REGISTRATION RIGHTS AGREEMENT BY AND AMONG AVATECH SOLUTIONS, INC. AND RWWI HOLDINGS LLC
Exhibit
10.2
BY
AND AMONG
AVATECH
SOLUTIONS, INC.
AND
RWWI
HOLDINGS LLC
Dated as
of August 17, 2010
TABLE
OF CONTENTS
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Page
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SECTION
1.
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CERTAIN
DEFINITIONS
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1
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SECTION
2.
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DEMAND
REGISTRATION
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4
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SECTION
3.
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PIGGYBACK
EVENTS
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6
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SECTION
4.
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SHELF
REGISTRATION
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7
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SECTION
5.
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SUSPENSION
PERIODS
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8
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SECTION
6.
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REGISTRATION
PROCEDURES
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8
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SECTION
7.
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REGISTRATION
EXPENSES
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13
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SECTION
8.
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INDEMNIFICATION
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13
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SECTION
9.
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SECURITIES
ACT RESTRICTIONS
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15
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SECTION
10.
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TRANSFERS
OF RIGHTS
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15
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SECTION
11.
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MISCELLANEOUS
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15
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ANNEX
A – Plan of Distribution
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A-1
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ANNEX
B – Selling Securityholder Notice and Questionnaire
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B-1
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THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), is made
and entered into as of August 17, 2010, by and between Avatech Solutions, Inc.,
a Delaware corporation (the “Company”), and RWWI
Holdings LLC, a Delaware limited liability company (the “Investor”).
WHEREAS,
on August 17, 2010, the Company, a wholly owned subsidiary of the Company
(“Merger Sub”),
Rand Worldwide, Inc. (“Merger Partner”) and
the Investor entered into an Agreement and Plan of Merger (the “Merger Agreement”),
pursuant to which upon consummation Merger Partner shall merge (the “Merger”) with Merger
Sub and be the surviving corporation, and the Company shall issue shares of its
Common Stock, par value $0.01 per share (the “Common Shares”) as
the merger consideration to the Investor (the “Merger
Shares”),
WHEREAS,
a condition to the consummation of the Merger is that the Company concurrently
enter into this Agreement with the Investor with respect to registration
rights,
WHEREAS,
on August 17, 2010, the Merger was consummated and the Company issued an
aggregate of 34,232,682 Merger Shares to the Investor, and, as of the date
hereof, the Company and the Investor desire to enter into this
Agreement,
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valid consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
Section
1. Certain
Definitions.
In
addition to the terms defined elsewhere in this Agreement, the following terms
shall have the following meanings:
“Affiliate” of any
Person means any other Person which directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such Person. The term “control” (including the terms “controlling,”
“controlled” and “under common control with”) as used with respect to any Person
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
“Agreement” means this
Registration Rights Agreement, including all amendments, modifications and
supplements and any exhibits or schedules to any of the foregoing, and shall
refer to this Registration Rights Agreement as the same may be in effect at the
time such reference becomes operative.
“beneficially own”
means, with respect to any Person, securities of which such Person or any of
such Person’s Affiliates, directly or indirectly, has “beneficial ownership” as
determined pursuant to Rule 13d-3 and Rule 13d-5 of the Exchange Act,
including securities beneficially owned by others with whom such Person or any
of its Affiliates has agreed to act together for the purpose of acquiring,
holding, voting or disposing of such securities; provided that a Person shall
not be deemed to “beneficially own” (i) securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person’s Affiliates
until such tendered securities are accepted for payment, purchase or exchange,
or (ii) any security as a result of an oral or written agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (a) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable provisions of the Exchange Act, and
(b) is not also then reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor report). Without
limiting the foregoing, a Person shall be deemed to be the beneficial owner of
all Registrable Shares owned of record by any majority-owned subsidiary of such
Person.
“Closing Date” has the
meaning set forth in the Merger Agreement.
“Common Shares” has
the meaning set forth in the first Recital hereto.
“Company” has the
meaning set forth in the introductory paragraph.
“Demand Registration”
has the meaning set forth in Section 2(a).
“Demand Registration
Statement” has the meaning set forth in Section 2(a).
“Exchange Act” means
the Securities Exchange Act of 1934, as amended.
“Form S-3 means a
registration statement on Form S-3 under the Securities Act or such
successor forms thereto permitting registration of securities under the
Securities Act.
“Governmental Entity”
means any national, federal, state, municipal, local, territorial, foreign or
other government or any department, commission, board, bureau, agency,
regulatory authority or instrumentality thereof, or any court, judicial,
administrative or arbitral body or public or private tribunal.
“Investor” has the
meaning set forth in the introductory paragraph.
“Investor’s Counsel”
has the meaning set forth in Section 6(a)(i).
“Merger Shares” has
the meaning set forth in the first Recital hereto.
“Minimum Amount” means
Three Million Dollars ($3,000,000).
“Person” means any
individual, sole proprietorship, partnership, limited liability company, joint
venture, trust, incorporated organization, association, corporation,
institution, public benefit corporation, Governmental Entity or any other
entity.
“Piggyback Event” has
the meaning set forth in Section 3(a).
“Prospectus” means the
prospectus or prospectuses (whether preliminary or final) included in any
Registration Statement and relating to Registrable Shares, as amended or
supplemented and including all material incorporated by reference in such
prospectus or prospectuses.
-2-
“Registrable Shares”
means, at any time, (i) the Merger Shares held of record by the Investor at
such time and (ii) any securities issued by the Company after the date
hereof in respect of the Shares referred to in clause (i) by way of a share
dividend or share split or other distribution thereon or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization, but excluding all such Common Shares and such other securities
held by the Investor at a time when such securities are eligible for resale by
the Investor pursuant to Rule 144 under the Securities Act without limitation
thereunder on volume or manner of sale.
“Registration
Expenses” has the meaning set forth in Section 7(a).
“Registration
Statement” means any registration statement of the Company which covers
any of the Registrable Shares pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all documents
incorporated by reference in such Registration Statement.
“SEC” means the
Securities and Exchange Commission or any successor agency.
“Securities Act” means
the Securities Act of 1933, as amended.
