARTICLE
II
7
(b) DATE
OF DELIVERY OF PUT NOTICE. A Put Notice shall be deemed delivered on (i) the
Trading Day it is received by facsimile or otherwise by Investor if such notice
is received on or prior to 12:00 noon New York time, or (ii) the immediately
succeeding Trading Day if it is received by facsimile or otherwise after 12:00
noon New York time on a Trading Day or at anytime on a day which is not a
Trading Day.
8
Section
2.5
[INTENTIONALLY OMITTED]
(a) If
at any time or from time to time after the date of effectiveness of the
Registration Statement, the Company delivers a Blackout Notice to the Investor,
the Investor shall not offer or sell any Put Shares, or Blackout Shares (as
defined below), or engage in any other transaction involving or relating to such
shares, from the time of the Blackout Notice until Investor receives written
notice from the Company that such Potential Blackout Event either has been
disclosed to the public or no longer constitutes a Potential Blackout Event
(such period, a "Blackout Period").
(b) In
the event that, (i) within fifteen (15) Trading Days following any Closing Date,
the Company delivers a Blackout Notice to Investor, and (ii) the Closing Price
on the Trading Day immediately preceding the applicable Blackout Period ("OLD
PRICE") is greater than the Closing Price on the first Trading Day following
such Blackout Period that Investor may sell its Registrable Securities pursuant
to an effective Registration Statement ("NEW PRICE"), then the Company shall
issue to Investor the number of additional shares of Registrable Securities (the
"BLACKOUT SHARES") equal to the excess of (x) the product of the number of Put
Shares held by Investor immediately prior to the Blackout Period that were
issued on the most recent Closing Date (the "REMAINING PUT SHARES") multiplied
by the Old Price, divided by the New Price, over (y) the Remaining Put
Shares.
Section
2.7
[INTENTIONALLY OMITTED]
9
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF INVESTOR
Investor represents and warrants to the
Company that:
Section
3.2 NO LEGAL
ADVICE FROM THE COMPANY. The Investor acknowledges that it has had
the opportunity to review this Agreement and the transactions contemplated by
this Agreement with its own legal counsel and investment and tax
advisors. The Investor is relying solely on such counsel and advisors
and not on any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.
Section
3.3
SOPHISTICATED INVESTOR. Investor is a sophisticated investor (as
described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor (as
defined in Rule 501 of Regulation D), and Investor has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in the Registrable Securities. Investor acknowledges that
an investment in the Registrable Securities is speculative and involves a high
degree of risk.
Section
3.5 NOT AN
AFFILIATE. Investor is not an officer, director or "affiliate" (as that term is
defined in Rule 405 of the Securities Act) of the Company.
10
Section
3.8
DISCLOSURE; ACCESS TO INFORMATION. Investor had an
opportunity to review copies of the SEC Documents filed on behalf of the Company
and has had access to all publicly available information with respect to the
Company.
Section
3.9 MANNER OF
SALE. At no time was Investor presented with or solicited by or through any
leaflet, public promotional meeting, television advertisement or any other form
of general solicitation or advertising.
ARTICLE
IV
The Company represents and warrants to
Investor that, except as disclosed in the SEC Documents:
11
Except as otherwise disclosed in the
SEC Documents, there are no outstanding securities which are convertible into
shares of Common Stock, whether such conversion is currently exercisable or
exercisable only upon some future date or the occurrence of some event in the
future.
All of the outstanding shares of Common
Stock of the Company have been duly and validly authorized and issued and are
fully paid and non-assessable.
12
Section
4.7
[INTENTIONALLY OMITTED]
Section
4.8
[INTENTIONALLY OMITTED]
13
Section
4.10 NO MATERIAL ADVERSE
CHANGE. Since January 14, 2011 no event has occurred that would have a Material
Adverse Effect on the Company.
Section
4.11 [INTENTIONALLY
OMITTED]
Section
4.12 [INTENTIONALLY
OMITTED]
Section
4.13 [INTENTIONALLY
OMITTED]
Section
4.16 [INTENTIONALLY
OMITTED]
Section
4.17 [INTENTIONALLY
OMITTED]
14
ARTICLE
V
COVENANTS
OF INVESTOR
Section
5.1 COMPLIANCE
WITH LAW; TRADING IN SECURITIES. Investor's trading activities with respect to
shares of the Common Stock will be in compliance with all applicable state and
federal securities laws, rules and regulations and the rules and regulations of
FINRA and the Principal Market on which the Common Stock is listed or
quoted.
