Exhibit 10.1

 

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (the “Registration Rights Agreement”), dated
as July 26, 2019, is entered into by and between American Electric Technologies,
Inc., a Florida corporation (the “Company”), LNG Investment Company, LLC, a
Texas limited liability company (“Holdings”), and AEGIS NG LLC, a Texas limited
liability company (“AEGIS” and, collectively with the Company and Holdings, the
“Parties”).  Each of Holdings and AEGIS is herein referred to as an “Initial
Holder” and collectively as the “Initial Holders”.  

WHEREAS, in connection with, and in consideration of, the transactions
contemplated by that certain Share Exchange Agreement (the “Share Exchange
Agreement”), dated as of December 17, 2018, by and among the Company, Holdings,
AEGIS and the other parties thereto, each of the Initial Holders has requested,
and the Company has agreed to provide, registration rights with respect to the
Registrable Securities (as hereinafter defined) as set forth in this
Registration Rights Agreement.  

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each Party, the Parties hereby
agree as follows:

1.

Definitions

.  In addition to the terms defined elsewhere in this Registration Rights
Agreement, when used in this Registration Rights Agreement the following terms
shall have the meanings indicated.  

“Additional Demand Notice” has the meaning set forth in Section 2(j).  

“Additional Demand Registration” has the meaning set forth in Section 2(j).  

“Additional Shelf Demand Notice” has the meaning set forth in Section 2(k).  

“AEGIS” has the meaning set forth in the Preamble.  

“Affiliate” means with respect to a particular Person, any other Person that
Controls, is Controlled by, or is Under Common Control with such Person. For the
avoidance of doubt, for purposes of this Registration Rights Agreement, the
Company, on the one hand, and the Initial Holders, on the other, shall not be
considered Affiliates of each other.  

“Automatic Shelf Registration Statement” means an “automatic shelf registration
statement” as defined in Rule 405 promulgated under the Securities Act.  

“Block Trade” has the meaning set forth in Section 2(i).  

“Board” means the board of directors of the Company.  

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“Business Day” means any day other than a Saturday, a Sunday, or a holiday on
which banks are authorized or required by Law to close in the city of Houston,
Texas.  

“Common Stock” means the common stock, par value $0.001 per share, of the
Company.  

“Company” has the meaning set forth in the Preamble.  

“Company Notice” has the meaning set forth in Section 2(c).  

“Control” (including the correlative terms “Controlling”, “Controlled by”, and
“Under Common Control”) means possession, directly or indirectly, of the power
to direct or cause the direction of management or policies (whether through
ownership of securities or any partnership or other ownership interest, by
contract or otherwise) of a Person.  

“Demand Holder” means Holdings and each transferee of Registrable Securities
directly or indirectly (in a chain of title) from Holdings if such transferee to
whom the right to request a Requested Underwritten Offering under Section 2(a)
has been expressly assigned in writing directly or indirectly (in a chain of
title) from Holdings as permitted by Section 9.  

“Demand Notice” has the meaning set forth in Section 2(c).  

“Determination Date” has the meaning set forth in Section 2(a)(iii).  

“End of Suspension Notice” has the meaning set forth in Section 4(c)(i).  

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time.  

“FINRA” means the Financial Industry Regulatory Authority, Inc.  

“Follow-On Shelf” has the meaning set forth in Section 2(g)(i).  

“Follow-On Registration Notice” has the meaning set forth in Section 2(g)(i).  

“Holder” means (a) each Initial Holder until such Initial Holder ceases to hold
any Registrable Securities, (b) any Affiliate of an Initial Holder if such
Affiliate holds Registrable Securities and until such Affiliate ceases to hold
any Registrable Securities, and (c) any holder of Registrable Securities to whom
registration rights conferred by this Registration Rights Agreement have been
transferred in compliance with Section 9; provided, that any Person referenced
in clauses (b) or (c) shall be a Holder only if such Person agrees in writing to
be bound by and subject to the terms set forth in this Registration Rights
Agreement.  

“Indemnified Party” has the meaning set forth in Section 7(c).  

“Indemnifying Party” has the meaning set forth in Section 7(c).  

“Initial Holder” has the meaning set forth in the Preamble.  

“Inspectors” has the meaning set forth in Section 5(a)(x).  

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“Law” means any applicable constitutional provision, statute, act, code, law,
regulation, rule, ordinance, order, decree, ruling, proclamation, resolution,
judgment, decision, declaration, or interpretative or advisory opinion or letter
of a governmental authority.  

“Lock-Up Period” has the meaning set forth in Section 4(a).  

“Other Holders” has the meaning set forth in Section 3(c).  

“Parties” has the meaning set forth in the Preamble.  

“Person” means any natural person, limited liability company, corporation,
limited partnership, general partnership, joint stock company, joint venture,
association, company, trust, bank trust company, land trust, business trust, or
other organization, whether or not a legal entity, and any government or agency
or political subdivision thereof.  

“Piggyback Notice” has the meaning set forth in Section 3(a).  

“Piggyback Offering” has the meaning set forth in Section 3(a).  

“Records” has the meaning set forth in Section 5(a)(x).  

“Registrable Securities” means the Common Stock issued to the Initial Holders
pursuant to the Share Exchange Agreement and any other securities issued or
issuable with respect to such Common Stock by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or reorganization; provided, that any Registrable Security will
cease to be a Registrable Security when (a) a registration statement covering
such Registrable Security has become effective, or has been declared effective
by the SEC, and it has been disposed of pursuant to such effective registration
statement; (b) it is sold under circumstances in which all of the applicable
conditions of Rule 144 (or any similar provisions then in force) under the
Securities Act are met and the transferee thereof does not receive “restricted
securities” as defined in Rule 144; (c) it shall have ceased to be outstanding
(whether as a result of repurchase and cancellation, conversion or otherwise);
or (d) it is held by a Person that is not a Holder in accordance with the
provisos to the definition of Holder provided for herein.  

“Registration Expenses” has the meaning set forth in Section 6.  

“Registration Rights Agreement” has the meaning set forth in the Preamble.  

“Registration Statement” means any registration statement filed hereunder or in
connection with a Piggyback Offering.  

“Requested Underwritten Offering” has the meaning set forth in Section 2(b).  

“Requesting Holders” means a Holder who requests a Requested Underwritten
Offering or a Block Trade.  

“SEC” means the Securities and Exchange Commission or any successor governmental
agency.  

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“Securities Act” means the Securities Act of 1933, as amended from time to
time.  

“Selling Holder” means a Holder who is selling Registrable Securities pursuant
to a registration statement under the Securities Act.  

“Share Exchange Agreement” has the meaning set forth in the Preamble.  

“Shelf Registration” means a registration of securities pursuant to a
registration statement filed with the SEC in accordance with and pursuant to
Rule 415 promulgated under the Securities Act (or any successor rule then in
effect).  

“Shelf Registration Statement” means a registration statement to permit the
public resale of the Registrable Securities pursuant to Rule 415 promulgated
under the Securities Act (or any successor rule then in effect).  

“Suspension Notice” has the meaning set forth in Section 4(c)(i).  

“Underwriter” means a securities dealer which purchases any Registrable
Securities as principal and not as part of such dealer’s market-making
activities.  

