EX-10.2






EXHIBIT 10.2




EXHIBIT A




REGISTRATION RIGHTS AGREEMENT




This Registration Rights Agreement (this “Agreement”) is made and entered into as of January
17, 2005, by and among Xenonics Holdings, Inc., a Nevada corporation (the “Company”), and the
investors signatory hereto (each a “Investor” and collectively, the “Investors”).



This Agreement is made pursuant to the Selling Stockholder and Securities Purchase Agreement,
dated as of the date hereof among the Company and the Investors (the “Purchase Agreement”).




The Company and the Investors hereby agree as follows:



1. Definitions. Capitalized terms used and not otherwise defined herein that are defined
in the Purchase Agreement will have the meanings given such terms in the Purchase Agreement. As
used in this Agreement, the following terms have the respective meanings set forth in this Section
1:




"Advice” has the meaning set forth in Section 6(d).



"Effective Date” means, as to a Registration Statement, the date on which such Registration
Statement is first declared effective by the Commission.



"Effectiveness Date” means (a) with respect to the initial Registration Statement required to
be filed under Section 2(a), the earlier of: (a)(i) the 120th day following the Closing Date, and
(ii) the fifth Trading Day following the date on which the Company is notified by the Commission
that the initial Registration Statement will not be reviewed or is no longer subject to further
review and comments; and (b) with respect to any additional Registration Statements that may be
required pursuant to Section 2(b), the earlier of (i) the 120th day following (x) if such
Registration Statement is required because the Commission shall have notified the Company in
writing that certain Registrable Securities were not eligible for inclusion on a previously filed
Registration Statement, the date or time on which the Commission shall indicate as being the first
date or time that such Registrable Securities may then be included in a Registration Statement, or
(y) if such Registration Statement is required for a reason other than as described in (x) above,
the date on which the Company first knows that such additional Registration Statement(s) is
required, and (ii) the fifth Trading Day following the date on which the Company is notified by the
Commission that such additional Registration Statement will not be reviewed or is no longer subject
to further review and comments.




"Effectiveness Period” has the meaning set forth in Section 2(a).




"Exchange Act” means the Securities Exchange Act of 1934, as amended.



"Filing Date” means (a) with respect to the initial Registration Statement required to be
filed under Section 2(a), the 45th day following the Closing Date; and (b) with respect to any
additional Registration Statements that may be required pursuant to Section 2(b), the 45th day
following (x) if such Registration Statement is required because the Commission shall have notified
the Company in writing that certain Registrable Securities were not eligible for inclusion on a
previously filed Registration Statement, the date or time on which the Commission shall indicate as
being the first date or time that such Registrable Securities may then be included in a
Registration Statement, or (y) if such Registration Statement is required for a reason other than
as described in (x) above, the date on which the Company first knows that such additional
Registration Statement(s) is required.



"Holder” or “Holders” means the holder or holders, as the case may be, from time to time of
Registrable Securities.




"Indemnified Party” has the meaning set forth in Section 5(c).




"Indemnifying Party” has the meaning set forth in Section 5(c).




"Losses” has the meaning set forth in Section 5(a).



"Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether commenced or
threatened.



"Prospectus” means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by a Registration Statement,
and all other amendments and supplements to the Prospectus, including post effective amendments,
and all material incorporated by reference or deemed to be incorporated by reference in such
Prospectus.



"Registrable Securities” means (i) the shares of Common Stock issued and sold to the Investors
by either the Company or the Selling Stockholders pursuant to Section 2.2 of the Purchase
Agreement, (ii) any shares of Common Stock issuable upon the exercise of warrants issued to any
placement agent as compensation in connection with the financing subject of the Purchase Agreement
and (iii) any securities issued or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event.



"Registration Statement” means the initial registration statement required to be filed in
accordance with Section 2(a) and any additional registration statement(s) required to be filed
under Section 2(b) and 2(c), including (in each case) the Prospectus, amendments and supplements to
such registration statements or Prospectus, including pre and post effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be incorporated by
reference therein.



"Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.



"Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.



"Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.




"Securities Act” means the Securities Act of 1933, as amended.



"Shares” means the shares of Common Stock issued or issuable to the Investors pursuant to the
Purchase Agreement.




2. Registration.



(a) On or prior to each Filing Date, the Company shall prepare and file with the Commission a
Registration Statement covering the resale of all Registrable Securities not already covered by an
existing and effective Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415, on Form SB-2 (or on such other form appropriate for such purpose). Such
Registration Statement shall contain (except if otherwise required pursuant to written comments
received from the Commission upon a review of such Registration Statement) the “Plan of
Distribution” attached hereto as Annex A. The Company shall cause such Registration
Statement to be declared effective under the Securities Act as soon as possible but, in any event,
no later than its Effectiveness Date, and shall use its reasonable best efforts to keep the
Registration Statement (and any other Registration Statement) continuously effective under the
Securities Act until the date which is the earlier of (i) five years after its Effective Date, (ii)
such time as all of the Registrable Securities covered by such Registration Statement have been
publicly sold by the Holders, or (iii) such time as all of the Registrable Securities covered by
such Registration Statement may be sold by the Holders pursuant to Rule 144(k) as determined by the
counsel to the Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company’s transfer agent and the affected Holders (the “Effectiveness Period”).



(b) If for any reason the Commission does not permit all of the Registrable Securities to be
included in the Registration Statement filed pursuant to Section 2(a), or for any other reason any
outstanding Registrable Securities are not then covered by an effective Registration Statement,
then the Company shall prepare and file by the Filing Date for such Registration Statement, an
additional Registration Statement covering the resale of all Registrable Securities not already
covered by an existing and effective Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415, on Form SB-2 (or on such other form appropriate for such
purpose). Each such Registration Statement shall contain (except if otherwise required pursuant to
written comments received from the Commission upon a review of such Registration Statement) the
“Plan of Distribution” attached hereto as Annex A. The Company shall cause each such
Registration Statement to be declared effective under the Securities Act as soon as possible but,
in any event, by its Effectiveness Date, and shall use its reasonable best efforts to keep such
Registration Statement continuously effective under the Securities Act during the entire
Effectiveness Period.



(c) Promptly following any date on which the Company becomes eligible to use a registration
statement on Form S-3 to register the Registrable Securities for resale, the Company shall file a
registration statement on Form S-3 covering the Registrable Securities (or a post-effective
amendment on Form S-3 to the then effective Registration Statement) and shall cause such
Registration Statement to be declared effective as soon as possible thereafter. Such Registration
Statement shall contain (except if otherwise required pursuant to written comments received from
the Commission upon a review of such Registration Statement) the “Plan of Distribution” attached
hereto as Annex A. The Company shall use its reasonable best efforts to keep such
Registration Statement continuously effective under the Securities Act during the entire
Effectiveness Period.



