REGISTRATION RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the 2nd
day of June, 2006, between XXXXXXXX.XXX, INCORPORATED, a Nevada corporation
(the
"Company"), and COGENT CAPITAL FINANCIAL LLC, a Delaware limited liability
company (the "Holder").
WHEREAS,
the Holder has acquired a warrant, dated this date and issued by the Company
to
purchase 5,000,000 shares of the Company’s Common Stock (the “Warrant”) and has
received 5,000,000 shares of Common Stock, each in connection with its entering
into an equity swap with the Company as of the date hereof (the “Common Stock”);
WHEREAS,
it is a condition to the issuance of such Common Stock and Warrant that the
Company enter into this Agreement to provide the Holder with certain rights
relating to the registration of such Common Stock and the Common Stock
underlying such Warrant;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
The
following capitalized terms used herein have the following
meanings:
“Agreement”
means
this Agreement, as amended, restated, supplemented or otherwise modified from
time to time.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock, par value $0.001 per share, of the Company.
“Company”
has
the
meaning set forth in the preamble to this Agreement.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission promulgated thereunder, all as the same shall be in effect
at
the time.
“Holder”
has
the
meaning set forth in the preamble to this Agreement.
“Holder
Indemnified Party”
has
the
meaning set forth in Section 4.1.
“Indemnified
Party”
has
the
meaning set forth in Section 4.3.
“Indemnifying
Party”
has
the
meaning set forth in Section 4.3.
“Maximum
Number of Shares”
means,
with respect to any underwritten offering, the maximum dollar amount or maximum
number of shares (if any) that the Underwriter or Underwriters advise the
Company and/or the selling security holders can be sold in such offering without
adversely affecting the proposed offering price, the timing, the distribution
method, or the probability of success of such offering.
1
“Notices”
has
the
meaning set forth in Section 6.3.
“Piggy-Back
Registration”
has
the
meaning set forth in Section 2.2.1.
“Register,”
“registered”
and
“registration”
mean
a
registration effected by preparing and filing a registration statement or
similar document in compliance with the requirements of the Securities Act,
and
the applicable rules and regulations promulgated thereunder, and such
registration statement becoming effective.
“Registrable
Securities”
mean
collectively (i) the 5,000,000 shares of Common Stock issued to the Holder
as
part of the Initial Exchange Amount under the Equity Swap and (ii) all shares
of
Common Stock underlying and issuable pursuant to the Warrant issued to the
Holder as part of the Initial Exchange Amount under the Equity Swap. Registrable
Securities include any warrants, shares of capital stock or other securities
of
the Company issued as a dividend or other distribution with respect to or in
exchange for or in replacement of such shares of Common Stock. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when: (a) a Registration Statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been sold, transferred, disposed of or exchanged in
accordance with such Registration Statement; (b) such securities shall have
been
otherwise transferred; (c) such securities shall have ceased to be outstanding;
or (d) the Registrable Securities are sellable under Rule 144(k).
“Registration
Statement”
means
a
registration statement filed by the Company with the Commission in compliance
with the Securities Act and the rules and regulations promulgated thereunder
for
a public offering and sale of Common Stock (other than a registration statement
on Form S-4 or Form S-8, or their successors forms, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another entity).
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect at the
time.
“Underwriter”
means
a
securities dealer who purchases any Registrable Securities as principal in
an
underwritten offering and not as part of such dealer’s market-making
activities.
“Warrant
Shares”
means
the 5,000,000 shares of Common Stock issuable under the Warrant.
2
2. REGISTRATION
RIGHTS.
2.1.1. Request
for Registration.
At any
time and from time to time on or after the date hereof, the holders of a
majority-in-interest of the Warrant and/or the Warrant Shares may make up to
three written demands for registration under the Securities Act of at least
25%
of the Warrant Shares (each, a “Demand
Registration”).
Any
demand for a Demand Registration shall specify the number of shares of
Registrable Securities proposed to be sold and the intended method(s) of
distribution thereof. The Company will notify all holders of Registrable
Securities of the demand, and each holder of Registrable Securities who wishes
to include all or a portion of such holder’s Registrable Securities in the
Demand Registration (each such holder including shares of Registrable Securities
in such registration, a “Demanding
Holder”)
shall
so notify the Company within fifteen (15) days after the receipt by the holder
of the notice from the Company. Upon any such request, the Demanding Holders
shall be entitled to have their Registrable Securities included in the Demand
Registration, subject to the provisos set forth below in this Section 2.1.
