exv10w2



 





EXHIBIT 10.2




EXHIBIT A




REGISTRATION RIGHTS AGREEMENT




          This Registration Rights Agreement (this “Agreement”) is made and entered into as of
September 21, 2007, among Xenonics Holdings, Inc., a Nevada corporation (the “Company”),
and Gemini Master Fund, Ltd. and any additional purchasers identified on the signature pages hereto
(each, including its successors and assigns, a “Purchaser” and collectively the
“Purchasers”).




          This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date
hereof, between the Company and each Purchaser (the “Purchase Agreement”).




          The Company and each Purchaser hereby agree as follows:




     1. Definitions. Initially capitalized terms used and not otherwise defined herein
that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the following meanings:



          “Advice” shall have the meaning set forth in Section 6(d).





     “Effectiveness Deadline” means, with respect to the initial Registration
Statement required to be filed hereunder, the 120th calendar day following the
date hereof (or the 150th calendar day following the date hereof in the case of a
“full review” by the Commission) and, with respect to any additional Registration Statements
which may be required pursuant to Section 3(c), the 90th calendar day following
the date on which the Company first knows, or reasonably should have known, that such
additional Registration Statement is required hereunder; provided, however,
that in the event the Company is notified by the Commission that one of the above
Registration Statements will not be reviewed or is no longer subject to further review and
comments, the Effectiveness Deadline as to such Registration Statement shall be the fifth
Trading Day following the date on which the Company is so notified if such date precedes the
dates required above.




     “Effectiveness Period” shall have the meaning set forth in Section 2(a).




     “Filing Deadline” means, with respect to the initial Registration Statement
required hereunder, the 90th calendar day following the date hereof and, with
respect to any additional Registration Statements which may be required pursuant to Section
3(c), the 30th calendar day following the date on which the Company first knows,
or reasonably should have known that such additional Registration Statement is required
hereunder.



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




     “Indemnified Party” shall have the meaning set forth in Section 5(c).




     “Indemnifying Party” shall have the meaning set forth in Section 5(c).




     “Losses” shall have the meaning set forth in Section 5(a).




     “Plan of Distribution” shall have the meaning set forth in Section 2(a).




     “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 all of (i) the Shares (including without
limitation any Additional Shares), (ii) the Warrant Shares (including without limitation any
Additional Warrant Shares), (iii) the Placement Agent Shares, (iv) the Placement Agent
Warrant Shares, (iv) any additional shares issuable in connection with any anti-dilution
provisions in the Warrants (without giving effect to any limitations on exercise set forth
in the Warrant), and (v) any shares of Common Stock issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event with respect to the
foregoing; provided that (i) such Placement Agent Shares and Placement Agent Warrant Shares
shall not be included in the definition of Registrable Securities unless the
Placement Agent requests in writing to the Company that such shares be so included, and (ii)
notwithstanding any such inclusion in such definition, the Placement Agent shall not have
any rights, and such warrants and shares shall not contain any rights, under the Transaction
Documents to the extent such rights would or may cause such warrants, shares or rights to
constitute unfair or unreasonable compensation, individually or in the aggregate, to the
Placement Agent under Rule 2710.




     “Registration Statement” means the registration statements required to be filed
hereunder and any additional registration statements contemplated by Section 3(c), including
(in each case) the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in such
registration statement.




     “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 purpose and
effect as such Rule.



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     “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 purpose and
effect as such Rule.




     “Rule 429” means Rule 429 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 purpose and
effect as such Rule.



