REGISTRATION RIGHTS AGREEMENT
EXHIBIT 4.1
This Registration Rights Agreement (the “Agreement”) is entered into as of December 11, 2006,
by and among XxxxXxxx.xxx, Inc., a Delaware corporation (the “Company”), and Xxxxxxxx Family
Partnership, Ltd. (“Xxxxxxxx”), and any successors and assigns (collectively, including Xxxxxxxx,
the “Holders”). In consideration of the mutual promises herein contained, and other consideration,
the receipt and adequacy of which hereby is acknowledged, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms shall have the
following respective meanings:
1.1 “Common Stock” means the common stock, par value $.0001 per share, of the Company.
1.2 “Demand” means a written request to the Company signed by Holders of at least 10,000,000
shares of the outstanding Registrable Securities which can be made at any time after January 1,
2008.
1.3 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the SEC promulgated thereunder, all as the same shall be in effect at that time.
1.4 “Exchange Shares” shall mean the 2,862,687 shares of Common Stock issued to Xxxxxxxx
pursuant to the terms of the Exchange Agreement (as defined below).
1.5 “Preferred Shares” shall mean those certain shares of Series E Convertible Redeemable
Preferred Stock of the Company, initially convertible into 15,686,274 shares of Common Stock of the
Company issued to Xxxxxxxx pursuant to the Exchange Agreement by and among Xxxxxxxx, the Company
and others dated as of December 11, 2006 (the “Exchange Agreement”).
1.6 The terms “register,” “registered” and “registration” refer to a registration effected by
preparing and filing a registration statement in compliance with the Securities Act (as defined
below), and the declaration or ordering of the effectiveness of such registration statement.
1.7 “Registrable Securities” means (i) the shares of Common Stock issuable or issued upon
conversion of the Preferred Shares, the shares of Common Stock issuable or issued upon exercise of
the Warrant (as defined below) and the Exchange Shares and (ii) any other shares of the Common
Stock issued as (or issuable upon or the exercise of any right or other security which is issued
as) a dividend or other distribution with respect to or in exchange for or replacement of the
Preferred Shares, or the Common Stock issued upon conversion of the Preferred Shares, the Common
Stock issued upon exercise of the Warrant and the Exchange Shares; provided,
however, that Registrable Securities shall only be treated as Registrable Securities if and
so long as, they have
not been (A) sold to or through a broker or dealer or underwriter in a public distribution or
a public securities transaction or (B) sold, in the opinion of counsel to the Company, in a
transaction exempt
from the registration and prospectus delivery requirements of the Securities Act
under Section 4(1) thereof so that all transfer restrictions and restrictive legends with respect
thereto are removed upon the consummation of such sale.
1.8 “Registration Expenses” shall mean all expenses (excluding underwriting discounts, selling
commissions, and fees and expenses in excess of an aggregate of $10,000 of counsel for the Holders)
incurred in connection with a registration under Section 2 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of counsel and
accountants for the Company (including expenses of special audits or “cold comfort” letters or
opinions) and blue sky fees and expenses.
1.9 “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder, all as the same shall be in effect at the time.
1.10 “SEC” shall mean the Securities and Exchange Commission or any other federal agency at
the time administering the Securities Act.
1.11 “Warrant” shall mean the warrant granted to Xxxxxxxx to initially acquire upon exercise
of the warrant 2,500,000 shares of Common Stock, which warrant was issued pursuant to the terms of
the Exchange Agreement.
2. Demand Registration.
2.1 Request for Demand Registration. At any time after January 1, 2008, Holders of
at least the lesser of (a) 10,000,000 shares of the Registrable Securities or (b) Registrable
Securities with a market value of $10,000,000 (the “Demand Holders”) shall have the right to make a
Demand to the Company that it register for resale the number of Registrable Securities set forth in
the Demand. Upon receiving a Demand, the Company shall provide to each other Holder the right to
include in the registration any of each other Holder’s Registrable Securities. Collectively, the
Demand Holders and such other Holders who elect to participate in the registration are referred to
as the “Selling Demand Holders.”
