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EXHIBIT 10.1
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of February
27, 2001 by and among FASTCOMM COMMUNICATIONS CORPORATION, a corporation
organized under the laws of the Commonwealth of Virginia (the "COMPANY"), and
the undersigned (together with affiliates, the "INVESTORS").
WHEREAS:
. In connection with the Securities Purchase Agreement of even date
herewith by and between the Company and the Investors (the "SECURITIES PURCHASE
AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Investors (i) prepaid
common stock purchase warrants (the "PREPAID WARRANTS") which entitle the holder
thereof to acquire shares of the Company's common stock, par value $.01 per
share (the "COMMON STOCK"), upon the terms and subject to the limitations and
conditions set forth in the Prepaid Warrants and (ii) additional warrants
(collectively, the "INCENTIVE WARRANTS") to acquire shares of Common Stock.
. In connection with the purchase and sale of the Prepaid Warrant
and Incentive Warrants, to induce the Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), and applicable state securities laws; and
. The Company has agreed to issue to The Zanett Securities
Corporation (the "PLACEMENT AGENT") warrants (the "PLACEMENT AGENT WARRANTS"
and, collectively with the Prepaid Warrants and the Incentive Warrants, the
"WARRANTS") to purchase shares of Common Stock pursuant to that certain
Placement Agency Agreement, dated as of even date herewith (the "PLACEMENT
AGREEMENT"), by and between the Company and the Placement Agent and has agreed
to provide the Placement Agent the rights set forth herein. For purposes of this
Agreement, the Placement Agent shall be deemed an "INVESTOR" and the shares of
Common Stock issuable upon the exercise of, or otherwise pursuant to, the
Warrants shall be deemed "WARRANT SHARES."
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Investors hereby agree as follows:
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1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have
the following meanings:
(i) "INVESTORS" means the Investors and any
permissible transferees or assignees under the Securities Purchase Agreement or
the Placement Agreement, as the case may be, and who agree to become bound by
the provisions of this Agreement in accordance with Section 9 hereof.
(ii) "REGISTER," "REGISTERED," and "REGISTRATION" refer
to a registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(iii) "REGISTRABLE SECURITIES" means the Warrant Shares
(including any Warrant Shares issuable with respect to Exercise Default Payments
under the Warrants and any Warrant Shares issuable with respect to the Default
Amount under the Prepaid Warrants) issued or issuable upon exercise of, or
otherwise with respect to, the Warrants and any shares of capital stock issued
or issuable, from time to time (with any adjustments), as a distribution on or
in exchange for or otherwise with respect to any of the foregoing.
(iv) "REGISTRATION STATEMENT" means a registration
statement of the Company under the Securities Act.
b. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Securities Purchase
Agreement, the Placement Agreement, and the Warrants.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare, on a
one time basis, and, as soon as practicable, but not later than the sixtieth
(60th) day following the date of the Closing under the Securities Purchase
Agreement (the "FILING DATE"), file with the SEC a Registration Statement on
Form S-3 (or, if Form S-3 is not then available, on such form of Registration
Statement as is then available to effect a registration of all of the
Registrable Securities required to be included in such Registration Statement
(as determined pursuant to Section 11(j) hereof) on or before the ninetieth
(90th) day following the date of the Closing) covering the resale of at least
4,116,288 Registrable Securities (200% of the maximum number of shares of Common
Stock issuable upon the full exercise of or otherwise with respect to the
Prepaid Warrants issued at the Closing, plus 100% of the maximum number of
shares of Common Stock issuable upon the full exercise of the Incentive Warrants
and Placement Agent Warrants issued at the Closing). The Registration Statement
filed hereunder, to the extent allowable under the Securities Act and the Rules
promulgated thereunder (including Rule 416),
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shall state that such Registration Statement also covers such indeterminate
number of additional shares of Common Stock as may become issuable upon exercise
of the Warrants (i) to prevent dilution resulting from stock splits, stock
dividends or similar transactions or (ii) by reason of reductions in the
Exercise Price of the Warrants in accordance with the terms thereof (including,
but not limited to, in the case of the Prepaid Warrants, the terms which cause
the Variable Exercise Price to decrease to the extent the Closing Bid Price of
the Common Stock decreases). The Registrable Securities included in any
Registration Statement filed hereunder shall be allocated to the Investors as
set forth in Section 11(k) hereof. The Registration Statement filed hereunder
(and each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to (and subject to review by) the
Placement Agent and its counsel acting on behalf of the Investors prior to its
filing or other submission. The Investors understand that such Registration
Statement may include other shares of stock as registered by the Company.