     2. Shelf Registration. On or prior to each Filing Deadline, the Company shall prepare
and file with the Commission a “Shelf” Registration Statement covering the resale of 100% of the
Registrable Securities on the filing date of such Registration Statement for an offering to be made
on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3
(except if the Company is not then eligible to register for resale the Registrable Securities on
Form S-3, in which case such registration shall be on another appropriate form in accordance
herewith) and shall contain a “Plan of Distribution” reasonably acceptable to the Holders.
Subject to the terms of this Agreement, the Company shall use its best efforts to cause a
Registration Statement to be declared effective under the Securities Act as promptly as possible
after the filing thereof, but in any event prior to the applicable Effectiveness Deadline, and
shall use its best efforts to keep such Registration Statement continuously effective under the
Securities Act until all Registrable Securities covered by such Registration Statement have been
sold, or may be sold without volume restrictions pursuant to Rule 144(k), as determined by the
counsel to the Company pursuant to a written opinion letter to such effect, addressed and
reasonably acceptable to the Company’s transfer agent and the affected Holders (the
“Effectiveness Period”). The Company shall telephonically request effectiveness of a
Registration Statement as of 5:00 p.m. New York City time on a Trading Day. The Company shall
promptly notify the Holders via facsimile or electronic mail of the effectiveness of a Registration
Statement on the same Trading Day that the Company telephonically confirms effectiveness with the
Commission, which shall be the date requested for effectiveness of a Registration Statement. The
Company shall, by 9:30 a.m. New York City time on the Trading Day after the Effective Date (as
defined in the Purchase Agreement), file a final Prospectus with the Commission if required by Rule
424 or reasonably requested by the Holders.



     3. Registration Procedures



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





     (a) Not less than five Trading Days prior to the filing of each Registration Statement
and not less than 1 Trading Day prior to the filing of any related Prospectus or any
amendment or supplement thereto (including any document that would be incorporated or deemed
to be incorporated therein by reference), the Company shall, (i) furnish to each Holder
copies of all such documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to the review of
such Holders, and (ii) cause its officers and directors, counsel and independent certified
public accountants to respond to such inquiries as shall be



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necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company shall not
file a Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Holders of a majority of the Registrable Securities shall reasonably
object in good faith, provided that the Company is notified of such objection in writing no
later than 5 Trading Days after the Holders have been so furnished copies of a Registration
Statement or 1 Trading Day after the Holders have been so furnished copies of any related
Prospectus or amendments or supplements thereto.




     (b) (i) Prepare and file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep a Registration Statement continuously effective as to the
applicable Registrable Securities for the 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 (subject to the terms of
this Agreement), 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 a Registration Statement or any amendment thereto and provide as promptly as
reasonably possible to the Holders true and complete copies of all correspondence from and
to the Commission relating to a Registration Statement (provided that the Company may excise
any information contained therein which would constitute material non-public information as
to any Holder which has not executed a confidentiality agreement with the Company); and (iv)
comply in all material respects with the provisions of the Securities Act and the Exchange
Act with respect to the disposition of all Registrable Securities covered by a Registration
Statement during the applicable period in accordance (subject to the terms of this
Agreement) with the intended methods of disposition by the Holders thereof set forth in such
Registration Statement as so amended or in such Prospectus as so supplemented.




     (c) If during the Effectiveness Period, the number of Registrable Securities at any
time exceeds 100% of the number of shares of Common Stock then registered in a Registration
Statement, then the Company shall file, as soon as reasonably practicable but in any case
prior to the applicable Filing Deadline, an additional Registration Statement covering the
resale by the Holders of not less than 100% of the number of such Registrable Securities.




     (d) Notify the Holders of Registrable Securities to be sold (which notice shall,
pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been made) as promptly as
reasonably possible (and, in the case of (i)(A) below, not less than 1 Trading Day prior to
such filing) and (if requested by any such Person) confirm such notice in writing no later
than two Trading Days 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; and (C) with respect to a Registration Statement or any



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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 or any other federal or state governmental authority 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;
(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 a 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 a Registration Statement, Prospectus or other documents so that, in the case of
a 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; and (vi) the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may be material
and that, in the determination of the Company, makes it not in the best interest of the
Company to allow continued availability of a Registration Statement or Prospectus, provided
that any and all of such information shall remain confidential to each Holder until such
information otherwise becomes public, unless disclosure by a Holder is required by law;
provided, further, that notwithstanding each Holder’s agreement to keep such
information confidential, the Holders make no acknowledgement that any such information is
material, non-public information.