(d) If: (i) a Registration Statement required to be filed under Section 2(a) or 2(b) is not
filed on or prior to its Filing Date (if the Company files a Registration Statement without
affording the Holders the opportunity to review and comment on the same as required by Section 3(a)
hereof, the Company shall not be deemed to have satisfied this clause (i)), or (ii) a Registration
Statement is not declared effective by the Commission on or prior to its required Effectiveness
Date, or (iii) after its Effective Date, without regard for the reason thereunder or efforts
therefore, any Registration Statement (including its predecessors in the case of a Registration
Statement filed under Section 2(c)) ceases for any reason to be effective and available to the
Holders as to all Registrable Securities to which it is required to cover at any time prior to the
expiration of its Effectiveness Period for more than an aggregate of 30 Trading Days (which need
not be consecutive) (any such failure or breach being referred to as an “Event,” and for purposes
of clauses (i) or (ii) the date on which such Event occurs, or for purposes of clause (iii) the
date which such 30 Trading Day-period is exceeded, being referred to as “Event Date”), then in
addition to any other rights the Holders may have hereunder or under applicable law, the Company
shall pay as partial liquidated damages for such failure or breach and not as a penalty, to each
Holder an amount in cash equal to (A) one percent (1%) of the Investment Amount paid by such Holder
for Shares pursuant to the Purchase Agreement on the Event Date for an Event under subsection (i)
and for each thirty (30) day period, or portion thereof, during which any Event described in
subsection (i) above occurs and is continuing, and (B) two percent (2%) of the Investment Amount
paid by such Holder for those Shares that are still owned by Holder on the Event Date for each
subsequent thirty (30) day period during which any Event described in subsection (ii) or (iii)
above occurs and is continuing, pro rated for any period less than thirty (30) days, until the
applicable Event has been cured. The payment required to be made under subsection (i) above shall
be paid on the Event Date and on each monthly anniversary thereafter, and the payment due under
subsections (ii) and (iii) above shall be paid in cash at the end of each thirty (30) day period
following the Event Date or, if earlier, on the date that the applicable Event has been cured.
Notwithstanding the other provisions of this Section 2, in no event shall the Company be liable for
liquidated damages under this Section 2(d) to a Holder for an Event which occurs after the
Registrable Securities may be sold by such Holder pursuant to Rule 144, as determined by counsel
(other than the Company’s counsel) pursuant to a written opinion letter to such effect, addressed
and acceptable to such Holder (it being understood and agreed that such counsel’s fees and expenses
incurred in connection with rendering such opinion shall be paid for by the Company), provided that
the immediately preceding clause shall not apply (1) (A) with respect to any Event which occurs
prior to a Holder being able to sell the Registrable Securities pursuant to Rule 144 (as determined
in accordance with the foregoing) or (B) which occurs prior to a Holder being able to sell the
Registrable Securities pursuant to Rule 144 (as determined in accordance with the foregoing) and
which continues after such Holder may sell such Registrable Securities pursuant to Rule 144 (as
determined in accordance with the foregoing) or (2) if during the continuance of an Event which
occurs after the Registrable Securities may be sold by such Holder pursuant to Rule 144 (as
determined in accordance with the foregoing) the Holder may no longer sell such Registrable
Securities under Rule 144 (as determined in accordance with the foregoing), in which case partial
damages pursuant to this Section 2(d) shall be calculated as if the Registrable Securities were
never eligible for resale by such Holder under Rule 144.



(e) Each Holder agrees to furnish to the Company a completed Questionnaire in the form
attached to this Agreement as Annex B (a “Selling Holder Questionnaire”). The Company
shall not be required to include the Registrable Securities of a Holder in a Registration Statement
and shall not be required to pay any liquidated or other damages under Section 2(d) to any Holder
who fails to furnish to the Company a fully completed Selling Holder Questionnaire at least two
Trading Days prior to the Filing Date (subject to the requirements set forth in Section 3(a)).



3. Registration Procedures.




In connection with the Company’s registration obligations hereunder, the Company shall:



(a) Not less than four Trading Days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto, the Company shall furnish to each Holder
copies of the “Selling Stockholders” section of such document, the “Plan of Distribution” and any
risk factor contained in such document that addresses specifically this transaction or the Selling
Stockholders, as proposed to be filed which documents will be subject to the review of such Holder.
The Company shall not file a Registration Statement, any Prospectus or any amendments or
supplements thereto in which the “Selling Stockholder” section thereof differs from the disclosure
received from a Holder in its Selling Holder Questionnaire (as amended or supplemented).



(b) (i) Prepare and file with the Commission such amendments, including post effective
amendments, to each Registration Statement and the Prospectus used in connection therewith as may
be necessary to keep such Registration Statement continuously effective as to the applicable
Registrable Securities for its Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the Securities Act all of
the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received from the Commission with
respect to each Registration Statement or any amendment thereto and (if requested by any such
Person), as promptly as reasonably possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to such Registration Statement that would not
result in the disclosure to the Holders of material and non-public information concerning the
Company; and (iv) comply in all material respects with the provisions of the Securities Act and the
Exchange Act with respect to the Registration Statements and the disposition of all Registrable
Securities covered by each Registration Statement.