The
Company shall not be obligated to effect more than an aggregate of three (3)
Demand Registrations under this Section 2.1.1 in respect of Registrable
Securities.
2.1.2. Effective
Registration.
A
registration will not count as a Demand Registration until the Registration
Statement filed with the Commission with respect to such Demand Registration
has
been declared effective and the Company has complied with all of its obligations
under this Agreement with respect thereto; provided,
however,
that
if, after such Registration Statement has been declared effective, the offering
of Registrable Securities pursuant to a Demand Registration is interfered with
by any stop order or injunction of the Commission or any other governmental
agency or court, the Registration Statement with respect to such Demand
Registration will be deemed not to have been declared effective, unless and
until, (i) such stop order or injunction is removed, rescinded or otherwise
terminated and (ii) a majority-in-interest of the Demanding Holders thereafter
elect to continue the offering; provided,
further,
that
the Company shall not be obligated to file a second Registration Statement
until
a Registration Statement that has been filed is counted as a Demand Registration
or is terminated.
2.1.3. Underwritten
Offering.
If a
majority-in-interest of the Demanding Holders so elect and such holders so
advise the Company as part of their written demand for a Demand Registration,
the offering of such Registrable Securities pursuant to such Demand Registration
shall be in the form of an underwritten offering. In such event, the right
of
any holder to include its Registrable Securities in such registration 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 Demanding Holders proposing to distribute their
Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the Underwriter or Underwriters
selected for such underwriting by a majority-in-interest of the holders
initiating the Demand Registration.
2.1.4. Withdrawal.
If a
majority-in-interest of the Demanding Holders disapprove of the terms of any
underwriting or are not entitled to include all of their Registrable Securities
in any offering, such majority-in-interest of the Demanding Holders may elect
to
withdraw from such offering by giving written notice to the Company and the
Underwriter or Underwriters of their request to withdraw prior to the
effectiveness of the Registration Statement filed with the Commission with
respect to such Demand Registration. If the majority-in-interest of the
Demanding Holders withdraws from a proposed offering relating to a Demand
Registration, then such registration shall not count as a Demand Registration
provided for in Section 2.1.1.
3
2.2 Piggy-Back
Registration.
2.2.1. Piggy-Back
Rights.
If at
any time on or after the date hereof, the Company proposes to file a
Registration Statement under the Securities Act with respect to an offering
of
equity securities, or securities or other obligations exercisable or
exchangeable for, or convertible into, equity securities, by the Company for
its
own account or for shareholders of the Company for their account (or by the
Company and by shareholders of the Company), other than a Registration Statement
(i) filed in connection with any employee stock option or other benefit plan,
(ii) for an exchange offer or offering of securities solely to the Company’s
existing shareholders, (iii) for an offering of debt that is convertible into
equity securities of the Company or (iv) for a dividend reinvestment plan,
then the Company shall (x) give written notice of such proposed filing to the
holders of Registrable Securities as soon as practicable but in no event less
than fifteen (15) days before the anticipated filing date, which notice shall
describe the amount and type of securities to be included in such offering,
the
intended method(s) of distribution, and the name of the proposed managing
Underwriter or Underwriters, if any, of the offering and (y) offer to the
holders of Registrable Securities in such notice the opportunity to register
the
sale of such number of shares of Registrable Securities as such holders may
request in writing within five (5) days following receipt of such notice (a
“Piggy-Back
Registration”).
The
Company shall cause such Registrable Securities to be included in such
registration and, in the case of an underwritten offering, shall use its
commercially reasonable efforts to cause the managing Underwriter or
Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company and
to
permit the sale or other disposition of such Registrable Securities in
accordance with the intended method(s) of distribution thereof. All holders
of
Registrable Securities proposing to distribute their securities through a
Piggy-Back Registration that involves an Underwriter or Underwriters shall
enter
into an underwriting agreement in customary form with the Underwriter or
Underwriters selected for such Piggy-Back Registration.
2.2.2. Reduction
of Offering.
