REGISTRATION RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT
(the
“Agreement”)
is
entered into as of July 10, 2007, by and among Xxxxxxx
Industries, Inc.,
a
Delaware corporation (the “Company”),
and
Whitebox
Xxxxxxx Ltd.,
a
British Virgin Islands corporation (“WSL”
or
the
“Investor”).
RECITALS
:
A. The
Company
and the
Investor
have
entered into a Note Purchase Agreement of this date (the “Note
Purchase Agreement”),
pursuant to which the Investor purchased a $2,000,000 face amount convertible
promissory note (the “Note”)
in
consideration of a $2,000,000 loan and a warrant to purchase shares of the
Company’s Common Stock (the “Warrant”)
from
the Company in consideration of $100.00.
B. As
a
condition to the Note Purchase Agreement, the Company has agreed to grant
certain registration rights with respect to the shares of the Company’s Common
Stock (or other securities) issuable upon conversion of the Note and/or exercise
of the Warrant pursuant to the terms of this Agreement.
C. The
execution of this Agreement is a condition precedent to WSL’s performance
obligations under the Note Purchase Agreement.
NOW,
THEREFORE,
in
consideration of the foregoing and of the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, hereby agree as follows:
ARTICLE
1.
DEFINITIONS
As
used
in this Agreement, the following terms shall have the following respective
meanings:
1.1 “Commission”
shall
mean the U.S. Securities and Exchange Commission or any other successor federal
agency at the time administering the Securities Act.
1.2 “Common
Stock”
shall
mean the Company’s common stock, $0.001 par value per share.
1.3 “Exchange
Act”
shall
mean the Securities and Exchange Act of 1934, as amended, or any similar federal
statute and the rules and regulations of the Commission thereunder, all as
the
same shall be in effect at the time.
1.4 “Holders”
shall
mean and include the Investor and any transferee thereof to whom the
registration rights conferred by this Agreement have been transferred in
accordance with Article 10 hereof.
1.5 “Register,” “registered”
and
“registration”
refer to
a registration effected by preparing and filing with the Commission a
registration statement in compliance with the Securities Act, and the
declaration or ordering by the Commission of the effectiveness of such
registration statement.
1.6 “Registrable
Securities”
means:
(i)
all
shares of Common Stock issuable upon exercise of the Warrant; (ii) all shares
of
Common Stock issuable upon conversion of the Note; and
(iii)
any and all shares of Common Stock or other securities issuable upon any stock
split, stock dividend, recapitalization, reclassification, merger, consolidation
or other similar event with respect to the Common Stock or other securities
issued or issuable pursuant to subsections (i) and (ii) of this Section 1.6;
excluding in all cases, however, Registrable Securities sold by a Holder to
the
public pursuant to a registered offering or pursuant to Rule 144 promulgated
by
the Commission under the Securities Act or sold in a private transaction in
which the Holder’s registration rights under this Agreement are not
assigned.
1.7 “Registration
Expenses”
shall
mean all
expenses incurred by the Company in complying with Articles 2, 3 and 4 hereof,
including, without limitation, all registration, qualification and Commission,
National Association of Securities Dealers, Inc., stock exchange and other
filing fees, printing expenses, escrow fees, fees and disbursements of legal
counsel for the Company, fees and disbursements of any special counsel engaged
by the Holders, blue sky fees and expenses, 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).
1.8 “Securities
Act”
shall
mean the Securities Act of 1933, as amended, or any similar federal statute
and
the rules and regulations of the Commission thereunder, all as the same shall
be
in effect at the time.
1.9 “Selling
Expenses”
shall
mean all underwriting fees, discounts, selling commissions and stock transfer
taxes applicable to the Registrable Securities registered by the
Holders.
1.10 “Underwriter”
shall
mean (whether or not the term is capitalized) a broker-dealer engaged by the
Company to distribute Registrable Securities as principal or agent.
1.11 “Underwriting” or
“Underwritten”
shall
mean (whether or not the term is capitalized) a method of publicly distributing
securities through an Underwriter.
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ARTICLE
2.
COMPANY
REGISTRATION
2.1 Notice
of Registration to Holder.
