EXHIBIT 4.01
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of May 22, 1998, by and between Asymetrix Learning Systems, Inc., a
Washington corporation (the "Company"), Xxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx
and Xxxx Xxxxxxxx (collectively, the "Shareholders" and each individually, a
"Shareholder") who immediately prior to the Effective Time of the Merger (as
defined below) are all of the shareholders of Strategic Systems Associates,
Inc., an Illinois corporation ("SSA").
RECITALS
A. Each of the Shareholders, SSA, the Company and Asymetrix Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of the Company
("Merger Sub"), have entered into an Agreement and Plan of Reorganization dated
as of May 22, 1998 (the "Plan"), pursuant to which Merger Sub will merge with
and into SSA in a reverse triangular merger, with SSA to be the surviving
corporation of the merger (the "Merger").
B. As a condition precedent to the consummation of the Merger, Section 8.6
of the Plan provides that the Shareholders shall be granted certain registration
rights with respect to the shares of the Company's Common Stock that are issued
to the Shareholders in the Merger, subject to the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. REGISTRATION RIGHTS
1.1 Certain Definitions. For purposes of this Agreement:
(a) Registration. The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act of 1933, as amended
(the "Securities Act"), and the declaration or ordering of effectiveness of such
registration statement.
(b) Registrable Securities. The term "Registrable Securities" means:
(1) all the shares of Common Stock of the Company issued pursuant to the Plan;
and (2) any shares of Common Stock of the Company issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, all such shares of Common Stock described in clause (1) of
this subsection (b); excluding in all cases, however, (i) any Registrable
Securities sold by a person in a transaction in which rights under this Section
1 are not assigned in accordance with this Agreement, (ii) any Registrable
Securities sold to the public or sold pursuant
to Rule 144 promulgated under the Securities Act or (iii) any Registrable
Securities which may be sold in the public market in a three-month period
without registration under the Securities Act pursuant to Rule 144 under the
Securities Act.
(c) Registrable Securities Then Outstanding. The number of shares of
"Registrable Securities then outstanding" shall mean the number of shares of
Common Stock which are Registrable Securities and (1) are then issued and
outstanding or (2) are then issuable pursuant to the exercise or conversion of
then outstanding and then exercisable options, warrants or convertible
securities.
(d) Holder. For purposes of this Section 1 and Section 2 hereof, the
term "Holder" means any person owning of record Registrable Securities that have
not been sold to the public or pursuant to Rule 144 promulgated under the
Securities Act or any assignee of record of such Registrable Securities to whom
rights under this Section 1 have been duly assigned in accordance with this
Agreement.
(e) SEC. The term "SEC" or "Commission" means the U.S. Securities and
Exchange Commission.
1.2 Piggyback Registrations. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to filing any
registration statement under the Securities Act for purposes of effecting a
public offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to (i) the Company's
initial public offering; (ii) any employee benefit plan or (iii) any
acquisition, merger, consolidation or other corporate reorganization) and will
afford each such Holder an opportunity to include in such registration statement
all or any part of the Registrable Securities then held by such Holder. Each
Holder desiring to include in any such registration statement all or any part of
the Registrable Securities held by such Holder shall, within twenty (20) days
after receipt of the above-described notice from the Company, so notify the
Company in writing, and in such notice shall inform the Company of the number of
Registrable Securities such Holder wishes to include in such registration
statement. If a Holder decides not to include all of its Registrable Securities
in any registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein.
