EXHIBIT 10.2
X-CHANGE CORPORATION
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
___________________ ___, 2007, is among X-CHANGE CORPORATION, a Nevada
corporation (the "COMPANY"), and ________________________ each of the purchasers
of the Company's common stock (the "COMMON STOCK") and warrants to purchase
shares of Common Stock (the "WARRANTS") listed on EXHIBIT A hereto (the
"PURCHASER").
R E C I T A L S:
A. WHEREAS, the Purchasers are acquiring or have acquired the shares of
Common Stock listed on EXHIBIT A (the "SHARES") and the Warrants listed on
EXHIBIT A pursuant to a private placement offering by the Company;
B. WHEREAS, the Company desires to grant to the Purchasers certain
registration rights relating to the Shares and the shares of Common Stock
issuable upon exercise of the Warrants (the "WARRANT SHARES") and the Purchasers
desire to obtain such registration rights, subject to the terms and conditions
set forth herein;
C. NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties set forth in this Agreement, the parties hereto,
intending to be legally bound, hereby agree as follows:
A G R E E M E N T:
In consideration of the foregoing promises and the mutual covenants
contained herein, the sufficiency of which is hereby acknowledged, the parties
hereby agree as follows:
SECTION 1. REGISTRATION OF THE REGISTRABLE SECURITIES; COMPLIANCE WITH THE
SECURITIES ACT.
1.1 REGISTRATION PROCEDURES. The Company is obligated to do the
following:
(a) The Company shall prepare and, within 120 days of the date
hereof, file with the Securities and Exchange Commission (the "SEC") a
registration statement on the appropriate form (the "REGISTRATION STATEMENT") in
order to register with the SEC the resale by the Holders (as defined below),
from time to time, of the Registrable Securities (as defined below). The Company
shall use commercially reasonable efforts to cause such Registration Statement
to be declared effective as soon as is reasonably possible following filing with
the SEC. The Company shall promptly notify the Holders of the effectiveness of
the Registration Statement. The holders of Registrable Securities (including a
Purchaser's permitted transferees hereunder) are referred to herein as the
"HOLDERS." "REGISTRABLE SECURITIES" shall mean (i) the Shares and the Warrant
Shares and (ii) Common Stock issued as (or issuable upon the conversion of
exercise of any warrant, right or other security that is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of
the Shares or the Warrant Shares; provided, however, such Shares, Warrant Shares
and Common Stock shall cease to be considered Registrable Securities hereunder
on the earlier of such date as they sold pursuant to the Registration Statement
or are eligible to be sold pursuant to Rule 144(k) promulgated pursuant to the
Securities Act of 1933, as amended (the "SECURITIES ACT").
(b) The Company agrees to use commercially reasonable efforts
to keep such Registration Statement effective until the earliest to occur of the
following:
(i) The date that all Registrable Securities have
been sold pursuant to the Registration Statement;
(ii) Six months after all the Warrants are exercised
or deemed exercised (including a forced net exercise pursuant to Section 1(b)
thereof by the Company) pursuant to any provision included therein;
(iii) The date all Shares and Warrant Shares have
ceased to be considered Registrable Securities within the definition thereof;
PROVIDED, HOWEVER, that at any time, upon written notice to the Purchasers and
for a period not to exceed fifteen (15) calendar days thereafter (the
"SUSPENSION PERIOD"), the Company may delay the filing or effectiveness of any
Registration Statement or suspend the use or effectiveness of any Registration
Statement (and the Holders hereby agree not to offer or sell any Registrable
Securities pursuant to such Registration Statement during the Suspension Period)
if the Company reasonably believes that the Company may, in the absence of such
delay or suspension hereunder, be required under state or federal securities
laws to disclose any corporate development the disclosure of which could
reasonably be expected to have an adverse effect upon the Company, its
stockholders, a potentially significant transaction or event involving the
Company, or any negotiations, discussions, or proposals directly relating
thereto. The Company may extend the Suspension Period for an additional
consecutive fifteen (15) calendar days upon written notice to the Holders. The
Company agrees to use its commercially reasonable efforts to ensure that the
Suspension Period is kept to a minimum number of days. If so directed by the
Company, each Holder shall use its best efforts to deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus relating to such Registrable Securities
current at the time of receipt of such notice.
(c) The Company shall furnish to the Holders such number of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) The Company shall use its best efforts to register and
qualify the securities covered by such Registration Statement under such other
securities or Blue Sky laws of such domestic jurisdictions as shall be
reasonably requested by a Holder; 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 domestic jurisdictions, unless the Company is already subject to service in
such jurisdiction and except as required by the Securities Act.