“Well-Known Seasoned Issuer” means a “well-known seasoned issuer” as defined in
Rule 405 promulgated under the Securities Act and which (a) is a “well-known
seasoned issuer” under paragraph (1)(i)(A) of such definition or (b) is a
“well-known seasoned issuer” under paragraph (1)(i)(B) of such definition and is
also eligible to register a primary offering of its securities relying on
General Instruction I.B.1 of Form S-3 or Form F-3 under the Securities Act.  

2.

Shelf Registrations.  

 

(a)

Filing.  

(i)The Company (A) shall prepare and file, no later than 180 days following the
closing of the transaction contemplated by the Share Exchange Agreement, a Shelf
Registration Statement on Form S-1 (or any successor form or other appropriate
form under the Securities Act) or, if the Company is then eligible to use Form
S-3, a Shelf Registration Statement on Form S-3 (or any successor form or other
appropriate form under the Securities Act), to permit the public resale of all
of the Registrable Securities in accordance with the terms of the Registration
Rights Agreement and (B) shall use commercially reasonable efforts to cause the
Shelf Registration Statement to be declared effective under the Securities Act
as promptly as practicable, but in no event more than five Business Days after
the date that is 30 days following the filing thereof (or 90 days following the
filing thereof if the SEC notifies the Company that it will “Review” the Shelf
Registration Statement) and (C) shall use commercially reasonable efforts to
cause such Shelf Registration Statement to remain effective thereafter until
there are no longer any Registrable Securities.  If the Shelf Registration
Statement initially filed pursuant to this Section 2(a)(i) is on Form S-1, then
the Company shall use commercially reasonable efforts, as soon as it is
permitted to

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do so, to convert such Shelf Registration Statement from a Form S-1 to a Form
S-3.  

(ii)Upon the Company becoming a Well-Known Seasoned Issuer, the Company
(A) shall give written notice to all of the Holders as promptly as practicable
but in no event later than three Business Days thereafter, and such notice shall
describe, in reasonable detail, the basis on which the Company has become a
Well-Known Seasoned Issuer, and (B) shall, as promptly as practicable, register,
under an Automatic Shelf Registration Statement, the sale of all of the
Registrable Securities in accordance with the terms of this Registration Rights
Agreement; provided, that the obligation in this Section 2(a)(ii) shall not
apply with respect to Registrable Securities included in an effective
Registration Statement.  The Company shall use its commercially reasonable
efforts to file such Automatic Shelf Registration Statement as promptly as
practicable, but in no event later than 20 Business Days after it becomes a
Well-Known Seasoned Issuer, and to cause such Automatic Shelf Registration
Statement to remain effective thereafter until there are no longer any
Registrable Securities.  The Company shall give written notice of filing such
Automatic Shelf Registration Statement to all of the Holders as promptly as
practicable thereafter.  

(iii)At any time after the filing of an Automatic Shelf Registration Statement
by the Company, if the Company is no longer a Well-Known Seasoned Issuer
(the “Determination Date”), within 10 Business Days after such Determination
Date, the Company shall (A) give written notice thereof to all of the Holders
and (B) file a Registration Statement on an appropriate form (or a
post-effective amendment converting the Automatic Shelf Registration Statement
to an appropriate form) covering all of the Registrable Securities, and use
commercially reasonable efforts to have such Registration Statement declared
effective as promptly as practicable (but in no event more than 30 days) after
the date the Automatic Shelf Registration Statement is no longer useable by the
Holders to sell their Registrable Securities.  

(iv)For so long as any Registrable Securities remain outstanding, the Company
shall use its commercially reasonable efforts to (A) become eligible to register
the Registrable Securities on Form S-3 (or any successor form) as promptly as
practicable and (B) thereafter maintain its eligibility to register the
Registrable Securities on Form S-3 (or any successor form).  

 

(b)

Requests for Requested Underwritten Offering

.  At any time and from time to time, any one or more Demand Holders shall have
the option and right, exercisable by delivering a Demand Notice (as defined
below) to the Company of their intention to distribute Registrable Securities by
means of an underwritten offering, to require the Company, pursuant to the terms
of and subject to the limitations of this Registration Rights Agreement, to
effectuate a distribution of any or all of such Demand Holder’s Registrable
Securities by means of an underwritten offering and to take all reasonable steps
to facilitate such underwritten offering (a “Requested Underwritten Offering”),
including amending or supplementing a Registration Statement filed pursuant to
Section 2(a) as necessary or, if such Registration Statement filed pursuant to
Section 2(a) has been

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declared effective by the Commission and such Registration Statement does not
cover all of the Registrable Securities held by a Demand Holder or is otherwise
unavailable to such Demand Holder, filing a Registration Statement for the
purpose of effecting such Underwritten Offering (a “Requested Underwritten
Offering”); provided, that in the case of the Requested Underwritten Offering
such Demand Holder or Demand Holders will be entitled to make such demand only
if the total offering price of the shares to be sold in such offering (including
piggyback shares and before deduction of underwriting discounts) is reasonably
expected to exceed, in the aggregate, $15 million.  The Company’s obligation to
file any Registration Statement pursuant to this Section 2(b) in connection with
a Requested Underwritten Offering shall not be affected by the filing or
effectiveness of any other Registration Statement of the Company.  

 

(c)

Demand Notices

.  Any requests for the Requested Underwritten Offering shall be made by giving
written notice to the Company (the “Demand Notice”).  The Demand Notice shall
specify the approximate number of Registrable Securities to be sold in the
Requested Underwritten Offering and the expected price range (net of
underwriting discounts and commissions) of the Requested Underwritten
Offering.  Within five days after receipt of any Demand Notice, the Company
shall give written notice of the Requested Underwritten Offering (the “Company
Notice”) to all other Holders of Registrable Securities and, subject to the
provisions of Section 2(d) hereof, shall include in the Requested Underwritten
Offering all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 10 days after sending the
Company Notice.  

 

(d)

Priority on Requested Underwritten Offering

.  If equity securities to be sold for the account of any Person (including the
Company) other than a Requesting Holder are desired to be included in the
Requested Underwritten Offering and if the managing underwriters for the
Requested Underwritten Offering advise the Company in writing that in their
opinion the number of Registrable Securities and, if permitted hereunder, other
equity securities requested to be included in the Requested Underwritten
Offering, exceeds the number of Registrable Securities and other equity
securities, if any, which can be sold in an orderly manner in such offering
within a price range acceptable to the Holders of a majority of the Registrable
Securities requested to be included in the Requested Underwritten Offering, the
Company shall include in the Requested Underwritten Offering the number of
equity securities which can be so sold in the following order of priority:
(i) first, the Registrable Securities requested to be included in the Requested
Underwritten Offering, which in the opinion of such underwriter can be sold in
an orderly manner within the price range of such offering, pro rata among the
respective Holders of such Registrable Securities on the basis of the relative
number of Registrable Securities requested to be included in such Requested
Underwritten Offering by each such Holder, (ii) second, the equity securities
the Company proposes to sell, and (iii) third, the other equity securities
requested to be included in the Requested Underwritten Offering to the extent
permitted hereunder.  

 

(e)

Restrictions on Requested Underwritten Offering

.  The Company shall not be obligated to effect more than six Requested
Underwritten Offerings pursuant to this Registration Rights Agreement and shall
not be obligated to effect a Requested Underwritten Offering within 60 days
after the pricing of a primary offering of Common

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Stock by the Company.  Notwithstanding the foregoing sentence, if a Registration
Statement filed pursuant to Section 2(a) has been declared effective by the SEC
and such Registration Statement does not cover all of the Registrable Securities
held by a Demand Holder or is otherwise unavailable to a Demand Holder, such
Demand Holder shall be granted the right to deliver one (1) additional Demand
Notice.  