If the
managing Underwriter or Underwriters for a Piggy-Back Registration that is
to be
an underwritten offering advises the Company and the holders of Registrable
Securities in writing that the dollar amount or number of securities which
the
Company desires to sell, taken together with securities, if any, as to which
registration has been demanded pursuant to written contractual arrangements
with
persons other than the holders of Registrable Securities hereunder, the
Registrable Securities as to which registration has been requested under this
Section 2.1, and the securities, if any, as to which registration has been
requested pursuant to the written contractual piggy-back registration rights
of
other shareholders of the Company, exceeds the Maximum Number of Shares, then
the Company shall include in any such registration:
(i) If
the
registration is undertaken for the Company’s account: (A) first, the securities
that the Company desires and the Registrable Securities as to which registration
has been requested pursuant to this Agreement in an aggregate amount not
exceeding the Maximum Number of Shares (pro rata in accordance with the number
of securities which are desired to be registered by the Company and the parties
requesting such registration under this Agreement, regardless of the number
of
shares of securities with respect to which such persons have the right to
request such inclusion); (B) second, to the extent that the Maximum Number
of
Shares has not been reached under the foregoing clause (A), the securities,
if
any, other than Registrable Securities hereunder, as to which registration
has
been requested pursuant to written contractual piggy-back registration rights
of
security holders that can be sold without exceeding the Maximum Number of
Shares; and
4
(ii) If
the
registration is a “demand” registration undertaken at the demand of persons
other than the holders of Registrable Securities pursuant to written contractual
arrangements with such persons, (A) first, the securities for the account of
the
demanding persons that can be sold without exceeding the Maximum Number of
Shares; (B) second, to the extent that the Maximum Number of Shares has not
been
reached under the foregoing clause (A), the securities that the Company desires
to sell and the Registrable Securities as to which registration has been
requested pursuant to this Agreement that can be sold without exceeding the
Maximum Number of Shares (pro rata in accordance with the number of securities
which are desired to be registered by the Company and the parties requesting
such registration under this Agreement, regardless of the number of shares
of
securities with respect to which such persons have the right to request such
inclusion); and (C) third, to the extent that the Maximum Number of Shares
has
not been reached under the foregoing clauses (A) and (B), the securities, if
any, as to which registration has been requested pursuant to written contractual
piggy-back registration rights which other shareholders desire to sell that
can
be sold without exceeding the Maximum Number of Shares.
2.2.3. Withdrawal.
Any
holder of Registrable Securities may elect to withdraw such holder’s request for
inclusion of Registrable Securities in any Piggy-Back Registration by giving
written notice to the Company of such request to withdraw prior to the
effectiveness of the Registration Statement. The Company may also elect to
withdraw a registration statement at any time prior to the effectiveness of
the
Registration Statement. Notwithstanding any such withdrawal, the Company shall
pay all expenses incurred by the holders of Registrable Securities in connection
with such Piggy-Back Registration as provided in Section 3.3.
3. REGISTRATION
PROCEDURES.
3.1 Filings;
Information.
Whenever the Company is required to effect the registration of any Registrable
Securities pursuant to Section 2, the Company shall use its best efforts to
effect the registration and sale of such Registrable Securities in accordance
with the intended method(s) of distribution thereof as expeditiously as
practicable, and in connection with any such request:
3.1.1. Notice
of Filing Registration Statement.
The
Company shall provide the Holder with prior notice of the filing of any
Registration Statement within the time period and with the information required
under Section 2.1.1 above.
3.1.2. Copies.
The
Company shall, prior to filing a Registration Statement or prospectus, or any
amendment or supplement thereto, furnish without charge to the holders of
Registrable Securities included in such registration, and such holders’ legal
counsel, copies of such Registration Statement as proposed to be filed, each
amendment and supplement to such Registration Statement (in each case including
all exhibits thereto and documents incorporated by reference therein), the
prospectus included in such Registration Statement (including each preliminary
prospectus), and such other documents as the holders of Registrable Securities
included in such registration or legal counsel for any such holders may request
in order to facilitate the disposition of the Registrable Securities owned
by
such holders.
5
3.1.3. Amendments
and Supplements.