If the
Company determines to register any of its securities, either for its own account
or the account of a security holder or holders, other than (i) a registration
relating solely to employee benefit plans on Form S-8 (or any successor form)
or
(ii) a registration relating solely to a Commission Rule 145 transaction on
Form
S-4 (or any successor form), the Company will:
(a) promptly
give Holder written notice thereof and
(b) include
in such registration (and any related qualification under blue sky laws or
other
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made within 30 days
after
receipt of such written notice from the Company described in Section 3.1(a),
by
Holder, subject to any reductions in the Registrable Securities to be registered
made in the manner set forth in Section 3.2(a) or any other reductions required
due to the Commission’s recent interpretation of Rule 415 of the Securities
Act.
2.2 Underwriting.
If the
registration of which the Company gives notice is for an offering involving
an
underwriting, the Company shall so advise the Holder as a part of the written
notice given pursuant to Section 2.1(a). In such event, the right of the Holder
to registration pursuant to this Article 2 shall be conditioned upon the
Holder’s participation in such underwriting and the inclusion of the Holder’s
Registrable Securities in the underwriting to the extent provided herein. In
such case, the Holder shall (together with the Company) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company.
(a) Notwithstanding
any other provision of this Article 2, if the managing underwriter determines
that marketing factors require a limitation of the number of shares to be
underwritten, the underwriter may exclude some or all Registrable Securities
from such registration and underwriting. The Company shall so advise the Holder
of Registrable Securities, and the number of shares of Common Stock to be
included in such registration shall be allocated as follows: first, for the
account of the Company, all shares of Common Stock proposed to be sold by the
Company; and
second, for the account of the Holder and any other shareholders of the Company
participating in such registration, the number of shares of Common Stock
requested to be included in the registration by the Holder and such other
shareholders in proportion, as nearly as practicable, to the respective amounts
of Registrable Securities that are proposed to be offered and sold by the Holder
and such other shareholders of Registrable Securities at the time of filing
the
registration statement. No
Registrable Securities excluded from the underwriting in this Article 2 by
reason of the underwriters’ marketing limitation shall be included in such
registration.
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(b) The
Company shall so advise the Holder and the other holders distributing their
securities through such underwriting of any such limitation, and the number
of
shares of Registrable Securities held by the Holder that may be included in
the
registration. If the Holder disapproves of the terms of any such underwriting,
the Holder may elect to withdraw therefrom by written notice to the Company
and
the managing underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration, but the Holder shall
continue to be bound by the terms hereof.
(c) The
Company shall have the right to terminate or withdraw any registration initiated
by it under this Article 2 prior to the effectiveness of such registration,
whether or not the Holder has elected to include Registrable Securities in
such
registration.
2.3 Inclusion
of Shares by the Company. If
the
resale distribution of Registrable Securities is being effected by means of
an
underwriting and if the managing underwriter will not limit the number of
Registrable Securities to be underwritten, the Company may include securities
for its own account or for the account of others in such registration if the
managing underwriter so agrees. The inclusion of such shares shall be on the
same terms as the registration of shares held by the Holder. In the event that
the underwriters exclude some of the securities to be registered, the securities
to be sold for the account of the Company and any other holders shall be
excluded in their entirety prior to the exclusion of any Registrable
Securities.
ARTICLE
3.
REQUIRED
REGISTRATION
3.1 Required
Registration.
To the
extent that all Registrable Securities have not been registered pursuant to
Section 2 above, within 180 days of the date hereof, the Company will file
a
registration statement under the Securities Act on Form SB-2 (or any successor
to Form SB-2) or a similar long form registration statement, covering the
registration of the Registrable Securities and will, as soon as practicable,
use
its best efforts to effect such registration (including, without limitation,
filing post-effective amendments, related qualification under blue sky laws
or
other compliance) of all the Registrable Securities. If, however, the Company
is
eligible for use of Form S-3 (or any comparable or successor form) to register
the Registrable Securities, the Company may satisfy the requirement of this
Section 3.1 through the use of such Form.
