EXHIBIT 10.8
REGISTRATION RIGHTS AGREEMENT
(CONVERTIBLE DEBENTURES)
THIS REGISTRATION RIGHTS AGREEMENT, dated as of October 16, 2001 (this
"Agreement"), is made by and between FLEXXTECH CORPORATION, a Nevada
corporation, with headquarters located at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company"), and each entity named on the signature
page hereto as "Investors" (each, an "Investor").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the Securities
Purchase Agreement, dated as of August 14, 2001, between the Buyers listed
therein and the Company (the "Securities Purchase Agreement"; terms not
otherwise defined herein shall have the meanings ascribed to them in the
Securities Purchase Agreement), the Company has agreed to issue and sell to the
Investors one or more debentures of the Company, in the aggregate principal
amount of $240,000.00 (the "Debentures"); and
WHEREAS, the Debentures are convertible into shares of Common Stock (the
"Conversion Shares"; which term, for purposes of this Agreement, shall include,
without limitation, shares of Common Stock of the Company issuable in lieu of
accrued interest on conversion as contemplated by the Debentures) upon the terms
and subject to the conditions contained in the Debentures.
WHEREAS, to induce the Investors to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "Securities
Act"), with respect to the Conversion Shares;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investors
hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Investor" means an Investor who agrees to become bound by the
provisions of this Agreement.
(b) "Potential Material Event" means any of the following: (i) the
possession by the Company of material information not ripe for disclosure in a
registration statement, which shall be evidenced by determinations in good faith
by the Board of Directors of the Company that disclosure of such
information in the registration statement would be detrimental to the business
and affairs of the Company; or (ii) any material engagement or activity by the
Company which would, in the good faith determination of the Board of Directors
of the Company, be adversely affected by disclosure in a registration statement
at such time, which determination shall be accompanied by a good faith
determination by the Board of Directors of the Company that the registration
statement would be materially misleading absent the inclusion of such
information.
(c) "Register," "Registered," and "Registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the Securities Act and pursuant to Rule 415 under the Securities
Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement by the SEC.
(d) "Registrable Securities" means the Conversion Shares.
(e) "Registration Statement" means a registration statement of the Company
under the Securities Act.
(f) "SEC" means the United States Securities and Exchange Commission.
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Securities Purchase Agreement.
2. REGISTRATION.
(A) Mandatory Registration.
(i) The Company shall prepare and file with the SEC, as soon as possible
after the Closing Date and no later than thirty (30) days following the Closing
Date (the "Required Filing Date"), either a Registration Statement or an
amendment to an existing Registration Statement, in either event registering for
resale by the Investors a sufficient number of shares of Common Stock for
the Investors to sell the Registrable Securities (or such lesser number as may
be required by the SEC, but in no event less than three hundred percent (300%)
of that number of shares of the Company's Common Stock into which the relevant
Debentures and all interest thereon through their respective Maturity Dates
would be convertible at the time of filing of such Registration Statement
(assuming for such purposes that all such Debentures had been eligible to be
converted, and had been converted, into Conversion Shares in accordance with
their terms, whether or not such accrual of interest, eligibility or conversion
had in fact occurred as of such date) . The Registration Statement (W) shall
include the Registrable Securities and (X) shall also state that, in accordance
with Rule 416 and 457 under the Securities Act, it also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon conversion of the Debentures to prevent dilution resulting from stock
splits or stock dividends. The Company will use its reasonable best efforts to
cause such Registration Statement to be declared effective on a date no later
than ninety (90) days after the Closing Date (the "Required Effective Date").
(ii) If at any time (an "Increased Registered Shares Date"), the number of
shares of Common Stock represented by the Registrable Securities, issued or to
be issued as contemplated by the Transaction Agreements, exceeds the aggregate
number of shares of Common Stock then registered, the Company shall, within ten
(10) business days after receipt of a written notice from any Investor, either
(X) amend the relevant Registration Statement filed by the Company pursuant to
the preceding provisions of this Section 2, if such Registration Statement has
not been declared effective by the SEC at that time, to register one hundred ten
percent (110%) of such Registrable Shares, computed as contemplated by the
immediately preceding subparagraph (i), or (Y) if such Registration Statement
has been declared effective by the SEC at that time, file with the SEC an
additional Registration Statement (an "Additional Registration Statement") to
register one hundred ten percent (110%) of the shares of Common Stock
represented by the Registrable Shares, computed as contemplated by the
immediately preceding subparagraph (i), that exceed the aggregate number of
shares of Common Stock already registered. The Company will use its reasonable
best efforts to cause the amended Registration Statement or the Additional
Registration Statement, as the case may be, to be declared effective as promptly
as possible and in no event later than (90) days after the Increased Registered
Shares Date.