(a) Underwriting. If a registration statement under which the Company
gives notice under this Section 1.2 is for an underwritten offering, then the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder's Registrable Securities to be included in a
registration pursuant to this Section 1.2 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter or underwriter(s)
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selected for such underwriting. Notwithstanding any other provision of this
Agreement, if the managing underwriter determine(s) in good faith that marketing
factors require a limitation of the number of shares to be underwritten, then
the managing underwriter(s) may exclude shares (including Registrable
Securities) from the registration and the underwriting, and the number of shares
that may be included in the registration and the underwriting shall be
allocated, first, to the Company; second to holders of the Company's Series A
Preferred Stock and Series 1 Class B Stock (or Registrable Securities issuable
upon conversion of such Series A Preferred Stock and Series 1 Class B Stock);
third, to the holders of "registrable securities," as that term is defined in,
and pursuant to, that certain Acquisition Agreement, dated as of July 17, 1997,
by and among the Company, Xxxxx Computing, Inc., Asymocha Merger Corporation and
Xxxx Xxxxx; fourth to the holders of "registrable securities," as that term is
defined in, and pursuant to, that certain Registration Rights Agreement, dated
as of September 11, 1997, by and among the Company and certain shareholders of
Aimtech Corporation; fifth to the holders of "registrable securities," as that
term is defined in, and pursuant to, that certain Registration Rights Agreement,
dated as of September 30, 1997, by and among the Company and certain
stockholders of Xxxxx Interactive, Inc., TopShelf Multimedia, Inc. and Acorn
Associates Incorporated; sixth to the holders of "registrable securities," as
that term is defined in, and pursuant to, that certain Registration Rights
Agreement, dated as of December 22, 1997, by and among the Company and certain
shareholders of Communication Strategies, Incorporated; and seventh to the
Holders requesting inclusion of their Registrable Securities in such
registration statement pursuant to this Section 1.2 on a pro rata basis based on
the total number of Registrable Securities held by each such Holder. If any
Holder disapproves of the terms of any such underwriting, such Holder may elect
to withdraw therefrom by written notice to the Company and the underwriter,
delivered at least ten (10) business days prior to the effective date of the
registration statement. Any Registrable Securities excluded or withdrawn from
such underwriting shall be excluded and withdrawn from the registration. For any
Holder which is a partnership or corporation, the partners, retired partners and
shareholders of such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single "Holder", and any pro rata
reduction with respect to such "Holder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "Holder," as defined in this sentence.
(b) Expenses. All expenses incurred in connection with a registration
pursuant to this Section 1.2 (excluding underwriters' and brokers' discounts and
commissions and the fees and expenses of Holders' counsel), including, without
limitation all federal and "blue sky" registration, qualification and filing
fees, printers' and accounting fees, fees and disbursements of counsel for the
Company shall be borne by the Company.
1.3 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as commercially reasonable:
(a) Furnish to the Holders and to the underwriters, if any, such
number of copies of the registration statement, prospectus, and preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request
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in order to facilitate the disposition of the Registrable Securities owned by
them that are included in such registration.
(b) Use its commercially reasonable efforts to register and qualify
the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(c) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an 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 not misleading in the light of the circumstances then
existing.
(d) Use its reasonable best efforts either to (i) cause all the
Registrable Securities covered by any Registration Statement to be listed on a
national securities exchange, if the listing of such Registrable Securities is
then permitted under the rules of such exchange, or (ii) secure the quotation of
the Registrable Securities on the Nasdaq National Market.
1.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 1.2 that the
selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be reasonably required to timely effect
the registration of their Registrable Securities.
1.5 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.6 Indemnification. In the event any Registrable Securities are included
in a registration statement under Sections 1.2:
(a) By the Company. To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers, directors of
each Holder, any underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Securities Exchange Act of 1934, as amended
(the "1934 Act"), against any expenses, losses, claims, damages, or liabilities
(joint or several) (or actions in respect thereof) to which they may become
subject under the Securities Act, the l934 Act or other federal or state law,
insofar as such expenses, losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"):
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(i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, preliminary prospectus, final
prospectus, offering circular or other document contained therein or any
amendments or supplements thereto;
(ii) 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, or
(iii) any violation or alleged violation by the Company of the
Securities Act, the 1934 Act, any federal or state securities law or any rule or
regulation promulgated under the Securities Act, the 1934 Act or any federal or
state securities law in connection with the offering covered by such
registration statement;
and the Company will reimburse each such Holder, partner, officer, director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating, defending or
settling any such loss, claim, damage, liability or action; provided however,
that the indemnity agreement contained in this subsection 1.6(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be liable in
any such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Holder or its agent, partner,
officer, director, underwriter or controlling person of such Holder.