3.2 Underwriting.
If
the
registration is for an underwritten offering, the provisions of Sections 2.2(a),
(b) and (c) and Section 2.3 hereof shall apply to such
registration.
3.3 Contingent
Additional Interest; Effect of Particular Note Conversions.
The
required registration statement under this Article 3 is the Registration
Statement referred to in Section 2(b) of the Note, as to which the failure
to so
timely file as provided in Section 3.1 above, or to obtain effectiveness within
270 days of the date hereof, will give rise to the Company’s obligation to pay
Contingent Additional Interest under the Note. To the extent that pursuant
to
Sections 3(d) and 3(b)(ii) of the Note, the registration rights as to
Registrable Securities issuable upon conversion of the Note become governed
by
the registration rights agreement relating to a Subsequent Equity Financing
(as
that term is defined in Section 2(c) of the Note), the registration rights
as to
Registrable Securities issuable upon exercise of the Warrant, and as to
Registrable Securities not governed by the Section 3(b)(ii) of the Note, will
continue to be governed by this Agreement.
-4-
ARTICLE
4.
REGISTRATION
ON FORM S-3
4.1 Request
for Registration.
The
Company shall use its reasonable best efforts to continue to qualify for
registration on Form S-3 or any comparable or successor form. At all times
when
the Company is eligible to use of Form S-3, and in addition to the rights
contained above in Articles 2 and 3, the Holder shall have the right to request
registrations on Form S-3. Such requests shall be in writing and shall state
the
number of Registrable Securities to be disposed of and the intended methods
of
disposition of such securities. The Company shall not be obligated to effect
any
such registration if in a given 6-month period, the Company has effected a
registration of Registrable Securities within the preceding 6-month
period.
4.2 Underwriting.
If the
registration is for an underwritten offering, the provisions of Sections 2.2(a),
(b) and (c) and Section 2.3 hereof shall apply to such registration.
ARTICLE
5.
EXPENSES
OF REGISTRATION
All
Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Articles 2, 3 and 4 hereof, shall be
borne by the Company; provided, however, that any expenses incurred as a result
of any amendment described in Section 2.2(a) shall be borne by the Holder of
the
Registrable Securities being registered in such registration. All Selling
Expenses relating to Registrable Securities registered by the Holder shall
be
borne by the Holder of such Registrable Securities (if there are multiple
Holders, then pro rata on the basis of the number of securities so
registered).
ARTICLE
6.
REGISTRATION
PROCEDURES
6.1 In
the
case of each registration effected by the Company pursuant to this Agreement,
the Company will keep the Holder advised in writing as to the initiation of
each
registration and as to the completion thereof. The Company agrees to use its
reasonable best efforts to effect or cause such registration to permit the
sale
of the Registrable Securities covered thereby by the Holder thereof in
accordance with the intended method or methods of distribution thereof described
in such registration statement. In connection with any registration of any
Registrable Securities, and except as otherwise provided in Article 5 hereof,
the Company shall, at its expense:
(a) prepare
and file with the Commission a registration statement with respect to such
Registrable Securities and use its reasonable best efforts to cause such
registration statement filed to become effective;
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(b) maintain
the effectiveness of such registration statement until the earlier of (A) two
years after the date that the registration statement filed pursuant to Section
3.1 is first declared effective by the Commission, (B) the date on which all
of
the Registrable Securities covered by a registration statement may be sold
by
the Holder pursuant to Rule 144(k) or (C) such time as all of the Registrable
Securities have been publicly sold pursuant to a registration
statement;
(c) prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus included therein as may be necessary
to effect and maintain the effectiveness of such registration statement as
may
be required by the applicable rules and regulations of the Commission and the
instructions applicable to the form of such registration statement and furnish
to the Holder of the Registrable Securities covered thereby copies of any such
supplement or amendment prior to this being used and filed with the
Commission;
(d) promptly
notify the Holder of Registrable Securities to be included in a registration
statement hereunder, the sales or placement agent, if any, therefor and the
managing underwriter of the securities being sold, and confirm such advice
in
writing, (A) when such registration statement or the prospectus included therein
or any prospectus amendment or supplement or post-effective amendment has been
filed, and, with respect to such registration statement or any post-effective
amendment, when the same has become effective, (B) of the issuance by the
Commission of any stop order suspending the effectiveness of such registration
statement or the initiation of any proceedings for that purpose, (C) of the
receipt by the Company of any notification with respect to the suspension of
the
qualification of the Registrable Securities for sale in any jurisdiction or
the
initiation or threatening of any proceeding for such purpose or (D) if,
to
the Company’s knowledge, it shall be the case, at any time when a prospectus is
required to be delivered under the Securities Act, that such registration
statement or prospectus, or any document incorporated by reference in any of