(c) Notify the Holders as promptly as reasonably possible (and, in the case of (i)(A) below,
not less than three Trading Days prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one Trading Day following the day (i)(A) when a
Prospectus or any Prospectus supplement or post effective amendment to a Registration Statement is
proposed to be filed; (B) when the Commission notifies the Company whether there will be a “review”
of such Registration Statement and whenever the Commission comments in writing on such Registration
Statement (the Company shall provide true and complete copies thereof and all written responses
thereto to each of the Holders that pertain to the Holders as a Selling Stockholder or to the Plan
of Distribution, but not information which the Company believes would constitute material and
non-public information); and (C) with respect to each Registration Statement or any post effective
amendment, when the same has become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to a Registration Statement
or Prospectus or for additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of a Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose; (iv) 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; and (v) of the occurrence of any
event or passage of time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in such Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or the Prospectus, as the case may
be, 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.



(d) Use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii) 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.



(e) Furnish to each Holder, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto and all exhibits to the extent requested by such Person
(including those previously furnished) promptly after the filing of such documents with the
Commission.



(f) Promptly deliver to each Holder, without charge, as many copies of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request. The Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders in connection with the offering and
sale of the Registrable Securities covered by such Prospectus and any amendment or supplement
thereto.



(g) Prior to any public offering of Registrable Securities, to register or qualify or
cooperate with the selling Holders in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable Securities for offer and
sale under the securities or Blue Sky laws of all jurisdictions within the United States, to keep
each such registration or qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Registrable Securities covered by the Registration Statements.



(h) Cooperate with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee pursuant to the
Registration Statements, which certificates shall be free, to the extent permitted by the Purchase
Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holders may request.



(i) Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a post effective amendment, to
the affected Registration Statements or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, no Registration Statement nor any Prospectus will
contain 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, in light of the circumstances under
which they were made, not misleading.



4. Registration Expenses. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect to filings required
to be made with any Trading Market on which the Common Stock is then listed for trading, and (B) in
compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities and of printing
prospectuses if the printing of prospectuses is reasonably requested by the holders of a majority
of the Registrable Securities included in the Registration Statement), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act
liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all
other Persons retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual audit and the fees and
expenses incurred in connection with the listing of the Registrable Securities on any securities
exchange as required hereunder. The company shall not be responsible for the payment of any
commissions or other expenses incurred by the Holder in connection with their sales of Registrable
Securities or for the fees of any counsel retained by any Holder.



5. Indemnification.



(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors,
agents, investment advisors, partners, members and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, reasonable costs of preparation
and reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of
or relating to any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the extent, but only to the
extent, that (1) such untrue statements or omissions are based solely upon information regarding
such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved in writing by such
Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus
or in any amendment or supplement thereto (it being understood that the Holder has approved
Annex A hereto for this purpose) or (2) in the case of an occurrence of an event of the
type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or
defective and prior to the receipt by such Holder of an Advice or an amended or supplemented
Prospectus, but only if and to the extent that following the receipt of the Advice or the amended
or supplemented Prospectus the misstatement or omission giving rise to such Loss would have been
corrected. The Company shall notify the Holders promptly of the institution, threat or assertion
of any Proceeding of which the Company is aware in connection with the transactions contemplated by
this Agreement.



(b) Indemnification by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as incurred, arising
solely out of or based solely upon: (x) such Holder’s failure to comply with the prospectus
delivery requirements of the Securities Act or (y) any untrue statement of a material fact
contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements therein not
misleading to the extent, but only to the extent that, (1) such untrue statements or omissions are
based solely upon information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, or to the extent that such information relates to such Holder or
such Holder’s proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the Registration Statement (it
being understood that the Holder has approved Annex A hereto for this purpose), such
Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case
of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder
of an outdated or defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder of an Advice or an
amended or supplemented Prospectus, but only if and to the extent that following the receipt of the
Advice or the amended or supplemented Prospectus the misstatement or omission giving rise to such
Loss would have been corrected. In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale
of the Registrable Securities giving rise to such indemnification obligation.