“Shares” means any of
the Common Shares. If at any time Registrable Shares include
securities of the Company other than Common Shares, then, when referring to
Shares other than Registrable Shares, “Shares” shall include the class or
classes of such other securities of the Company.
“Shelf Registration”
has the meaning set forth in Section 4(a).
“Shelf Registration
Statement” has the meaning set forth in Section 4(a).
“Shelf Takedown” has
the meaning set forth in Section 3(a).
“Suspension Period”
has the meaning set forth in Section 5.
“Termination Date”
means the first date on which the Investor no longer owns any Registrable
Shares.
“underwritten
offering” means a registered offering in which securities of the Company
are sold to one or more underwriters on a firm-commitment basis for reoffering
to the public, and “underwritten Shelf
Takedown” means an underwritten offering effected pursuant to a Shelf
Registration.
In
addition to the above definitions, unless the context requires
otherwise:
(i) any
reference to any statute, regulation, rule or form as of any time shall mean
such statute, regulation, rule or form as amended or modified and shall also
include any successor statute, regulation, rule or form from time to
time;
-3-
(ii) “including”
shall be construed as inclusive without limitation, in each case notwithstanding
the absence of any express statement to such effect, or the presence of such
express statement in some contexts and not in others;
(iii) references
to “Section” are references to Sections of this Agreement;
(iv) words
such as “herein”, “hereof”, “hereinafter” and “hereby” when used in this
Agreement refer to this Agreement as a whole;
(v)
references to “business day” mean a business day
in The City of Boston, Massachusetts; and
(vi) references
to “dollars” and “$” mean U.S. dollars.
Section
2. Demand
Registration.
(a) Right to Request
Registration. The following demand registration rights will
apply only if the Company fails to provide the resale registration rights set
forth in Section 4, as follows: Subject to the provisions hereof and
until the Termination Date, if the Company has not filed, caused to be declared
effective, and maintained the effectiveness of a Shelf Registration Statement,
then the Investor may request in writing registration for resale under the
Securities Act of all or part of its Registrable Shares (a “Demand
Registration”); provided, however, that (based on the
then-current market prices) the Company shall have no obligations under this
Section 2(a) unless the number of Registrable Shares included in the Demand
Registration would, if fully sold, reasonably be expected to yield gross
proceeds of at least the Minimum Amount. Subject to Section 2(d)
and Section 5 below, the Company shall use reasonable best efforts
(i) to file a Registration Statement registering for resale such number of
Registrable Shares as requested to be so registered pursuant to this
Section 2(a) (a “Demand Registration
Statement”) within twenty (20) days after the Investor’s request therefor
if such registration is to be effected using a Form S-3 and within forty (40)
days after the Investor’s request therefor in all other cases and (ii) to use
reasonable best efforts to cause such Demand Registration Statement to be
declared effective by the SEC as soon thereafter as is practicable.
(b) Number of Demand
Registrations. Subject to the limitations of
Sections 2(a) and 2(d) below, until the Termination Date the Investor shall
be entitled to request, in the aggregate, three (3) Demand Registrations under
this Agreement but in no event more than one (1) Demand Registration in any
rolling period of 180 days. A Registration Statement shall count as a
permitted Demand Registration only if and when it has become effective and the
Investor is able to register and sell the Registrable Shares requested to be
included in such registration under such Registration Statement.
(c) Priority on Demand
Registrations. The Company shall not include Shares or other
securities of the Company other than Registrable Shares in a Demand
Registration.
(d) Restrictions on Demand
Registrations. Notwithstanding anything to the contrary
contained in this Section 2, the Company shall not be obligated to proceed with
a Demand Registration if the offering to be effected pursuant to such
registration can be effected at that time pursuant to a then currently effective
Shelf Registration previously filed by the Company in accordance with
Section 4.
-4-
(e) Underwritten
Offerings. At the request of the Investor, the Company shall
use reasonable best efforts to cause a Demend Registration to be an underwritten
offering, but only if (i) the number of Registrable Shares to be sold in the
offering would reasonably be expected to yield gross proceeds of at least the
Minimum Amount (based on then-current market prices), and (ii) the request is
made more than sixty (60) days after the Investor has sold Shares in another
underwritten registered offering pursuant to Section 2 or Section 4
hereof. If any of the Registrable Shares covered by a Demand
Registration are to be sold in an underwritten offering, then the Investor shall
have the right to select the managing underwriter or underwriters to lead the
offering, subject to the Company’s consent, not to be unreasonably withheld,
conditioned or delayed.
(f) Effective Period of Demand
Registrations. Upon the date of effectiveness of any Demand
Registration for an underwritten offering (the “Effective Date”) and
if such offering is priced promptly on or after the Effective Date, the Company
shall use reasonable best efforts to keep such Demand Registration Statement
effective for a period (the “Effective Period”)
equal to the lesser of (i) one hundred twenty (120) days from the Effective Date
or (ii) that number of days between the Effective Date and the date on which all
of the Registrable Shares covered by such Demand Registration have been sold by
the Investor pursuant to such Demand Registration. If the Company
withdraws any Demand Registration pursuant to Section 5 before the
expiration of the Effective Period and before all of the Registrable Shares
covered by such Demand Registration have been sold pursuant thereto, then the
Investor shall be entitled to a replacement Demand Registration which shall be
subject to all of the provisions of this Agreement. A Demand
Registration shall not count against the limit on the number of such
registrations set forth in Section 2(b) if (i) after the applicable
Registration Statement has become effective, such Registration Statement or the
related offer, sale or distribution of Registrable Shares thereunder becomes the
subject of any stop order, injunction or other order or restriction imposed by
the SEC or any other governmental agency or court for any reason not directly
attributable to the Investor or its Affiliates (other than the Company and its
controlled Affiliates) and such interference is not thereafter eliminated so as
to permit the completion of the contemplated distribution of Registrable Shares
or (ii) in the case of an underwritten offering, the conditions specified
in the related underwriting agreement, if any, are not satisfied or waived for
any reason not directly attributable to the Investor or its Affiliates (other
than the Company and its controlled Affiliates), and as a result of any such
circumstances described in clause (i) or (ii), less than all of the
Registrable Shares covered by the Registration Statement are sold by the
Investor pursuant to such Registration Statement.