 

(f)

Selection of Underwriters

.  If the Requesting Holder so indicates, the Requesting Holder shall have the
right to select the investment banker(s) and manager(s) to administer the
offering (which shall consist of one or more reputable, nationally-recognized
investment banks), subject to the Company’s approval which shall not be
unreasonably withheld, conditioned or delayed.  

 

(g)

Additional Selling Stockholders and Additional Registrable Securities

.  

(i)If the Company is not a Well-Known Seasoned Issuer, within 30 days after a
written request by one or more Demand Holders to register for resale any
additional Registrable Securities owned by such Holders not included in an
effective Registration Statement, the Company shall file a Registration
Statement substantially similar to the Shelf Registration Statement then
effective, if any (each, a “Follow-On Shelf”), to register for resale such
Registrable Securities.  The Company shall give written notice of the filing of
the Follow-On Shelf at least 25 days prior to filing the Follow-On Shelf to all
Holders of Registrable Securities (the “Follow-On Registration Notice”) and
shall include in such Follow-On Shelf all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within 10
days after sending the Follow-On Registration Notice.  Notwithstanding the
foregoing, the Company shall not be required to file a Follow-On Shelf (A) if
the aggregate amount of Registrable Securities requested to be registered on
such Follow-On Shelf by all Holders that have not yet been registered represent
less than one percent of the then outstanding Common Stock, (B) if the Company
is not then eligible to use Form S-3 for secondary offerings or (C) the Company
has filed a Follow-On Shelf in the prior 180 days.  The Company shall use
commercially reasonable efforts to cause such Follow-On Shelf to be declared
effective as promptly as practicable and in any event within thirty (30) days of
filing such Follow-On Shelf (or (90) days if the SEC elects to review the
filing).  Any Registrable Securities requested to be registered pursuant to this
Section 2(g)(i) that have not been registered on a Shelf Registration Statement
or pursuant to Section 3 below at the time the Follow-On Shelf is filed shall be
registered pursuant to such Follow-On Shelf.  

(ii)If the Company is a Well-Known Seasoned Issuer, within 10 Business Days
after a written request by one or more Demand Holders to register for resale any
additional Registrable Securities owned by such Holders, the Company shall make
all necessary filings to include such Registrable Securities in the Automatic
Shelf Registration Statement filed pursuant to Section 2(a).  

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(iii)If a Shelf Registration Statement or Automatic Shelf Registration Statement
is effective, within twenty Business Days after written request therefor by a
Holder of Registrable Securities, the Company shall file a prospectus supplement
or current report on Form 8-K to add such Holder as a selling stockholder in
such Shelf Registration Statement or Automatic Shelf Registration Statement to
the extent permitted under the rules and regulations promulgated by the SEC.  

 

(h)

Other Registration Rights

.  The Company represents and warrants that, as of the date hereof, it is not a
party to, or otherwise subject to, any other agreement granting registration
rights to any Person with respect to any equity securities of the Company.  

 

(i)

Block Trades

.  Notwithstanding anything contained in this Section 2, in the event any one or
more Demand Holders requests in writing a sale of Registrable Securities in an
underwritten transaction requiring the involvement of the Company but not
involving (i) any “road show” or (ii) any lock-up agreement of more than 45 days
to which the Company is a party, and which is commonly known as a “block trade”
(a “Block Trade”), (A) the Requesting Holder shall (1) give at least five
Business Days prior notice in writing of such transaction to (I) the Company and
(II) any holder of Registrable Securities that is a party to this Registration
Rights Agreement and (x) holds more than ten percent of the Common Stock if able
to be identified through public filings or (y) is identified by the Company as
an Affiliate of the Company and (2) with respect to any Block Trade, identify
the potential underwriter(s) in such notice with contact information for such
underwriter(s); and (B) the Company shall cooperate, with such Requesting Holder
or Holders to the extent it is reasonably able and shall not be required to give
notice thereof to other Holders of Registrable Securities or permit their
participation therein.  Any Block Trade shall be for at least $5 million in
expected gross proceeds.  The Company shall not be required to effectuate more
than two Block Trades in any 90-day period.  For the avoidance of doubt, a Block
Trade shall not constitute an Requested Underwritten Offering.  

 

(j)

Additional Demand Registration

.  Subject to the provisions hereof, if at any time the Company ceases to be
eligible under applicable Law to register resales of Registrable Securities on a
Shelf Registration Statement, any one or more Demand Holders shall have the
right to require the Company to file a Registration Statement registering for
sale all or part of the Registrable Securities of such Demand Holder under the
Securities Act (an “Additional Demand Registration”) by delivering a written
request therefor to the Company (i) specifying the number of Registrable
Securities to be included in such registration and (ii) containing all
information about such Demand Holder required to be included in such
Registration Statement in accordance with applicable Law.  Within 15 days after
receipt of demand for an Additional Demand Registration, the Company shall give
written notice of the Additional Demand Registration (the “Additional Demand
Notice”) to all other Holders and shall include in the Registration Statement
all Registrable Securities, which are not otherwise already covered by an
effective Registration Statement, with respect to which the Company has received
written requests for inclusion therein within 10 days after sending the
Additional Demand Notice.  As soon as practicable after expiration of such, 10
day period, the Company shall use

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commercially reasonable efforts to effect such registration (including
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act and any other governmental requirements or regulations) of the
Registrable Securities that the Company has been so requested to register.  The
Company shall not be obligated to effect more than one Additional Demand
Registration pursuant to this Registration Rights Agreement.  

 

(k)

Notwithstanding anything to the contrary herein, if a Registration Statement
filed pursuant to Section 2(a) has been declared effective by the SEC and such
Registration Statement does not cover all of the Registrable Securities held by
an Initial Holder or is otherwise unavailable to such Initial Holder, then upon
such Initial Holder becoming eligible under applicable Law to register resales
of Registrable Securities on a Shelf Registration Statement, the Company shall
file an additional Shelf Registration Statement registering for sale all or part
of the Registrable Securities of such Initial Holder under the Securities Act
upon receipt of a written request therefor from such Initial Holder (the
“Additional Shelf Demand Notice”), (i) specifying the number of Registrable
Securities to be included in such registration and (ii) containing all
information about such Initial Holder required to be included in such Shelf
Registration Statement in accordance with applicable Law.  The Company (A) shall
prepare and file, no later than 60 days following receipt of the Additional
Shelf Demand Notice, a Shelf Registration Statement on Form S-1 (or any
successor form or other appropriate form under the Securities Act) or, if the
Company is then eligible to use Form S-3, a Shelf Registration Statement on Form
S-3 (or any successor form or other appropriate form under the Securities Act),
to permit pursuant to Rule 415 the public resale of all Registrable Securities
so requested by such Initial Holder in accordance with the terms of this
Agreement; and (B) shall use commercially reasonable efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act as
promptly as practicable, but in any event no later than the earlier of (i) 120
days (or 180 days if the Commission notifies the Company that it will “Review”
the Shelf Registration Statement) following receipt of the Additional Shelf
Demand Notice and (ii) five Business Days following the date the Commission
notifies (orally or in writing, whichever is earlier) the Company that it will
not “Review” the Shelf Registration Statement or that the Shelf Registration
Statement will not be subject to further review.  For the avoidance of doubt, an
Initial Holder shall be deemed not to have delivered a Demand Notice for
purposes of Sections 2(c) and 2(e) in connection with its delivery of an
Additional Shelf Demand Notice to require the filing of a Shelf Registration
Statement pursuant to this Section 2(k).  Any Shelf Registration Statement filed
pursuant to this Section 2(k) shall be deemed to constitute a Shelf Registration
Statement filed pursuant to Section 2(a) and shall be entitled to all rights
relating thereto under this Agreement.  