(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations
or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.



An Indemnified Party shall have the right to employ separate counsel in any such 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 or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the Indemnifying 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 thereof and such counsel shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be unreasonably withheld.
No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such Proceeding.



All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such Proceeding in a manner
not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten
Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to indemnification hereunder;
provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined that such Indemnified
Party is not entitled to indemnification hereunder).



(d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided for in this Section
was available to such party in accordance with its terms.



The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 5(d) were determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually
received by such Holder from the sale of the Registrable Securities subject to the Proceeding
exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.



The indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.



6. Miscellaneous.



(a) Remedies. In the event of a breach by the Company or by a Holder, of any of their
obligations under this Agreement, each Holder or the Company, as the case may be, in addition to
being entitled to exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this Agreement (without
any requirement to post any bond). The Company and each Holder agree that monetary damages would
not provide adequate compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that a remedy at law
would be adequate.



(b) No Piggyback on Registrations. Except as and to the extent specified in
Schedule 3.1(v) to the Purchase Agreement, neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include securities of the
Company in a Registration Statement other than the Registrable Securities, and the Company shall
not during the Registration Period enter into any agreement providing any such right to any of its
security holders.



(c) Compliance. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.



(d) Discontinued Disposition. Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any
event of the kind described in Section 3(c), such Holder will forthwith discontinue disposition of
such Registrable Securities under the Registration Statement until such Holder’s receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised
in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed,
and, in either case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to enforce the provisions of this
paragraph. Without implication that the contrary would otherwise be true, the Company agrees and
acknowledges that any periods during which the Holder is required to discontinue the disposition of
Registrable Securities hereunder shall be subject to the provisions of Section 2(d).



(e) Piggy-Back Registrations. If at any time during the Effectiveness Period there
is not an effective Registration Statement covering all of the Registrable Securities and the
Company shall determine to prepare and file with the Commission a registration statement relating
to an offering for its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in connection with stock
option or other employee benefit plans, then the Company shall send to each Holder written notice
of such determination and, if within fifteen days after receipt of such notice, any such Holder
shall so request in writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such holder requests to be registered, subject to customary
underwriter cutbacks applicable to all holders of registration rights.



(f) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this Section 6(f), may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the same shall be in
writing and signed by the Company and the Holders of no less than a majority in interest of the
then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates exclusively to the rights
of certain Holders and that does not directly or indirectly affect the rights of other Holders may
be given by Holders of at least a majority of the Registrable Securities to which such waiver or
consent relates.



(g) Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile (provided the sender receives a machine-generated confirmation of successful
transmission) at the facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in this Section on a day
that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the
Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier
service, or (d) upon actual receipt by the party to whom such notice is required to be given. The
address for such notices and communications shall be as follows:




If to the Company: Xenonics Holdings, Inc.



	 	 	 
	2236 Rutherford Road, Suite 123

	 
	 	 
	Carlsbad, CA 92008

Attn: Chief Financial Officer

Facsimile: (760) 438-1184

With a copy to:

	 	





Troy & Gould Professional Corporation








1801 Century Park East, 26th Floor




Los Angeles, CA 90067




Attn: William Gould, Esq.




Facsimile: (310) 201-4746




	 	 	 	If to a Investor: To the address set forth under such Investor’s name on the
signature pages hereto.






If to any other Person who is then the registered Holder:




To the address of such Holder as it appears in the stock transfer
books of the Company



or such other address as may be designated in writing hereafter, in the same manner, by such
Person.



(h) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and shall inure to the
benefit of each Holder. The Company may not assign its rights or obligations hereunder without the
prior written consent of each Holder. Each Holder may assign their respective rights hereunder in
the manner and to the Persons as permitted under the Purchase Agreement.



(i) Execution and Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.