-5-
Section
3. Piggyback
Events.
(a) Right to
Piggyback. Whenever prior to the Termination Date the Company
proposes (i) to register any Shares under the Securities Act (other than on a
registration statement on Form ▇-▇, ▇-▇, ▇-▇ or F-4), whether for its own
account or for the account of one or more holders of Shares, and the form of
registration statement to be used may be used for any registration of
Registrable Shares or (ii) to sell Shares that have already been registered “off
the shelf” by means of a prospectus supplement (a “Shelf Takedown”)
(each a “Piggyback
Event”), the Company shall give prompt written notice to the Investor of
its intention to effect such a registration and/or Shelf Takedown and, subject
to Sections 3(b) and 3(c), shall include in such registration statement and
in any offering of Shares to be made pursuant to that registration statement
and/or Shelf Takedown all Registrable Shares with respect to which the Company
has received a written request for inclusion therein from the Investor within
twenty (20) days after the Investor’s receipt of the Company’s notice
(provided that only
Registrable Shares of the same class or classes as the Shares being registered
and/or taken-down may be included). The Company shall have no
obligation to proceed with any Piggyback Event and may abandon, terminate and/or
withdraw such registration and/or Shelf Takedown for any reason at any time
prior to the pricing thereof. If the Company proposes to register an
offering of any Shares for cash by the Company or for the account of any Person
other than the Investor in an underwritten offering pursuant to a registration
statement under the Securities Act (other than on a registration statement on
Form ▇-▇, ▇-▇, ▇-▇ or F-4), such offering shall be treated as a primary or
secondary underwritten offering pursuant to a Piggyback Event.
(b) Priority on Primary
Piggyback Events. If a Piggyback Event is initiated as a
primary underwritten offering on behalf of the Company and the managing
underwriter(s) advise the Company and the Investor that in their opinion the
number of Shares proposed to be included in such offering exceeds the number of
Shares (of any class) which can be sold in such offering without materially
delaying or jeopardizing the success of the offering (including the price per
share of the Shares proposed to be sold in such offering), the Company shall
include in such registration and offering (i) first, the number of Shares
that the Company proposes to sell and (ii) second, the number of Shares
requested to be included therein by the Investor; provided that the
number of Registrable Shares permitted to be included therein shall in any event
be at least 50% of the total securities included therein.
(c) Priority on Secondary
Registrations. If a Piggyback Event is initiated as an
underwritten registration on behalf of a holder of Shares, and the managing
underwriter(s) advise the Company that in their opinion the number of Shares
proposed to be included in such registration exceeds the number of Shares (of
any class) (the “Secondary Maximum Number of
Shares”) which can be sold in such offering without materially delaying
or jeopardizing the success of the offering (including the price per share of
the Shares to be sold in such offering), then the Company shall include in such
registration (i) first, the number of Shares requested to be included
therein by holder(s) requesting such registration, (ii) second, the number
of Shares requested to be included therein by the Investor, and
(iii) third, the number of Shares that the Company proposes to sell; provided that the number of
Registrable Shares permitted to be included therein shall in any event be at
least 50% of the total securities included therein.
(d) Selection of
Underwriters. If any Piggyback Event is a primary or secondary
underwritten offering, the Company (or if the Person or Persons initiating the
Piggyback Event in the context of a secondary underwritten offering have such
right, such Person(s)) shall have the right to select the managing underwriter
or underwriters to administer any such offering.
(e) Basis of
Participations. The Investor may not sell Registrable Shares
in any offering on account of a Piggyback Event unless it (a) agrees to
sell such Shares on the basis provided in the underwriting or other distribution
arrangements approved by the Company and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements,
lockups and other documents reasonably required of other participants under the
terms of such arrangements.
-6-
Section
4. Shelf
Registration.
(a) Shelf
Registration. The Company shall (i) file with the SEC a
Registration Statement on Form S-3 (except if the Company is not then
eligible to register for resale the Registrable Shares on Form S-3, in which
case such registration shall be on another appropriate form in accordance
herewith (it being understood by the parties hereto that at the date of this
Agreement, the Company is not eligible to register for resale the Registrable
Shares on Form S-3)), with a “Plan of Distribution” substantially in the form
set forth as Annex
A (a “Shelf
Registration Statement”), for a public offering of all or such portion of
the Registrable Shares designated by any Investor pursuant to Rule 415
promulgated under the Securities Act or otherwise (a “Shelf Registration”)
as soon as is practicable, but no later than seventy-five (75) calendar days
from the Closing Date and (ii) use reasonable best efforts to cause such
Shelf Registration Statement to be declared effective as soon as is practicable
following the Closing Date and to thereafter remain effective. The
Shelf Registration Statement shall only include Registrable
Shares. Subject to Section 5 hereof and any applicable Lock-up
Agreement, the Investor shall be entitled to sell its Registrable Shares at any
time and in any amount in accordance with any of the sale methods set forth in
the “Plan of Distribution” section. However, in the case of a Shelf Takedown
from the Shelf Registration Statement (an “Investor Shelf
Takedown”), the provisions of Section 4(b), (c) and (d) shall govern, as
applicable.
(b) Right to Effect Shelf
Takedowns. The Investor shall be entitled, at any time and
from time to time when a Shelf Registration Statement is effective to sell such
Registrable Shares as are then registered pursuant to an Investor Shelf
Takedown, but only upon not less than two (2) business days’ prior written
notice to the Company, during which period the Company shall be entitled to
implement a Suspension Period to the extent then permitted pursuant to
Section 5. The Investor shall give the Company prompt written
notice of the consummation of each Investor Shelf Takedown (whether or not
underwritten). For the avoidance of doubt, the parties agree that an
Investor Shelf Takedown is a non-exclusive means to effectuate the offer and
sale of Registrable Shares under the Shelf Registration
Statement. Subject to Section 5 hereof, the Investor shall have the
benefit of all the selling means permitted in the Shelf Registration Statement
“Plan of Distribution,” including those that do not constitute Investor Shelf
Takedowns (and therefore are not subject to Sections 4(b) and (c) hereof)
because they are offerings that do not require the filing of a prospectus
supplement based on the existing disclosure in the “Plan of Distribution”, such
as ordinary brokerage transactions in the open market (the foregoing being only
an example).