Section
5.2 SHORT
SALES AND CONFIDENTIALITY. Neither Investor nor any affiliate of the Investor
acting on its behalf or pursuant to any understanding with it will execute any
Short Sales during the period from the date hereof to the end of the Commitment
Period. For the purposes hereof, and in accordance with Regulation
SHO, the sale after delivery of a Put Notice of such number of shares of Common
Stock reasonably expected to be purchased under a Put Notice shall not be deemed
a Short Sale.
Other than to other Persons party to
this Agreement, Investor has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and
terms of this transaction).
ARTICLE
VI
15
Section
6.5 The
Company shall issue to its management and directors a series of preferred stock
with voting rights sufficient to grant such holders the ability to vote in favor
of an increase the Company’s authorized common stock and/or a reverse split of
the outstanding shares of common stock.
ARTICLE
VII
CONDITIONS
TO DELIVERY OF
PUT
NOTICES AND CONDITIONS TO CLOSING
Section
7.1 CONDITIONS
PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE AND SELL COMMON STOCK. The
obligation hereunder of the Company to issue and sell the Put Shares to Investor
incident to each Closing is subject to the satisfaction, at or before each such
Closing, of each of the conditions set forth below.
(a) ACCURACY
OF INVESTOR'S REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Investor shall be true and correct in all material respects as of the date of
this Agreement and as of the date of each such Closing as though made at each
such time.
(b) PERFORMANCE
BY INVESTOR. Investor shall have performed, satisfied and complied in all
respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by Investor at or prior to
such Closing.
(c) Principal Market
Regulation. The Company shall not issue any Put Shares or Blackout
Shares, if any, and the Investor shall not have the right to receive any Put
Shares or Blackout Shares, if the issuance of such shares would exceed the
aggregate number of shares of Common Stock which the Company may issue without
breaching the Company’s obligations under the rules or regulations of the
Principal Market if any (the “EXCHANGE CAP”), except that such limitation shall
not apply in the event that the Company obtains the approval of its stockholders
as required by the applicable rules of the Principal Market for issuances of
Common Stock in excess of such amount, which such approval the Company will use
its best efforts to obtain. Until such approval is obtained, Investor shall not
be issued under the Transaction Documents, shares of Common Stock in an amount
greater than the Exchange Cap.
16
Section
7.2 CONDITIONS
PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER A PUT NOTICE AND THE OBLIGATION
OF INVESTOR TO PURCHASE PUT SHARES. The right of the Company to deliver a Put
Notice and the obligation of Investor hereunder to acquire and pay for the Put
Shares incident to a Closing is subject to the satisfaction, on (i) the date of
delivery of such Put Notice and (ii) the applicable Closing Date (each a
"CONDITION SATISFACTION DATE"), of each of the following
conditions:
(a) EFFECTIVE
REGISTRATION STATEMENT. As set forth in the Registration Rights Agreement, a
Registration Statement, and any amendment or supplement thereto, shall have
previously become effective for the resale by Investor of the Registrable
Securities subject to such Put Notice, and such Registration Statement shall
remain effective on each Condition Satisfaction Date and (i) neither the Company
nor Investor shall have received notice that the SEC has issued or intends to
issue a stop order with respect to such Registration Statement or that the SEC
otherwise has suspended or withdrawn the effectiveness of such Registration
Statement, either temporarily or permanently, or intends or has threatened to do
so (unless the SEC's concerns have been addressed and Investor is reasonably
satisfied that the SEC no longer is considering or intends to take such action),
and (ii) no other suspension of the use or withdrawal of the effectiveness of
such Registration Statement or related prospectus shall exist.
(b) ACCURACY
OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company shall be true and correct in all material respects as
of each Condition Satisfaction Date as though made at each such time (except for
representations and warranties specifically made as of a particular date) with
respect to all periods, and as to all events and circumstances occurring or
existing to and including each Condition Satisfaction Date, except for any
conditions which have temporarily caused any representations or warranties
herein to be incorrect and which have been corrected with no continuing
impairment to the Company or Investor.
(c) PERFORMANCE
BY THE COMPANY. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by this
Agreement and the Registration Rights Agreement to be performed, satisfied or
complied with by the Company at or prior to each Condition Satisfaction
Date.
(d) NO
INJUNCTION. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or adopted by any court
or governmental authority of competent jurisdiction that prohibits or directly
and materially adversely affects any of the transactions contemplated by this
Agreement, and no proceeding shall have been commenced that may have the effect
of prohibiting or materially adversely affecting any of the transactions
contemplated by this Agreement.