b. Underwritten Offering. If any offering pursuant to the
Registration Statement pursuant to Section 2(a) hereof involves an underwritten
offering, the Investors who hold a majority in interest of the Registrable
Securities subject to such underwritten offering, with the consent of the
Investors, shall have the right to select one legal counsel to represent the
Investors (at the Investors' expense) and an investment banker or bankers and
manager or managers to administer the offering, which investment banker or
bankers or manager or managers shall be reasonably satisfactory to the Company.
In the event that any Investors elect not to participate in such underwritten
offering, such Investors shall provide the Company with appropriate plans of
distribution for inclusion in such Registration Statement.
c. Payments by the Company. The Company shall use its best
efforts to cause the Registration Statement required to be filed pursuant to
Section 2(a) hereof to become effective as soon as practicable, but in no event
later than the one hundred twentieth (120th) day following the date it was
required to be filed hereunder or no later than the one hundred eightieth
(180th) day following the date it was required to be filed if Form S-3 was not
available (each a "REGISTRATION DEADLINE"). If (i) (A) the Registration
Statement required to be filed by the Company pursuant to Section 2(a) hereof is
not declared effective by the SEC on or before the Registration Deadline
applicable to such Registration Statement or (B) the Registration Statement
required to be filed by the Company pursuant to Section 3(b) hereof is not
declared effective by the SEC within sixty (60) days after the applicable
Registration Trigger Date (as defined in Section 3(b) hereof), or (ii) if, after
any such Registration Statement has been declared effective by the SEC, sales of
all of the Registrable Securities required to be covered by such Registration
Statement (including any Registrable Securities required to be registered
pursuant to Section 3(b) hereof) cannot be made pursuant to such Registration
Statement (by reason of a stop order or the Company's failure to update the
Registration Statement or any other reason outside the control of the Investors
but within the control of the Company), or (iii) the Common Stock (including any
Registrable Securities) is not listed or included for quotation on the Nasdaq
Over-the-Counter Bulletin Board (the "BULLETIN BOARD"), National Market ("NNM"),
the Nasdaq SmallCap Market ("SMALLCAP"), the New York Stock Exchange (the
"NYSE") or the American Stock Exchange (the "AMEX") at any time after the
initial Registration Deadline hereunder, then the Company will make payments to
the Investors in such amounts and at such times as shall be determined pursuant
to this Section 2(c) as partial relief for the damages to the Investors
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by reason of any such delay in or reduction of their ability to sell the
Registrable Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity). Notwithstanding the foregoing, in the
event the Registration Statement is not declared effective within sixty (60)
days after the applicable Registration Trigger Date, the Company will not have
to pay the Investors such amounts if (i) the Company filed the Registration
Statement by the Filing Date and (ii) the Company, in each instance, fully
responds to all SEC comments received by it within the longer of (A) five (5)
business days after receipt thereof or (B) the time period provided by the SEC.