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3.

Piggyback Offerings.  

 

(a)

Right to Piggyback

.  Whenever the Company proposes to sell any of its Common Stock pursuant to a
registration statement in an underwritten offering under the Securities Act (a
“Piggyback Offering”), whether or not for its own account, the Company shall
give prompt written notice (a “Piggyback Notice”) to all Holders of Registrable
Securities of its intention to effect such Piggyback Offering; provided, that if
a Holder notifies the Company in writing that it does not wish to receive
notices of Piggyback Offerings, the Company will not send such Holder any such
notices.  In the case of a Piggyback Offering that is an underwritten offering
under a shelf registration statement, such notice shall be given not less than
five Business Days prior to the expected date of commencement of marketing
efforts for such Piggyback Offering.  In the case of a Piggyback Offering that
is an underwritten offering under a registration statement that is not a shelf
registration statement, such notice shall be given not less than five Business
Days prior to the expected date of filing of such registration statement.  Each
Holder shall be entitled to make a request in writing to the Company (including
by electronic mail) within one Business Day after the receipt of any Piggyback
Notice, which request shall specify the number of Registrable Securities
intended to be disposed of by such Holder, and the Company shall, subject to the
provisions of Sections 3(b) and 3(c), include in such Piggyback Offering, as
applicable, all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within one Business Day after
sending the Piggyback Notice.  For the avoidance of doubt, if such request is
not received by the Company in a timely fashion in accordance with this section,
the failure to submit a timely request shall be deemed a waiver of such Holder’s
rights pertaining to this Section 3(a) with respect to such Piggyback Offering
but shall not be deemed to be a waiver with respect to any future Piggyback
Offerings.  For the avoidance of doubt, a Piggyback Offering shall not be
considered an Requested Underwritten Offering for purposes of
Section 2.  Notwithstanding anything to the contrary contained herein, the
Company may determine not to proceed with any Piggyback Offering upon written
notice to the Holders of Registrable Securities requesting to include their
Registrable Securities in such Piggyback Offering.  

 

(b)

Priority on Primary Piggyback Offerings

.  If a Piggyback Offering is an underwritten primary registration on behalf of
the Company, and the managing underwriters for a Piggyback Offering advise the
Company in writing that in their reasonable opinion the number of securities
requested to be included in such Piggyback Offering exceeds the number which can
be sold in an orderly manner in such offering within a price range acceptable to
the Company, the Company shall include in such Piggyback Offering the number
which can be so sold in the following order of priority: (i) first, the
securities the Company proposes to sell, (ii) second, the Registrable Securities
requested to be included in such Piggyback Offering pursuant to this
Registration Rights Agreement (pro rata on the basis of the relative number of
Registrable Securities requested to be included in such Piggyback Offering by
each such Holder), and (iii) third, other securities requested to be included in
such Piggyback Offering.  

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(c)

Priority on Secondary Piggyback Offerings

.  If a Piggyback Offering is an underwritten secondary registration on behalf
of holders of the Company’s securities (“Other Holders”), and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such Piggyback Offering exceeds the
number which can be sold in an orderly manner in such offering within a price
range acceptable to the Other Holders, the Company shall include in such
registration the number which can be so sold in the following order of priority:
(i) first, the securities requested to be included in such registration by the
Other Holders, (ii) second, the securities the Company proposes to sell,
(iii) third, the Registrable Securities requested to be included therein by
Holders other than the Other Holders pursuant to this Registration Rights
Agreement (pro rata among such Holders on the basis of the number of Registrable
Securities requested to be included in such Piggyback Offering by each such
Holder), and (iv) fourth, other securities requested to be included in such
Piggyback Offering.  

 

(d)

Selection of Underwriters

.  If any Piggyback Offering is an underwritten offering, the Company will have
the sole right to select the investment banker(s) and manager(s) for the
offering.  

 

(e)

Confidentiality

.  Each Holder of Registrable Securities agrees that the fact that a notice
pursuant to this Section 3 has been delivered shall constitute confidential
information and such Holder agrees not to disclose that such notice has been
delivered.  

4.

Holdback Agreements.

 

(a)

Restrictions on Public Sale by Holder of Registrable Securities

.  

(i)In connection with any underwritten public offering of equity securities by
the Company or any Holder of Registrable Securities effected pursuant to this
Registration Rights Agreement, each Holder of Registrable Securities agrees not
to effect any public sale or distribution of securities similar to those being
registered or of any securities convertible into or exchangeable or exercisable
for such securities or hedging transactions relating to the Registrable
Securities, including a sale pursuant to Rule 144 under the Securities Act,
during the period beginning five days prior to the expected date of “pricing” of
such offering and continuing for a period not to exceed 60 days from the date of
such final prospectus (or prospectus supplement if the offering is made pursuant
to a shelf registration statement) as shall be reasonably requested by the
managing Underwriter(s) except as part of such registration (the “Lock-Up
Period”).  If and to the extent requested by the managing Underwriter(s), each
Holder of Registrable Securities subject to the restrictions of this
Section 4(a)(i) agrees to execute an agreement to the foregoing effect with the
Underwriters for such offering on such terms as the managing Underwriter(s)
shall reasonably request (with such modification as reasonably requested by such
managing Underwriter(s) to take into consideration then existing rules of an
applicable securities exchange regarding research analyst
publications).  Notwithstanding the foregoing, in no event shall any Holder of
Registrable Securities be restricted from effecting any

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public sale or distribution of securities pursuant to this Section 4(a)(i) for
more than 120 days during any 12-month period.  

(ii)Without limiting Section 4(a)(i), each Initial Holder shall not, during the
period ending one year after the date of this Registration Rights Agreement,
(A) offer, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock (including without limitation, Common Stock or
such other securities which may be deemed to be beneficially owned by such
Initial Holder in accordance with the rules and regulations of the SEC and
securities which may be issued upon exercise of a stock option or warrant), or
publicly disclose the intention to make any offer, sale or disposition,
(B) enter into any swap or other agreement that transfers, in whole or in part,
any of the economic consequences of ownership of the Common Stock or such other
securities, whether any such transaction described in clauses (A) or (B) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise, or (C) make any demand for or exercise any right with respect to
the registration of any shares of Common Stock or any security convertible into
or exercisable or exchangeable for Common Stock, in each case other than (1) in
connection with participation in any underwritten offering of Common Stock
effected pursuant to this Registration Rights Agreement, (2) in connection with
the filing of any Registration Statement effected pursuant to this Registration
Rights Agreement, and (3) distributions of shares of Common Stock to members,
partners or stockholders of such Initial Holder; provided, that in the case of
any distribution pursuant to clause (3), each distribution shall be made in
compliance with Section 9 hereof and each distributee shall agree in writing to
be bound by and subject to the terms set forth in this Section 4(a)(ii) as if
such distributee was an Initial Holder.