17
(e) ADVERSE
CHANGES. Since the date of filing of the Company's most recent SEC Document, no
event that had or is reasonably likely to have a Material Adverse Effect has
occurred.
(f) NO
SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK. The trading of the Common
Stock shall not have been suspended by the SEC, the Principal Market or the
FINRA and the Common Stock shall have been approved for listing or quotation on
and shall not have been delisted from the Principal Market.
(g) [INTENTIONALLY
OMITTED]
(h) TEN
PERCENT LIMITATION. On each Closing Date, the number of Put Shares then to be
purchased by Investor shall not exceed the number of such shares that, when
aggregated with all other shares of Registrable Securities then owned by
Investor beneficially or deemed beneficially owned by Investor, would result in
Investor owning more than 9.99% of all of such Common Stock as would be
outstanding on such Closing Date, as determined in accordance with Section 16 of
the Exchange Act and the regulations promulgated thereunder. For purposes of
this Section, in the event that the amount of Common Stock outstanding as
determined in accordance with Section 16 of the Exchange Act and the regulations
promulgated thereunder is greater on a Closing Date than on the date upon which
the Put Notice associated with such Closing Date is given, the amount of Common
Stock outstanding on such Closing Date shall govern for purposes of determining
whether Investor, when aggregating all purchases of Common Stock made pursuant
to this Agreement and Blackout Shares, if any, would own more than 9.99% of the
Common Stock following such Closing Date.
(i) Principal Market
Regulation. The Company shall not issue any Put Shares or Blackout
Shares, if any, and the Investor shall not have the right to receive any Put
Shares or Blackout Shares, if the issuance of such shares would exceed the
Exchange Cap if any, except that such limitation shall not apply in the event
that the Company obtains the approval of its stockholders as required by the
applicable rules of the Principal Market for issuances of Common Stock in excess
of such amount, which such approval the Company will use its best efforts to
obtain. Until such approval is obtained, Investor shall not be issued under the
Transaction Documents, shares of Common Stock in an amount greater than the
Exchange Cap.
(j) NO
KNOWLEDGE. The Company shall have no knowledge of any event more likely than not
to have the effect of causing such Registration Statement to be suspended or
otherwise ineffective (which event is more likely than not to occur within the
fifteen (15) Trading Days following the Trading Day on which such Put Notice is
deemed delivered).
(k) SHAREHOLDER
VOTE. The issuance of shares of Common Stock with respect to the applicable
Closing, if any, shall not violate the shareholder approval requirements of the
Principal Market.
18
(l)
NO VALUATION EVENT. No Valuation Event shall have
occurred since the Put Date.
(m)
OTHER. On each Condition Satisfaction Date, Investor
shall have received a certificate in substantially the form and substance of
Exhibit C hereto, executed by an executive officer of the Company and to the
effect that all the conditions to such Closing shall have been satisfied as at
the date of each such certificate.
ARTICLE
VIII
THESE
SECURITIES HAVE NOT 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.
The Company warrants that it will give
its Transfer Agent no instructions inconsistent with the provisions hereof. It
is the intent and purpose of such instructions, as provided therein, to require
its Transfer Agent to issue to Investor certificates evidencing shares of Common
Stock incident to a Closing, free of the Legend; provided that (a) a
Registration Statement shall then be effective, (b) Investor confirms to the
Transfer Agent and the Company that it has sold or intends to sell such Common
Stock to a third party which is not an affiliate of Investor or the Company and
Investor agrees to redeliver the certificate representing such shares of Common
Stock to the Transfer Agent to add the Legend in the event the Common Stock is
not sold, and (c) Investor confirms to the transfer agent and the Company that
Investor has complied, or will comply with the prospectus delivery
requirement under the Securities Act.
Section
8.3
[INTENTIONALLY OMITTED]
19
ARTICLE
IX
The
addresses for such communications shall be:
If to the
Company:
American
Scientific Resources, Incorporated
0000
Xxxxxx Xxxx, Xxxx 000
Xxxxxx,
XX 00000
Tel: (000)
000-0000
Fax:
(000) 000-0000
Email: xxxxxx@xxxxxxx.xxx
With
copies (which shall not constitute notice) to:
Xxxxxxx
Law, PLLC
000 Xxxx
Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
Xxx Xxxx, 00000
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
00
Xxxxxxxx
00
Xxx Xxxx,
Xxx Xxxx 00000
If to
Investor:
Southridge
Partners II, LP
00 Xxxxx
Xxxxxx
Xxxxxxxxxx,
Xxxxxxxxxxx 00000
Tel:
000-000-0000
Fax:
000-000-0000
Email:
xxxx@xxxxxxxxxxxxx.xxx
Either
party hereto may from time to time change its address or facsimile number for
notices under this Section 9.1 by giving at least ten (10) days' prior written
notice of such changed address or facsimile number to the other party
hereto.