(b) By Selling Holders. To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors, each
of its officers who have signed the registration statement, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder within the meaning of the Securities Act or the
1934 Act, against any losses, claims, damages or liabilities (joint or several)
to which the Company or any such director, officer, controlling person,
underwriter or other such Holder, partner or director, officer or controlling
person of such other Holder may become subject under the Securities Act, the
1934 Act or other federal or state law, insofar as such losses, claims, damages
or liabilities (or actions in respect thereto) arise out of or are based upon
any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder or its agent expressly for use in connection with such
registration; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, underwriter or other Holder, partner, officer, director or controlling
person of such other Holder in connection with investigating, defending or
settling any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this subsection 1.6(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld; and provided further, that the total
amounts payable in indemnity by a Holder under this Section
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1.6(b) in respect of any Violation shall not exceed the net proceeds received by
such Holder in the registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party under this
Section 1.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.6, 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 the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential conflict of interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.6, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 1.6.
(d) Defect Eliminated in Final Prospectus. The foregoing indemnity
agreements of the Company and Holders are subject to the condition that, insofar
as they relate to any Violation made in a preliminary prospectus but which
Violation is eliminated or remedied in the amended prospectus on file with the
SEC at the time the registration statement in question becomes effective or the
amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
Prospectus), such indemnity agreement shall not inure to the benefit of any
person if a copy of the Final Prospectus was furnished to the indemnified party
and was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Securities Act.
(e) Contribution. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any Holder exercising rights under this Agreement, or any controlling
person of any such Holder, makes a claim for indemnification pursuant to this
Section 1.6 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 1.6 provides
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided under this Section
1.6; then, and in each such case, the Company and such Holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
that resulted in such expense, loss, claim, damage or liability in such
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proportion as is appropriate to reflect the relative fault of each such party in
connection with such statements or omissions as well as any other relevant
considerations; provided, however, that, in any such case, (A) the total amounts
payable in contribution by any Holder under this Section 1.6(e) shall not exceed
the net proceeds received by such Holder in the registered offering out of which
such responsibility arises; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
(f) Survival. The obligations of the Company and Holders under this
Section 1.6 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
1.7 "Market Stand-Off" Agreement. Each Holder hereby agrees that it shall
not, to the extent requested by the Company or an underwriter of securities of
the Company, sell or otherwise transfer or dispose of any Registrable Securities
or any shares of capital stock of the Company then owned by such Holder (other
than to donees or partners of the Holder who agree to be similarly bound) for up
to one hundred eighty (180) days following the effective date of any
registration statement (other than a registration statement relating to any
employee benefit plan or to any acquisition, merger, consolidation or other
corporate reorganization) of the Company filed under the Securities Act (whether
filed pursuant to the provisions of this Agreement or otherwise); provided,
however, that:
(a) such agreement shall not apply to shares of capital stock of the
Company sold pursuant to such registration statement;
(b) all executive officers and directors of the Company then holding
Common Stock of the Company enter into a similar agreement, and any other
stockholder of the Company owning at least as many shares of the Company's
Common Stock as such Holder is also requested by the Company or the underwriter
to enter into a similar agreement; and
(c) in an offering other than the Company's initial public offering,
such agreement shall apply only for a period of 90 days from the effective date
of the registration statement filed under the Securities Act with respect
thereto.
In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the shares
subject to this Section and to impose stop transfer instructions with respect to
the shares of stock of each Holder (and the shares or securities of every other
person subject to the foregoing restriction) until the end of such period. The
Holders agree that they will, if so requested by the Company, execute and
deliver to NationsBank Xxxxxxxxxx Securities a market stand-off agreement in the
form attached as Exhibit A.