2.2 Form of Registration Statement. On or before the sixtieth (60th) day following a
Demand, the Company file with the SEC a registration statement under the Securities Act covering
the resale of the number of Registrable Securities elected pursuant to Section 2.1 to be included
in such registration. In addition, the Company may elect to register for resale shares of Common
Stock held by other security holders of the Company, so long as (i) the Registrable Securities of
the Selling Demand Holders to be registered will not be reduced thereby; (ii) if such registration
is an underwritten offering, such other security holders agree in writing to sell the Common Stock
on the same terms and conditions as apply to the Registrable Securities being sold so long as any
Common Stock to be sold pursuant to this clause (ii) will not, in the opinion of the managing
underwriter(s) adversely affect the offering price of the Registrable Securities being sold;
and (iii) the Company will be responsible for any and all costs (including reasonable
attorneys’ fees) incurred by the Selling Demand Holders arising out of the registration of such
other security holder’s Common Stock.
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2.3 Effecting the Registration Statement. The Company shall use its reasonable best
efforts to cause the registration statement to become effective as soon as possible following the
filing thereof and shall use its reasonable best efforts to keep the registration statement in
effect and maintain compliance with all securities laws until the end of the Registration Period
(hereafter defined).
2.4 Number of Demands. Subject to Section 2.7, the Company shall only be obligated
under this Section 2 to effect an aggregate of one (1) registration on Demand for any and all
Holders, unless the Company breaches its obligations under Sections 2.2, 2.3 or 4.2 (b), (c), (d),
(e) or (f).
2.5 Delay due to Underwritten Offering. If, upon receiving a Demand, the Company is
otherwise registering its securities pursuant to an underwritten public offering and in the good
faith judgment of the managing underwriter, the registration of the Registrable Securities pursuant
to the Demand or the resale of the Registrable Securities pursuant thereto would interfere with the
Company’s successful marketing of its securities, the Company may, by giving prompt written notice
to the Holders giving the Demand, delay the registration of the Registrable Securities pursuant to
the Demand or any resale of such Registrable Securities for the minimum period necessary to not
interfere with the Company’s offering, but in no event more than ninety (90) days. The Holders
shall have piggyback rights under Section 3 with respect to the Company’s offering.
2.6 Underwritten Offering. If any registration under Section 2 of this Agreement is
an underwritten offering, the underwriter(s) that will administer the offering will be selected by
the Company.
2.7 Withdrawal. If any Holder disapproves of the terms of any offering, such Holder
may, in its sole discretion, withdraw such Holder’s Registrable Securities therefrom by giving
written notice to the Company. Such Holder’s Registrable Securities so withdrawn from the offering
shall also be withdrawn from registration. If all Holders requesting the Demand withdraw all
Registrable Securities from such registration (whether before or after the registration statement
is declared effective by the SEC) as a result of a Permitted Withdrawal Event (as hereafter
defined), then such registration shall not be counted as or constitute the Demand effected
hereunder. The term “Permitted Withdrawal Event” means (a) there has occurred any material adverse
change in the financial markets in the United States or the international financial markets, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international political, financial or
economic conditions, including, without limitation, as a result of terrorist activities after the
date of filing of such registration statement either within or outside the United States, (b)
trading in any securities of the Company has been suspended or materially limited by the SEC or
the New York Stock Exchange, the American Stock Exchange, or NASDAQ if such securities were so
traded immediately prior to such suspension or material limitation, or if trading generally on the
New York Stock Exchange or the American
Stock Exchange or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the SEC, the National
Association of Securities Dealers, Inc. or any other governmental authority, (c) a material
disruption
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has occurred in commercial banking or securities settlement or clearance services in the
United States, or (d) a banking moratorium has been declared by either Federal or New York
authorities.
3. Piggyback Registration.
3.1 Notice. If at any time prior to the expiration of the Registration Period, (i)
the Company shall determine to register any of its equity securities, either for its own account or
for the account of a security holder or holders, other than a registration relating solely to
employee benefit plans or a registration relating solely to a Rule 145 transaction or other merger
transaction or a registration on any registration form which does not permit secondary sales of
Common Stock and (ii) registration statements covering the resale of all of the Registrable
Securities are not then effective and available for sales thereof, the Company will:
(a) promptly give the Holders written notice thereof;
(b) include in such registration, and in any underwriting involved therein, all of the
Registrable Securities specified in a written request or requests made by the Holders within
thirty (30) days after receipt of the written notice from the Company described in clause
(a) above, except as set forth in Section 3.2 below. Such written request or requests shall
specify all of the Holders’ Registrable Securities; provided, however, the
aggregate amount of Registrable Securities specified in such written request shall not be
less than one-half of the Registrable Securities; and
(c) use its reasonable best efforts to keep the registration statement in effect and
maintain compliance with all securities laws for the Registration Period.
