Exhibit 10.6
REGISTRATION RIGHTS AGREEMENT
This registration rights agreement is dated May 12, 2000, and is
between TERACOMM RESEARCH, INC., a Delaware corporation ("TeraComm"), and
ATLANTIC TECHNOLOGY VENTURES, INC., a Delaware limited liability company
("Atlantic").
Pursuant to a stock purchase agreement dated the date hereof between
TeraComm and Atlantic, Atlantic is issuing to TeraComm 200,000 shares of
Atlantic's common stock (the "Shares") and a warrant to purchase an additional
200,000 shares of Atlantic's Common Stock (the "Warrant"). TeraComm and Atlantic
wish to specify TeraComm's rights in connection with public offerings and sales
of the Shares and the shares of Common Stock issuable upon exercise of the
Warrant.
The parties therefore agree as follows:
1. Definitions. As used in this agreement, the following terms have the
following meanings:
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday
that is not a day on which banking institutions in the State of Vermont are
authorized by law, regulation or executive order to close.
"Common Stock" means Atlantic's common stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
(or any similar successor federal statute), and the rules and regulations
thereunder, as in effect from time to time.
"Holder" means TeraComm and its successors, assigns and transferees
(subject to Section 13). For purposes of this agreement, Atlantic may, subject
to Section 13, deem the registered holder of a Registrable Security to be the
Holder thereof, except that the beneficial owner of any Registrable Securities
held in "street name" will be deemed to be the Holder thereof.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, government or
agency or political subdivision thereof or other entity.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by a prospectus supplement with respect to
the terms of the offering of any portion of the Registrable Securities covered
by that Registration Statement and by all other amendments and supplements to
the prospectus, including post-effective amendments, and all material
incorporated by reference in such prospectus.
"Registrable Securities" means (1) the Shares and any shares of Common
Stock issued or issuable upon exercise of the Warrant, and (2) any shares of
Common Stock issued as, or issued upon the conversion or exercise of any
warrant, right or other convertible security that is issued as, a dividend or
other distribution with respect to, or in exchange for or in replacement of, the
Shares or issuable upon exercise of the Warrant.
"Registration Statement" means any registration statement covering any
of the Registrable Securities pursuant to the provisions of this agreement,
including the Prospectus included therein, all amendments and supplements to
that Registration Statement, including post-effective amendments, all exhibits
and all material incorporated by reference in that Registration Statement.
"SEC" means the Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended (or any
similar successor federal statute), and the rules and regulations thereunder as
in effect from time to time.
"Underwritten Offering" means an offering that is registered under the
Securities Act in which securities of Atlantic are sold to an underwriter for
reoffering to the public.
2. Securities Subject to this Agreement. The securities entitled to the
benefits of this agreement are the Registrable Securities but, with respect to
any particular Registrable Security, only so long as that security continues to
be a Restricted Security. A Registrable Security that has ceased to be a
Registrable Security cannot thereafter become a Registrable Security. As used
herein, a "Restricted Security" is a Registrable Security that has not been
effectively registered under the Securities Act and distributed in accordance
with an effective Registration Statement and that has not been distributed by a
Holder pursuant to Rule 144, Rule 903 or Rule 904, unless, in the case of a
Registrable Security distributed pursuant to Rule 903 or Rule 904, any
applicable restricted period has not expired or the SEC or its staff has taken
the position in a published release, ruling or no-action letter that securities
distributed under Rule 903 or 904 are ineligible for resale in the United States
under Section 4(1) of the Securities Act notwithstanding expiration of the
applicable restricted period.
3. Registration. Atlantic shall in accordance with the terms of this
agreement cause a registration statement covering all Registrable Securities to
be filed and declared effective no later than 30 days following the date hereof.
Atlantic shall use its best efforts to keep such registration statement
effective until the first anniversary of the date hereof and to prevent the
happening of any event of the kind described in Sections 4(a)(2)(D) and (E).
Atlantic may initiate or engage in negotiations with respect to, or consummate,
any transaction (whether or not material to Atlantic), even if the effect
thereof would be cause the happening of an event described in Section 4(a)(2)(F)
(b) Atlantic may elect to effect any registration under this
Section 3 on a form permitted by the rules and regulations of the SEC, except
that Atlantic shall use Form S-3 if Atlantic is eligible to use that form.
(c) When in the opinion of counsel for Atlantic registration of
the Registrable Securities is not required by the Securities Act and other
applicable securities laws in connection with a proposed sale of Registrable
Securities, the Holders may not request registration pursuant to this Section 3
in connection with that proposed sale and Atlantic shall promptly provide to the
transfer agent and the Holder's or Holders' broker or brokers in connection with
any sale transaction an opinion of counsel for Atlantic to the effect set forth
above, on condition that the
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Holder or Holders provide representation letters in customary form to counsel
for Atlantic rendering that opinion.