(c) Underwritten Shelf
Takedowns. The Investor shall be entitled to, in the
aggregate, six (6) underwritten Investor Shelf Takedown(s) under this Agreement,
but only if (i) the number of Registrable Shares to be sold in the offering
would reasonably be expected to yield gross proceeds to the Investor of at least
the Minimum Amount (based on then-current market prices), and (ii) without the
Company’s consent, such consent not to be unreasonably withheld, conditioned or
delayed, the request is made more than sixty (60) days after the Investor has
sold Shares in another underwritten registered offering pursuant to Section 2 or
Section 4 hereof. For the avoidance of doubt, the if the Company uses
reasonable best efforts to cause an offering to be underwritten, the Company
shall not be in breach of this Section 4(c) because of its inability to cause
such offering to be underwritten.
-7-
(d) Selection of
Underwriters. In connection with an underwritten Investor
Shelf Takedown, the Investor shall have the right to select the managing
underwriter or underwriters to lead the offering, subject to the Company’s
consent, not to be unreasonably withheld.
(e) Effective Period of Shelf
Registrations. Subject to Section 5 of this Agreement,
the Company shall use reasonable best efforts to keep any Shelf Registration
Statement continuously effective until the Termination Date.
Section
5. Suspension
Periods
(a) Suspension
Periods. The Company may delay the filing or
effectiveness of, or by written notice to the Investor suspend the use of, a
Registration Statement in conjunction with a Demand Registration or a Shelf
Registration (and, if reasonably required, withdraw any registration statement
that has been filed), but in each such case only if the board of directors of
the Company determines in good faith that (x) such delay would enable the
Company to avoid disclosure of material information, the disclosure of which at
that time would be materially adverse to the Company’s best interests (including
by materially interfering with, or jeopardizing the success of, any pending or
proposed material acquisition, disposition or reorganization) or
(y) obtaining any financial statements (including required consents)
required to be included in any such Registration Statement would be
impracticable. Any period during which the Company has delayed a
filing, an effective date or the use of a Registration Statement pursuant to
this Section 5 is herein called a “Suspension
Period”. In no event shall there be more than four (4)
Suspension Periods during any rolling period of three hundred sixty five
(365) days, and the number of days covered by any one Suspension Period
shall not exceed thirty (30) days, and the number of days covered by all
Suspension Periods shall not exceed seventy-five (75) days in the aggregate
during any rolling period of three hundred sixty five
(365) days. If pursuant to this Section 5 the Company
delays or withdraws a Demand Registration or underwritten Investor Shelf
Takedown requested by the Investor, the Investor shall be entitled to withdraw
such request and, if it does so, such request shall not count against the
limitation on the number of such registrations set forth in Section 2 or
Section 4. The Company shall provide prompt written notice to the
Investor of the commencement and termination of any Suspension Period (and any
withdrawal of a registration statement pursuant to this Section 5), but
shall not be obligated under this Agreement to disclose the reasons
therefor. The Investor shall keep the existence of each Suspension
Period confidential.
Section
6. Registration
Procedures.
(a) In
connection with the Shelf Registration provided for in Section 4 and
otherwise whenever the Investor requests that any Registrable Shares be
registered pursuant to this Agreement, the Company shall use reasonable best
efforts to effect, as soon as practical as provided herein, the registration and
the sale of such Registrable Shares in accordance with the intended methods of
disposition thereof, and, pursuant thereto, the Company shall, as soon as is
practicable as provided herein:
-8-
(i) subject
to the other provisions of this Agreement, use reasonable best efforts to
prepare and file with the SEC a Registration Statement with respect to such
Registrable Shares and cause such Registration Statement to become effective
(unless it is automatically effective upon filing); and before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
furnish to the Investor and the underwriters or other distributors, if any,
identified by the Investor copies of all such documents proposed to be filed,
including documents incorporated by reference in the Prospectus and one set of
the exhibits incorporated by reference, and the Investor and a single counsel
selected by the Investor (“Investor’s Counsel”)
shall have a reasonable opportunity to review and comment on the Registration
Statement and each such Prospectus (and each amendment or supplement thereto)
before it is filed with the SEC, and the Investor shall have the opportunity to
object to any information pertaining to the Investor that is contained therein
and the Company will make the corrections reasonably requested by the Investor
with respect to such information prior to filing any Registration Statement or
Prospectus or any amendment or supplement thereto;
(ii) use
reasonable best efforts to prepare and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in connection
therewith as may be necessary to comply with the applicable requirements of the
Securities Act and to keep such Registration Statement effective for the
relevant period required hereunder, but no longer than is necessary to complete
the distribution of the Shares covered by such Registration Statement, and to
comply with the applicable requirements of the Securities Act with respect to
the disposition of all the Shares covered by such Registration Statement during
such period in accordance with the intended methods of disposition set forth in
such Registration Statement;
(iii) use
reasonable best efforts to obtain the withdrawal of any order suspending the
effectiveness of any Registration Statement, or the lifting of any suspension of
the qualification or exemption from qualification of any Registrable Shares for
sale in any jurisdiction in the United States;
(iv) furnish
to the Investor and each managing underwriter, if any, without charge, conformed
copies of each Registration Statement and amendment thereto and copies of each
supplement thereto promptly after they are filed with the SEC (but only one set
of exhibits thereto need be provided); and deliver, without charge, such number
of copies of the preliminary and final Prospectus and any supplement thereto as
the Investor may reasonably request in order to facilitate the disposition of
the Registrable Shares of the Investor covered by such Registration Statement in
conformity with the requirements of the Securities Act;
(v) use
reasonable best efforts to register or qualify such Registrable Shares under
such other securities or blue sky laws of such U.S. jurisdictions as the
Investor reasonably requests and continue such registration or qualification in
effect in such jurisdictions for as long as the applicable Registration
Statement may be required to be kept effective under this Agreement (provided that the Company
will not be required to (I) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subparagraph (v), (II) subject itself to taxation in any such
jurisdiction or (III) consent to general service of process in any such
jurisdiction);
-9-
(vi) notify
the Investor and each distributor of such Registrable Shares identified by the
Investor, at any time when a Prospectus relating thereto would be required under