3.2 Underwriting. The right of the Holders to registration pursuant to this Section 3
shall be conditioned upon their participation in any underwriting and the inclusion of their
Registrable Securities in such underwriting to the extent provided herein. If the Holders wish to
include Registrable Securities in the registration and underwriting, if any, the Holders shall
(together with the Company and the other stockholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with an underwriter(s)
selected by the Company. Notwithstanding any other provision of this Section 3, if the
underwriter(s) determines that marketing factors require a limitation on the number of shares to be
underwritten, then the Company shall include in such registration to the extent that such
securities may be included in such registration without materially affecting the offering price
thereof in the opinion of such managing underwriter in the following order: (i) if such
registration is initiated by the Company proposing to register any of its Common Stock, first such
Common Stock proposed to be sold by the Company; (ii) if such registration is initiated by the
Company proposing to register any of its Common Stock, second, up to all the Registrable Securities
held by any Holder which have been duly requested to be included in such registration in accordance
with this Agreement with the actual amount being
determined by the managing underwriter; (iii) if such registration is not initiated by the
Company proposing to register any of its Company, first, up to all the Registrable Securities held
by any Holder which have been duly requested to be included in such registration in accordance with
this Agreement with the actual amount being determined by the managing underwriter; (iv) if such
registration is initiated by the Company proposing to register any of its Common Stock, third, up
to
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all of any other securities of the Company held by Persons other than a Holder having rights to
participate in such registration, in accordance with their agreements with respect thereto with the
actual amount being determined by the managing underwriter; and (v) if such registration is not
initiated by the Company proposing to register any of its Common Stock, second, up to all of any
other securities of the Company held by Persons other than a Holder having rights to participate in
such registration, in accordance with their agreements with respect thereto with the actual amount
being determined by the managing underwriter. If the Holders or other stockholder disapproves of
the terms of any such underwriting, the Holders or other stockholder may elect to withdraw
therefrom by written notice to the Company and the underwriter(s). Any Registrable Securities or
other securities excluded or withdrawn from such underwriting shall be withdrawn from such
registration.
4. Expenses of Registration; Registration Procedures.
4.1 Expenses. All Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to this Agreement shall be borne by the Company.
4.2 Procedures. If and whenever the Company effects the registration of any
Registrable Securities as provided herein, the Company shall, subject to the limitations provided
herein:
(a) if requested, prior to filing a registration statement or prospectus or any amendment or
supplement thereto, furnish to the selling Holders and each underwriter, if any, of the Registrable
Securities covered by such registration statement copies of such registration statement,
prospectus, any amendment or supplement thereto as proposed to be filed;
(b) prepare and file with the SEC such amendments and supplements to any registration
statement and the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such registration statement
until such time as all of such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the Holders thereof set forth in such registration statement;
(c) furnish to the Holders of Registrable Securities covered by such registration statement
such number of conformed copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the Securities Act, and such other
documents, as the Holders may reasonably request;
(d) use its reasonable best efforts to register or qualify all Registrable Securities and
other securities covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as the Holders shall reasonably request (the “Blue Sky Laws”), to keep
such registration or qualification in effect for so long as such registration statement remains in
effect, and take any other action which may be reasonably necessary or advisable to enable the
Holders to consummate the disposition in such jurisdictions of the securities owned by the Holders,
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except that the Company shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not but for the requirements
of this Section 4.2(d) be obligated to be so qualified or to consent to general service of process
in any such jurisdiction;
(e) use its reasonable best efforts to cause all Registrable Securities covered by such
registration statement to be registered with or approved by such other United States Federal or
state governmental agencies or authorities as may be necessary to enable the Holders thereof to
consummate the disposition of such Registrable Securities;
(f) notify the Holders of Registrable Securities covered by such registration statement, at
any time when a prospectus relating thereto is required to be delivered under the Securities Act,
upon discovery that, or upon 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 any material fact required to be stated therein or necessary to
make the statements therein not misleading, and at the request of the Holders, prepare and furnish
to the Holders a reasonable number of copies of a supplement to or an amendment of such prospectus
as may be necessary so that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an 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;
(g) after the filing of the registration statement, promptly notify the Holders of any stop
order issued or, to its knowledge, threatened by the SEC and take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered;
(h) provide and cause to be maintained a transfer agent for all Registrable Securities covered
by such registration statement from and after a date not later than the effective date of such
registration statement;
(i) use its reasonable best efforts to list all Registrable Securities covered by such
registration statement on any national or regional securities exchange or quoting service on which
any of the Common Stock is then listed or quoted, including the “pink sheets” or any
over-the-counter trading activity;
(j) the Company will make reasonably available for inspection by the Holders requesting
registration of Registrable Securities, any underwriter participating in any disposition pursuant
to such registration statement and any attorney, accountant or other professional retained by the
Holders or underwriter (collectively, the “Inspectors”), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the “Records”)
as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and
cause the Company’s officers, directors and employees to supply all information reasonably
requested by any Inspectors in connection with such registration statement. Records which the
Company determines, in good faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such registration statement or (ii) the
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release of such Records is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction. The Holders agree that information obtained by it as a result of such inspections
shall be deemed confidential and shall not be used by it as the basis for any market transactions
in the securities of the Company or its affiliates unless and until such is made generally
available to the public;
(k) the Company will otherwise use its reasonable best efforts to comply with all applicable
rules and regulations of the SEC; and
(l) upon the transfer of any Registrable Securities by the Holders in connection with a
registration hereunder, the Company shall furnish unlegended certificates representing ownership of
the Registrable Securities in such denominations as shall be requested by the Holders or the
underwriters.