The Company shall pay to each Investor an amount equal to the product of (i) the
aggregate Purchase Price of the Warrants held by such Investor (including,
without limitation, Warrants that have been exercised for Warrant Shares then
held by such Investor) (the "AGGREGATE SHARE PRICE"), multiplied by (ii)
thirty-five thousandths (.035), for the first thirty (30) day period (or portion
thereof) (A) after a Registration Deadline and prior to the date the applicable
Registration Statement filed pursuant to Section 2(a) is declared effective by
the SEC, (B) after the sixtieth (60th) day following a Registration Trigger Date
(as defined in Section 3(b)) and prior to the date the Registration Statement
filed pursuant to Section 3(b) hereof is declared effective by the SEC, and (C)
during which sales of any Registrable Securities cannot be made pursuant to any
such Registration Statement after the Registration Statement has been declared
effective or the Common Stock (including any Registrable Securities) is not
listed or included for quotation on the Bulletin Board, NNM, SmallCap, NYSE or
AMEX. In addition, the Company shall pay to each Investor an amount equal to the
product of (i) the Aggregate Share Price, multiplied by (ii) fifty-five
thousandths (.055), for each additional thirty (30) day period (or portion
thereof) following the initial thirty (30) day period referred to in the
preceding sentence (A) after a Registration Deadline and prior to the date the
applicable Registration Statement filed pursuant to Section 2(a) is declared
effective by the SEC, (B) after the sixtieth (60th) day following a Registration
Trigger Date and prior to the date the Registration Statement filed pursuant to
Section 3(b) hereof is declared effective by the SEC, and (C) during which sales
of any Registrable Securities cannot be made pursuant to any such Registration
Statement after the Registration Statement has been declared effective or the
Common Stock (including any Registrable Securities) is not listed or included
for quotation on the Bulletin Board, NNM, SmallCap, NYSE or AMEX; provided,
however, that there shall be excluded from each such period any delays which are
solely attributable to changes (other than corrections of Company mistakes with
respect to information previously provided by the Investors) required by the
Investors in the Registration Statement with respect to information relating to
the Investors, including, without limitation, changes to the plan of
distribution. (For example, if a Registration Statement is not effective by the
Registration Deadline applicable thereto, the Company would pay $35,000 for the
first thirty (30) days and $55,000 for each thirty (30) day period thereafter
with respect to each $1,000,000 of Aggregate Share Price until the Registration
Statement becomes effective.) Such amounts shall be paid in cash or, at each
Investor's option, may be convertible into Common Stock at the "EXERCISE PRICE"
then in effect with respect to the Prepaid Warrants. Any shares of Common Stock
issued upon conversion of such amounts shall be Registrable Securities. If the
Investor desires to convert the amounts due hereunder into Registrable
Securities it shall so notify the Company in writing within two (2) business
days after the date on which such amounts are first payable in cash and such
amounts shall be so convertible beginning on the last day upon which the cash
amount would otherwise be due in accordance with the following sentence.
Payments of cash pursuant hereto shall be made within five (5) days after the
end of each period that gives rise to such obligation, provided that, if any
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such period extends for more than thirty (30) days, interim payments shall be
made for each such thirty (30) day period.
d. Piggy-Back Registrations. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the Company shall
file with the SEC a Registration Statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities (other than on Form S-4 or Form S-8 or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), the Company shall
send to each Investor who is entitled to registration rights under this Section
2(d) written notice of such determination and, if within five (5) business days
after the date of such notice, such Investor shall so request in writing, the
Company shall include in such Registration Statement all or any part of the
Registrable Securities such Investor requests to be registered, except that if,
in connection with any underwritten public offering, the managing underwriter(s)
thereof shall impose a limitation on the number of shares of Common Stock which
may be included in the Registration Statement because, in such underwriter(s)'
judgment, marketing or other factors dictate such limitation is necessary to
facilitate public distribution, then the Company shall be obligated to include
in such Registration Statement only such limited portion of the Registrable
Securities with respect to which such Investor has requested inclusion hereunder
as the underwriter shall permit. Any exclusion of Registrable Securities shall
be made pro rata among the Investors seeking to include Registrable Securities,
in proportion to the number of Registrable Securities sought to be included by
such Investors; provided, however, that the Company shall not exclude any
Registrable Securities unless the Company has first excluded all outstanding
securities, the holders of which are not entitled to inclusion of such
securities in such Registration Statement or are not entitled to pro rata
inclusion with the Registrable Securities in accordance with agreements
predating the date hereof, and provided, further, however, that, after giving
effect to the immediately preceding proviso, any exclusion of Registrable
Securities shall be made pro rata with holders of other securities having the
right to include such securities in the Registration Statement other than
holders of securities entitled to inclusion of their securities in such
Registration Statement by reason of demand registration rights. No right to
registration of Registrable Securities under this Section 2(d) shall be
construed to limit any registration required under Section 2(a) hereof. If an
offering in connection with which an Investor is entitled to registration under
this Section 2(d) is an underwritten offering, then each Investor whose
Registrable Securities are included in such Registration Statement shall, unless
otherwise agreed by the Company, offer and sell such Registrable Securities in
an underwritten offering using the same underwriter or underwriters and, subject
to the provisions of this Agreement, on the same terms and conditions as other
shares of Common Stock included in such underwritten offering.