The
Company shall prepare and file with the Commission such amendments, including
post-effective amendments, and supplements to such Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective and in compliance with the provisions of the
Securities Act until all Registrable Securities and other securities covered
by
such Registration Statement have been disposed of in accordance with the
intended method(s) of distribution set forth in such Registration Statement
(which period shall not exceed the sum of one hundred eighty (180) days plus
any
period during which any such disposition is interfered with by any stop order
or
injunction of the Commission or any governmental agency or court) or such
securities have been withdrawn.
3.1.4. Notification.
After
the filing of a Registration Statement, the Company shall promptly, and in
no
event more than two (2) business days after such filing, notify the holders
of
Registrable Securities included in such Registration Statement of such filing,
and shall further notify such holders promptly and confirm such advice in
writing in all events within two (2) business days of the occurrence of any
of
the following: (i) when such Registration Statement becomes effective; (ii)
when
any post-effective amendment to such Registration Statement becomes effective;
(iii) the issuance or threatened issuance by the Commission of any stop order
(and the Company shall take all actions required to prevent the entry of such
stop order or to remove it if entered); and (iv) when an amendment or supplement
to such Registration Statement or any prospectus may be necessary so that,
as
thereafter delivered to the purchasers of the securities covered by such
Registration Statement, such prospectus will not contain an untrue statement
of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. Upon the occurrence
of an event described in clause (iv), the Company shall promptly make available
to the holders of Registrable Securities included in such Registration Statement
any such supplement or amendment; except that before filing with the Commission
a Registration Statement or prospectus or any amendment or supplement thereto,
the Company shall furnish to the holders of Registrable Securities included
in
such Registration Statement and to the legal counsel for any such holders,
copies of all such documents proposed to be filed sufficiently in advance of
filing to provide such holders and legal counsel with a reasonable opportunity
to review such documents and comment thereon, and the Company shall not file
any
Registration Statement or prospectus or amendment or supplement thereto,
including documents incorporated by reference, to which such holders or their
legal counsel shall object.
3.1.5. State
Securities Laws Compliance.
The
Company shall use its best efforts to (i) register or qualify the Registrable
Securities covered by the Registration Statement under such securities or “blue
sky” laws of such jurisdictions in the United States as the holders of
Registrable Securities included in such Registration Statement (in light of
their intended plan of distribution) may request and (ii) take such action
necessary to cause such Registrable Securities covered by the Registration
Statement to be registered with or approved by such other Governmental
Authorities as may be necessary by virtue of the business and operations of
the
Company and do any and all other acts and things that may be necessary or
advisable to enable the holders of Registrable Securities included in such
Registration Statement to consummate the disposition of such Registrable
Securities in such jurisdictions; provided,
however,
that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3.1.5 or subject itself to taxation in any such
jurisdiction.
6
3.1.6. Agreements
for Disposition.
The
Company shall enter into customary agreements (including, if applicable, an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities. The representations, warranties and covenants of the
Company in any underwriting agreement which are made to or for the benefit
of
any Underwriters, to the extent applicable, shall also be made to and for the
benefit of the holders of Registrable Securities included in such registration
statement. No holder of Registrable Securities included in such registration
statement shall be required to make any representations or warranties in the
underwriting agreement except, if applicable, with respect to such holder’s
organization, good standing, authority, title to Registrable Securities, lack
of
conflict of such sale with such holder’s material agreements and organizational
documents, and with respect to written information relating to such holder
that
such holder has furnished in writing expressly for inclusion in such
Registration Statement.
3.1.7. Cooperation.
The
principal executive officer of the Company, the principal financial officer
of
the Company, the principal accounting officer of the Company and all other
officers and members of the management of the Company shall cooperate fully
in
any offering of Registrable Securities hereunder, which cooperation shall
include, without limitation, the preparation of the Registration Statement
with
respect to such offering and all other offering materials and related documents,
and participation in meetings with Underwriters, attorneys, accountants and
potential investors.
3.1.8. Records.
The
Company shall make available for inspection by the holders of Registrable
Securities included in such Registration Statement, any Underwriter
participating in any disposition pursuant to such registration statement and
any
attorney, accountant or other professional retained by any holder of Registrable
Securities included in such Registration Statement or any Underwriter, all
financial and other records, pertinent corporate documents and properties of
the
Company, as shall be necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors and employees to
supply all information requested by any of them in connection with such
Registration Statement.
3.1.9. Opinions
and Comfort Letters.