     (e) Use its 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.




     (f) Furnish to each Holder, without charge, at least one conformed copy of each such
Registration Statement and each amendment thereto, including financial statements and
schedules, all documents incorporated or deemed to be incorporated therein by reference to
the extent requested by such Person, and all exhibits to the extent requested by such Person
(including those previously furnished or incorporated by reference) promptly after the
filing of such documents with the Commission.




     (g) Subject to the terms of this Agreement, 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, except after the giving of any notice
pursuant to Section 3(d).




     (h) If NASD manual Rule 2710 requires any broker-dealer to make a filing prior to
executing a sale by a Holder, the Company shall (i) make an Issuer Filing with



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the NASD Corporate Financing Department pursuant to proposed Rule 2710(b)(10)(A)(i),
(ii) respond within five Trading Days to any comments received from NASD in connection
therewith, and (iii) pay the filing fee required in connection therewith.




     (i) Prior to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders in
connection with the registration or qualification (or exemption from the Registration or
qualification) of such Registrable Securities for the resale by the Holder under the
securities or Blue Sky laws of such jurisdictions within the United States as any Holder
reasonably requests in writing, to keep each registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of the
Registrable Securities covered by each Registration Statement; provided, that the Company
shall not be required to qualify generally to do business in any jurisdiction where it is
not then so qualified, subject the Company to any material tax in any such jurisdiction
where it is not then so subject or file a general consent to service of process in any such
jurisdiction.




     (j) If requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to a Registration Statement, 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.




     (k) Upon the occurrence of any event contemplated by this Section 3, as promptly as
reasonably possible under the circumstances taking into account the Company’s good faith
assessment of any adverse consequences to the Company and its stockholders of the premature
disclosure of such event, prepare a supplement or amendment, including a post-effective
amendment, to a Registration Statement 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, neither a Registration Statement nor
such 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. If the Company
notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to
suspend the use of any Prospectus until the requisite changes to such Prospectus have been
made, then the Holders shall suspend use of such Prospectus. The Company will use its best
efforts to ensure that the use of the Prospectus may be resumed as promptly as is
practicable. The Company shall be entitled to exercise its right under this Section 3(k) to
suspend the availability of a Registration Statement and Prospectus for a period not to
exceed 60 calendar days (which need not be consecutive days) in any 12 month period.




     (l) Comply with all applicable rules and regulations of the Commission.



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     (m) The Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such Holder and,
if required by the Commission, the natural persons thereof that have voting and dispositive
control over the Shares.



     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, (B) in
compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in
writing (including, without limitation, fees and disbursements of counsel for the Company in
connection with Blue Sky qualifications or exemptions of the Registrable Securities) and (C) if not
previously paid by the Company in connection with an Issuer Filing, with respect to any filing that
may be required to be made by any broker through which a Holder intends to make sales of
Registrable Securities with the NASD pursuant to the NASD Rule 2710, so long as the broker is
receiving no more than a customary brokerage commission in connection with such sale, (ii) printing
expenses (including, without limitation, expenses of printing certificates for Registrable
Securities, (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. In no event shall the Company be
responsible for any broker or similar commissions of any Holder or, except to the extent provided
for in the Transaction Documents, any legal fees or other costs of the Holders.



     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, members, partners, agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or any failure to perform under
a margin call of Common Stock), investment advisors and employees (and any other Persons
with a functionally equivalent role of a Person holding such titles, notwithstanding a lack
of such title or any other title) 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, members, shareholders, partners, agents and employees (and any
other Persons with a functionally equivalent role of a Person holding such titles,
notwithstanding a lack of such title or any other title)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



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limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”),
as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a
material fact contained in a 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, or (2) any violation or alleged violation by the
Company of the Securities Act, Exchange Act or any state securities law, or any rule or
regulation thereunder, in connection with the performance of its obligations under this
Agreement, except to the extent, but only to the extent, that (i) 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 a 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 (ii) in the case of an occurrence of an event of the type
specified in Section 3(d)(iii)-(vi), 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 the Advice contemplated in
Section 6(d). The Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding arising from or in connection with the transactions contemplated
by this Agreement of which the Company is aware.