(a) In
the event any claim or demand in respect of which an Indemnified
Party might seek indemnity under Section 9.2 is asserted against or
sought to be collected from such Indemnified Party by a person other than a
party hereto or an affiliate thereof (a "THIRD PARTY CLAIM"), the Indemnified
Party shall deliver a written notification, enclosing a copy of all papers
served, if any, and specifying the nature of and basis for such Third Party
Claim and for the Indemnified Party's claim for indemnification that is being
asserted under any provision of Section 9.2 against an Indemnifying Party,
together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such Third Party Claim (a "CLAIM NOTICE")
with reasonable promptness to the Indemnifying Party. If the Indemnified Party
fails to provide the Claim Notice with reasonable promptness after the
Indemnified Party receives notice of such Third Party Claim, the Indemnifying
Party shall not be obligated to indemnify the Indemnified Party with respect to
such Third Party Claim to the extent that the Indemnifying Party's ability to
defend has been prejudiced by such failure of the Indemnified Party. The
Indemnifying Party shall notify the Indemnified Party as soon as practicable
within the period ending thirty (30) calendar days following receipt by the
Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined
below) (the "DISPUTE PERIOD") whether the Indemnifying Party disputes its
liability or the amount of its liability to the Indemnified Party under Section
9.2 and whether the Indemnifying Party desires, at its sole cost and expense, to
defend the Indemnified Party against such Third Party Claim.
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(i) If
the Indemnifying Party notifies the Indemnified Party within the Dispute Period
that the Indemnifying Party desires to defend the Indemnified Party with respect
to the Third Party Claim pursuant to this Section 9.3(a), then the Indemnifying
Party shall have the right to defend, with counsel reasonably satisfactory to
the Indemnified Party, at the sole cost and expense of the Indemnifying Party,
such Third Party Claim by all appropriate proceedings, which proceedings shall
be vigorously and diligently prosecuted by the Indemnifying Party to a final
conclusion or will be settled at the discretion of the Indemnifying Party (but
only with the consent of the Indemnified Party in the case of any settlement
that provides for any relief other than the payment of monetary damages or that
provides for the payment of monetary damages as to which the Indemnified Party
shall not be indemnified in full pursuant to Section 9.2). The Indemnifying
Party shall have full control of such defense and proceedings, including any
compromise or settlement thereof; provided, however, that the Indemnified Party
may, at the sole cost and expense of the Indemnified Party, at any time prior to
the Indemnifying Party's delivery of the notice referred to in the first
sentence of this clause (i), file any motion, answer or other pleadings or take
any other action that the Indemnified Party reasonably believes to be necessary
or appropriate to protect its interests; and provided further, that if requested
by the Indemnifying Party, the Indemnified Party will, at the sole cost and
expense of the Indemnifying Party, provide reasonable cooperation to the
Indemnifying Party in contesting any Third Party Claim that the Indemnifying
Party elects to contest. The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this clause (i), and except as provided in the
preceding sentence, the Indemnified Party shall bear its own costs and expenses
with respect to such participation. Notwithstanding the foregoing, the
Indemnified Party may takeover the control of the defense or settlement of a
Third Party Claim at any time if it irrevocably waives its right to indemnity
under Section 9.2 with respect to such Third Party Claim.