The
Company shall furnish to each holder of Registrable Securities included in
any
Registration Statement a signed counterpart, addressed to such holder, of (i)
any opinion of counsel to the Company delivered to any Underwriter and (ii)
any
comfort letter from the Company’s independent public accountants delivered to
any Underwriter. In the event no legal opinion is delivered to any Underwriter,
the Company shall furnish to each holder of Registrable Securities included
in
such Registration Statement, at any time that such holder elects to use a
prospectus, an opinion of counsel to the Company to the effect that the
Registration Statement containing such prospectus has been declared effective
and that no stop order is in effect.
7
3.1.10. Earnings
Statement.
The
Company shall comply with all applicable rules and regulations of the Commission
and the Securities Act, and make available to its shareholders, as soon as
practicable, an earnings statement covering a period of twelve (12) months,
beginning within three (3) months after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder.
3.1.11. Listing.
The
Company shall use its best efforts to cause all Registrable Securities included
in any registration to be listed on such exchanges or otherwise designated
for
trading in the same manner as similar securities issued by the Company are
then
listed or designated or, if no such similar securities are then listed or
designated, in a manner satisfactory to the holders of a majority of the
Registrable Securities included in such registration.
3.2 Obligation
to Suspend Distribution.
Upon
receipt of any notice from the Company of the happening of any event of the
kind
described in Section 3.1.4(iv), each holder of Registrable Securities
included in any registration shall immediately discontinue disposition of such
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such holder receives the supplemented or amended
prospectus contemplated by Section 3.1.4(iv) and, if so directed by the
Company, each such holder will deliver to the Company all copies, other than
permanent file copies then in such holder’s possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such
notice.
3.3 Registration
Expenses.
The
Company shall bear all costs and expenses incurred in connection with any
Piggy-Back Registration pursuant to Section 2.2, and all expenses incurred
in performing or complying with its other obligations under this Agreement,
whether or not the Registration Statement becomes effective, including, without
limitation: (i) all registration and filing fees; (ii) fees and
expenses of compliance with securities or “blue sky” laws (including fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities); (iii) printing expenses; (iv) the Company’s
internal expenses (including, without limitation, all salaries and expenses
of
its officers and employees); (v) the fees and expenses incurred in
connection with the listing of the Registrable Securities as required by
Section 3.1.11; (vi) National Association of Securities Dealers, Inc.
fees; (vii) fees and disbursements of counsel for the Company and fees and
expenses for independent certified public accountants retained by the Company
(including the expenses or costs associated with the delivery of any opinions
or
comfort letters requested pursuant to Section 3.1.9); (viii) the fees
and expenses of any special experts retained by the Company in connection with
such registration; and (ix) the reasonable fees and expenses of one legal
counsel selected by the holders of a majority-in-interest of the Registrable
Securities included in such registration (which such fees and expenses shall
not
exceed $15,000). The Company shall have no obligation to pay any underwriting
discounts or selling commissions attributable to the Registrable Securities
being sold by the holders thereof, which underwriting discounts or selling
commissions shall be borne by such holders. Additionally, in an underwritten
offering, all selling shareholders and the Company shall bear the expenses
of
the underwriter pro rata in proportion to the respective amount of shares each
is selling in such offering.
8
3.4 Information.
The
holders of Registrable Securities shall provide such information as may
reasonably be requested by the Company, or the managing Underwriter, if any,
in
connection with the preparation of any Registration Statement, including
amendments and supplements thereto, in order to effect the registration of
any
Registrable Securities under the Securities Act pursuant to Section 2 and
in connection with the Company’s obligation to comply with federal and
applicable state securities laws.
4. INDEMNIFICATION
AND CONTRIBUTION.
4.1 Indemnification
by the Company.