 

(b)

Restrictions on Public Sale by the Company

.  In connection with any underwritten public offering of equity securities by
any Holder of Registrable Securities effected pursuant to this Registration
Rights Agreement, the Company agrees not to effect any public sale or
distribution of any securities similar to those being registered, or any
securities convertible into or exchangeable or exercisable for such securities
or hedging transactions relating to such securities, during the Lock-Up Period
as shall be reasonably requested by the managing Underwriter(s) except as part
of such registration as permitted hereby and subject to other customary
exceptions.  

 

(c)

Use, and Suspension of Use, of Shelf Registration Statement

.  

(i)If the Company has filed a shelf registration statement and has included
Registrable Securities therein, the Company shall be entitled to suspend (but
not more than an aggregate of 60 days in any 12 month period), for a reasonable
period of time not in excess of 20 days, the offer or sale of Registrable
Securities pursuant to such registration statement by any Holder of Registrable
Securities if (A) a “road show” is not then in progress with respect to a
proposed

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offering of Registrable Securities by such Holder pursuant to such registration
statement and such Holder has not executed an underwriting agreement with
respect to a pending sale of Registrable Securities pursuant to such
registration statement and (B) (1) the Company or any of its subsidiaries are
engaged in confidential negotiations or other confidential business activities,
disclosure of which would be required if such registration statement were used
(but would not be required if such registration statement were not used) and the
Board determines in good faith that such disclosure would be materially
detrimental to the Company, (2) the Board determines that a postponement is in
the best interest of the Company and its stockholders due to a pending
transaction involving the Company (including a pending securities offering by
the Company) or (3) the Company has experienced some other material non-public
event or is in possession of material non-public information concerning the
Company, and the Board determines in good faith that such disclosure would be
materially detrimental to the Company.  In order to suspend the use of the
registration statement pursuant to this Section 4(c), the Company shall
promptly, upon determining to seek such suspension, deliver to the holders of
Registrable Securities included in such registration statement, a notice stating
that the Company is suspending use of such registration statement pursuant to
this Section 4(c) (a “Suspension Notice”).  Following the conclusion of any
circumstance resulting in the suspension of a registration statement hereunder,
the Company shall promptly notify each Holder in writing that it may resume use
of the registration statement (an “End of Suspension Notice”).  Each Holder of
Registrable Securities agrees that the fact that a Suspension Notice pursuant to
this Section 4(c) has been delivered shall constitute confidential information
and such Holder agrees not to disclose that such notice has been delivered.  

(ii)Notwithstanding any other provision of this Section 4, the Company will not
send any Suspension Notices or End of Suspension Notices to any Holder following
the six-month anniversary of the closing of the transaction contemplated by the
Share Exchange Agreement, except as provided in the next sentence.  Following
the six month anniversary of the closing of the transaction contemplated by the
Share Exchange Agreement, prior to a Holder’s each intended use of an effective
Shelf Registration Statement, such Holder will notify the Company in writing at
least two Business Days in advance of such intended use, and if a Suspension
Notice was previously delivered (or would have been delivered but for the
provisions of this Section 4) and the related suspension period remains in
effect, the Company will so notify such Holder, within one Business Day of such
Holder’s notification to the Company, by delivering to such Holder a copy of
such previous Suspension Notice, and thereafter will provide such Holder with
the related End of Suspension Notice immediately upon its availability.  

5.

Registration Procedures

.  

 

(a)

Whenever a Holder requests that any Registrable Securities not previously
included in an effective registration statement be registered pursuant to this

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Registration Rights Agreement, and when any Holder proposes to carry out the
Requested Underwritten Offering pursuant to this Registration Rights Agreement,
the Company will, at its sole expense, use commercially reasonable efforts to
effect the registration and the sale of such Registrable Securities under the
Securities Act as soon as reasonably practicable in accordance with the intended
method of disposition thereof, and in connection therewith the Company will as
expeditiously as practicable:

(i)to the extent applicable, prepare and file with the SEC a registration
statement on any form for which the Company then qualifies or which counsel for
the Company shall deem appropriate and which form shall be available for the
sale of the Registrable Securities to be registered thereunder in accordance
with the intended method of distribution thereof, and use commercially
reasonable efforts and proceed diligently and in good faith to cause such filed
registration statement to become effective under the Securities Act; provided,
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish to all Selling Holders and to one
counsel reasonably acceptable to the Company selected by the Selling Holders,
copies of all such documents proposed to be filed, which documents will be
subject to the review of such counsel;

(ii)prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective pursuant to Section 2
for a period (except as provided in the last paragraph of this Section 5) of not
less than 270 consecutive days (or three years, or such shorter period as the
Holder who holds a majority of the Registrable Securities covered by such
registration may elect, if a shelf registration) or, if shorter, the period
terminating when all Registrable Securities covered by such registration
statement have been sold (but not before the expiration of the applicable period
referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder, if
applicable) and comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement during
such period in accordance with the intended method of disposition by the Selling
Holders thereof set forth in such registration statement; provided, that any
Selling Holder that has been included on a shelf registration statement may
request that such Seller Holder’s Registrable Securities be removed from such
registration statement, in which event the Company shall promptly either
withdraw such registration statement or file a post-effective amendment to such
registration statement removing such Registrable Securities;

(iii)furnish to each such Selling Holder such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
such Selling Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Selling Holder;

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(iv)notify the Selling Holders promptly, and (if requested by any such Person)
confirm such notice in writing, (A) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with respect to a
registration statement or any post-effective amendment, when the same has become
effective under the Securities Act and each applicable state law, (B) of any
request by the SEC or any other federal or state governmental authority for
amendments or supplements to a registration statement or related prospectus or
for additional information, (C) of the issuance by the SEC of any stop order
suspending the effectiveness of a registration statement or the initiation of
any proceedings for that purpose, (D) if at any time the representations or
warranties of the Company or any of its subsidiaries contained in any agreement
(including any underwriting agreement) contemplated by Section 5(a)(ix) below
cease to be true and correct in any material respect, (E) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose, (F) of the happening of any event which makes any statement made in
such registration statement or related prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect
or that requires the making of any changes in such registration statement,
prospectus or documents so that, in the case of the registration statement, it
will not contain any 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, and that in the case of the prospectus, it will not
contain any 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,
in light of the circumstances under which they were made, not misleading, and
(G) of the Company’s reasonable determination that a post-effective amendment to
a registration statement would be appropriate;

(v)use commercially reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a registration statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest practicable
moment;

(vi)cooperate with the Selling Holders and the managing Underwriter(s) to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold, which certificates shall not bear any
restrictive legends and shall be in a form eligible for deposit with The
Depositary Trust Company;

(vii)use commercially reasonable efforts to register or qualify such Registrable
Securities as promptly as practicable under such other securities or blue sky
laws of such jurisdictions as any Selling Holder or managing Underwriter
reasonably (in light of the intended plan of distribution) requests and do any
and all other acts and things which may be reasonably necessary or advisable to
enable such Selling Holder or managing Underwriter to consummate

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the disposition in such jurisdictions of the Registrable Securities owned by
such Selling Holder; provided, that the Company will not be required to
(A) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 5(a)(vii), (B) subject
itself to taxation in any such jurisdiction, or (C) consent to general service
of process in any such jurisdiction;