22
(ii) If
the Indemnifying Party fails to notify the Indemnified Party within the Dispute
Period that the Indemnifying Party desires to defend the Third Party Claim
pursuant to Section 9.3(a), or if the Indemnifying Party gives such notice but
fails to prosecute vigorously and diligently or settle the Third Party Claim, or
if the Indemnifying Party fails to give any notice whatsoever within the Dispute
Period, then the Indemnified Party shall have the right to defend, at the sole
cost and expense of the Indemnifying Party, the Third Party Claim by all
appropriate proceedings, which proceedings shall be prosecuted by the
Indemnified Party in a reasonable manner and in good faith or will be settled at
the discretion of the Indemnified Party(with the consent of the Indemnifying
Party, which consent will not be unreasonably withheld). The Indemnified Party
will have full control of such defense and proceedings, including any compromise
or settlement thereof; provided, however, that if requested by the Indemnified
Party, the Indemnifying Party will, at the sole cost and expense of the
Indemnifying Party, provide reasonable cooperation to the Indemnified Party and
its counsel in contesting any Third Party Claim which the Indemnified Party is
contesting. Notwithstanding the foregoing provisions of this clause (ii), if the
Indemnifying Party has notified the Indemnified Party within the Dispute Period
that the Indemnifying Party disputes its liability or the amount of its
liability hereunder to the Indemnified Party with respect to such Third Party
Claim and if such dispute is resolved in favor of the Indemnifying Party in the
manner provided in clause (iii) below, the Indemnifying Party will not be
required to bear the costs and expenses of the Indemnified Party's defense
pursuant to this clause (ii) or of the Indemnifying Party's participation
therein at the Indemnified Party's request, and the Indemnified Party shall
reimburse the Indemnifying Party in full for all reasonable costs and expenses
incurred by the Indemnifying Party in connection with such litigation. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this clause (ii), and
the Indemnifying Party shall bear its own costs and expenses with respect to
such participation.
(iii) If
the Indemnifying Party notifies the Indemnified Party that it does not dispute
its liability or the amount of its liability to the Indemnified Party with
respect to the Third Party Claim under Section 9.2 or fails to notify the
Indemnified Party within the Dispute Period whether the Indemnifying Party
disputes its liability or the amount of its liability to the Indemnified Party
with respect to such Third Party Claim, the amount of Damages specified in the
Claim Notice shall be conclusively deemed a liability of the Indemnifying Party
under Section 9.2 and the Indemnifying Party shall pay the amount of such
Damages to the Indemnified Party on demand. If the Indemnifying Party has timely
disputed its liability or the amount of its liability with respect to such
claim, the Indemnifying Party and the Indemnified Party shall proceed in good
faith to negotiate a resolution of such dispute; provided, however, that if the
dispute is not resolved within thirty (30) days after the Claim Notice, the
Indemnifying Party shall be entitled to institute such legal action as it deems
appropriate.
23
(b) In
the event any Indemnified Party should have a claim under Section 9.2 against
the Indemnifying Party that does not involve a Third Party Claim, the
Indemnified Party shall deliver a written notification of a claim for indemnity
under Section 9.2 specifying the nature of and basis for such claim, together
with the amount or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such claim (an "INDEMNITY NOTICE") with reasonable
promptness to the Indemnifying Party. The failure by any Indemnified Party to
give the Indemnity Notice shall not impair such party's rights hereunder except
to the extent that the Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim or the amount of the claim
described in such Indemnity Notice or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party disputes the claim or
the amount of the claim described in such Indemnity Notice, the amount of
Damages specified in the Indemnity Notice will be conclusively deemed a
liability of the Indemnifying Party under Section 9.2 and the Indemnifying Party
shall pay the amount of such Damages to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that if the dispute is not resolved within thirty (30) days
after the Claim Notice, the Indemnifying Party shall be entitled to institute
such legal action as it deems appropriate.
(c) The
indemnity provisions contained herein shall be in addition to (i) any cause of
action or similar rights of the Indemnified Party against the Indemnifying Party
or others, and (ii) any liabilities the Indemnifying Party may be subject
to.
ARTICLE
X
Section
10.1 GOVERNING LAW;
JURISDICTION. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York without regard to the principles of
conflicts of law. Each of the Company and Investor hereby submit to the
exclusive jurisdiction of the United States Federal and state courts located in
New York with respect to any dispute arising under this Agreement, the
agreements entered into in connection herewith or the transactions contemplated
hereby or thereby.
24
Section
10.8 [INTENTIONALLY
OMITTED]
25
[SIGNATURES
ON FOLLOWING PAGE]
26
[SIGNATURE
PAGE]
IN WITNESS WHEREOF, the
parties hereto have caused this Equity Purchase Agreement to be executed by the
undersigned, thereunto duly authorized, as of the date first set forth
above.
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SOUTHRIDGE
PARTNERS II, LP
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By: Southridge
Advisors LLC
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By:
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/s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx
Xxxxx
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Title:
Manager
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AMERICAN
SCIENTIFIC RESOURCES, INCORPORATED
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By:
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/s/ Xxxxxxxxxxx Xxxxxxx
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Name:
Xxxxxxxxxxx Tirorra
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Title:
CEO
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EXHIBITS
|
EXHIBIT
A
|
Registration
Rights Agreement
|
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EXHIBIT
B
|
Put
Notice
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EXHIBIT
C
|
Closing
Certificate
|
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EXHIBIT
D
|
Warrant
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