EXHIBIT A TO PRIVATE EQUITY CREDIT AGREEMENT REGISTRATION RIGHTS AGREEMENT
Exhibit 10.107
EXHIBIT
A TO PRIVATE EQUITY CREDIT AGREEMENT
This
Registration Rights Agreement ("Agreement"), dated as of January 7, 2010,
is made by and between IMAGING DIAGNOSTIC SYSTEMS, INC., a Florida corporation
("Company"), and SOUTHRIDGE PARTNERS II LP, a Delaware limited partnership (the
"Investor").
RECITALS
WHEREAS,
upon the terms and subject to the conditions of the Amended Private Equity
Credit Agreement of even date ("Purchase Agreement"), between the Investor and
the Company, the Company has agreed to issue and sell to the Investor 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 Investor 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 Investor 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) the 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
(ii)
Board of
Directors of the Company that the Registration Statement would be materially
misleading absent the inclusion of such information.
(iii) "Subscription
Date" shall have the same meaning as set forth in the Purchase
Agreement.
(iv) "Investor",
has the meaning set forth in the preamble to this Agreement.
(v) "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").
(vi) "Registrable
Securities" shall have the same meaning as set forth in the Purchase
Agreement.
(vii) "Registration
Statement" shall have the same meaning as set forth in the Purchase
Agreement.
(b) Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Purchase Agreement.
2. 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 sixty (60) days of the Subscription
Date, a Registration Statement with respect to not less than 100,000,000 of
Registrable Securities, 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 eighty (180) 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 Investor may
sell all Registrable Securities under Rule 144 without volume limitations, or
(iii) the date the Investor 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;
2
(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 Investor 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.
(d) Notify
Investor and Investor’s legal counsel identified to the Company ((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 Investor’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 Investor’s Counsel with copies of all intended written
responses to the comments
3
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 Investor shall have the
opportunity to comment thereon.
(e) Furnish
to Investor, (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 Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by the
Investor;
(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 Investor 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 2(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 Investor
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 Investor as the Investor 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.
4
(h) As
promptly as practicable after becoming aware of such event, notify the Investor
(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.
(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
Investor 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:
5
(k) Provide
a transfer agent for the Registrable Securities not later than the Subscription
Date of the Registration Statement;
(l) Cooperate
with the Investor 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
Investor may reasonably request and registration in such names as the Investor
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 Investor) an appropriate instruction and opinion of such counsel, if so
required by the Company’s transfer agent; and
(m) Take
all other reasonable actions necessary to expedite and facilitate distribution
to the Investor of the Registrable Securities pursuant to the Registration
Statement.
3. Obligations of the
Investor. In connection with the registration of the
Registrable Securities, the Investor 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 Investor that the Investor 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
Investor by such Investor’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
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2(g) or 2(h) above, the
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until the Investor receives the copies of the supplemented or amended prospectus
contemplated by Section 2(g) or 2(h) and, if so directed by the Company, the
Investor 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
Investor’s possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
6
4. Expenses of
Registration.
(a) All
reasonable expenses incurred in connection with Registrations, filings or
qualifications pursuant to Section 2, 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 Company.
(b) Except
as otherwise provided for in Schedule 4(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 4(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 4, and
without limiting the generality of the foregoing, without 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.
5. 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
Investor, the directors, if any, of such Investor, the officers, if any, of such
Investor, each person, if any, who controls the Investor 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
7
reimburse
the Investor, 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 5(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 2(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 supplemented, if
such prospectus was timely made available by the Company pursuant to Section
2(b) hereof; (iii) be available to the extent such Claim is based on a failure
of the Investor 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 Investor 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
Investor, 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 5 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 5, 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 Investor selected by the Investor. 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 5, except to
the extent that the indemnifying party is prejudiced in its ability to defend
such action. The
8
indemnification
required by this Section 5 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.
6. 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 5 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
5; (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 shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable
Securities.
7. 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
9
(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 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.
8. 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,
10
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 Investors 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 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 Investor, 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.
(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
Investor. Any amendment or waiver affected in accordance with this
Section 8 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 Investor, 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 8(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.
11
(i) Governing Law. This
Agreement shall be governed by the interpreted in accordance with the laws of
the State of Florida 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 Florida in connection
with any dispute arising under this Agreement and hereby waives, to 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]
12
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
|
INVESTOR:
SOUTHRIDGE
PARTNERS II LP
By: /s/
Xxxxxxx Xxxxx
Name:
Xxxxxxx Xxxxx
Title:
Manager of General Partner
13