(j) Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of California, without regard to the principles of conflicts of
law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement (whether brought against a party
hereto or its respective Affiliates, employees or agents) may be commenced in the California
Courts. Each party hereto hereby irrevocably submits to the jurisdiction of the California Courts
for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any Proceeding, any claim that it is not personally subject to the jurisdiction of any California
Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to process being served
in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury in any Proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby. If either
party shall commence a Proceeding to enforce any provisions of this Agreement, then the prevailing
party in such Proceeding shall be reimbursed by the other party for its attorney’s fees and other
costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.



(k) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.



(l) Severability. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or unenforceable.



(m) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.



(n) Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under this Agreement are several and not joint with the obligations of each other
Investor, and no Investor shall be responsible in any way for the performance of the obligations of
any other Investor under this Agreement. Nothing contained herein or in any Transaction Document,
and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors
as a partnership, an association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement or any other Transaction Document.
Each Investor acknowledges that no other Investor will be acting as agent of such Investor in
enforcing its rights under this Agreement. Each Investor shall be entitled to independently
protect and enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Investor to be joined as an additional party
in any Proceeding for such purpose. The Company acknowledges that each of the Investors has been
provided with the same Registration Rights Agreement for the purpose of closing a transaction with
multiple Investors and not because it was required or requested to do so by any Investor.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK




SIGNATURE PAGES TO FOLLOW]






1






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




XENONICS HOLDINGS, INC.




By:




Name:




Title:



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK




SIGNATURE PAGES OF INVESTORS TO FOLLOW]






2






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




NAME OF INVESTING ENTITY




By:




Name:




Title:




ADDRESS FOR NOTICE




c/o:




Street:




City/State/Zip:




Attention:




Tel:




Fax:




Email:



3



Annex A




Plan of Distribution




The Selling Stockholders and any of their pledgees, donees, transferees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on
any stock exchange, market or trading facility on which the shares are traded or in private
transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use
any one or more of the following methods when selling shares:




	 	•	 	ordinary brokerage transactions and transactions in which the broker dealer solicits Investors;






	 	•	 	block trades in which the broker dealer will attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction;






	 	•	 	purchases by a broker dealer as principal and resale by the broker dealer for its account;






	 	•	 	an exchange distribution in accordance with the rules of the applicable exchange;






	 	•	 	privately negotiated transactions;






	 	•	 	to cover short sales made after the date that this Registration Statement is declared effective by the Commission;






	 	•	 	broker dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated
price per share;






	 	•	 	a combination of any such methods of sale; and






	 	•	 	any other method permitted pursuant to applicable law.





The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if
available, rather than under this prospectus.



Broker dealers engaged by the Selling Stockholders may arrange for other brokers dealers to
participate in sales. Broker dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions involved.



The Selling Stockholders may from time to time pledge or grant a security interest in some or
all of the Shares owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell shares of Common Stock from time to
time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933 amending the list of selling stockholders to
include the pledgee, transferee or other successors in interest as selling stockholders under this
prospectus.



Upon the Company being notified in writing by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of Common Stock through a block
trade, special offering, exchange distribution or secondary distribution or a purchase by a broker
or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b)
under the Securities Act, disclosing (i) the name of each such Selling Stockholder and of the
participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such
the shares of Common Stock were sold, (iv)the commissions paid or discounts or concessions allowed
to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in this prospectus,
and (vi) other facts material to the transaction. In addition, upon the Company being notified in
writing by a Selling Stockholder that a donee or pledgee intends to sell more than 500 shares of
Common Stock, a supplement to this prospectus will be filed if then required in accordance with
applicable securities law.



The Selling Stockholders also may transfer the shares of Common Stock in other circumstances,
in which case the transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.