4. Registration Procedures and Other Agreements. (a) In connection with
Atlantic's registration obligations pursuant to Section 3, Atlantic shall do the
following:
(1) prepare and file with the SEC a new Registration Statement or such
amendments and post-effective amendments to an existing Registration
Statement as may be necessary to keep that Registration Statement
effective, except that no Registration Statement need remain in effect
after all Registrable Securities covered by that Registration Statement
have been sold and distributed as contemplated by that Registration
Statement;
(2) notify each selling Holder promptly of the following:
(A) when a new Registration Statement, amendment thereto, Prospectus
or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to any new Registration Statement or
post-effective amendment, when it has become effective;
(B) of any request by the SEC for amendments or supplements to any
Registration Statement or Prospectus or for additional
information;
(C) of the issuance by the SEC of any comments with respect to any
filing;
(D) of any stop order suspending the effectiveness of any
Registration Statement or the initiation or threatening of any
proceedings for that purpose;
(E) of any suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(F) of the happening of any event that makes any statement of a
material fact made in any Registration Statement, Prospectus or
any document incorporated therein by reference untrue or that
requires the making of any changes in any Registration Statement,
Prospectus or any document incorporated therein by reference in
order to make the statements therein (in the case of any
Prospectus, in the light of the circumstances under which they
were made) not misleading; and make every reasonable effort to
obtain as promptly as practicable the withdrawal of any order or
other action suspending the effectiveness of any Registration
Statement or suspending the qualification or registration (or
exemption therefrom) of the Registrable Securities for sale in
any jurisdiction;
(3) furnish to each selling Holder, without charge, at least one manually
signed or "edgarized" copy and as many conformed copies as that Holder
reasonably requests, of the then-effective Registration Statement and
any post-effective amendment thereto, and one copy of all financial
statements and schedules, all documents incorporated therein by
reference and all exhibits thereto (including those incorporated by
reference);
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(4) deliver to each selling Holder, without charge, as many copies of the
then-effective Prospectus (including each prospectus subject to
completion) and any amendments or supplements thereto as that Holder
reasonably requests;
(5) use best efforts to register or qualify under the securities or blue
sky laws of such jurisdictions as the selling Holders reasonably
request in writing and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in those jurisdictions
of the Registrable Securities covered by the then-effective
Registration Statement, except that Atlantic will not be required to
(A) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify or (B) subject itself to general
taxation in any such jurisdiction;
(6) upon the occurrence of any event contemplated by Section 4(a)(2)(F), as
promptly as practicable (in light of the circumstances causing the
occurrence of that event) prepare a supplement or post-effective
amendment to the Registration Statement or the related Prospectus or
any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of
the Registrable Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(7) use reasonable efforts to cause all Registrable Securities covered by
the Registration Statement to be listed on each securities exchange (or
quotation system operated by a national securities association) on
which identical securities issued by Atlantic are then listed, and
enter into customary agreements including, if necessary, a listing
application and indemnification agreement in customary form;
(8) if the registration is in connection with an Underwritten Offering,
enter into an underwriting agreement with respect to the Registrable
Securities containing provisions that are customary in connection with
underwritten secondary offerings, including representations, opinions
of counsel, letters of accountants and indemnification provisions with
underwriters that acquire Registrable Securities;
(9) otherwise use its best efforts to comply in all material respects with
all applicable rules and regulations of the SEC relating to such
registration and the distribution of the securities being offered and
make generally available to its securities holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and
complying with Rule 158 of the SEC thereunder;
(10) cooperate and assist in any filings required to be made with the
National Association of Securities Dealers, Inc.; and
(11) make available for inspection by a representative of selling Holders
and any attorney or accountant retained by such selling Holders all
financial and other records, pertinent corporate documents and
properties of Atlantic and cause Atlantic's officers, directors and
employees to supply all information reasonably requested by, and to
cooperate fully with, any such representative, underwriter, attorney or
accountant in connection with such
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registration, and otherwise to cooperate fully in connection with any
due diligence investigation; provided that such representatives,
underwriters, attorneys or accountants enter into a confidentiality
agreement, in form and substance reasonably satisfactory to Atlantic,
prior to the release or disclosure to them of any such information,
records or documents.
(b) Each selling Holder shall furnish to Atlantic, upon request,
in writing such information and documents as, in the opinion of counsel to
Atlantic, is reasonably necessary to prepare properly and file that Registration
Statement in accordance with the applicable provisions of the Securities Act.