     (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, to the extent arising 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 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 not misleading (i) to the extent, but only to the extent, that such
untrue statement or omission is contained in any information so furnished in writing by such
Holder to the Company specifically for inclusion in such Registration Statement or such
Prospectus or (ii) to the extent that such information relates to 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 a 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 (iii) in the case of an
occurrence of an event of the type specified in Section 3(d)(iii)-(vi), 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



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defective and prior to the receipt by such Holder of the Advice contemplated in Section
6(d). 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 have
the right to 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 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 counsel to the Indemnified Party shall
reasonably believe that a material 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 the reasonable fees and expenses
of no more than one separate 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 or
delayed. 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.




     Subject to the terms of this Agreement, all reasonable 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, provided that the
Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such
fees and expenses applicable to such actions for which such Indemnified Party is judicially
determined to be not entitled to indemnification hereunder.



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     (d) Contribution. If the indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable
by such Indemnified Party, 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 this Agreement, any reasonable attorneys’ or other
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 net 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, except in the case of fraud by such Holder.




     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 respective 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, shall be entitled to specific performance of its
rights under this Agreement. 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 not assert or shall
waive the defense that a remedy at law would be adequate. Notwithstanding anything herein
to the contrary, each Holder hereby waives any right to make a claim for monetary damages
arising from the failure of a Registration Statement



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to be declared and remain effective so long as the Company has fulfilled its obligation
to use its best efforts to cause such effectiveness in accordance herewith (provided that
nothing contained herein shall limit such Holder’s right to seek and obtain any and all
remedies in the event of a breach of this Agreement, including without limitation specific
performance and monetary damages).




     (b) Piggyback on Registrations. Except for the security holders selling the
amount of shares indicated on Schedule 6(b) attached hereto, if any, 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 the initial Registration Statement other
than the Registrable Securities, provided that (1) such shares of other security holders may
not be included to the extent the total number of shares registered on a Registration
Statement would then exceed 30% of the number of shares of Common Stock then held by the
Company’s non-affiliates, and (2) pursuant to Rule 429, the Company may file a single,
combined Prospectus as part of the Registration Statement (after consultation with Purchaser
counsel) which combines the prospectus contained in Form S-3 registration statement number
333-141055 filed by the Company on March 5, 2007 and declared effective July 23, 2007 with
the Prospectus contained in the Registration Statement. The Company shall not file any
other registration statements (other than on Form S-8) until the initial Registration
Statement required hereunder is declared effective by the Commission, provided that this
Section 6(b) shall not prohibit the Company from filing amendments to registration
statements filed prior to the date of this Agreement.




     (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 a Registration Statement.




     (d) Discontinued Disposition. By its acquisition of Registrable Securities,
each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any
event of the kind described in Section 3(d), such Holder will forthwith discontinue
disposition of such Registrable Securities under a Registration Statement until it is
advised in writing (the “Advice”) by the Company that the use of the applicable
Prospectus (as it may have been supplemented or amended) may be resumed. The Company will
use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as
it practicable.




     (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 the stock option or other employee benefit
plans, then the Company shall send to each Holder a written notice of such determination
and, if within fifteen days after the date of such notice, any such Holder shall so request
in writing, the Company shall include in such registration statement all or any part of



11









 







such Registrable Securities such Holder requests to be registered; provided,
however, that, the Company shall not be required to register any Registrable
Securities pursuant to this Section 6(e) that are eligible for resale pursuant to Rule
144(k) promulgated under the Securities Act or that are the subject of a then effective
Registration Statement.