The
Company agrees to indemnify and hold harmless the Holder and its officers,
employees, affiliates, directors, partners, members, attorneys and agents,
and
each person, if any, who controls the Holder and each other holder of
Registrable Securities (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) (each, an “Holder
Indemnified Party”),
from
and against any expenses, losses, judgments, claims, damages or liabilities,
whether joint or several, arising out of or based upon (i) any untrue statement
(or allegedly untrue statement) of a material fact contained in any Registration
Statement under which the sale of such Registrable Securities was registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment
or
supplement to such Registration Statement or (ii) any omission (or alleged
omission) to state a material fact required to be stated therein or necessary
to
make the statements therein not misleading, or any violation by the Company
of
the Securities Act or any rule or regulation promulgated thereunder applicable
to the Company and relating to action or inaction required of the Company in
connection with any such registration; and the Company shall promptly reimburse
the Holder Indemnified Party for any legal and any other expenses reasonably
incurred by such Holder Indemnified Party in connection with investigating
and
defending any such expense, loss, judgment, claim, damage, liability or action;
provided,
however,
that
the Company will not be liable in any such case to the extent that any such
expense, loss, claim, damage or liability arises out of or is based upon any
(i)
the failure of the Holder to comply with the covenants and agreements contained
in this Agreement with respect to the sale of the Registrable Securities, (ii)
untrue statement or allegedly untrue statement or omission or alleged omission
made in such Registration Statement, preliminary prospectus, final prospectus
or
summary prospectus, or any such amendment or supplement, in reliance upon and
in
conformity with information furnished to the Company, in writing, by such
selling holder expressly for use therein or (iii) an untrue statement or
omission in any Registration Statement or prospectus that is corrected in any
subsequent prospectus, or amendment or supplement thereto, that was delivered
to
the Holder prior to the pertinent sale or sales by the Holder and not delivered
by the Holder to the individual or entity to which it or they made such sale(s)
prior to such sale(s).
9
4.2 Indemnification
by Holders of Registrable Securities.
The
Holder will, in the event that any registration is being effected under the
Securities Act pursuant to this Agreement of any Registrable Securities held
by
such selling holder, indemnify and hold harmless the Company, each of its
directors and officers and each underwriter (if any), and each other person,
if
any, who controls such selling holder or such underwriter within the meaning
of
the Securities Act, against any losses, claims, judgments, damages or
liabilities, whether joint or several, insofar as such losses, claims,
judgments, damages or liabilities (or actions in respect thereof) arise out
of
or are based upon any untrue statement or allegedly untrue statement of a
material fact contained in any Registration Statement under which the sale
of
such Registrable Securities was registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained in
the
Registration Statement, or any amendment or supplement to the Registration
Statement, or arise out of or are based upon any omission or the alleged
omission to state a material fact required to be stated therein or necessary
to
make the statement therein not misleading, if the statement or omission was
made
in reliance upon and in conformity with information furnished in writing to
the
Company by the Holder expressly for use therein, and shall reimburse the
Company, its directors and officers, and each such controlling person for any
legal or other expenses reasonably incurred by any of them in connection with
investigation or defending any such loss, claim, damage, liability or action.
Each selling holder’s indemnification obligations hereunder shall be several and
not joint and shall be limited to the amount of any net proceeds actually
received by such selling holder.
4.3 Conduct
of Indemnification Proceedings.
Promptly after receipt by any person of any notice of any loss, claim, damage
or
liability or any action in respect of which indemnity may be sought pursuant
to
Section 4.1 or 4.2, such person (the “Indemnified
Party”)
shall,
if a claim in respect thereof is to be made against any other person for
indemnification hereunder, notify such other person (the “Indemnifying
Party”)
in
writing of the loss, claim, judgment, damage, liability or action; provided,
however,
that
the failure by the Indemnified Party to notify the Indemnifying Party shall
not
relieve the Indemnifying Party from any liability which the Indemnifying Party
may have to such Indemnified Party hereunder, except and solely to the extent
the Indemnifying Party is actually prejudiced by such failure. If the
Indemnified Party is seeking indemnification with respect to any claim or action
brought against the Indemnified Party, then the Indemnifying Party shall be
entitled to participate in such claim or action, and, to the extent that it
wishes, jointly with all other Indemnifying Parties, to assume control of the
defense thereof with counsel satisfactory to the Indemnified Party. After notice
from the Indemnifying Party to the Indemnified Party of its election to assume
control of the defense of such claim or action, the Indemnifying Party shall
not
be liable to the Indemnified Party for any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation; provided,
however,
that in
any action in which both the Indemnified Party and the Indemnifying Party are
named as defendants, the Indemnified Party shall have the right to employ
separate counsel (but no more than one such separate counsel) to represent
the
Indemnified Party and its controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
Indemnified Party against the Indemnifying Party, with the fees and expenses
of
such counsel to be paid by such Indemnifying Party if, based upon the written
opinion of counsel of such Indemnified Party, representation of both parties
by
the same counsel would be inappropriate due to actual or potential differing
interests between them. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, consent to entry of judgment or effect any
settlement of any claim or pending or threatened proceeding in respect of which
the Indemnified Party is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Party, unless such judgment or
settlement includes an unconditional release of such Indemnified Party from
all
liability arising out of such claim or proceeding.