the Securities Act to be delivered by such distributor, of the occurrence of any
event as a result of which the Prospectus included in such Registration
Statement contains an untrue statement of a material fact or omits a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and, at the request of the Investor,
the Company shall use reasonable best efforts to prepare, as soon as is
practicable, a supplement or amendment to such Prospectus so that, as thereafter
delivered to any prospective purchasers of such Registrable Shares, such
Prospectus shall not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(vii) in
the case of an underwritten offering in which the Investor participates pursuant
to a Demand Registration, Piggyback Event or a Shelf Registration, enter into an
underwriting agreement containing such provisions (including provisions for
indemnification, lockups, opinions of counsel and comfort letters) as are
customary and reasonable for an offering of such kind, and take all such other
customary and reasonable actions as the managing underwriters of such offering
may request in order to facilitate the disposition of such Registrable Shares
(including making members of senior management of the Company available at
reasonable times and places to participate in “road-shows” and investor calls,
provided that any reasonable travel and accommodation expenses in connection
with any such road shows shall be borne by the Investor);
(viii)
in the case of an underwritten offering in which the Investor participates
pursuant to a Demand Registration, Piggyback Event or a Shelf Registration, and
to the extent not prohibited by applicable law or pre-existing applicable
contractual restrictions, (A) make reasonably available, for inspection by
the Investor, Investor’s Counsel, the managing underwriter(s) of such offering
and counsel and accountants acting for such managing underwriter(s), pertinent
corporate documents and financial and other records of the Company and its
subsidiaries and controlled Affiliates, (B) use reasonable best efforts to cause
the Company’s officers and employees to supply information reasonably requested
by the Investor or such managing underwriter(s) or attorney in connection with
such offering, (C) use reasonable best efforts to cause the Company’s
independent registered public accounting firm to make itself available for any
such managing underwriter’s due diligence and to cause such accounting firm to
provide customary “cold comfort” letters to such underwriters in connection
therewith, and (D) use reasonable best efforts to cause the Company’s
counsel to furnish customary legal opinions to such underwriters in connection
therewith; provided,
however, that such
records and other information shall be subject to such confidential treatment as
is customary for underwriters’ due diligence reviews;
-10-
(ix) use
reasonable best efforts to cause all such Registrable Shares to be listed on
each securities exchange (if any) on which securities of the same class issued
by the Company are then listed;
(x) provide
a transfer agent and registrar for all such Registrable Shares not later than
the effective date of such Registration Statement and, a reasonable time before
any proposed sale of Registrable Shares pursuant to a Registration Statement,
provide the transfer agent with printed certificates for the Registrable Shares
to be sold, subject to the provisions of Section 11;
(xi) in
the case of an underwritten offering, make generally available to its
stockholders a consolidated earnings statement (which need not be audited) for a
period of twelve (12) months beginning after the effective date of the
Registration Statement as soon as reasonably practicable after the end of such
period, which earnings statement shall satisfy the requirements of an earnings
statement under Section 11(a) of the Securities Act and Rule 158
thereunder; and
(xii) promptly
notify the Investor and the managing underwriter(s) of any underwritten
offering, if any:
(1) when
the Registration Statement, any pre-effective amendment, the Prospectus or any
Prospectus supplement or any post-effective amendment to the Registration
Statement has been filed and, with respect to the Registration Statement or any
post-effective amendment, when the same has become effective;
(2) of
any request by the SEC for amendments or supplements to the Registration
Statement or the Prospectus or for any additional information regarding the
Investor;
(3) of
the notification to the Company by the SEC of its initiation of any proceeding
with respect to the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement; and
(4) of
the receipt by the Company of any notification with respect to the suspension of
the qualification of any Registrable Shares for sale under the applicable
securities or blue sky laws of any jurisdiction; and keep Investor’s Counsel
reasonably apprised as to the intention and progress of the Company with respect
to any Registration Statement hereunder.
For the
avoidance of doubt, the provisions of clauses (vii), (viii) and
(xi) of this Section 7(a) shall apply only if (based on market prices
at the time the offering is requested by the Investor) the number of Registrable
Shares to be sold in the offering would reasonably be expected to yield gross
proceeds to the Investor of at least the Minimum Amount.
(b) No
Registration Statement (including any amendments thereto) and no Prospectus
(including any supplements thereto) shall 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 under
which they were made, not misleading, except for any untrue statement or alleged
untrue statement of a material fact or omission or alleged omission of a
material fact made in reliance on and in conformity with written information
furnished to the Company by or on behalf of the Investor or any underwriter or
other distributor specifically for use therein.
-11-
(c) Until
the Termination Date, the Company shall use reasonable best efforts to file all
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder, all to the extent
required to enable the Investor to be eligible to sell Registrable Shares (if
any) pursuant to Rule 144 under the Securities Act.
(d) The
Company may require the Investor and each distributor of Registrable Shares as
to which any registration is being effected to furnish to the Company any other
information regarding such Person and the distribution of such securities as the
Company may from time to time reasonably request.
(e) Subject
to the limitations on the Company’s ability to delay the use or effectiveness of
a Registration Statement as provided by the Suspension Periods set forth in
Section 5(a), the Investor agrees by having its Shares treated as
Registrable Shares hereunder that, upon being advised in writing by the Company
of the occurrence of an event pursuant to Section 6(a)(vi) when the Company
is entitled to do so pursuant to Section 5, the Investor will immediately
discontinue (and direct any other Persons making offers and sales of Registrable
Shares to immediately discontinue) offers and sales of Registrable Shares
pursuant to any Registration Statement (other than those pursuant to a plan that
is in effect and that complies with Rule 10b5-1 of the Exchange Act) until it is
advised in writing by the Company that the use of the Prospectus may be resumed
and is furnished with a supplemented or amended Prospectus as contemplated by
Section 6(a)(vi), and, if so directed by the Company, the Investor will
deliver to the Company all copies, other than permanent file copies then in the
Investor’s possession, of the Prospectus covering such Registrable Shares
current at the time of receipt of such notice.