5. Registration Expenses. Whether or not any Registration Statement
becomes effective, Atlantic will be responsible for all expenses incident to
Atlantic's performance of or compliance with this agreement, including without
limitation all registration and filing fees, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements of
one counsel in connection with blue sky qualifications or registrations (or the
obtaining of exemptions therefrom) of the Registrable Securities), the
reasonable fees and disbursements of one counsel retained by the Holders,
printing expenses (including expenses of printing Prospectuses), messenger and
delivery expenses, internal expenses (including all salaries and expenses of its
officers and employees performing legal or accounting duties), fees and
disbursements of its counsel and its independent certified public accountants
(including the expenses of any special audit or "comfort" letters required by or
incident to such performance or compliance), securities acts liability insurance
(if Atlantic to obtain such insurance), fees and expenses of any special experts
retained by Atlantic in connection with any registration hereunder and the fees
and expenses of any other Person retained by Atlantic (all such fees and
expenses being referred to as "Registration Expenses"). Not included in
Registration Expenses are underwriting discounts, commissions or fees and any
stock transfer taxes, attributable to the sale of the Registrable Securities.
6. Suspension of Sales under Certain Circumstances. (a) Upon receipt of
any notice from Atlantic that dispositions under the then-current Prospectus
must be discontinued and suspended, whether as a result of an event described in
Section 4(a)(2)(D), (E) or (F) or otherwise, each Holder shall forthwith
discontinue and suspend disposition of Registrable Securities pursuant to that
Prospectus until (1) the Holders are advised in writing by Atlantic that a new
Registration Statement covering the offer of Registrable Securities has become
effective under the Securities Act, or (2) the Holders receive copies of a
supplemented or amended Prospectus contemplated by Section 4, or (3) the Holders
are advised in writing by Atlantic that they may resume use of the Prospectus.
(b) If at any time following the date hereof any shares of Common
Stock are to be sold pursuant to an Underwritten Offering (other than in
connection with a registration statement on Form S-4 or S-8, or any successor or
substantially similar form, or a registration statement covering (A) an employee
stock option, stock purchase or compensation plan or securities issued or
issuable pursuant to any such plan, or (B) a dividend reinvestment plan), then
for the period commencing 15 days prior to, and expiring 90 days after, the
effective date of such Underwritten Offering, none of the Holders may effect any
public sale or distribution of any Registrable Securities or any other shares of
Common Stock of Atlantic then owned by the
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Holders, other than pursuant to that Underwritten Offering (if any Registrable
Securities are included in such Underwritten Offering).
7. Indemnification. Atlantic shall indemnify, to the full extent
permitted by law, but without duplication, each Holder, any of their respective
officers and directors, if any, and each Person who controls any Holder within
the meaning of the Securities Act against all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation and
reasonable legal fees and expenses) resulting from any untrue statement of a
material fact in, or any omission of a material fact required to be stated in,
any Registration Statement or in any preliminary or final Prospectus, or any
amendment or supplement thereto, or necessary to make the statements therein (in
the case of a Prospectus in light of the circumstances under which they were
made) not misleading, except that Atlantic will not be liable in any such case
to the extent that any such loss, claim, damage, liability or expense (A) arises
out of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to Atlantic by or on behalf of the Holders
specifically for inclusion therein or (B) is caused by any untrue statement or
omission, or any alleged untrue statement or omission, made in a Prospectus but
eliminated or remedied in a subsequent Prospectus if Atlantic shall have timely
furnished copies thereof to the relevant Holder in accordance with this
agreement and a copy of the Prospectus was required pursuant to the Securities
Act to be sent or given by that Holder or on its behalf to the Person asserting
that loss, claim, damage, liability or expense at or prior to the sale of those
Registrable Securities to that Person and was not so sent or given.
(b) In connection with any Registration Statement covering
Registrable Securities of any Holder, that Holder shall furnish to Atlantic in
writing such information as Atlantic reasonably requests for use in connection
with any such Registration Statement or Prospectus and shall indemnify, to the
full extent permitted by law, but without duplication, Atlantic, its officers,
directors, stockholders, employees, advisors and agents, and each Person who
controls Atlantic (within the meaning of the Securities Act), against any
losses, claims, damages, liabilities and expenses resulting from any untrue
statement of a material fact in, or any omission of a material fact required to
be stated in, the Registration Statement or in any preliminary or final
Prospectus, or any amendment or supplement thereto, or necessary to make the
statements therein (in the case of a Prospectus in light of the circumstances
under which they were made) not misleading, but only to the extent that such
untrue statement or omission is contained in any information so furnished in
writing by that Holder to Atlantic specifically for inclusion therein. If the
offering to which the Registration Statement relates is an Underwritten
Offering, each Holder shall enter into an underwriting agreement in customary
form with the underwriters and indemnify the underwriters, their officers and
directors, if any, and each Person who controls the underwriters within the
meaning of the Securities Act to the same extent as each Holder is required to
indemnify Atlantic.