e. Eligibility for Form S-3. The Company represents and
warrants that it meets the current requirements for the use of Form S-3 for
registration of the sale by the Investors of the Registrable Securities and the
Company shall file all reports required to be filed by the Company with the SEC
in a timely manner as is required so as to maintain such eligibility for the use
of Form S-3.
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f. Rule 416. The Company and the Investors each acknowledge
that an indeterminate number of Registrable Securities shall be registered
pursuant to Rule 416 under the Securities Act so as to include in such
Registration Statement any and all Registrable Securities which may become
issuable (i) to prevent dilution resulting from stock splits, stock dividends or
similar transactions and (ii) by reason of reductions in the Exercise Price of
the Warrants in accordance with the terms thereof, including, but not limited
to, in the case of the Prepaid Warrants, the terms which cause the applicable
Exercise Percentages to decrease and the terms which cause the Variable Exercise
Price to decrease to the extent the Closing Bid Price of the Common Stock
decreases (collectively, the "RULE 416 SECURITIES"). If the Company determines
that the Registration Statements filed hereunder do not cover all of the Rule
416 Securities, the Company shall immediately provide to each Investor written
notice (a "RULE 416 NOTICE") setting forth the basis for the Company's position
and the authority therefor. The Company acknowledges that the number of shares
of Common Stock initially included in any Registration Statement relating to the
Registrable Securities represents a good faith estimate of the maximum number of
shares issuable upon exercise of the Warrants.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
. The Company shall prepare and file with the SEC the
Registration Statements required by Section 2(a) (but in no event later than the
applicable Filing Date with respect thereto), and use reasonable best efforts to
cause such Registration Statements relating to Registrable Securities to become
effective as soon as practicable after such filing (but in no event later than
the Registration Deadline applicable thereto), and keep such Registration
Statements effective pursuant to Rule 415 at all times until such date as is the
earlier of (i) the date on which all of the Registrable Securities have been
sold and (ii) the date on which all of the Registrable Securities (in the
reasonable opinion of counsel to the Investors) may be immediately sold to the
public without registration or restriction pursuant to Rule 144(k) under the
Securities Act or any successor provision (the "REGISTRATION PERIOD"), which
Registration Statements (including any amendments or supplements thereto and
prospectuses contained therein and all documents incorporated by reference
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein not misleading.
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. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statements and the prospectus used in connection with the
Registration Statements as may be necessary to keep the Registration Statements
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities of the Company covered by the Registration
Statements until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in the Registration Statements. In the event (i)
the Company delivers a Rule 416 Notice to the Investors or the Investors who
hold a majority in interest of the Registrable Securities shall reasonably
determine, or the SEC shall state formally or informally, that Rule 416 under
the Securities Act does not permit a registration statement to cover securities
which may become issuable upon conversion or exercise of convertible or
exercisable securities by reason of reductions in the conversion or exercise
price of such securities and (ii) the number of shares available under all
Registration Statements filed pursuant to this Agreement is, for any three (3)
consecutive trading days (the last of such three (3) trading days being the
"REGISTRATION TRIGGER DATE"), insufficient to cover one hundred thirty-five
percent (135%) of the Registrable Securities issued or issuable upon exercise of
the Warrants (without giving effect to any limitations on exercise contained in
the Warrants), the Company shall amend the Registration Statements, or file a
new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover two hundred percent (200%) of the
Registrable Securities issued or issuable (without giving effect to any
limitations on exercise contained in the Warrants) as of the Registration
Trigger Date, in each case, as soon as practicable, but in any event within
fifteen (15) days after the Registration Trigger Date (based on the market price
then in effect of the Common Stock and other relevant factors on which the
Company reasonably elects to rely). The Company shall cause such amendment(s)
and/or new Registration Statement to become effective as soon as practicable
following the filing thereof, but in any event within sixty (60) days after the
applicable Registration Trigger Date.