(f) The
Company may prepare and deliver an issuer free-writing prospectus (as such term
is defined in Rule 405 under the Securities Act) in lieu of any supplement
to a prospectus, and references herein to any “supplement” to a Prospectus shall
include any such issuer free-writing prospectus. No seller of
Registrable Shares may use a free-writing prospectus to offer or sell any such
shares without the Company’s prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed).
(g) It
is further understood and agreed that the Company shall not have any obligations
under this Section 6 at any time on or after the Termination Date, unless
an underwritten offering in which the Investor participates has been priced but
not completed prior to the Termination Date, in which event the Company’s
obligations under this Section 6 shall continue with respect to such
offering until it is completed.
-12-
Section
7. Registration
Expenses.
(a) All
expenses incident to the Company’s performance of or compliance with this
Agreement, including all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, Financial Industry Regulatory
Authority fees, listing application fees, printing expenses, transfer agent’s
and registrar’s fees, cost of distributing Prospectuses in preliminary and final
form as well as any supplements thereto, and fees and disbursements of counsel
for the Company and all independent registered public accounting firm and other
Persons retained by the Company, together with the reasonable documented fees
and expenses of the Investor’s Counsel (all such expenses being herein called
“Registration
Expenses”) (but not including any underwriting discounts or commissions
attributable to the sale of Registrable Shares), shall be borne by the
Company. The Investor shall bear the cost of all underwriting
discounts and commissions associated with any sale of Registrable
Shares.
(b) The
obligation of the Company to bear the expenses described in Section 7(a)
shall apply irrespective of whether a registration, once properly demanded or
requested, becomes effective or is withdrawn or suspended, unless the Investor
elects to pay the Registration Expenses, in which event such registration shall
not count against the limit on the number of registrations set forth in Section
2(b).
Section
8. Indemnification.
(a) The
Company shall indemnify, to the fullest extent permitted by law, the Investor
and each Person who controls the Investor (within the meaning of the Securities
Act) against all losses, claims, damages, liabilities, judgments, costs
(including reasonable costs of investigation) and expenses (including reasonable
attorneys’ fees) arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus or any amendment thereof or supplement thereto or arising out of or
based upon any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are made in reliance and in conformity with
information furnished in writing to the Company by or on behalf of the Investor
or to the Company by or on behalf of any participating underwriter, in each case
expressly for use therein. In connection with an underwritten
offering in which the Investor participates conducted pursuant to a registration
effected hereunder, the Company shall indemnify each participating underwriter
and each Person who controls such underwriter (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the Investor.
(b) In
connection with any Registration Statement in which the Investor is
participating, the Investor shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with any
such Registration Statement or Prospectus, or amendment or supplement thereto,
and shall indemnify to the fullest extent permitted by law the Company, its
officers and directors and each Person who controls the Company (within the
meaning of the Securities Act), against all losses, claims, damages,
liabilities, judgments, costs (including reasonable costs of investigation) and
expenses (including reasonable attorneys’ fees) arising out of or based upon any
untrue or alleged untrue statement of material fact contained in the
Registration Statement or Prospectus, or any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that the same are made in reliance and in
conformity with information furnished in writing to the Company by or on behalf
of the Investor expressly for use therein. In connection with an
underwritten offering conducted pursuant to a registration effected hereunder,
the Investor shall indemnify each participating underwriter and each Person who
controls such underwriter (within the meaning of the Securities Act) to the same
extent as provided above with respect to the indemnification of the
Company.
-13-
(c) Any
Person entitled to indemnification hereunder shall (i) give prompt written
notice to the indemnifying Person of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying Person to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
Person. Failure so to notify the indemnifying Person shall not
relieve it from any liability that it may have to an indemnified Person except
to the extent that the indemnifying Person is materially and adversely
prejudiced thereby. The indemnifying Person shall not be subject to
any liability for any settlement made by the indemnified Person without its
consent (but such consent will not be unreasonably withheld). An
indemnifying Person who is entitled to, and elects to, assume the defense of a
claim shall not be obligated to pay the fees and expenses of more than one
counsel (in addition to one local counsel) for all Persons indemnified
(hereunder or otherwise) by such indemnifying Person with respect to such claim
(and all other claims arising out of the same circumstances), unless in the
reasonable judgment of any indemnified Person there may be one or more legal or
equitable defenses available to such indemnified Person which are in addition to
or may conflict with those available to another indemnified Person with respect
to such claim, in which case each such indemnified Person shall be entitled to
use separate counsel. The indemnifying Person shall not consent to
the entry of any judgment or enter into or agree to any settlement relating to a
claim or action for which any indemnified Person would be entitled to
indemnification by any indemnified Person hereunder unless such judgment or
settlement imposes no ongoing obligations on any such indemnified Person and
includes as an unconditional term the giving, by all relevant claimants and
plaintiffs to such indemnified Person, a release, reasonably satisfactory in
form and substance to such indemnified Person, from all liabilities in respect
of such claim or action for which such indemnified Person would be entitled to
such indemnification. The indemnifying Person shall not be liable
hereunder for any amount paid or payable or incurred pursuant to or in
connection with any judgment entered or settlement effected with the consent of
an indemnified Person unless the indemnifying Person has also consented to such
judgment or settlement.
(d) The
indemnification provided for under this Agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified
Person or any officer, director or controlling Person of such indemnified Person
and shall survive the transfer of securities and the Termination Date but only
with respect to offers and sales of Registrable Shares made before the
Termination Date or during the period following the Termination Date referred to
in Section 6(g).