(viii)use commercially reasonable efforts to cause such Registrable Securities
to be registered with or approved by such other governmental agencies or
authorities, if any, as may be required of the Company to enable the Selling
Holder or Selling Holders thereof to consummate the disposition of such
Registrable Securities;

(ix)enter into customary agreements (including an underwriting agreement in
customary form with customary indemnification provisions) and take such other
actions as are reasonably required or advisable in order to expedite or
facilitate the disposition of such Registrable Securities, including providing
reasonable availability of appropriate members of senior management of the
Company to provide customary due diligence assistance in connection with any
offering and to participate in customary “road show” presentations in connection
with any underwritten offerings in substantially the same manner as they would
in an underwritten primary registered public offering by the Company of its
Common Stock, after taking into account the reasonable business requirements of
the Company in determining the scheduling and duration of any “road show”;

(x)make available for inspection by any Selling Holder of such Registrable
Securities, any Underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other professional
retained by any such Selling Holder 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 such Inspectors in connection
with such registration statement.  Each Selling Holder of such Registrable
Securities agrees 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
(other than by such Selling Holder).  Each Selling Holder of such Registrable
Securities further agrees that it will, as soon as practicable upon learning
that disclosure of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company at its expense to undertake
appropriate action to prevent disclosure of the Records deemed confidential;

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(xi)use commercially reasonable efforts to obtain a comfort letter or comfort
letters from the Company’s independent public accountants in customary form and
covering such matters of the type customarily covered by comfort letters as the
managing Underwriter(s) reasonably request(s);

(xii)otherwise use commercially reasonable efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering a period of 12
months, beginning within three months after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;

(xiii)use commercially reasonable efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar securities
issued by the Company are then listed or quoted on any inter-dealer quotation
system on which similar securities issued by the Company are then quoted;

(xiv)if any event contemplated by Section 5(a)(iv)(F) shall occur, as promptly
as practicable prepare a supplement or amendment or post-effective amendment to
such registration statement or the related prospectus or any document
incorporated therein by reference or promptly file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, the 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, in light of the circumstances under
which they were made, not misleading; and

(xv)cooperate and assist in any filing required to be made with FINRA and in the
performance of any due diligence investigation by any underwriter, including any
“qualified independent underwriter,” or any Selling Holder.  

 

(b)

Notwithstanding anything contained herein to the contrary, the Company hereby
agrees that any registration effected pursuant to this Registration Rights
Agreement that is a shelf registration pursuant to Rule 415 under the Securities
Act shall contain all language (including on the prospectus cover page, the
principal stockholders’ chart and the plan of distribution) as may be reasonably
requested by a holder of Registrable Securities.  The Company may require each
Selling Holder to promptly furnish in writing to the Company such information
regarding the distribution of the Registrable Securities as it may from time to
time reasonably request and such other information as may be legally required in
connection with such registration.  Notwithstanding anything herein to the
contrary, the Company shall have the right to exclude from any offering the
Registrable Securities of any Selling Holder who does not comply with the
provisions of the immediately preceding sentence.  

 

(c)

Each Selling Holder agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 5(a)(iv)(F) hereof,

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such Selling Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Selling Holder’s receipt of the copies of the supplemented
or amended prospectus contemplated by Section 5(a)(xiv) hereof, and, if so
directed by the Company, such Selling Holder will deliver to the Company all
copies, other than permanent file copies, then in such Selling Holder’s
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice.  In the event the Company shall give such
notice, the Company shall extend the period during which such registration
statement shall be maintained effective (including the period referred to in
Section 5(a)(ii) hereof) by the number of days during the period from and
including the date of the giving of notice pursuant to Section 5(a)(iv)(F)
hereof to the date when the Company shall make available to the Selling Holders
of Registrable Securities covered by such registration statement a prospectus
supplemented or amended to conform with the requirements of Section 5(a)(xiv)
hereof.  

6.Registration Expenses

.  In connection with any registration statement required to be filed hereunder,
the Company shall pay the following registration expenses (the “Registration
Expenses”):

 

(a)

all registration and filing fees (including with respect to filings to be made
with FINRA);

 

(b)

fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities);

 

(c)

printing expenses;

 

(d)

internal expenses (including all salaries and expenses of its officers and
employees performing legal or accounting duties);

 

(e)

the fees and expenses incurred in connection with the listing on an exchange of
the Registrable Securities if the Company shall choose, or be required pursuant
to Section 5(a)(xiii), to list such Registrable Securities;

 

(f)

the reasonable fees and expenses of any special experts retained by the Company
in connection with such registration;

 

(g)

reasonable fees and expenses of one counsel reasonably acceptable to the Company
selected by the Selling Holders incurred in connection with the registration of
such Registrable Securities hereunder;

 

(h)

all expenses relating to marketing the sale of the Registrable Securities,
including expenses related to conducting a “road show”;

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(i)

fees and expenses of any “qualified independent underwriter” or other
independent appraiser participating in any offering pursuant to Rule 2720 of the
FINRA Manual; and

 

(j)

reasonable fees and disbursements of counsel for the Company and customary fees
and expenses for independent certified public accountants retained by the
Company (including the expenses of any comfort letters requested pursuant to
Section 5(a)(xi) hereof).  

The Company shall not have any obligation to pay any underwriting fees,
discounts or commissions attributable to the sale of Registrable Securities or,
except as provided by clauses (b), (g) and (i) above, any out-of-pocket expenses
of the Holders (or the agents who manage their accounts) or the fees and
disbursements of any Underwriter.  

7.

Indemnification; Contribution.  

 

(a)

Indemnification by the Company

.  The Company agrees to indemnify and hold harmless each Selling Holder, each
Person, if any, who controls such Selling Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and the
officers, directors, agents, general and limited partners, and employees of each
Selling Holder and each such controlling Person from and against any and all
losses, claims, damages, liabilities (joint or several), and expenses (including
reasonable costs of investigation and attorneys’ fees) arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the
Registrable Securities or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon 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, except insofar as such
losses, claims, damages, liabilities or expenses arise out of, or are based upon
and in conformity with, any such untrue statement or omission or allegation
thereof based upon information furnished in writing to the Company by such
Selling Holder or on such Selling Holder’s behalf expressly for use
therein.  The Company also agrees to indemnify any Underwriters of the
Registrable Securities, their officers and directors and each Person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Selling Holders provided in this Section 7(a).  

 

(b)

Indemnification by Holder of Registrable Securities

.  Each Selling Holder agrees to indemnify and hold harmless each other Selling
Holder, the Company, and each Person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act and the officers, directors, agents and employees of each other
Selling Holder, the Company and each such controlling Person to the same extent
as the foregoing indemnity from the Company to such Selling Holder, but only
with respect to information furnished in writing by such Selling Holder or on
such Selling Holder’s behalf expressly for use in any registration statement or
prospectus relating to the Registrable Securities.  The liability of any Selling
Holder under this Section 7(b) shall be limited to the aggregate cash and
property received by such Selling

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Holder pursuant to the sale of Registrable Securities covered by such
registration statement or prospectus.  