(c) Any Person entitled to indemnification hereunder must (1)
give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification, and (2) permit the indemnifying party to assume the
defense of that claim with counsel reasonably satisfactory to the indemnified
party, except that the indemnified party may employ separate counsel and
participate in, but not control, the defense of that claim. The indemnified
party will be responsible for the fees and expenses of such counsel, unless (A)
the indemnifying party fails
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to assume the defense of that claim and employ counsel reasonably satisfactory
to the indemnified party in a timely manner, or (B) in the reasonable judgment
of the indemnified party, based upon written advice of its counsel, a conflict
of interest may exist between the indemnified party and the indemnifying party
with respect to that claim (in which case, if the indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party may not assume the
defense of any claim as to which that conflict of interest may exist). The
indemnifying party will not be subject to any liability for any settlement made
without its consent. No indemnified party will be required to consent to the
entry of any judgment or enter into any settlement that does not require that
the claimant or plaintiff give the indemnified party a release from all
liability in respect of that claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of the claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by that indemnifying party with respect to that claim, as well as
one local counsel in each relevant jurisdiction.
(d) If for any reason indemnification provided for in Section
7(a) or 7(b) is unavailable to an indemnified party or insufficient to hold it
harmless as contemplated by Sections 7(a) and 7(b), then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of the loss, claim, damage, liability or expense for which it is entitled
to indemnification in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnifying party and the indemnified party,
but also the relative fault of the indemnifying party and the indemnified party,
as well as any other relevant equitable considerations. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentations.
8. Rule 144. Atlantic shall use its reasonable best efforts to make
publicly available and available to the Holders, pursuant to Rule 144, such
information as is necessary to enable the Holders to make sales of Registrable
Securities pursuant to that Rule. Atlantic shall use its reasonable best efforts
to file timely with the SEC all documents and reports required of Atlantic under
the Exchange Act. Atlantic shall furnish to any Holder, upon request, a written
statement executed on behalf of Atlantic as to compliance with the current
public information requirements of Rule 144.
9. Amendments and Waivers. The provisions of this agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, without the written consent of Atlantic
and Holders of a majority of the Registrable Securities.
10. Notices. Every notice or other communication required or
contemplated by this agreement must be in writing and sent by one of the
following methods: (1) personal delivery, in which case delivery is deemed to
occur the day of delivery; (2) certified or registered mail, postage prepaid,
return receipt requested, in which case delivery is deemed to occur the day it
is officially recorded as delivered to the intended recipient; or (3) next-day
delivery by a recognized overnight delivery service such as Federal Express, in
which case delivery is deemed to occur one business day after being sent. In
each case, a notice or other communication sent to a party
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must be directed to the address for that party set forth below, or to another
address designated by that party by written notice:
If to a Holder, at the most current address for that Holder as it
appears on the books of Atlantic; and
If to Atlantic, to:
Atlantic Technology Ventures, Inc.
000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx, President
with a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq.
11. Successors and Assigns. This agreement inures to the benefit of and
is binding upon the successors, transferees and assigns of the parties hereto,
except that (1) no transferee in any transfer made in reliance on Rule 144 under
the Securities Act will have any rights as a Holder under this agreement, and
(2) no Person to whom Registrable Securities are transferred will have any
rights under this agreement as a Holder unless that Person agrees to be bound by
the terms and conditions of this agreement.
12. Governing Law. This agreement is governed by the laws of the State
of New York, without giving effect to principles of conflict of laws.
13. Jurisdiction; Service of Process. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
agreement may be brought against any of the parties in the courts of the State
of New York, or, if it has or can acquire jurisdiction, in the United States
District Court for the Southern District of New York, and each of the parties
consents to the jurisdiction of those courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. Process in any such action or proceeding may be served by sending or
delivering a copy of the process to the party to be served at the address and in
the manner provided for the giving of notices in Section 10. Nothing in this
Section 13, however, affects the right of any party to serve legal process in
any other manner permitted by law.
14. Entire Agreement. This agreement constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties.
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Atlantic and TeraComm are executing this agreement on the date stated
in the introductory clause.
TERACOMM RESEARCH, INC.
By:________________________________
Xxxxxxx X. PuzeyPresident
ATLANTIC TECHNOLOGY VENTURES, INC.
By:_______________________________
A. Xxxxxx Xxxxxx
President
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