-14-
(e) If
the indemnification provided for in or pursuant to this Section 8 is due in
accordance with the terms hereof, but is held by a court to be unavailable or
unenforceable in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then each applicable indemnifying Person, in lieu of
indemnifying such indemnified Person, shall contribute to the amount paid or
payable by such indemnified Person as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying Person on the one hand and of the indemnified
Person on the other in connection with the statements or omissions which result
in such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative fault of the
indemnifying Person, on the one hand, and of the indemnified Person, on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying Person or by the indemnified Person, and by such Person’s relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. In no event shall the liability of the
indemnifying Person be greater in amount than the amount for which such
indemnifying Person would have been obligated to pay by way of indemnification
if the indemnification provided for under Section 8(a) or 8(b) hereof had
been available under the circumstances.
Section
9. Securities Act
Restrictions.
(a) The
Investor agrees that all certificates or other instruments representing the
Merger Shares will bear a legend substantially to the following
effect:
THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS.
(b) Upon
the reasonable request of the Investor, at a time when such legend is no longer
required under the Securities Act and applicable state laws, the Company shall
promptly cause the legend to be removed from any certificate for any Merger
Shares to be Transferred by the Investor upon the receipt by the Company of an
opinion of counsel, certification and/or other information reasonably
satisfactory to the Company. The Investor acknowledges that the
Merger Shares have not been registered under the Securities Act or under any
state securities laws and agrees that it will not sell or otherwise dispose of
any of the Merger Shares, except in compliance with the registration
requirements or exemption provisions of the Securities Act and any other
applicable securities laws.
Section
10. Miscellaneous.
(a) Notices. Except
as otherwise provided herein, all notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
hand delivered, mailed (postage prepaid) by registered or certified mail or sent
by e-mail or facsimile transmission (with telephone confirmation promptly
thereafter),
If to
Investor:
RWWI
Holdings LLC
c/o
Ampersand Ventures
▇▇
▇▇▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
J. ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
-15-
With a
copy to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Dodge LLP
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
If to the
Company:
Avatech
Solutions, Inc.
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
With a
copy to:
▇▇▇▇▇▇,
Feinblatt, Rothman, Hoffberger & ▇▇▇▇▇▇▇▇▇, LLC
The
▇▇▇▇▇▇▇ Building
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Abba
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq.
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
or at
such other address as any such party hereto may specify by written notice to the
others, and, except as otherwise provided herein, each such notice, request,
consent and other communication shall for all purposes of the Agreement be
treated as being effective or having been given when delivered personally or by
mail or, in the case of e-mail or facsimile delivery, upon receipt of e-mail or
facsimile confirmation of delivery and telephonic confirmation.
(b) No
Waivers. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
(c) Successors and
Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, it being understood that there are no intended third-party
beneficiaries hereof.
-16-
(d) Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to conflict of
law principles that would result in the application of any law other than the
law of the State of Delaware.
(e) Jurisdiction. Any
suit, action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby must be brought in any federal or state court located in the
non-exclusive jurisdiction of any Delaware State or Federal court sitting
in New Castle County, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient forum. Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Section 13(a) shall be deemed effective service of process
on such party.
(f) Waiver of Jury
Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(g) Counterparts;
Effectiveness. This Agreement may be executed in any number of
counterparts (including by e-mail or facsimile) and by different parties hereto
in separate counterparts, with the same effect as if all parties had signed the
same document. All such counterparts shall be deemed an original,
shall be construed together and shall constitute one and the same
instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto.
(h) Entire
Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes and replaces all other prior agreements, written or oral, among the
parties hereto with respect to the subject matter hereof.
(i) Captions. The
headings and other captions in this Agreement are for convenience and reference
only and shall not be used in interpreting, construing or enforcing any
provision of this Agreement.
(j) Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such a determination, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.
-17-
(k) Amendments.
(i) 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 without the prior written consent of the
Company and the Investor.
(ii) The
Company has not entered into, and will not, from and after the date hereof,
enter into, any agreements or arrangements that grant to any other holders of
its securities any rights that violate or conflict with this Agreement or impede
the Company’s ability to fulfill and comply with its obligations set forth
herein.
(l) Lock-Up. The
Investor shall, in connection with any underwritten offering of the Company’s
securities, in each case, in which the Investor is selling Registrable Shares
pursuant to its rights under Section 3, upon the request of the Company or
the managing underwriter(s), agree in writing not to effect any sale,
disposition or distribution of any Registrable Shares (other than those included
in such offering) without the prior written consent of the Company or such
managing underwriter(s), as the case may be, for such period of time prior to
and/or following the completion of the sale of the Company’s securities in such
underwritten offering as the Company or the managing underwriter(s) may specify;
provided, however, that all executive officers and directors of the Company
shall also have agreed not to effect any sale, disposition or distribution of
any such securities under the circumstances and pursuant to the terms set forth
in this Section 10(l).
(m) Limitations on Subsequent
Registration Rights. From and after the date of this
Agreement, the Company shall not, without the prior written consent of the
Investor, enter into any agreement with any holder or prospective holder of any
securities of the Company that (i) would allow such holder or prospective holder
(i) to include such securities in any registration unless, under the terms of
such agreement, such holder or prospective holder may include such securities in
any such registration only to the extent that the inclusion of such securities
will not reduce the number of the Registrable Securities of the Holders that are
included or (ii) allow such holder or prospective holder to initiate a demand
for registration of any securities held by such holder or prospective
holder.
[Execution
Page Follows]
-18-
IN
WITNESS WHEREOF, this Registration Rights Agreement has been duly executed by
each of the parties hereto as of the date first written above.
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COMPANY:
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AVATECH
SOLUTIONS, INC.
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By:
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/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
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▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
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Title:
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President
and Chief Financial Officer
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INVESTOR:
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RWWI
HOLDINGS LLC
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By:
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Ampersand
2006 Limited Partnership, its
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Manager
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By:
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AMP-06
Management Company Limited
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Partnership,
its General Partner
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By:
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AMP-06
MC LLC, its General Partner
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By:
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
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Principal
Managing Member
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[Signature
Page to Registration Rights Agreement]
Annex A
PLAN OF
DISTRIBUTION
Each
selling stockholder, and any of their pledgees, assignees and
successors-in-interest (the “Selling Stockholders”) may from time to time offer
and sell, separately or together, some or all of the shares of Common Stock
covered by this Registration Rights Agreement. Registration of shares of common
stock covered by the Registration Rights Agreement does not mean, however, that
those shares necessarily will be offered or sold.