(B) PAYMENTS BY THE COMPANY.
(i) If the Registration Statement covering the Registrable Securities is not
filed with the SEC by the Required Filing Date, the Company will make
payment to the Investors in such amounts and at such times as shall be
determined pursuant to this Section 2(b).
(ii) If the Registration Statement covering the Registrable Securities is
not declared effective by the SEC by the Required Effective Date, the Company
will make payment to the Investors in such amounts and at such times as shall be
determined pursuant to this Section 2(b).
(iii) If the Company does not respond to comments issued by the SEC within
five (5) business days of first receipt thereof by the Company or its counsel,
then the Company will make payments to the Investors in such amounts and at such
times as shall be determined pursuant to this Section 2(b).
(iv) If either the conditions set forth in Sections 2(b)(i), 2(b)(ii) or
2(b)(iii) are not satisfied as required thereby, then within three (3) days
after the end of the time periods referenced in Sections 2(b)(i), 2(b)(ii) or
2(b)(iii) (the third such day being referred to as the "Set Date"), as the case
may be, the Company shall immediately pay to the Investors without demand
therefore a cash amount equal to 2% per month of the outstanding principal
amount of the Debentures and, until such time as the actions required by
Sections 2(b)(i), 2(b)(ii) or 2(b)(iii), as the case may be, shall have been
taken, the same amount shall accrue and become payable to the Investors within
three (3) days on the same day as the Set Date of each subsequent month until
such Sections shall have been complied with (the "Periodic Amounts"). In light
of the difficulty of ascertaining the amount of damage that the Investors will
suffer as a result of the Company's failure to comply therewith, all amounts
payable under this Section shall be payable as liquidated damages, and not as a
penalty. The Company shall keep the registration statement effective throughout
the period during which the life of the Registrable Securities are issued
and outstanding.
(v) It is the intention of the parties that interest payable under
any of the terms of this Agreement shall not exceed the maximum amount permitted
under any applicable law. If a law, which applies to this Agreement which sets
the maximum interest amount, is finally interpreted so that the interest in
connection with this Agreement exceeds the permitted limits, then: (1) any such
interest shall be reduced by the amount necessary to reduce the interest to the
permitted limit; and (2) any sums already collected (if any) from the Company
which exceed the permitted limits will be refunded to the Company. The Investor
may choose to make this refund by reducing the amount that the Company owes
under this Agreement or by making a direct payment to the Company. If a refund
reduces the amount that the Company owes the Investor, the reduction will be
treated as a partial payment. In case any provision of this Agreement is held
by a court of competent jurisdiction to be excessive in scope or otherwise
invalid or unenforceable, such provision shall be adjusted rather than voided,
if possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Agreement will
not in any way be affected or impaired thereby.
(vi) The parties acknowledge that the damages which may be incurred by
the Investors if the Registration Statement is not filed by the Required Filing
Date, declared effective by the SEC by the Required Effective Date or if the
Registration Statement has not been declared effective as promptly as possible
may be difficult to ascertain. The parties agree that the Periodic Amounts
represent a reasonable estimate on the part of the parties, as of the date of
this Agreement, of the amount of such damages, and shall be the exclusive
remedy.
(vii) Notwithstanding the foregoing, the amounts payable by the Company
pursuant to this provision shall not be payable to the extent any delay in the
effectiveness of the Registration Statement occurs because of an act of, or a
failure to act or to act timely by the Investors or its counsel, or in the event
all of the Registrable Securities may be sold pursuant to Rule 144 or another
available exemption under the Act.