 

(c)

Conduct of Indemnification Proceedings

.  If any action or proceeding (including any governmental investigation) shall
be brought or asserted against any Person entitled to indemnification under
Sections 7(a) or 7(b) (an “Indemnified Party”) in respect of which indemnity may
be sought from any Person who has agreed to provide such indemnification under
Sections 7(a) or 7(b) (an “Indemnifying Party”), the Indemnified Party shall
give prompt written notice to the Indemnifying Party and the Indemnifying Party
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Party, and shall assume the payment of all
reasonable expenses of such defense.  Such Indemnified Party shall have the
right to employ separate counsel in any such action or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the Indemnifying
Party has agreed to pay such fees and expenses, (ii) the Indemnifying Party
fails promptly to assume the defense of such action or proceeding or fails to
employ counsel reasonably satisfactory to such Indemnified Party or (iii) the
named parties to any such action or proceeding (including any impleaded parties)
include both such Indemnified Party and Indemnifying Party (or an Affiliate of
the Indemnifying Party), and such Indemnified Party shall have been advised by
counsel that there may be one or more legal defenses available to the
Indemnified Party that are different from or additional to those available to
the Indemnifying Party, or there is a conflict of interest on the part of
counsel employed by the Indemnifying Party to represent such Indemnified Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense of such action or proceeding on behalf of such Indemnified
Party).  Notwithstanding the foregoing, the Indemnifying Party shall not, in
connection with any such action or proceeding or separate but substantially
similar related actions or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable at any time for the
fees and expenses of more than one separate firm of attorneys (together in each
case with appropriate local counsel).  The Indemnifying Party shall not be
liable for any settlement of any such action or proceeding effected without its
written consent (which consent will not be unreasonably withheld), but if
settled with its written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Party from and against any loss or
liability (to the extent stated above) by reason of such settlement or
judgment.  The Indemnifying Party shall not consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party of a release,
in form and substance reasonably satisfactory to the Indemnified Party, from all
liability in respect of such action or proceeding for which such Indemnified
Party would be entitled to indemnification hereunder.  

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(d)

Contribution

.  

(i)If the indemnification provided for in this Section 7 is unavailable to the
Indemnified Parties in respect of any losses, claims, damages, liabilities or
judgments referred to herein, then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Parties, shall contribute to the amount paid or
payable by such Indemnified Parties as a result of such losses, claims, damages,
liabilities and judgments as between the Company on the one hand and each
Selling Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of each Selling Holder in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations.  The relative fault of the Company on the one hand and of each
Selling Holder on the other 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 Person, and such Persons’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.  

(ii)The Company and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by any
method of allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraph.  The amount
paid or payable by an Indemnified Party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or
claim.  Notwithstanding the provisions of this Section 7(d), no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of such Selling Holder were
offered to the public (less any underwriting discounts or commissions) exceeds
the amount of any damages which such Selling Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission.  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.  

8.

Participation in Underwritten Offering

.  No Holder may participate in any underwritten offering hereunder unless such
Holder (a) agrees to sell such Holder’s Registrable Securities on the basis
provided in any underwriting arrangements approved by the Person entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, custody agreements, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and this Registration Rights Agreement.  

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9.

Transfers of Registration Rights

.  The provisions hereof will inure to the benefit of and be binding upon the
successors and assigns of each of the Parties, except as otherwise provided
herein; provided, that the registration rights granted hereby may be transferred
only (a) by operation of Law or (b) to any Person to whom a Holder transfers
Registrable Securities, provided, that any such transferee shall not be entitled
to rights pursuant to Sections 2, 3 or 4 hereof unless such transferee of
registration rights hereunder agrees to be bound by the terms and conditions
hereof and executes and delivers to the Company an acknowledgment and agreement
to such effect.  

10.

Rule 144 and Rule 144A; Other Exemptions

.  With a view to making available to the Holders of Registrable Securities the
benefits of Rule 144 and Rule 144A promulgated under the Securities Act and
other rules and regulations of the SEC that may at any time permit a Holder of
Registrable Securities to sell securities of the Company to the public without
registration, the Company agrees that it will use commercially reasonable
efforts to (a) file in a timely manner all reports and other documents required,
if any, to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted thereunder and (b) make available information
necessary to comply with Rule 144 and Rule 144A, if available with respect to
resales of the Registrable Securities under the Securities Act, at all times,
all to the extent required from time to time to enable such Holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (i) Rule 144 and Rule 144A promulgated
under the Securities Act (if available with respect to resales of the
Registrable Securities), as such rules may be amended from time to time or
(ii) any other rules or regulations now existing or hereafter adopted by the
SEC. Upon the reasonable request of any Holder of Registrable Securities, the
Company will deliver to such Holder a written statement as to whether it has
complied with such information requirements, and, if not, the specific reasons
for non-compliance.  

11.

Entire Agreement

.  The foregoing provisions of this Registration Rights Agreement contain the
entire understanding of the Parties respecting the subject matter hereof and
supersede all prior agreements, discussions and understandings with respect
thereto.  

12.

Miscellaneous.  

 

(a)

Construction

.  All references in this Registration Rights Agreement to Sections,
subsections, and other subdivisions refer to the corresponding Sections,
subsections, and other subdivisions of or to this Registration Rights Agreement
unless expressly provided otherwise.  Titles appearing at the beginning of any
Sections, subsections, or other subdivisions of this Registration Rights
Agreement are for convenience only, do not constitute any part of this
Registration Rights Agreement, and shall be disregarded in construing the
language hereof.  The words “this Registration Rights Agreement,” “herein,”
“hereby,” “hereunder”, and “hereof” and words of similar import refer to this
Registration Rights Agreement as a whole and not to any particular subdivision
unless expressly so limited.  The words “this Section” and “this subsection” and
words of similar import refer only to the Section or subsection hereof in which
such words occur.  The word “or” is not exclusive, and the word “including” (in
its various forms) means including without limitation.  Pronouns in masculine,
feminine, or neuter genders shall be construed to state and include any other
gender, and words, terms, and titles (including

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terms defined herein) in the singular form shall be construed to include the
plural and vice versa, unless the context otherwise requires.  

 

(b)

Notice

.  All notices, requests, claims, demands, and other communications hereunder
shall be in writing and shall be deemed to have been duly given or made (i) when
delivered if delivered in person or sent by nationally recognized overnight or
second day courier service, (ii) upon transmission by fax or electronic mail if
transmission or electronic mail is confirmed by the recipient thereof, or (iii)
three Business Days after deposit with a United States post office if delivered
by registered or certified mail (postage prepaid, return receipt requested) to
the Parties as follows:

if to the Company, addressed to:

American Electric Technologies, Inc.

6575 West Loop South, Suite 500

Bellaire, Texas 77401

Attention: Peter Menikoff

E-mail: peter@menikoff.com

 

with a copy to (which shall not constitute notice):

Locke Lord LLP
600 Travis, Suite 2800

Houston, Texas 77002
Attention: Eric Johnson
E-mail: ejohnson@lockelord.com

 

if to Holdings, addressed to:

LNG Investment Company, LLC

1655 Louisiana Street

Beaumont, Texas 77701

Attention: Casey Crenshaw

E-mail: casey.crenshaw@stabilisenergy.com

 

with a copy to (which shall not constitute notice):

Thompson & Knight LLP

811 Main Street, Suite 2500

Houston, Texas 77002

Attention: Jerry L. Metcalf

Facsimile: 832-746-8050

E-mail: jerry.metcalf@tklaw.com

 

if to AEGIS, addressed to:

AEGIS NG LLC

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10375 Richmond Avenue, Suite 825

Houston, Texas 77042

Attention: Jim Aivalis

E-mail: jaivalis@prometheusenergy.com

 

with a copy to (which shall not constitute notice):

 

BoyarMiller
2925 Richmond Ave., 14th Floor
Houston, Texas 77098
Attention: Lawrence E. Wilson
Telephone: (832) 615-4236
Facsimile: (713) 552-1758
E-mail: lwilson@boyarmiller.com

or to such other place and with such other copies as any Party may designate as
to itself by written notice to the others in accordance with this Section 12(b).