. The Company shall furnish to each Investor whose
Registrable Securities are included in any Registration Statement (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, one copy of each such Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of any Registration Statement referred
to in Section 2(a), each letter written by or on behalf of the Company to the
SEC or the staff of the SEC (including, without limitation, any request to
accelerate the effectiveness of any Registration Statement or amendment
thereto), and each item of correspondence from the SEC or the staff of the SEC,
in each case relating to any such Registration Statement (other than any
portion, if any, thereof which contains information for which the Company has
sought confidential treatment), (ii) on the date of effectiveness of any
Registration Statement or any amendment thereto, a notice stating that such
Registration Statement or amendment has been declared effective, and (iii) such
number of copies of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as such Investor may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
. The Company shall use its best efforts to (i) register and
qualify the Registrable Securities covered by each Registration Statement under
such other securities or
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"blue sky" laws of such jurisdictions in the United States as each Investor who
holds Registrable Securities being offered reasonably requests (but in no event
shall the Company be required to make such registration and qualification in
more than 10 states), (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (a) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (b) subject itself to general taxation in any such
jurisdiction, (c) file a general consent to service of process in any such
jurisdiction, (d) provide any undertakings that cause the Company undue expense
or burden, or (e) make any change in its charter or bylaws, which in each case
the Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders.
. In the event the Investors who hold a majority in interest
of the Registrable Securities which are initially requested to be offered in an
offering select underwriters for the offering, the Company shall enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and contribution
obligations, with the underwriters of such offering.
. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor of the happening of any event, of
which the Company has knowledge, as a result of which the prospectus included in
a Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and use its best
efforts promptly to prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission, and deliver such number
of copies of such supplement or amendment to each Investor as such Investor may
reasonably request.
. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to use its best efforts
to obtain the withdrawal of such order at the earliest practicable moment
(including in each case by amending or supplementing such Registration
Statement) and to notify each Investor who holds Registrable Securities being
sold (or, in the event of an underwritten offering, the managing underwriters)
of the issuance of such order and the resolution thereof (and if such
Registration Statement is supplemented or amended, deliver such number of copies
of such supplement or amendment to each Investor as such Investor may reasonably
request).
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. The Company shall permit a single firm of counsel
designated by the Investors to review each Registration Statement (at the
Investors' expense) and all amendments and supplements thereto a reasonable
period of time prior to their filing with the SEC, and not file any document
which contains information relating to such Investors in a form as to such
counsel reasonably objects.
. The Company shall make generally available to its security
holders as soon as practical, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Securities Act) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of a Registration Statement.
. [Intentionally omitted].
. The Company shall make available for inspection by any
underwriter participating in any disposition pursuant to a Registration
Statement, one firm of attorneys retained by all such underwriters
(collectively, the "INSPECTORS") at such Inspectors' expense all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "RECORDS"), as shall be reasonably deemed
necessary and customary in similar transactions by each Inspector to enable each
Inspector to exercise its due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence; provided, however,
that each Inspector shall agree to hold in confidence and shall not make any
disclosure (except to an Investor) of any Record or other information which the
Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (b) the release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent jurisdiction, or (c)
the information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to the Company)
with the Company with respect thereto. Each Investor agrees that it shall, upon
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential. Nothing herein shall be deemed to limit
the Investors' ability to sell Registrable Securities in a manner which is
otherwise consistent with applicable laws and regulations.
. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws (as determined in good faith by the Company upon advice of
outside legal counsel), (ii) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement, (iii)
the release of such information is ordered pursuant to a subpoena or other order
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from a court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement, (v) such Investor
consents to the form and content of any such disclosure or (vi) such information
is required by the SEC; provided that such Investor shall have an opportunity to
request confidential treatment thereof. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to such Investor prior to making such disclosure, and
allow the Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
. The Company shall use its best efforts to promptly either
(i) cause all of the Registrable Securities covered by any Registration
Statement to be reported on or listed on the Bulletin Board (if required by
applicable rules and regulations), NYSE or the AMEX or another national
securities exchange and on each additional national securities exchange on which
securities of the same class or series issued by the Company are then listed, if
any, if the listing of such Registrable Securities is then permitted under the
rules of such exchange, or (ii) secure the designation and quotation of all of
the Registrable Securities covered by any Registration Statement on the Bulletin
Board, NNM or SmallCap and, without limiting the generality of the foregoing, to
arrange for or maintain at least two market makers to register with the National
Association of Securities Dealers, Inc. ("NASD") as such with respect to such
Registrable Securities.