3. OBLIGATIONS OF THE COMPANY. In connection with the registration of the
Registrable Securities, the Company shall do each of the following:
(a) Prepare promptly, and file with the SEC by the Required Filing Date a
Registration Statement with respect to not less than the number of Registrable
Securities provided in Section 2(a) above, and thereafter use its reasonable
efforts to cause such Registration Statement relating to Registrable Securities
to become effective as promptly as possible and keep the Registration Statement
effective at all times during the period (the "Registration Period") continuing
until the earliest of (i) the date that is five (5) years after the last day of
the calendar month following the month in which the Registration Statement is
declared effective, (ii) the date when the Investorss may sell all Registrable
Securities under Rule 144, or (iii) the date the Investorss no longer own any of
the Registrable Securities, which Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any 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 in which they were made, not misleading;
(b) Prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus
used in connection with the Registration Statement as may be necessary to keep
the Registration Statement effective at all times during the Registration
Period, and, during the Registration Period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by the Registration Statement until such time as all of such
Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
the Registration Statement;
(c) The Company shall permit a single firm of counsel designated by the
Investors to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time (but not less than three (3)
business days) prior to their filing with the SEC, and not file any document in
a form to which such counsel reasonably objects. If such counsel objects, the
Required Filing Date shall be extended by the number of days from the date the
Registration Statement was delivered to such counsel to the date such counsel no
longer objects;
(d) Notify each Investor, such Investor's legal counsel identified to the
Company (which, until further written notice, shall be deemed to be ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; (the
"Investor's Counsel")), and any managing underwriters immediately (and, in the
case of (i)(A) below, not less than five (5) days prior to such filing) and (if
requested by any such Person) confirm such notice in writing no later than one
(1) business day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed; (B) whenever the SEC notifies the Company whether there will
be a "review" of Registration Statement; (C) whenever the Company receives (or
a representative of the Company receives on its behalf) any oral or written
comments from the SEC relating to a Registration Statement (copies or, in the
case of oral comments, summaries of such comments shall be promptly furnished by
the Company to the Investors); and (D) with respect to the Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the SEC or any other Federal or state governmental
authority for amendments or supplements to the Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the SEC of
any stop order suspending the effectiveness of the Registration Statement
covering any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (iv) if at any time any of the representations or
warranties of the Company contained in any agreement (including any underwriting
agreement) contemplated hereby ceases to be true and correct in all material
respects; (v) 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 (vi) of the occurrence of
any event that to the best knowledge of the Company makes any statement made in
the 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 the Registration Statement, Prospectus or other
documents so that, in the case of the 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. In addition, the Company shall furnish the Investors
with copies of all intended written responses to the comments contemplated in
clause (C) of this Section 3(d) not later than one (1) business day in advance
of the filing of such responses with the SEC so that the Investors shall have
the opportunity to comment thereon;
(e) Furnish to each Investor and such Investor's Counsel (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, one (1) copy of the Registration Statement, each
preliminary prospectus and prospectus, and each amendment or supplement thereto,
and (ii) such number of copies of a prospectus, and all amendments and
supplements thereto and such other documents, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor;
(g) As promptly as practicable after becoming aware thereof, notify each
Investor of the happening of any event of which the Company has actual
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits 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, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement or other appropriate
filing with the SEC to correct such untrue statement or omission, and deliver a
number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request;
(h) As promptly as practicable after becoming aware thereof, notify each
Investor who holds Registrable Securities being sold (or, in the event of an
underwritten offering, the managing underwriters) of the issuance by the SEC of
a Notice of Effectiveness or any notice of effectiveness or any stop order or
other suspension of the effectiveness of the Registration Statement at the
earliest possible time;
(i) Notwithstanding the foregoing, if at any time or from time to time after
the date of effectiveness of the Registration Statement, the Company notifies
the Investors in writing of the existence of a Potential Material Event, the
Investors shall not offer or sell any Registrable Securities, or engage in any
other transaction involving or relating to the Registrable Securities, from the
time of the giving of notice with respect to a Potential Material Event until
such Investor receives written notice from the Company that such Potential
Material Event either has been disclosed to the public or no longer constitutes
a Potential Material Event; provided, however,that the Company may not so
-------------------
suspend the right to such holders of Registrable Securities for more than two
twenty (20) business day periods in the aggregate during any 12-month period
("Suspension Period") with at least a ten (10) business day interval between
such periods, during the periods the Registration Statement is required to be in
effect;
(j) Use its reasonable efforts to secure and maintain the designation of
all the Registrable Securities covered by the Registration Statement on the
NASDAQ/National Market System or the "OTC Bulletin Board Market" of the National
Association of Securities Dealers Automated Quotations System ("NASDAQ") within
the meaning of Rule 11Aa2-1 of the SEC under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the quotation of the Registrable
Securities on The NASDAQ National Market System; and further use its efforts to
arrange for at least two (2) market makers to register with the National
Association of Securities Dealers, Inc. ("NASD") as such with respect to such
Registrable Securities;
(k) Provide a transfer agent and registrar, which may be a single entity,
for the Registrable Securities not later than three (3) business days after the
effective date of the Registration Statement;
(l) Cooperate with the Investors to facilitate the timely preparation and
delivery of certificates for the Registrable Securities to be offered pursuant
to the Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts as the case may be, as the
Investors may reasonably request, and, within three (3) business days after a
Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, to the transfer agent for the Registrable
Securities (with copies to the Investors whose Registrable Securities are
included in such Registration Statement) an appropriate instruction and opinion
of such counsel;
(m) Take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of the Registrable Securities pursuant to the
Registration Statement; and
(n) Not take, or omit to take, any actions that would preclude the filing or
effectiveness of the Registration Statement or require the withdrawal of
the Registration Statement.