 

(c)

No Lock-Up

.  For the avoidance of doubt and notwithstanding anything contained in this
Registration Rights Agreement, in no event will any officer or director of the
Company be obligated to enter into any lock-up or similar agreement in
connection with any offer or sale effected pursuant to this Registration Rights
Agreement unless (i) such individual owns securities that are included in such
offer and sale or (ii) the managing underwriters advise the Company that, in
their opinion, the failure to do so would preclude the Holders from effecting a
Requested Underwritten Offering or a Block Trade, in which case the Company
shall use commercially reasonable efforts to cause each of its officers and
directors as may be reasonably requested by the managing underwriters to enter
into a lock-up or similar agreement in a form consistent with that used in
connection with prior offerings by the Company (including with respect to
permitted exceptions as to stock options and 10b5-1 trading plans).  

 

(d)

Binding Effect

.  This Registration Rights Agreement is binding on and inures to the benefit of
the Parties and their respective heirs, legal representatives, successors, and
assigns.  

 

(e)

Governing Law

.  This Registration Rights Agreement is governed by and shall be construed in
accordance with the Law of the State of Texas without regard to the principles
of conflicts of law thereof.  

 

(f)

Severability

.  If any provision of this Registration Rights Agreement or the application
thereof to any Person or circumstance is held invalid or unenforceable to any
extent, the remainder of this Registration Rights Agreement and the application
of that provision to other Persons or circumstances shall not be affected
thereby and that provision shall be enforced to the greatest extent permitted by
Law.  Furthermore, in lieu of each such invalid or unenforceable provision,
there shall be added automatically as a part of this Registration Rights
Agreement a provision as similar in terms to such

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invalid or unenforceable provision as may be possible and be legal, valid, and
enforceable.  

 

(g)

Counterparts

.  This Registration Rights Agreement may be executed in any number of
counterparts, including facsimile counterparts, with the same effect as if all
signing parties had signed the same document.  All counterparts shall be
construed together and constitute the same instrument.  

 

(h)

Section Headings

.  Headings contained in this Registration Rights Agreement are inserted only as
a matter of convenience and in no way define, limit, or extend the scope or
intent of this Registration Rights Agreement or any provisions hereof.  

 

(i)

Cumulative Rights

.  The rights of the Parties under this Registration Rights Agreement are
cumulative and in addition to all similar and other rights of such parties under
other agreements.  

 

(j)

Further Assurances

.  In connection with this Registration Rights Agreement and the transactions
contemplated hereby, each Party shall execute and deliver any additional
documents and instruments and perform any additional acts that may be necessary
or appropriate to effectuate and perform the provisions of this Registration
Rights Agreement and those transactions.  

 

(k)

Amendment

.  The provisions of this Registration Rights Agreement may only be amended by
the written consent of the Company and Holders of at least a majority of the
Registrable Securities.  The Holders acknowledge and agree that any Person that
becomes a Stockholder shall have the rights and obligations set forth in this
Registration Rights Agreement and that such Person becoming a Stockholder shall
be deemed not to be an amendment to this Registration Rights Agreement.  

 

(l)

Termination

.  The provisions of this Registration Rights Agreement shall terminate with
respect to any Holder and be of no further force or effect when all Registrable
Securities held by such Holder no longer constitute Registrable Securities;
provided, that the provisions of Section 7 of this Registration Rights Agreement
shall survive for any sales of Registrable Securities prior to such date.  

 

(m)

Removal of Legend

.  The Company, at its sole cost, shall remove any legend ordinarily included on
restricted securities of the Company (or instruct its transfer agent to so
remove such legend) from the certificates or book-entries evidencing Registrable
Securities if such Common Stock (i) is sold pursuant to an effective
registration statement under the Securities Act, (ii) is sold or transferred
pursuant to Rule 144 (if the transferor is not an Affiliate of the Company), or
(iii) is eligible for sale without restriction and without the need for current
public information pursuant to Rule 144(b) (or any successor rule) under the
Securities Act.  Each Holder agrees to provide the Company, its counsel and/or
the transfer agent with evidence reasonably requested by it in order to cause
the removal of such legend, including, as may be appropriate, any information
the Company deems necessary to determine that the legend is no longer required
under the Securities Act or applicable state laws, including a certification
that the holder is not an Affiliate of

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the Company (and a covenant to inform the Company if it should thereafter become
an Affiliate and to consent to exchange any certificates or instruments
representing the Common Stock for ones bearing an appropriate restrictive
legend) and regarding the length of time the Common Stock has been held.  Any
fees (with respect to the transfer agent, Company counsel or otherwise)
associated with the issuance of any legal opinion required by the Company’s
transfer agent or the removal of such legend shall be borne by the Company.  If
a legend is no longer required pursuant to the foregoing, the Company will use
commercially reasonable efforts to, no later than three Business Days following
the delivery by a Holder to the Company or the transfer agent (with notice to
the Company) of a legended certificate or instrument representing the Common
Stock (endorsed or with stock powers attached, signatures guaranteed, and
otherwise in form necessary to affect the reissuance and/or transfer) and any
representation letter or certification as may be requested by the Company,
deliver or cause to be delivered to such Company a certificate or instrument (as
the case may be) representing such Common Stock that is free from all
restrictive legends.  

 

(n)

Remedies; Specific Performance

.  Any Person having rights under any provision of this Registration Rights
Agreement shall be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Registration
Rights Agreement, and to exercise all other rights existing in their favor.  The
Parties agree and acknowledge that money damages would not be an adequate remedy
for any breach of the provisions of this Registration Rights Agreement and that
any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive relief
(without posting any bond or other security) in order to enforce or prevent
violation of the provisions of this Registration Rights Agreement and shall not
be required to prove irreparable injury to such party or that such party does
not have an adequate remedy at law with respect to any breach of this
Registration Rights Agreement (each of which elements the Parties admit).  The
Parties further agree and acknowledge that each and every obligation applicable
to it contained in this Registration Rights Agreement shall be specifically
enforceable against it and hereby waives and agrees not to assert any defenses
against an action for specific performance of their respective obligations
hereunder.  All rights and remedies existing under this Registration Rights
Agreement are cumulative to, and not exclusive of, any rights or remedies
available under this Registration Rights Agreement or otherwise.  

[Signature Page Follows]

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IN WITNESS WHEREOF, the Parties have executed this Registration Rights Agreement
as of the date first written above.

American Electric Technologies, Inc.

 

By: s/ Peter Menikoff
Name: Peter Menikoff

Title: President and Chief Executive Officer

 

LNG Investment Company, LLC

 

By: s/Casey Crenshaw
Name: Casey Crenshaw
Title: President

 

AEGIS NG LLC

 

By: s/James G. Aivalis
Name: James G. Aivalis
Title: Managing Member

 

81072182v.2 0026183/00012