. The Company shall provide a transfer agent and registrar,
which may be a single entity, for the Registrable Securities not later than the
effective date of any Registration Statement.
. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to any Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Investors may reasonably
request (at the underwriters or Investors cost and expense) and registered in
such names as the managing underwriter or underwriters, if any, or the Investors
may request, and, within three (3) business days after a Registration Statement
which includes Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel selected by the Company to
deliver, to the transfer agent for the Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) an opinion of such counsel in the form attached hereto as EXHIBIT 1.
. At the request of any Investor, the Company shall prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary in order to change the plan
of distribution set forth in such Registration Statement at the Investor's
expense.
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. The Company and any managing underwriter or underwriters,
and any Investor shall comply with all applicable laws related to a Registration
Statement and offering and sale of securities and all applicable rules and
regulations of governmental authorities in connection therewith (including,
without limitation, the Securities Act and the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated by the SEC.)
. The Company shall take all such other actions as any
Investor or the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of the Registrable Securities pursuant to the terms
of the Registration Statement; provided that any such additional actions shall
be at the sole cost and expense of the person requesting same.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least five (5)
business days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify the Placement Agent on behalf of the
Investors of the information the Company requires from each such Investor.
b. Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of each
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from such Registration Statement.
c. In the event Investors holding a majority in interest of
the Registrable Securities being offered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor has notified the
Company in writing of such Investor's election not to participate in such
underwritten distribution.
d. Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Sections 3(f)
or 3(g), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the
12
supplemented or amended prospectus contemplated by Sections 3(f) or 3(g) and, if
so directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
e. No Investor may participate in any underwritten
distribution hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting arrangements in
usual and customary form entered into by the Company, (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions and any expenses in excess of those
payable by the Company pursuant to Section 5 below.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, the
fees and disbursements of counsel for the Company shall be borne by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will
indemnify, hold harmless and defend (i) each Investor who holds such Registrable
Securities, and (ii) the directors, officers, partners, members, employees,
agents and each person who controls any Investor within the meaning of Section
15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), if any, (each, an "INDEMNIFIED PERSON"),
against any joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in respect
thereof, "CLAIMS") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the omission
or alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation by the
Company of the Securities Act, the Exchange Act, any other applicable securities
law, including, without limitation, any state securities law, or any rule
13
or regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "VIOLATIONS"). Subject to the restrictions set forth in Section
6(c) with respect to the number of legal counsel, the Company shall reimburse
the Investors and each other Indemnified Person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall not apply to
a Claim arising out of or based upon a Violation which occurs in reliance upon
information furnished in writing to the Company by such Indemnified Person
expressly for use in the Registration Statement or any such amendment thereof or
supplement thereto or in any filings required by any state's securities laws;
(ii) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company which
the Company has, or would have had a good faith basis not to have consented to;
and (iii) with respect to any preliminary prospectus, shall not inure to the
benefit of any Indemnified Person if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented, if such corrected
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof, and the Indemnified Person was promptly advised in writing not to use
the incorrect prospectus prior to the use giving rise to a Violation and such
Indemnified Person, notwithstanding such advice, used it. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive any permissible transfer of
the Registrable Securities by the Investors pursuant to Section 9 hereof.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees severally and not jointly
to indemnify, hold harmless and defend, to the same extent and in the same
manner set forth in Section 6(a), the Company, each of its directors, each of
its officers who signs the Registration Statement, its employees, agents and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, and any other
stockholder selling securities pursuant to the Registration Statement or any of
its directors or officers or any person who controls such stockholder within the
meaning of the Securities Act or the Exchange Act (collectively and together
with an Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim to which
any of them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon any Violation,
in each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished to the
Company by such Investor expressly for use in connection with such Registration
Statement; and subject to Section 6(c) such Investor will reimburse any legal or
other expenses (promptly as such expenses are incurred and are due and payable)
reasonably incurred by them in connection with defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 6(b)
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor where such Investor
has a good faith basis not to consent to provided, further, however, that the
Investor shall be liable under this Agreement (including this Section 6(b) and
Section 7) for only that amount as does not exceed the net proceeds actually
received by such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on
14
behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9 hereof.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented, and the Indemnified Party failed to utilize such corrected
prospectus.