10
4.4 Contribution.
4.4.1. If
the
indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is
unavailable to any Indemnified Party in respect of any loss, claim, damage,
liability or action referred to herein, then each such Indemnifying Party,
in
lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid
or payable by such Indemnified Party as a result of such loss, claim, damage,
liability or action in such proportion as is appropriate to reflect the relative
fault of the Indemnified Parties and the Indemnifying Parties in connection
with
the actions or omissions which resulted in such loss, claim, damage, liability
or action, as well as any other relevant equitable considerations. The relative
fault of any Indemnified Party and any Indemnifying Party 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 such Indemnified Party or such Indemnifying
Party and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
4.4.2. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 4.4 were determined by pro rata
allocation or by any other method of allocation which does not take account
of
the equitable considerations referred to in the immediately preceding Section
4.4.1. The amount paid or payable by an Indemnified Party as a result of any
loss, claim, damage, liability or action referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations
set
forth above, any legal or other expenses incurred by such Indemnified Party
in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.4, no holder of
Registrable Securities shall be required to contribute any amount in excess
of
the dollar amount of the net proceeds (after payment of any underwriting fees,
discounts, commissions or taxes) actually received by such holder from the
sale
of Registrable Securities which gave rise to such contribution obligation.
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.
5. UNDERWRITING
AND DISTRIBUTION.
5.1 Rule
144.
The
Company covenants that it shall file any reports required to be filed by it
under the Securities Act and the Exchange Act and shall take such further action
as the holders of Registrable Securities may reasonably request, all to the
extent required from time to time to enable such holders to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 under the Securities Act, as such
Rules may be amended from time to time, or any similar Rule or regulation
hereafter adopted by the Commission.
6. MISCELLANEOUS.
6.1 Other
Registration Rights.
The
Company represents and warrants that no person, other than a holder of the
Registrable Securities, has any right to require the Company to register any
shares of the Company’s capital stock for sale or to include shares of the
Company’s capital stock in any registration filed by the Company for the sale of
shares of capital stock for its own account or for the account of any other
person.
11
6.2 Assignment;
No Third Party Beneficiaries.
This
Agreement and the rights, duties and obligations of the Company hereunder may
not be assigned or delegated by the Company in whole or in part. This Agreement
and the rights, duties and obligations of the holders of Registrable Securities
hereunder may be freely assigned or delegated by the holders of Registrable
Securities in conjunction with and to the extent of any transfer of Registrable
Securities by such holders. This Agreement and the provisions hereof shall
be
binding upon and shall inure to the benefit of each of the parties and their
respective successors and the permitted assigns of the Holder or holder of
Registrable Securities or of any assignee of the Holder or holder of Registrable
Securities. This Agreement is not intended to confer any rights or benefits
on
any persons that are not party hereto other than as expressly set forth in
Article 4 and this Section 6.2.
6.3 Notices.
All
notices, demands, requests, consents, approvals or other communications
(collectively, “Notices”)
required or permitted to be given hereunder or which are given with respect
to
this Agreement shall be in writing and shall be personally served, delivered
by
reputable air courier service with charges prepaid, or transmitted by hand
delivery, telegram, telex or facsimile, addressed as set forth below, or to
such
other address as such party shall have specified most recently by written
notice. Notice shall be deemed given on the date of service or transmission
if
personally served or transmitted by telegram, telex or facsimile; provided,
that if
such service or transmission is not on a business day or is after normal
business hours, then such notice shall be deemed given on the next business
day.