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(e) The Company shall notify each Holder whose Registrable
Securities are 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. The Company shall use reasonable efforts to
promptly amend or supplement such prospectus in order to cause such prospectus
not to include 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 not misleading in the light of the circumstances then existing. During
any such period, the Holders shall not dispose of their Registrable Securities
pursuant to the Registration Statement.
1.2 TRANSFER OF SECURITIES. Each holder of the Shares and each Holder,
severally and not jointly, agrees that it will not effect any disposition of the
Registrable Securities or the Warrants that would constitute a sale within the
meaning of the Securities Act, unless (a) pursuant to a registration statement
then in effect covering such disposition, if such disposition is made in
accordance with such registration statement; or (b) such Holder shall have
notified the Company of the proposed disposition and shall have furnished the
Company with a reasonably detailed statement of the circumstances surrounding
the proposed disposition, and if reasonably requested by the Company, such
Holder shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, or other evidence, reasonably satisfactory to the
Company, that such disposition will not require registration of such Registrable
Securities under the Securities Act.
1.3 TRANSFER OF REGISTRATION RIGHTS. Any Holder may transfer its rights
hereunder if:
(a) such transfer is made in connection with, and to the
extent of, a transfer of Registrable Securities;
(b) the Company is given written notice prior to said transfer
or assignment, stating the name and address of the transferee or assignee and
identifying the Registrable Securities that are intended to be transferred or
assigned;
(c) the transferee or assignee of such rights delivers to the
Company, in a form reasonably acceptable to the Company, an agreement evidencing
the assumption of all of the rights and obligations of such Holder under this
Agreement; and
(d) such transferee or assignee is:
(i) a partner, retired partner, member, retired
member or affiliate of the
Holder; or
(ii) an Immediate Family Member of such Holder.
"IMMEDIATE FAMILY MEMBER" means a spouse and lineal antecedents and descendants,
including by marriage or adoption, and trusts or family partnerships or limited
liability companies controlled by any of the foregoing and exclusively for the
benefit of any of the foregoing.
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1.4 LEGENDS. Each certificate representing the Shares and the Warrants
shall (unless otherwise permitted by the provisions of the Agreement) be stamped
or otherwise imprinted with a standard legend regarding restrictions under
applicable securities laws.
1.5 EXPENSES OF REGISTRATION. Except as specifically provided herein,
all expenses incurred by the Company in complying with SECTION 1 hereof,
including, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, fees and
the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company) shall be borne by the Company.
All underwriting discounts and brokerage/selling commissions applicable to a
sale incurred in connection with any registrations hereunder shall be borne by
the holders of the securities so registered PRO RATA on the basis of the number
of shares registered for resale.
1.6 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this SECTION 1.
(a) The Company will indemnify and hold harmless each Holder,
the partners, officers and 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
Exchange Act, against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state law, insofar as such 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"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus 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 Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
state securities law in connection with the offering covered by such
registration statement; and the Company will pay as incurred to each such
Holder, partner, officer, director, underwriter or controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that the indemnity agreement contained in this Section 1.6
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 specifically
for use in connection with such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.
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(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which registration, qualifications
or compliance is being effected, indemnify and hold harmless the Company, each
of its directors, its officers and 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,
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, or partner, director, officer or controlling person of such
other Holder may become subject under the Securities Act, the Exchange 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 specifically for use in connection with such
registration; and each such Holder will pay as incurred any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other person registering shares under such
registration, or partner, officer, director or controlling person of such other
person registering shares under such registration in connection with
investigating or defending any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that the indemnity agreement contained in this Section 1.6
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 such
Holder, which consent shall not be unreasonably withheld; PROVIDED FURTHER, that
in no event shall any indemnity under this Section 1.6 exceed the net proceeds
from sale of Registrable Securities pursuant to the Registration Statement
received by such Holder (i.e., gross proceeds less discounts and commissions).
(c) 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 reasonable and actual 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 differing 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 materially
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) If the indemnification provided for in this Section 1.6 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
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amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability 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 Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; PROVIDED, that in no event shall any contribution by a
Holder hereunder exceed the net proceeds from sale of Registrable Securities
pursuant to the Registration Statement received by such Holder (i.e., gross
proceeds less discounts and commissions).
(e) The obligations of the Company and the Holders under this
Section 1.6 shall survive completion of any offering of Registrable Securities
in a registration statement and the termination of this Agreement. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
1.7 AGREEMENT TO FURNISH INFORMATION. In connection with a registration
in which a Holder is participating, such Holder agrees to execute and deliver
such other agreements as may be reasonably requested by the Company.