     (f) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, 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 Holders of at least 50.1% of the then outstanding
Registrable Securities provided, however, that no such amendment or waiver that adversely
changes the specifically enumerated rights hereunder of a Purchaser in a manner adversely
different (other than differences that are de minimus or inconsequential) from the manner in
which such specifically enumerated rights of any other Purchaser are being adversely changed
by such amendment or waiver may be effected without the consent of such Purchaser.
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 Holders and that does not
directly or indirectly affect the rights of other Holders may be given by Holders of all of
the Registrable Securities to which such waiver or consent relates; provided,
however, that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately preceding sentence.




     (g) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be delivered as set forth in
the Purchase Agreement.




     (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 (except by merger) or
obligations hereunder without the prior written consent of all of the Holders of the
then-outstanding Registrable Securities. Each Holder may assign their respective rights
hereunder in the manner and to the Persons as permitted under the Purchase Agreement.




     (i) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries
has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or
after the date of this Agreement, enter into any agreement with respect to its securities,
that would have the effect of impairing the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. Except as set forth on Schedule
6(i), if any, neither the Company nor any of its subsidiaries has previously entered
into any agreement granting any registration rights with respect to any of its securities to
any Person that have not been satisfied in full.




     (j) Execution and Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not sign the



12









 







same counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create
a valid and binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf” signature page were
an original thereof.




     (k) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in accordance with the
provisions of the Purchase Agreement.




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




     (m) 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 commercially 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.




     (n) Headings. The headings in this Agreement are for convenience only, do not
constitute a part of this Agreement, and shall not be deemed to limit or affect any of the
provisions hereof.




     (o) Independent Nature of Holders’ Obligations and Rights. The obligations of
each Holder hereunder are several and not joint with the obligations of any other Holder
hereunder, and no Holder shall be responsible in any way for the performance of the
obligations of any other Holder hereunder. Nothing contained herein or in any other
agreement or document delivered at any closing, and no action taken by any Holder pursuant
hereto or thereto, shall be deemed to constitute the Holders as a partnership, an
association, a joint venture or any other kind of entity, or create a presumption that the
Holders are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this Agreement,
and it shall not be necessary for any other Holder to be joined as an additional party in
any proceeding for such purpose.



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




	 	 	 	 	 
	 	COMPANY: 



XENONICS HOLDINGS, INC. 

 	 
	 	By:  	/s/ RICHARD S. KAY
 	 
	 	Print Name: 	Richard S. Kay                 	 
	 	Print Title: 	Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	PURCHASERS:



TAPESTRY INVESTMENT PARTNERS, LP

 	 
	 	By:  	/s/ GARY S. SIPERSTEN
 	 
	 	Name: 	Gary S. Sipersten 	 
	 	Title: 	GP 	 
	 



	 	 	 	 	 
	 	CALM WATERS PARTNERSHIP

 	 
	 	By: 	/s/ RICHARD S. STRONG
 	 
	 	Name: 	Richard S. Strong 	 
	 	Title: 	Managing Partner 	 
	 



	 	 	 	 	 
	 	MEADOWBROOK OPPORTUNITY FUND, LLC

 	 
	 	By:  	/s/ MICHAEL RAGINS
 	 
	 	Name: 	Michael Ragins 	 
	 	Title: 	Manager 	 
	 



	 	 	 	 	 
	 	 	 
	 	                                       /s/ JAMES SCHOENIKE
 	 
	 	James Schoenike 	 
	 	 	 
	 



	 	 	 	 	 
	 	 	 
	 	                                       /s/ MARK D. WESTMAN
 	 
	 	Mark D. Westman 	 
	 	 	 
	 



	 	 	 	 	 
	 	 	 
	 	                                       /s/ HARVEY BLITZ
 	 
	 	Harvey Blitz 	 
	 	 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	 	 
	 	                                       /s/ STEPHEN J. POSNER
 	 
	 	Stephen J. Posner 	 
	 	 	 
	 



	 	 	 	 	 
	 	GEMINI MASTER FUND, LTD.

 	 
	 	By:  	/s/ STEVEN WINTERS
 	 
	 	Name: 	Steven Winters 	 
	 	Title: 	President 	 
	 




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