the
foregoing, contains an untrue statement of a material fact or omits to state
any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(e)
notwithstanding anything herein to the contrary, the Company may, at any time,
suspend the effectiveness of any Registration Statement for a period of up
to 60
consecutive days or 90 days in the aggregate in any calendar year, as
appropriate (a “Suspension Period”), by giving notice to each holder of
Registrable Securities to be included in the Registration Statement, if the
Company shall have determined, after consultation with its counsel, that the
Company is required to disclose any material corporate development which the
Company determines could reasonably be expected to have a material effect on
the
Company. Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of
a
Suspension Period or an event described under Section 6.1(d), such holder shall
forthwith discontinue disposition of such Registrable Securities covered by
such
Registration Statement or Prospectus until such holder (i) is advised in
writing by the Company that the use of the applicable Prospectus may be resumed,
(ii) has received copies of a supplemental or amended prospectus, if
applicable and (iii) has received copies of any additional or supplemental
filings which are incorporated or deemed to be incorporated by reference in
such
Prospectus. The Company shall prepare, file and furnish to each holder of
Registrable Securities immediately upon the expiration of any Suspension Period,
appropriate supplements or amendments, if applicable, to the Prospectus and
appropriate documents, if applicable, incorporated by reference in the
Registration Statement. The Company agrees to use its best efforts to cause
any
Suspension Period to be terminated as promptly as possible;
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(f)
use
its reasonable best efforts to obtain the withdrawal of any order suspending
the
effectiveness of such registration statement or any post-effective amendment
thereto or of any order suspending or preventing the use of any related
prospectus or suspending the qualification of any Registrable Securities
included in such registration statement for sale in any jurisdiction at the
earliest practicable date;
(g)
furnish to the Holder of Registrable Securities to be included in such
registration statement hereunder, each placement or sales agent, if any,
therefor and each underwriter, if any, thereof a conformed copy of such
registration statement, each such amendment and supplement thereto (in each
case
excluding all exhibits and documents incorporated by reference) and such number
of copies of the registration statement (excluding exhibits thereto and
documents incorporated by reference therein unless specifically so requested
by
the Holder, agent or underwriter, as the case may be) of the prospectus included
in such registration statement (including each preliminary prospectus and any
summary prospectus), in conformity with the requirements of the Securities
Act,
as the Holder, agent, if any, and underwriter, if any, may reasonably request
in
order to facilitate the disposition of the Registrable Securities owned by
the
Holder sold by such agent or underwritten by such underwriter and to permit
the
Holder, agent and underwriter to satisfy the prospectus delivery requirements
of
the Securities Act;
(h)
use
its reasonable best efforts to (A) register or qualify the Registrable
Securities to be included in such registration statement under such other
securities laws or blue sky laws of such states of the United States or the
District of Columbia to be designated by the Holder participating in such
registration and each placement or sales agent, if any, therefor and
underwriter, if any, thereof, as the Holder and each underwriter, if any, of
the
securities being sold shall reasonably request (provided, that the Company
shall
not be required to use its best efforts to register or qualify the Registrable
Securities in more than 15 such jurisdictions unless the expenses thereof are
borne by the Holder requesting such efforts), (B) keep such registrations or
qualifications in effect and comply with such laws at all times during the
period described in Section 6.1(b) above and (C) take any and all such actions
as may be reasonably necessary or advisable to enable the Holder, agent, if
any,
and underwriter to consummate the disposition in such jurisdictions of such
Registrable Securities; provided, however, that in order to fulfill the
foregoing obligations under this Section 6.1(g), the Company shall not (unless
otherwise required to do so in any jurisdiction) be required to (1) qualify
generally to do business as a foreign company or a broker-dealer, (2) execute
a
general consent to service of process or (3) subject itself to taxation;
and
-7-
(i)
furnish, at the request of the Holder participating in the registration, on
the
date that such Registrable Securities are delivered to the underwriters for
sale, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i)
an
opinion, dated as of such date, of the counsel representing the Company for
the
purposes of such registration, in form and substance as is customarily given
to
underwriters in an underwritten public offering and reasonably satisfactory to
the Holder requesting registration, addressed to the underwriters, if any,
and
to the Holder requesting registration of Registrable Securities and (ii) a
letter dated as of such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering
and reasonably satisfactory to the Holder requesting registration, addressed
to
the underwriters, if any, and if permitted by applicable accounting standards,
to the Holder requesting registration of Registrable Securities.