The
Company will not receive any proceeds from the sale of the common shares by the
Selling Stockholders.
The
Selling Stockholder may sell shares in one or more of the following ways (or in
any combination) from time to time:
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·
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through
underwriters or dealers;
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·
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directly
to one or more purchasers;
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·
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through
agents; or
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·
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through
any other methods described in a prospectus
supplement.
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Neither
the Company nor the Selling Stockholders have entered into any agreements,
understandings or arrangements with any underwriters or dealers regarding the
sale of shares covered by the Registration Rights Agreement. At any
time a particular offer of the shares covered by the Registration Rights
Agreement is made, a revised prospectus or prospectus supplement, if required,
will be distributed which will set forth the aggregate amount of shares of
common stock covered by the Registration Rights Agreement being offered and the
terms of the offering, including the name or names of any underwriters, dealers
or agents. In addition, to the extent required, any discounts, commissions,
concessions and other items constituting underwriters’ or agents’ compensation,
as well as any discounts, commissions or concessions allowed or re-allowed or
paid to dealers, will be set forth in such revised prospectus or prospectus
supplement. Any such required prospectus or prospectus supplement, and, if
necessary, a post-effective amendment to any registration statement, will be
filed with the SEC to reflect the disclosure of additional information with
respect to the distribution of the Common Shares covered by the Registration
Rights Agreement.
The
shares may also be sold in one or more of the following transactions, or in any
transactions described in a prospectus or prospectus supplement:
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·
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block
transactions in which a broker-dealer may sell all or a portion of the
shares as agent but may position and resell all or a portion of the block
as principal to facilitate the
transaction;
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·
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purchase
by a broker-dealer as principal and resale by the broker-dealer for its
own account;
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A-1
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·
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ordinary
brokerage transactions and transactions in which a broker-dealer solicits
purchasers;
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·
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sales
“at the market” to or through a market maker or into an existing trading
market, on an exchange or
otherwise;
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·
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through
the writing of options; or
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·
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sales
in other ways not involving market makers or established trading markets,
including direct sales to
purchasers.
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The
shares that the Selling Stockholder sell by any of the methods described above
may be sold to the public, in one or more transactions, either:
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·
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at
a fixed public offering price or prices, which may be
changed;
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·
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at
market prices prevailing at the time of
sale;
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·
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at
prices related to prevailing market
prices;
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·
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at
varied prices determined at the time of sale;
or
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·
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at
negotiated prices.
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Underwriters
and agents may be entitled under agreements entered into with the Selling
Stockholders to indemnification by the Company and/or the Selling Stockholders
against certain civil liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments which the underwriters or
agents may be required to make. Underwriters and agents may engage in
transactions with, or perform services for, the Company, the Company’s
affiliates, the Selling Stockholders and their affiliates in the ordinary course
of business.
The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended (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,
but, except as set forth in a supplement to this Prospectus, in the case of an
agency transaction not in excess of a customary brokerage commission in
compliance with FINRA Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with FINRA IM-2440.
In
connection with the sale of the common stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
A-2
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. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In no
event shall any broker-dealer receive fees, commissions and markups which, in
the aggregate, would exceed eight percent (8%).
The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. There is no underwriter or
coordinating broker acting in connection with the proposed sale of the resale
shares by the Selling Stockholders.
The
Company has agreed to keep this prospectus effective until the earlier of
(i) the date on which the shares may be resold by the Selling Stockholders
without registration by reason of Rule 144 under the Securities Act or any other
rule of similar effect or (ii) all of the shares have been sold pursuant to
this prospectus or Rule 144 under the Securities Act or any other rule of
similar effect. The resale shares will be sold only through registered or
licensed brokers or dealers if required under applicable state securities laws.
In addition, in certain states, the resale shares may not be sold unless they
have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholders or any other
person. The Company will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).
* *
*
A-3
Annex B
AVATECH
SOLUTIONS, INC.
Selling
Securityholder Notice and Questionnaire
The
undersigned beneficial owner of common stock (the “Registrable
Securities”) of Avatech Solutions, Inc., a Delaware corporation (the
“Company”),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “SEC”) a registration
statement (the “Registration
Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of
the Registrable Securities, in accordance with the terms of the Registration
Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed. A copy of the Registration
Rights Agreement is available from the Company upon request at the address set
forth below. All capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Registration Rights Agreement.
Certain
legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus. Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Registration Statement and the related
prospectus.
NOTICE
The
undersigned beneficial owner (the “Selling
Securityholder”) of Registrable Securities hereby elects to include the
Registrable Securities owned by it in the Registration Statement.
The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
QUESTIONNAIRE
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1.
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Name.
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(a) Full
Legal Name of Selling Securityholder
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(b) Full
Legal Name of Registered Holder (if not the same as (a) above) through which
Registrable Securities are held:
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B-1
(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):
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2.
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Address
for Notices to Selling
Securityholder:
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Telephone:
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Fax:
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Contact
Person:
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3.
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Broker-Dealer
Status:
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(a) Are
you a broker-dealer?
Yes ¨ No ¨
(b) If
“yes” to Section 3(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company.
Yes ¨ No ¨
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Note:
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If
“no” to Section 3(b), the SEC’s staff has indicated that you should be
identified as an underwriter in the Registration
Statement.
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(c) Are
you an affiliate of a broker-dealer?
Yes ¨ No ¨
(d) If
you are an affiliate of a broker-dealer, do you certify that you purchased 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 ¨
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Note:
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If
“no” to Section 3(d), the SEC’s staff has indicated that you should be
identified as an underwriter in the Registration
Statement.
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4.
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Beneficial
Ownership of Securities of the Company Owned by the Selling
Securityholder.
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B-2
Except
as set forth below in this Item 4, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.
(a) Type
and Amount of other securities beneficially owned by the Selling
Securityholder:
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5.
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Relationships
with the Company:
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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:
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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
at any time while the Registration Statement remains effective.
By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto. 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.
B-3
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.
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Dated:
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Beneficial
Owner:
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By:
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Name:
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Title:
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PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:
B-4