4. OBLIGATIONS OF THE INVESTORS. In connection with the registration of the
Registrable Securities, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least ten (10) business days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Investor of the
information the Company requires from each such Investor (the "Requested
Information") if such Investor elects to have any of such Investor's Registrable
Securities included in the Registration Statement. If at least two (2) business
days prior to the filing date the Company has not received the Requested
Information from an Investor (a "Non-Responsive Investor"), then the Company may
file the Registration Statement without including Registrable Securities of such
Non-Responsive Investor;
(b) Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement; and
(c) Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(e) or 3(f),
above, such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) or 3(f) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
(d) Each holder of Registrable Securities that sells Registrable Securities
pursuant to a registration under this Agreement agrees that in connection with
registration as follows:
(i) Such seller shall cooperate as reasonably requested by the Company with
the Company in connection with the preparation of the registration statement,
and for as long as the Company is obligated to file and keep effective the
registration statement, shall provide to the Company, in writing, for use in the
registration statement, all such information regarding such seller and its plan
of distribution of the Registrable Securities as may reasonably be necessary to
enable the Company to prepare the registration statement and prospectus covering
the Registrable Securities, to maintain the currency and effectiveness thereof
and otherwise to comply with all applicable requirements of law in connection
therewith; and
(ii) During such time as such seller may be engaged in a distribution of the
Registrable Securities, such seller shall comply with Rules 10b-6 and 10b-7
promulgated under the Securities Exchange Act and pursuant thereto it shall,
among other things; (x) not engage in any stabilization activity in connection
with the securities of the Company in contravention of such rules; (y)
distribute the Registrable Securities under the registration statement solely in
the manner described in the registration statement; and (z) cease distribution
of such Registrable Securities pursuant to such registration statement upon
written notice from the Company that the prospectus covering the Registrable
Securites contains any untrue statement of a material fact required to be stated
therein or necessary to make the statements therein not misleading.
5. EXPENSES OF REGISTRATION. (a) All reasonable expenses (other than
underwriting discounts and commissions of the Investors) incurred in connection
with registrations, filings or qualifications pursuant to Sections 2 and 3, but
including, without limitation, all registration, listing, and qualifications
fees, printers, legal and accounting fees, the fees and disbursements of counsel
for the Company and a fee for a single counsel for the Investors (as a
group and not individually) not exceeding $10,000 for the Registration Statement
covering the Registrable Securities applicable to the Debentures issued on the
Closing Date shall be borne by the Company.
(b) Neither the Company nor any of its subsidiaries has, as of the date
hereof, nor shall the Company nor any of its subsidiaries, on or after the date
of this Agreement, entered into any agreement with respect to its securities
that is inconsistent with the rights granted to the Investors in this Agreement
or otherwise conflicts with the provisions hereof. Except as disclosed in the
Securities Purchase Agreement or the other documents entered into simultaneously
therewith, 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. Without limiting the generality of the
foregoing, without the written consent of the Investors holding a majority of
the Registrable Securities, the Company shall not grant to any person the right
to request the Company to register any securities of the Company under the
Securities Act unless the rights so granted are subject in all respects to the
prior rights in full of the Investors set forth herein, and are not otherwise in
conflict or inconsistent with the provisions of this Agreement and the other
Transaction Agreements.