6.2 The
Company may require the Holder of Registrable Securities as to which any
registration is being effected to furnish to the Company such information
regarding the Holder and the Holder’s method of distribution of such Registrable
Securities as the Company may from time to time reasonably request in writing.
The Holder agrees to notify the Company as promptly as practicable of any
inaccuracy or change in information previously furnished by the Holder to the
Company or of the occurrence of any event in either case as a result of which
any prospectus relating to such registration contains or would contain an untrue
statement of a material fact regarding the Holder or the distribution of such
Registrable Securities or omits to state any material fact regarding the Holder
or the distribution of such Registrable Securities required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly to furnish to the Company any
additional information required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with respect
to the Holder or the distribution of such Registrable Securities, an untrue
statement or 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
light of the circumstances then existing.
6.3 The
Holder will (i) comply with the provisions of the Securities Act with respect
to
disposition of the Registrable Securities to be included in any registration
statement filed by the Company and (ii) comply with the “Plan of Distribution”
section of the current prospectus relating to any registration statement
covering Registrable Securities filed by the Company.
-8-
6.4 The
Holder, by the Holder’s acceptable of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested in connection with the
preparation and filing of any Registration Statement hereunder and in responding
to any comments of the Commission in connection therewith.
ARTICLE
7.
INDEMNIFICATION
7.1 The
Company will indemnify the Holder, each of its officers, directors and partners,
and the Holder’s legal counsel and independent accountants, if any, and each
person controlling any such persons within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Agreement, and each underwriter, if any,
and
each person who controls any underwriter within the meaning of Section 15 of
the
Securities Act, against all expenses, claims, losses, damages and liabilities
(or actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereof, incident to any such
registration, qualification or compliance, or based on any 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 any violation by
the
Company of any rule or regulation promulgated under the Securities Act or any
state securities laws applicable to the Company and relating to action or
inaction by the Company in connection with any such registration, qualification
or compliance, and will reimburse each such Holder, each of its officers,
directors and partners and the Holder’s legal counsel and independent
accountants, and each person controlling any such persons, each such underwriter
and each person who controls any such underwriter, for any reasonable legal
and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action;
provided, however, that the Company will not be liable in any such case to
the
extent that any such claim, loss, damage, liability or expense arises out of
or
is based on any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by such Holder, officers, directors, partners, legal
counsel, accountants, underwriter or controlling persons, and expressly intended
for use in such registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereof; and provided further, that
the
Company shall not be liable in any such case to the extent that any such loss
arises out of or is based upon an untrue statement or alleged untrue statement
or omission made in any preliminary prospectus or prospectus if (i) such Holder
failed to send or deliver a copy of the prospectus or prospectus supplement
with
or prior to the delivery of written confirmation of the sale of Registrable
Securities and (ii) the prospectus or prospectus supplement would have corrected
such untrue statement or omission. If requested, the Company shall also
indemnify underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, their officers,
directors, agents and employees and each person who controls such persons
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
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7.2 The
Holder will, if Registrable Securities held by the Holder are included in the
securities as to which such registration, qualification or compliance is being
effected, indemnify the Company, each of its directors and officers and its
legal counsel and independent accountants, each underwriter, if any, of the
Company’s securities covered by such a registration statement, and each person
who controls the Company or such underwriter within the meaning of Section
15 of
the Securities Act, against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising
out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other document, or any amendment or supplement thereto, incident to any
such
registration, qualification or compliance or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
the
Company, such directors, officers, partners, legal counsel, independent
accountants, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating, preparing or defending
any
such claim, loss, damage, liability or action, in each case to the extent,
but
only to the extent, that such untrue statement (or alleged untrue statement)
or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, other document or amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the Holder and expressly intended for use in such registration
statement, prospectus, offering circular or other document, or any amendment
or
supplement thereof; provided, however, that the obligations of the Holder
hereunder shall be limited to an amount equal to the proceeds to the Holder
of
Registrable Securities sold as contemplated herein.