4.3 Company Right to Delay. Notwithstanding anything set forth in this Agreement, the
Company shall have the right once per every twelve (12) consecutive months to delay the filing of a
registration statement pursuant to this Agreement and to suspend the effectiveness of any such
Registration Statement for a reasonable period of time (not exceeding ninety (90) days) if the
Company furnishes to the selling Holders a certificate signed by the Chairman of the Board or the
President of the Company stating that the Company has determined in good faith that effecting such
registration or offering at such time would adversely affect a material financing, acquisition or
disposition of assets, distribution rights or stock, merger or other comparable transaction, or
would require the Company to make public disclosure of information the public disclosure of which
would have a material adverse effect upon the Company. The right pursuant to this Section 4.3
cannot be used with the delay right under Section 2.5. If a registration is delayed under Sections
2.5 or 4.3, then such registration may not also be delayed under the other section.
5. Indemnification.
5.1 Company. The Company shall indemnify a Holder and the directors, officers,
employees, agents and representatives of the Holder, and each person, if any, who controls any
Holder within the meaning of Section 15 of the Securities Act, if Registrable Securities held by
the Holder are included in the securities with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus, offering circular or
other document (including any related registration statement) 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 the Securities Act or the Blue Sky Laws including any rule or
regulation thereunder applicable to the Company relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance, and will reimburse
the Holder and such directors, officers, employees, agents, representatives or control persons for
any attorney’s fees, legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the
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extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement (or alleged untrue
statement) or omission (or alleged omission) contained in a writing signed by that Holder and
furnished to the Company by that Holder and stated to be specifically for use in preparing such
prospectus, offering circular or other document incident to such registration, qualification or
compliance in that writing.
5.2 Holder. Each Holder will, if Registrable Securities or other securities held by
such Holder are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors, officers, employees,
agents and representatives and each underwriter, if any, of the Company’ securities covered by such
a registration statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act against all claims, losses, damages and liabilities (or
actions in respect thereof) 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 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 and such directors, officers, agents, representatives, underwriters or
control persons for any legal or any other expenses reasonably incurred in connection with
investigating 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 or other document incident to such registration, qualification or compliance and contained
in a writing signed by that Holder and furnished to the Company by that Holder and stated to be
specifically for use in preparing such prospectus, offering circular or other document incident to
such registration, qualification or compliance in that writing. Notwithstanding anything to the
contrary in this Agreement, in no event shall the aggregate liability of such Holder for
indemnification or contribution under this Section 5 exceed the proceeds actually received by such
Holder from the sale of shares in such offering (after deducting any and all costs, fees, and
expenses, including underwriting commissions, discounts, and legal fees and expenses).
5.3 Procedures. Each party entitled to indemnification under this Section 5 (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 any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the
Indemnified Party may participate in such defense at such party’s expense, and provided further
that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Agreement, except to the extent that the Indemnified Party is
prejudiced thereby. Each Indemnified Party, at the Indemnifying Party’s cost, shall furnish such
information regarding itself or the claim in question as an Indemnifying Party may reasonably
request and as shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom. An Indemnified Party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the Indemnifying Party, if representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to
actual or potential
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differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding, provided that in no event shall the Indemnifying
Party be required to pay the fees and expenses of more than one such separate counsel for all
Indemnified Parties.