6. INDEMNIFICATION. In the event any Registrable Securities are included in
a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor who holds such Registrable Securities, the directors,
managers and members, if any, of such Investor, the officers, if any, of such
Investor, and each person, if any, who controls any Investor within the meaning
of the Securities Act or the Exchange Act (each, an "Indemnified Person" or
"Indemnified Party"), against any losses, claims, damages, liabilities or
expenses (joint or several) incurred (collectively, "Claims") to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation under the Securities Act, the Exchange Act or any state
securities law (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to clause (b) of this Section 6, the
Company shall reimburse the Investors, promptly as such expenses are incurred
and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a) shall not (I) apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of any
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section
3(c) hereof; (II) be available to the extent such Claim is based on a failure
of the Investor to deliver or cause to be delivered the prospectus made
available by the Company; (III) apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld; or (IV) apply to any
violation or alleged violation by an Indemnified Person of the Securities Act,
the Exchange Act, any state securities laws or any rule or regulation under the
Securities Act, the Exchange Act, or any state securities laws. Each Investor
will indemnify the Company and its officers, directors and agents (each, an
"Indemnified Person" or "Indemnified Party") against any claims arising out of
or based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company, by or on behalf of such
Investor, expressly for use in connection with the preparation of the
Registration Statement, subject to such limitations and conditions as are
applicable to the Indemnification provided by the Company to this Section 6.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person.
(b) Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be. In case
any such action is brought against any Indemnified Person or Indemnified Party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified,
assume the defense thereof, subject to the provisions herein stated and after
notice from the indemnifying party to such Indemnified Person or Indemnified
Party of its election so to assume the defense thereof, the indemnifying party
will not be liable to such Indemnified Person or Indemnified Party under this
Section 6 for any legal or other reasonable out-of-pocket expenses subsequently
incurred by such Indemnified Person or Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion. The
Indemnified Person or Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and reasonable out-of-pocket expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed the
defense of the action with counsel reasonably satisfactory to the Indemnified
Person or Indemnified Party. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as such expense, loss, damage or liability is incurred and is due
and payable.
7. CONTRIBUTION. To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
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however, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6; (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation; and (c)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to:
(c) make and keep public information available, as those terms are
understood and defined in Rule 144;
(d) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act;
(e) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration; and
(d) cause its counsel to deliver to its transfer agent such opinions of
law as shall be required to remove restrictive legends on the shares to be sold.
9. ASSIGNMENT OF THE REGISTRATION RIGHTS. This Agreement shall not be
assignable.
10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold a fifty (50%) percent
interest of the Registrable Securities. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each Investor and the
Company.
11. MISCELLANEOUS.
(f) A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
(g) Notices required or permitted to be given hereunder shall be given in
the manner contemplated by the Securities Purchase Agreement, (i) if to the
Company or to the Investors, to their respective address contemplated by the
Securities Purchase Agreement, and (iii) if to any other Investor, at such
address as such Investor shall have provided in writing to the Company, or at
such other address as each such party furnishes by notice given in accordance
with this Section 11(b).
(h) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(i) This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York for contracts to be wholly performed in such
state and without giving effect to the principles thereof regarding the conflict
of laws. Each of the parties consents to the jurisdiction of the federal
courts whose districts encompass any part of the City of New York or the state
courts of the State of New York sitting in the City of New York in connection
with any dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non coveniens, to the bringing of any such proceeding in such jurisdictions. To
the extent determined by such court, the Company shall reimburse the Buyer for
any reasonable legal fees and disbursements incurred by the Buyer in enforcement
of or protection of any of its rights under this Agreement.
(j) If any provision of this Agreement shall be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
(k) All pronouns and any variations thereof refer to the masculine, feminine
or neuter, singular or plural, as the context may require.
(l) The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning thereof.
(m) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
(n) The Company acknowledges that any failure by the Company to perform its
obligations under Section 3(a) hereof, or any delay in such performance could
result in loss to the Investors, and the Company agrees that, in addition to any
other liability the Company may have by reason of such failure or delay, the
Company shall be liable for all direct damages caused by any such failure or
delay, unless the same is the result of force majeure. Neither party shall be
liable for consequential damages.
(o) This Agreement constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof. This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement thereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
COMPANY:
FLEXXTECH CORPORATION
By:
Name:
Title:
INVESTORS:
Name of Investor
By:
Name:
Title:
Name of Investor
By:
Name:
Title:
Name of Investor
By:
Name:
Title:
Name of Investor
By:
Name:
Title:
Name of Investor
By:
Name:
Title:
Name of Investor
By:
Name:
Title:
Name of Investor
By:
Name:
Title:
Name of Investor
By:
Name:
Title:
Name of Investor
By:
Name:
Title:
Name of Investor
By:
Name:
Title:
Name of Investor