c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that such indemnifying party shall not be
entitled to assume such defense and an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential conflicts of interest between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding or the actual or potential defendants in, or targets
of, any such action include both the Indemnified Person or the Indemnified Party
and the indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are different from or in addition
to those available to such indemnifying party. The indemnifying party shall pay
for only one separate legal counsel for the Indemnified Persons or the
Indemnified Parties, as applicable, and such legal counsel shall be selected by
Investors holding a majority-in-interest of the Registrable Securities included
in the Registration Statement to which the Claim relates (with the approval of
the Investors if they hold Registrable Securities included in such Registration
Statement), if the Investors are entitled to indemnification hereunder, or by
the Company, if the Company is entitled to indemnification hereunder, as
applicable. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is actually prejudiced in its ability to defend such action.
The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by
15
law; provided, however, that (i) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6, (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation, and (iii)
contribution (together with any indemnification or other obligations under this
Agreement) by any seller of Registrable Securities shall be limited in amount to
the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the Securities Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:
a. file with the SEC in a timely manner and make and keep
available all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being understood that nothing herein shall limit the
Company's obligations under Section 4(c) of the Securities Purchase Agreement)
and the filing and availability of such reports and other documents is required
for the applicable provisions of Rule 144; and
b. furnish to each Investor so long as such Investor owns
Warrants or Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, and (ii) such other
information as may be reasonably requested to permit the Investors to sell such
securities under Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
automatically assignable by each Investor to any permitted transferee (as
defined in the Securities Purchase Agreement) of all or any portion of the
Warrants or the Registrable Securities if: (i) the Investor agrees in writing
with the transferee as defined in Securities Purchase Agreement or assignee to
assign such rights, and a copy of such agreement is furnished to the Company
after such assignment, (ii) the Company is furnished with written notice of (a)
the name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned,
(iii) following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act
and applicable state securities laws, (iv) the transferee or assignee agrees in
writing for the benefit of the Company to be bound by all of the provisions
contained herein, and (v) such transfer shall have been made in accordance with
the applicable requirements of the Securities Purchase Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS.
16
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with written consent of the Company and
Investors who hold a majority in interest of the Registrable Securities;
provided, however, that no amendment hereto which restricts the ability of an
Investor to elect not to participate in an underwritten offering shall be
effective against any Investor which does not consent in writing to such
amendment; provided, further, however, that no consideration shall be paid to an
Investor by the Company in connection with an amendment hereto unless each
Investor similarly affected by such amendment receives a pro-rata amount of
consideration from the Company. Unless an Investor otherwise agrees, each
amendment hereto must similarly affect each Investor. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each Investor
and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
b. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five (5) days after being placed in the mail,
if mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier or confirmed telecopy, in each case addressed to a party. The addresses
for such communications shall be:
If to the Company:
FastComm Communications Corporation
00000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, President
with a copy simultaneously transmitted by like means to:
Xxxxxxx, Dunaud, Mercadier and Carreras, LLP
000 Xxxxxxxxx Xxxxxx - 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. Xxxx, Esq.
17
and if to any Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes by
notice given in accordance with this Section 11(b).
c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in the State of New York. The Company and each of the
Investor irrevocably consent to the jurisdiction of the United States federal
courts located in the City of New York in the State of New York in any suit or
proceeding based on or arising under this Agreement and irrevocably agree that
all claims in respect of such suit or proceeding may be determined in such
courts. The Company and each Investor irrevocably waive the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The Company
and each Investor further agree that service of process upon the Company and
each Investor mailed by first class mail shall be deemed in every respect
effective service of process upon the Company and each Investor, as the case may
be, in any such suit or proceeding. Nothing herein shall affect the parties'
right to serve process in any other manner permitted by law. The Company and
each Investor agree that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
e. This Agreement, the Securities Purchase Agreement
(including all schedules and exhibits thereto) and the Warrants constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. This Agreement, the Securities Purchase Agreement and the
Warrants supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement.