1.8 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to:
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(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date of the first registration under the Securities Act filed by
the Company for an offering of its securities to the general public;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934 Act (at
any time after it has become subject to such reporting requirements); and
(c) So long as a Holder owns any Registrable Securities, to furnish to
the Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 (at any time after
90 days after the effective date of the first registration statement filed by
the Company for an offering of its securities to the general public), of the
Securities Act and the 1934 Act (at any time after it has become subject to the
reporting requirements of the 1934 Act), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration (at any time after the Company has become subject to the
reporting requirements of the 1934 Act).
2. Assignment
Notwithstanding anything herein to any the contrary, the registration
rights of a Holder under Section 1 hereof may be assigned by a Holder only to a
party who acquires all of the shares of Registrable Securities of such Holder;
provided, however that no party may be assigned any of the foregoing rights
unless the Company is given written notice by the assigning party at the time of
such assignment stating the name and address of the assignee and identifying the
securities of the Company as to which the rights in question are being assigned;
and provided further that any such assignee shall receive such assigned rights
subject to all the terms and conditions of this Agreement, including without
limitation the provisions of this Section 2.
3. GENERAL PROVISIONS
3.1 Amendment of Rights. 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 Holders of a majority of all Registrable Securities
then outstanding. Any amendment or waiver effected in accordance with this
Section 3.1 shall be binding upon each Holder, each permitted successor or
assignee of such Holder and the Company
3.2 Governing Law. The internal laws of the State of Washington
(irrespective of its conflict of law principles) will govern the validity of
this Agreement, the construction of its terms, and the interpretation and
enforcement of the rights and duties of the parties hereto.
3.3 Severability. If any provision of this Agreement, or the application
thereof, will for any reason and to any extent be invalid or unenforceable, the
remainder of this Agreement
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and application of such provision to other persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto. The
parties further agree to replace such void or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of the void or
unenforceable provision.
3.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures of
all parties reflected hereon as signatories. Facsimile copies of such
counterparts are acceptable.
3.5 Notices. Any notice or other communication required or permitted
to be given under this Agreement will be in writing, will be delivered
personally, by registered or certified mail, postage prepaid, by confirmed
facsimile or by nationally recognized courier service, and will be deemed given
upon delivery, if delivered personally, or five days after deposit in the mails,
if mailed, or upon receipt if delivered by confirmed facsimile or nationally
recognized courier service to the following addresses:
(i) If to Asymetrix:
Asymetrix Learning Systems, Inc.
000 000xx Xxxxxx XX, Xxxxx 000
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
With a copy to:
Xxxx X. Xxxxxxx, Esq.
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
(ii) If to Shareholders:
To the addresses set forth on Exhibit A hereto
or to such other address as a party may have furnished to the other parties in
writing pursuant to this Section 3.5.
3.6 Termination. The Company will have no obligations pursuant to
Section 1.2 with respect to any Holder if, (i) in the opinion of counsel to the
Company, all Registrable Securities held by such Holder may be sold in a three-
month period without registration under the Securities Act pursuant to Rule 144
promulgated under the Securities Act or otherwise; or (ii) if all Registrable
Securities held by such Holder have been registered and sold to the public or
sold
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pursuant to Rule 144 promulgated under the Securities Act and/or have been
transferred or sold in a transaction in which registration rights hereunder have
not been assigned in accordance with this Agreement.
3.7 Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder, partner or any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof will be personal solely between the parties
to this Agreement.
3.8 Entire Agreement. This Agreement and the exhibits hereto
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties. The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent with any
of the terms hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date and year first above written.
ASYMETRIX LEARNING SYSTEMS, INC. THE SHAREHOLDERS
By: /s/ Xxxx X. Xxxxxxx
----------------------------- ------------------------------------
Xxxx X. Xxxxxxx
Print Name: /s/ Xxxxxxx X. Xxxxxxx
--------------------- ------------------------------------
Xxxxxxx X. Xxxxxxx
Title: /s/ Xxxx Xxxxxxxx
-------------------------- ------------------------------------
Xxxx Xxxxxxxx
[SIGNATURE PAGE FOR REGISTRATION RIGHTS AGREEMENT]
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