7.3 Each
party entitled to indemnification under this Section 7 (the “Indemnified
Party”)
shall
give notice to the party required to provide indemnification (the “Indemnifying
Party”)
promptly after such Indemnified Party has actual knowledge of any claim as
to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of such
claim or litigation, shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld). The Indemnified Party may participate
in
such defense at such party’s expense; provided, however, that the Indemnifying
Party shall bear the expense of such defense of the Indemnified Party if
representation of both parties by the same counsel would be inappropriate due
to
actual or potential conflicts of interest. The failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party
of
its obligations under this Agreement, unless such failure is prejudicial to
the
ability of the Indemnifying Party to defend the action. 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 of such claim or litigation.
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7.4 If
the
indemnification provided for in Section 7.1 or 7.2 is unavailable or
insufficient to hold harmless an Indemnified Party, then each Indemnifying
Party
shall contribute to the amount paid or payable by such Indemnified Party as
a
result of the expenses, claims, losses, damages or liabilities (or actions
or
proceedings in respect thereof) referred to in Section 7.1 or 7.2, in such
proportion as is appropriate to reflect the relative fault of the Company on
the
one hand and the sellers of Registrable Securities on the other hand in
connection with statements or omissions which resulted in such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) or
expenses, as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the sellers of Registrable Securities and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Holders agree that it would
not be just and equitable if contributions pursuant to this Section 7.4 were
to
be determined by pro rata allocation (even if all Sellers of Registrable
Securities were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the first sentence of this Section 7.4. The amount paid by an
Indemnified Party as a result of the expenses, claims, losses, damages or
liabilities (or actions or proceedings in respect thereof) referred to in the
first sentence of this Section 7.4 shall be deemed to include any legal or
other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any claim, action or proceeding which is the subject
of this Section 7.4. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of sellers of Registrable Securities to
contribute pursuant to this Section 7.4 shall be several in proportion to the
respective amount of Registrable Securities sold by them pursuant to a
registration statement.
ARTICLE
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 securities of the Company
to
the public without registration, the Company agrees to use its best efforts
to:
8.1 Make
and
keep public information regarding the Company available as those terms are
understood and defined in Rule 144 under the Securities Act; and
8.2 File
with
the Commission in a timely manner all reports and other documents required
of
the Company under the Securities Act and the Exchange Act after the date hereof.
To this end, the Company will comply with its public filing and reporting
obligations set forth in Section 6.2 of the Note Purchase
Agreement.
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ARTICLE
9.
TRANSFER
OF REGISTRATION RIGHTS
The
rights to cause the Company to register Registrable Securities under this
Agreement may be assigned by the Holder to Whitebox Advisors, LLC (“Whitebox
Advisors”)
or to a
transferee or assignee of Registrable Securities that (i) is a subsidiary,
parent or affiliated entity, general partner or limited partner, member or
retired partner or member of the Holder or of Whitebox Advisors, (ii) is an
affiliated fund, a follow-on fund or predecessor fund of the Holder or a related
fund or of Whitebox Advisors, (iii) is a Holder’s family member or trust
for the benefit of an individual Holder or (iv) acquires at least
50,000 shares
of
Registrable Securities (as adjusted for stock splits, stock dividends, stock
combinations, reclassifications, recapitalizations, mergers, consolidations
or
other similar events); provided, however, (A) the transferor shall, within
ten days before such transfer, furnish to the Company written notice of the
name
and address of such transferee or assignee and the securities with respect
to
which such registration rights are being assigned and (B) such transferee
shall agree in writing to be subject to all restrictions set forth in this
Agreement. In each case, such rights may only be transferred together with
the
underlying Registrable Securities in a transfer permitted by the Securities
Act
and applicable state securities laws. Any such transferee or assignee shall
be
deemed a Holder hereunder (and references to the singular Holder herein will
thereafter mean the several Holders). If there is more than one Holder, then
actions taken hereunder (such as to demand registration not otherwise undertaken
by the Company) shall be by the Holders of a majority-in-interest of the
Registrable Securities.