5.4 Equitable Relief. If the indemnification provided for in this Section 5 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 amount paid or payable by such Indemnified Party as the 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 allegation(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’ relevant intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, that in no event shall any contribution by any Holder
hereunder exceed the proceeds from the sale of shares in the offering received by such Holder.
5.5 Survival. The obligations of the Company and the Holders under this Section 5
shall survive the 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 prior written consent of each Indemnified Party (which consent
shall not be unreasonably withheld), consent to the entry of any judgment or enter into any
settlement. Unless waived by the Indemnified Party, all judgments and settlements must 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.
6. Rule 144 Reporting. With a view to making available the benefits of certain rules
and regulations of the SEC which may permit the sale of the Registrable Securities to the public
without registration, the Company agrees to:
6.1 Public Information. Make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act;
6.2 Filings. File with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act;
6.3 Compliance. So long as a Holder owns any Registrable Securities, furnish to such
Holder forthwith upon request a written statement by the Company as to its compliance with the
reporting requirements of Rule 144, and of the Securities Act and the Exchange Act;
6.4 Removal of Legends. The Company will, at the written request of a Holder, upon
receipt from such Holder of a certificate certifying (i) that such Holder has held its Registrable
Securities for the applicable holding period under Rule 144 with respect to the Holder’s possession
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of such Registrable Securities, as in effect on the date of such certificate, (ii) that such Holder
has not been an affiliate (as defined in Rule 144) of the Company during any of the ninety (90)
preceding days, and (iii) as to such other matters as may be required in accordance with Rule
144, remove from the stock certificates representing such Registrable Securities that portion
of any restrictive legend which relates to the registration provisions of the Securities Act; and
6.5 Additional Information. The Company acknowledges and agrees that the purposes of
the requirements contained in this Section 6 are to enable the Holders to comply with the current
public information requirement contained in Paragraph (c) of Rule 144 under the Securities Act
should the Holders ever wish to dispose of any of the securities of the Company acquired by it
without registration under the Securities Act in reliance upon Rule 144 (or any other similar
exemptive provision). The Company shall take such other measures, and file such other information,
documents and reports, as shall hereafter be required by the SEC as a condition to the availability
of Rule 144 under the Securities Act (or any similar provision hereafter in effect).
7. Termination of Rights. The provisions of this Agreement, except the provisions in
Sections 5 and 6 of this Agreement, shall terminate upon the
earlier of (i) December 11, 2016, (ii)
the first day that all Registrable Securities have been sold by the Holders, or (iii) with regard
to any specific Holder, the first day that all Registrable Securities owned by such Holder (and any
affiliate of such Holder may be sold, in light of the status of such Holder as an affiliate of the
Company with whom such Holder must aggregate its shares under Rule 144), pursuant to Rule 144
promulgated under the Securities Act in any three (3) month period; provided,
however, that the indemnification and contribution rights and obligations hereunder shall
not terminate and shall survive forever. The period this Agreement is in effect is referred to as
the “Registration Period.”
8. Miscellaneous.
8.1 Transfer or Assignment of Registration Rights. The rights of a Holder shall be
assigned automatically to any transferee of the Preferred Shares or Registrable Securities from
such Holder as long as: (i) the Company is, within a reasonable period of time following such
transfer, furnished with written notice of the name and address of such transferee and (ii) the
transferee agrees in writing with the Company to be bound by all of the provisions hereof.
8.2 Governing Law. This Agreement shall be governed by and construed under the laws
of the State of Texas as applied to agreements entered into solely between residents of and to be
performed entirely within such state.
8.3 Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.
8.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting this Agreement.
8.5 Notices, Etc. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by first-class mail, postage prepaid, or
otherwise
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delivered by hand or by messenger, addressed (a) if to a Holder, at the address of such
Holder on the books of the Company, or at such other address as such Holder shall have furnished to
the Company in writing, or (b) if to the Company, at the address of its principal offices.
8.6 Expenses. If any action at law or in equity (including arbitration) is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys’ fees, expenses and necessary disbursements in addition to any other relief to
which such party may be entitled.
8.7 Amendments and Waivers. Any term of this Agreement may be amended with the
written consent of the Company and the Holders of at least a majority of the outstanding
Registrable Securities. Any amendment or waiver effected in accordance with this Section 8.7 shall
be binding upon the Holders, each transferee of the Registrable Securities, each future holder of
all such Registrable Securities, and the Company.