Furthermore, each Each Holder shall provide the Company such information in
writing as is reasonably requested to enable the Company and its counsel to
ascertain whether or not the Holder is eligible to sell the Registrable
Securities pursuant to Rule 144 of the Securities Act.
SECTION 2. PROHIBITION ON USE OF INSIDER INFORMATION. Each Purchaser and Holder
understands that federal and state securities laws prohibit trading in the
Company's securities while such Purchaser or Holder is in the possession of
"material nonpublic information" concerning the Company and/or its affiliates.
Each Purchaser represents that it has been advised of such laws and the
consequences of breaking such laws. Each Holder covenants not to enter into any
transactions that would violate applicable securities laws.
SECTION 3. NOTICES. All communications hereunder will be in writing and, (a) if
sent to a Purchaser will be mailed, delivered or faxed to the address on EXHIBIT
A to this Agreement and (b) if sent to the Company, will be mailed, delivered or
faxed and confirmed to it at 000 Xxxxxxx Xxxxxxx, Xxxxx, XX 00000, fax number
(000) 000-0000, Attention: Xxxxxxx X. Xxxxxxx, Chief Executive Officer, with a
copy to Xxxxxx and Xxxx LLP, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000 fax
number (000) 000-0000, Attention: Xxxxxxxx X. Xxxxxx.
SECTION 4. SUCCESSORS; CHANGE OF CONTROL TERMINATION. Subject to Section 1.3,
this Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors and no other person will have any right
or obligation hereunder. All obligations of the Company under Section 1
regarding the registration of the offer and sale of the Registrable Securities
shall terminate immediately before consummation of a Change of Control
Transaction. A "CHANGE OF CONTROL TRANSACTION" will be deemed to have occurred
upon the earliest to occur of the following:
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4.1 a liquidation, dissolution or winding up of the Company;
4.2 the Company's sale, conveyance, or other disposition of all or
substantially all of its assets or business, or exclusive license of all or
substantially all of the Company's intellectual property;
4.3 a reorganization, or the merger with or into or consolidation with
any other entity, unless the stockholders of the Company immediately before such
transaction continue to hold (by virtue of capital stock received in such
transaction or by virtue of capital stock of the Company that remains
outstanding following such transaction) at least 50% of the voting capital stock
(on an as converted to Common Stock basis) of the surviving corporation or
entity or its direct or indirect parent entity immediately following such
transaction; and
4.4 any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) becomes the "beneficial owner"
(as defined in Rule 13d-3 under said Act), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the total voting
power represented by the Company's then outstanding voting securities.
SECTION 5. COUNTERPARTS; FACSIMILE EXECUTION. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same Agreement. The
parties may execute this agreement by facsimile or .pdf, and will, at the
request of the other party, deliver original signature pages.
SECTION 6. APPLICABLE LAW AND VENUE. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas, without regard to
principles of conflicts of laws. Any dispute under this Agreement that is not
settled by mutual consent shall be finally adjudicated by any federal or state
court sitting in Dallas County or Collin County, Texas, and each party consents
to the exclusive jurisdiction of such courts (or any appellate court therefrom)
over any such dispute. Each party further consents to personal jurisdiction in
the courts mentioned in the prior sentence.
SECTION 7. AMENDMENTS AND WAIVERS. Except as expressly provided herein, neither
this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument referencing this Agreement and
signed by the Company and the holders of a majority of the Registrable
Securities. Any such amendment, waiver, discharge or termination effected in
accordance with this paragraph shall be binding upon each Holder and each future
holder of all such securities of Holder.
SECTION 8. ADDITIONAL PURCHASERS. Notwithstanding anything to the contrary
contained herein, if the Company shall issue additional Shares and Warrants in
connection with the private offering that includes such securities, any
purchaser thereof may become a party to this Agreement by executing and
delivering an additional counterpart signature page to this Agreement and shall
be deemed an "PURCHASER" and a "HOLDER" hereunder. The Company will update
EXHIBIT A hereto in connection with any such addition and distribute a revised
version to all Purchasers.
[Signature Page Follows]
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IN WITNESS WHEREOF, this Agreement is entered into by the undersigned parties as
of the date first written above.
X-CHANGE CORPORATION:
By:________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
[Signature Page to X-Change Corporation Registration Rights Agreement]
PURCHASER:
[________________________]
By: ________________________________________________
Name: ________________________________________________
________________________________________________
Exhibit A
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Schedule of Purchasers
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Name and Address Shares of $1.50 Warrant $2.00 Warrant
of Purchaser Common Stock Shares Shares
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