The Selling Stockholders and any broker dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection
with such sales. In such event, any commissions received by such broker dealers or agents and any
profit on the resale of the shares purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act. Discounts, concessions, commissions and similar selling
expenses, if any, that can be attributed to the sale of Securities will be paid by the Selling
Stockholder and/or the purchasers. Each Selling Stockholder has represented and warranted to the
Company that it acquired the securities subject to this registration statement in the ordinary
course of such Selling Stockholder’s business and, at the time of its purchase of such securities
such Selling Stockholder had no agreements or understandings, directly or indirectly, with any
person to distribute any such securities.



The Company has advised each Selling Stockholder that it may not use shares registered on this
Registration Statement to cover short sales of Common Stock made prior to the date on which this
Registration Statement shall have been declared effective by the Commission. If a Selling
Stockholder uses this prospectus for any sale of the Common Stock, it will be subject to the
prospectus delivery requirements of the Securities Act. The Selling Stockholders will be
responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and
the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as
applicable to such Selling Stockholders in connection with resales of their respective shares under
this Registration Statement.



The Company is required to pay all fees and expenses incident to the registration of the
shares, but the Company will not receive any proceeds from the sale of the Common Stock. The
Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages
and liabilities, including liabilities under the Securities Act.



4



Annex B




XENONICS HOLDINGS, INC.




Selling Securityholder Notice and Questionnaire




The undersigned beneficial owner of common stock (the “Common Stock”), of Xenonics Holdings, Inc.
(the “Company”) understands that the Company has filed or intends to file with the Securities and
Exchange Commission (the “Commission”) a Registration Statement for the registration and resale of
the Registrable Securities, in accordance with the terms of the Registration Rights Agreement,
dated as of January 17, 2005 (the “Registration Rights Agreement”), among the Company and the
Investors named therein. A copy of the Registration Rights Agreement is available from the Company
upon request at the address set forth below. All capitalized terms used and not otherwise defined
herein shall have the meanings ascribed thereto in the Registration Rights Agreement.



The undersigned hereby provides the following information to the Company and represents and
warrants that such information is accurate:



QUESTIONNAIRE




1. Name:




(a) Full Legal Name of Selling Securityholder




	 	(b)	 	Full Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities Listed in Item 3 below are held:






	 	(c)	 	Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by the questionnaire):





2. Address for Notices to Selling Securityholder:



Telephone:



Fax:



Contact Person:



3. Beneficial Ownership of Registrable Securities:




Type and Principal Amount of Registrable Securities beneficially owned:



4. Broker-Dealer Status:




(a) Are you a broker-dealer?




Yes No




	 	 	 	Note: If yes, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration Statement.






(b) Are you an affiliate of a broker-dealer?




Yes No




	 	(c)	 	If you are an affiliate of a broker-dealer, do you certify that you bought the
Registrable Securities in the ordinary course of business, and at the time of the
purchase of the Registrable Securities to be resold, you had no agreements or
understandings, directly or indirectly, with any person to distribute the Registrable
Securities?






Yes No




	 	 	 	Note: If no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration Statement.





5. Beneficial Ownership of Other Securities of the Company Owned by the Selling Securityholder.




Except as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable Securities
listed above in Item 3.




Type and Amount of Other Securities beneficially owned by the Selling
Securityholder:



6. Relationships with the Company:




Except as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity securities of the
undersigned) has held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.




State any exceptions here:



The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the
information provided herein that may occur subsequent to the date hereof and prior to the Effective
Date for the Registration Statement.



By signing below, the undersigned consents to the disclosure of the information contained herein in
its answers to Items 1 through 6 and the inclusion of such information in the Registration
Statement and the related prospectus. The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or amendment of the Registration
Statement and the related prospectus.



IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and
Questionnaire to be executed and delivered either in person or by its duly authorized agent.



	 	 	 
	Dated:	 	Beneficial Owner:
	
 
	 	By:
	
 
	 	 
	
 
	 	Name:
	
 
	 	Title:







PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL
BY OVERNIGHT MAIL, TO:




Troy & Gould Professional Corporation




1801 Century Park East, 26th Floor




Los Angeles, CA 90067




Attn: William Gould, Esq.



Facsimile: (310) 201-4746




5