Notice otherwise sent as provided herein shall be deemed given on the next
business day following timely delivery of such notice to a reputable air courier
service with an order for next-day delivery.
|
To
the Company:
|
|
|
Xxxxxxxx.xxx,
Incorporated
|
|
|
0000
Xxxxx Xxxxxx, Xxxxx 0000
|
|
|
Xxxxx
Xxxxxx, XX 00000
|
|
|
Attention:
Xxxx Xxxxxxxx
|
|
|
Facsimile:
|
|
|
To
the Holder, to:
|
|
|
Cogent
Capital Financial LLC
|
|
|
00000
Xxxxx 0000 Xxxx
|
|
|
Xxxxx,
Xxxx 00000
|
|
|
Attention: Xxxxxxx
X. Xxxxxxx
|
|
|
Facsimile: 000-000-0000
|
|
6.4 Severability.
This
Agreement shall be deemed severable, and the invalidity or unenforceability
of
any term or provision hereof shall not affect the validity or enforceability
of
this Agreement or of any other term or provision hereof. Furthermore, in lieu
of
any such invalid or unenforceable term or provision, the parties hereto intend
that there shall be added as a part of this Agreement a provision as similar
in
terms to such invalid or unenforceable provision as may be possible and be
valid
and enforceable.
12
6.5 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, and all of which taken together shall constitute one and
the
same instrument.
6.6 Entire
Agreement.
This
Agreement (including all agreements entered into pursuant hereto and all
certificates and instruments delivered pursuant hereto and thereto) constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous agreements, representations,
understandings, negotiations and discussions between the parties, whether oral
or written.
6.7 Modifications
and Amendments.
No
amendment, modification or termination of this Agreement shall be binding upon
any party unless executed in writing by such party.
6.8 Titles
and Headings.
Titles
and headings of sections of this Agreement are for convenience only and shall
not affect the construction of any provision of this Agreement.
6.9 Waivers
and Extensions.
Any
party to this Agreement may waive any right, breach or default which such party
has the right to waive; provided,
that
such waiver will not be effective against the waiving party unless it is in
writing, is signed by such party and specifically refers to this Agreement.
Waivers may be made in advance or after the right waived has arisen or the
breach or default waived has occurred. Any waiver may be conditional. No waiver
of any breach of any agreement or provision herein contained shall be deemed
a
waiver of any preceding or succeeding breach thereof nor of any other agreement
or provision herein contained. No waiver or extension of time for performance
of
any obligations or acts shall be deemed a waiver or extension of the time for
performance of any other obligations or acts.
6.10 Remedies
Cumulative.
In the
event that the Company fails to observe or perform any covenant or agreement
to
be observed or performed under this Agreement, the Holder or any other holder
of
Registrable Securities may proceed to protect and enforce its rights by suit
in
equity or action at law, whether for specific performance of any term contained
in this Agreement or for an injunction against the breach of any such term
or in
aid of the exercise of any power granted in this Agreement or to enforce any
other legal or equitable right, or to take any one or more of such actions,
without being required to post a bond. None of the rights, powers or remedies
conferred under this Agreement shall be mutually exclusive, and each such right,
power or remedy shall be cumulative and in addition to any other right, power
or
remedy, whether conferred by this Agreement or now or hereafter available at
law, in equity, by statute or otherwise.
6.11 Governing
Law.
This
Agreement shall be governed by, interpreted under, and construed in accordance
with the internal laws of the State of New York applicable to agreements made
and to be performed within the State of New York, without giving effect to
any
choice-of-law provisions thereof that would compel the application of the
substantive laws of any other jurisdiction.
13
6.12 Waiver
of Trial by Jury.
Each
party hereby irrevocably and unconditionally waives the right to a trial by
jury
in any action, suit, counterclaim or other proceeding (whether based on
contract, tort or otherwise) arising out of, connected with or relating to
this
Agreement, the transactions contemplated hereby, or the actions of the Holder
in
the negotiation, administration, performance or enforcement hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
14
IN
WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to
be executed and delivered by their duly authorized representatives as of the
date first written above.
|
XXXXXXXX.XXX,
INCORPORATED
|
|
|
By:
/s/
Xxxx Xxxxxxxx
|
|
|
Name:
Xxxx Xxxxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
COGENT
CAPITAL FINANCIAL LLC
|
|
|
By:
/s/
Xxxxxxx X. Xxxxxxx
|
|
|
Name:
Xxxxxxx X. Xxxxxxx
|
|
|
Title:
Senior Principal
|
15