18
j. All consents, approvals and other determinations to be
made by the Investors or the Investors pursuant to this Agreement shall be made
by the Investors or the Investors holding a majority in interest of the
Registrable Securities (determined as if all Warrants then outstanding had been
exercised for Registrable Securities) held by all Investors or Investors, as the
case may be.
k. The initial number of Registrable Securities included on
any Registration Statement and each increase (if any) to the number of
Registrable Securities included thereon shall be allocated pro rata among the
Investors based on the number of Registrable Securities held by each Investor at
the time of such establishment or increase, as the case may be. In the event an
Investor shall sell or otherwise transfer any of such holder's Registrable
Securities, each transferee shall be allocated a pro rata portion of the number
of Registrable Securities included on a Registration Statement for such
transferor. Any shares of Common Stock included on a Registration Statement and
which remain allocated to any person or entity which does not hold any
Registrable Securities shall be allocated to the remaining Investors, pro rata
based on the number of shares of Registrable Securities then held by such
Investors. For the avoidance of doubt, the number of Registrable Securities held
by any Investor shall be determined as if all Warrants then outstanding were
exercised for Registrable Securities.
l. Each party to this Agreement has participated in the
negotiation and drafting of this Agreement. As such, the language used herein
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied
19
against any party to this Agreement.
m. For purposes of this Agreement, the term "business day"
means any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law,
regulation or executive order to close.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
FASTCOMM COMMUNICATIONS CORPORATION
By:
Name: Xxxxx X. Xxxxxx
Its: President
THE ZANETT LOMBARDIER MASTER FUND, L.P.
By:
-----------------------------------------
Name:
---------------------------------------
Its:
----------------------------------------
--------------------------------------------
XXXX XXXXXXXXXXXX
--------------------------------------------
XXXXXXX XXXXXXX
--------------------------------------------
XXXXXX X. XXXXXXX
--------------------------------------------
XXXXX XXXXXXXX
--------------------------------------------
20
XXXXXXX XXXXXXXX
THE ZANETT SECURITIES CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Its:
----------------------------------------
21
TO
REGISTRATION
RIGHTS
AGREEMENT
[Date]
[Name and address
of transfer agent]
RE: FASTCOMM COMMUNICATIONS CORPORATION
Ladies and Gentlemen:
We are counsel to FastComm Communications Corporation, a corporation
organized under the laws of the Commonwealth of Virginia (the "COMPANY"), and we
understand that [Name of Investor] (the "HOLDER") has purchased from the Company
(i) prepaid common stock purchase warrants (the "PREPAID WARRANTS") which
entitle the holder thereof to acquire shares of the Company's common stock, par
value $.01 per share (the "COMMON STOCK"), and (ii) additional warrants (the
"INCENTIVE WARRANTS") to acquire shares of Common Stock. Pursuant to a
Registration Rights Agreement, dated as of ___________, 2001, by and among the
Company and the signatories thereto (the "REGISTRATION RIGHTS AGREEMENT"), the
Company agreed with the Holder, among other things, to register the Registrable
Securities (as that term is defined in the Registration Rights Agreement) under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), upon the terms
provided in the Registration Rights Agreement. In connection with the Company's
obligations under the Registration Rights Agreement, on ___________, 2000, the
Company filed a Registration Statement on Form S-___ (File No. 333-
_____________) (the "REGISTRATION STATEMENT") with the Securities and Exchange
Commission (the "SEC") relating to the Registrable Securities, which names the
Holder as a selling stockholder thereunder. The Registration Statement was
declared effective by the SEC on _____________, 2001.
[Other customary introductory and scope of examination language to be
inserted]
Based on the foregoing, we are of the opinion that the Registrable
Securities have been registered under the Securities Act.
[Other customary language to be included.]
Very truly yours,
cc: [Name of Investor]