8.8 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, portions of such provisions, or such provisions in their
entirety, to the extent necessary, shall be severed from this Agreement, and the balance of the
Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
8.9 Delays or Omissions. No delay or omission to exercise any right, power or remedy
accruing to any party to this Agreement, upon any breach or default of any other party, shall
impair any such right, power or remedy of such non-breaching party nor shall it be construed to be
a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any breach or default
under this Agreement, or any waiver on the part of any party of any provisions or conditions of
this Agreement, must be made in writing and shall be effective only to the extent specifically set
forth in such writing. All remedies, either under this Agreement, or by law or otherwise afforded
to the Holders, shall be cumulative and not alternative.
8.10 Entire Agreement. This Agreement and the documents referred to herein constitute
the entire agreement between the parties hereto pertaining to the subject matter hereof and
any other written or oral agreements between the parties hereto are expressly canceled.
8.11 Aggregation of Stock. All Registrable Securities held or acquired by affiliated
entities or persons shall be aggregated for the purposes of determining the availability of any
right under this Agreement.
8.12 Adjustment of Share Amounts. All share amounts in this Agreement are subject to
adjustment (a) in the event of any stock split, stock dividend or share combination (reverse stock
split) and (b) in accordance with (i) the Certificate of Designation creating the Preferred Shares
and (ii) the terms of the Warrant.
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8.13 Remedies. The Company acknowledges that in the event of any breach of this
Agreement by the Company, or any controversy arises concerning any Holder’s rights or obligations
under this Agreement, such Holder (1) would be irreparably and immediately harmed by such breach,
(2) could not be made whole by monetary damages, and (3) shall be entitled to seek temporary and
permanent injunctions (or their functional equivalents) to prevent any such breach and/or to compel
specific performance of this Agreement, in addition to all other remedies to which such Holder may
be entitled at law or in equity. The remedies of such Holder under this Agreement shall be
cumulative of each other and of the remedies available at law or in equity. Such Holder’s full or
partial exercise of any such remedy shall not preclude any subsequent exercise by such Holder of
the same or any other remedy.
8.14 Construction. Whenever the context requires in this Agreement, the gender of all
words used in Agreement include the masculine, feminine, and neuter and the singular form of nouns,
pronouns, and verbs shall include the plural and vice versa. Use of “herein,” “hereof,” “hereby,”
“hereunder,” or similar terms in this Agreement refer to this Agreement as a whole and not to any
particular provision or part hereof. Unless otherwise specified, all references to a Section refer
to sections of this Agreement. The terms “include,” “includes,” and “including” mean “include
without limitation,” “includes without limitation,” and “including without limitation” and the term
“or” has the inclusive meaning represented by the phrase “and/or.”
8.15 Time of the Essence. Time is of the essence with respect to all obligations of
the Company to give notice and otherwise take action hereunder.
9. Other Provisions.
9.1 No More Favorable Rights. The Company represents and warrants to Xxxxxxxx that no
other Person has registration rights equal to or more favorable than the registration rights set
forth in this Agreement. The Company covenants and agrees with Xxxxxxxx that so long as Xxxxxxxx
owns any Registrable Securities and this Agreement has not terminated with respect to Xxxxxxxx
pursuant to Section 7 hereof, it (i) will not grant any Person registration rights that are as
favorable or more favorable than the rights granted in this Agreement and (ii) will cause any
agreement granting registration rights to any other Person that is executed on or after the date
hereof to be expressly subject and subordinate to the rights in this Agreement.
9.2 Representations and Warranties. The Company represents and warrants to Xxxxxxxx
that (i) this Agreement has been duly approved by all necessary corporate action on the part of the
Company, (ii) this Agreement constitutes the Company’s legal, valid, and binding obligation,
enforceable against the Company in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors right generally and general
equitable principles, and (iii) the execution, delivery, and/or performance of this Agreement by
the Company does not, and will not, with the giving of notice, the passage of time, or both,
breach, violate, or conflict with the terms of any law, rule, or regulation by which the Company is
bound, any document or agreement to which the Company is a party or to which the Company’s assets
are subject, or any order, injunction, or decree to which the Company is subject or by which the
Company’s assets are bound.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth
above.
| COMPANY: | ||||
| XXXXXXXX.XXX, INC., a Delaware company | ||||
| By: | /s Xxxxxx X. Xxxxxx | |||
| Xxxxxx X. Xxxxxx | ||||
| Chief Financial Officer | ||||
| HOLDER: | ||||
| XXXXXXXX FAMILY PARTNERSHIP, LTD. | ||||
| By: | /s/ X.X. Xxxxxxxx, Xx. | |||
| X.X. Xxxxxxxx, Xx. | ||||
| General Partner | ||||
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