ARTICLE
10.
MISCELLANEOUS
10.1 Governing
Law.
The
internal laws of the state of Minnesota shall govern the interpretation,
validity and performance of the terms of this agreement, regardless of the
law
that might be applied under principles of conflicts of law.
10.2 Successors
and Assigns.
Except
as otherwise expressly provided herein, the provisions hereof shall inure to
the
benefit of, and be binding upon, the successors, assigns, heirs, executors
and
administrators of the parties hereto.
10.3 Entire
Agreement.
This
Agreement constitutes the full and entire understanding and agreement between
the parties with regard to the subject matter hereof.
10.4 Termination.
The
right of the Holder to request inclusion in any registration under Article
2 or
4 shall terminate on the date hereafter when (i) the Holder (together with
its
affiliates, partners, members and former partners and members) beneficially
holds less than 1% of the Company’s Common Stock and (ii) all Registrable
Securities held by or issuable to the Holder (and its affiliates, partners,
members and former partners and members) upon conversion of the Note or upon
exercise of the Warrant may be sold under Rule 144 during any 90 day
period.
-12-
10.5 Notices.
All
notices, requests, consents, and other communications hereunder shall be in
writing and shall be deemed effectively given and received when delivered in
person or by national overnight courier service or by certified or registered
mail, return receipt requested, or by telecopier, addressed as
follows:
| (a) |
if
to the Company, at
|
|
Xxxxxxx
Industries, Inc.
00000
XX 0000
Xxxxxx,
Xxxxx 00000
Attention:
Xxxxxxx X. Xxxxxxxx, Chief Financial Officer
Facsimile:
(000) 000-0000
|
|
with
a copy to:
Spectrum
Law Group, LLP
0000
Xxxx Xxxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxxxx 00000
Attention:
Xxxx X. Xxxxxxxx, Esq.
Facsimile:
(000) 000-0000
|
| (b) | if to WSL, at |
|
Whitebox
Advisors, LLC
0000
Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxx,
Xxxxxxxxx 00000
Attention:
Xxxxxxxx Xxxx, Chief Financial Officer
Facsimile:
(000) 000-0000
with
a copy to:
Xxxxxxxx
& Xxxxxx P.A.
000
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx,
Xxxxxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxxx, Esq.
Facsimile:
(000) 000-0000
|
(c) if
to any
other Holder, to the address reflected on the records of the Company, or such
other address or addresses as shall have been furnished in writing by such
party
to the Company and to the other parties to this Agreement.
10.6 Severability.
The
invalidity, illegality or unenforceability of one or more of the provisions
of
this Agreement in any jurisdiction shall not affect the validity, legality
or
enforceability of the remainder of this Agreement in such jurisdiction or the
validity, legality or enforceability of this Agreement, including any such
provision, in any other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest extent
permitted by law.
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10.7 Titles
and Subtitles.
The
titles of the sections and subsections of this Agreement are for convenience
of
reference only and are not to be considered in construing this
Agreement.
10.8 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together constitute one instrument.
IN
WITNESS WHEREOF,
the
undersigned have hereunto affixed their signatures.
| Whitebox Xxxxxxx Ltd. | Xxxxxxx Industries, Inc. | ||
| By | By | ||
|
Xxxxxxxx
Xxxx,
Chief
Financial Officer
|
Xxxxxxx
X. Xxxxxxxx,
Chief
Financial Officer
|
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