Exhibit 10.6

 

EXECUTION VERSION

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”), dated November 9, 2005,
is entered into by and between IT & E INTERNATIONAL GROUP, a Nevada corporation
(the “Company”) and COMVEST INVESTMENT PARTNERS II LLC, a Delaware limited
liability company (“ComVest”) and the purchasers set forth on the signature
pages attached hereto (each a “Purchaser” and collectively with ComVest, the
“Purchasers”), as a material inducement for the Purchasers to purchase
(i) senior secured notes (each a “Senior Secured Note”) in an aggregate
principal amount up to of $11,500,000 (ii) up to 11,500 of shares of convertible
preferred stock, stated value $1,000 per share (the “Series D Preferred Stock”),
(iii) warrants (the “Warrant”) to purchase up to 81,142,788 shares of common
stock, par value $0.001 per share (“Common Stock”) and (iv) and the six month
option to invest an additional $5,000,000 on the same terms as (i), (ii) and
(iii) (“the ComVest Option”) in accordance with the terms of that certain
Securities Purchase Agreement, dated on or about the date hereof (the “Purchase
Agreement”).  All capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Purchase Agreement.

 

NOW, THEREFORE, the Company and ComVest hereby agree as follows:

 

1.                                       Definitions.  In addition to those
terms defined elsewhere in this Agreement, the following terms shall have the
following meanings wherever used in this Agreement:

 

“Act” shall mean the Securities Act of 1933, as amended, and any successor
statute from time to time.

 

“Costs and Expenses” shall mean all of the costs and expenses relating to any
subject Registration Statement, including but not limited to registration,
filing and qualification fees, reasonable blue sky expenses, costs of listing
any shares of Common Stock on any national securities exchange automated
quotation system, printing expenses, fees and disbursements of counsel and
accountants to the Company, and reasonable fees and disbursements of counsel to
ComVest (such fees and disbursements not to exceed $25,000 per Registration);
provided, however, that underwriting discounts and commissions attributable
solely to the securities registered for the benefit of ComVest, fees and
disbursements of any additional counsel to ComVest, and all other expenses
attributable solely to ComVest shall be borne by ComVest.

 

“Excluded Registration Statement” shall mean a registration statement relating
solely to the registration of the sale of securities (i) other than for cash,
(ii) to participants in a Company stock plan or employee benefit plan, agreement
or arrangement, and (iii) in a transaction covered by Rule 145 under the Act or
the resale of securities issued in such a transaction.

 

“Existing Registration Rights Agreements” shall mean: (i) the Registration
Rights Agreement dated October 18, 2004 with Laurus Master Fund Ltd.; (ii) the
Company’s agreement

 

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with Peter Sollenne, Kelly Alberts, Anthony Allocca and David Vandertie to
register the resale of their outstanding shares on the Registration Statement,
subject to the Lock-Up Agreement dated as of even date herewith; and (iii) the
piggy-back registration rights that have been granted to the shareholders of
Millennix, Inc., subject to the Lock-Up Agreement dated as of even date
herewith.

 

“Lock-Up Agreement” shall mean each of the Lock-Up Agreements to be entered into
by the Company and each of Peter Sollenne, Kelly Alberts, Anthony Alloca, David
Vandertie, Gene Resnick, Margaret Barbetti, Russell Sobel, and John Garzio.

 

“Registrable Securities” shall mean all shares of Common Stock underlying the
Warrants, and the shares of Common Stock underlying the Preferred Stock held
from time to time by the Purchasers, and in each case including the Optional
Registerable Securities, if any; provided, however, that such Registrable
Securities shall cease to be Registrable Securities at such time as all such
Registrable Securities (i) are sold pursuant to any registration statement filed
by the Company with the SEC, pursuant to Rule 144 promulgated under the Act or
pursuant to any other exemption from registration under the Act or (ii) may be
sold, subject to any applicable volume limitations, in open market transactions
pursuant to any applicable exemption from the registration requirements of the
Act, including without limitation Rule 144(k) promulgated thereunder (or any
successor thereto).

 

“Optional Registrable Securities” shall mean the shares underlying the Warrants
and Preferred Stock issued in connection with the ComVest Option.

 

“Registration” shall mean any registration or proposed registration of
Registrable Securities pursuant to a Registration Statement in respect to the
sale of any Registrable Securities.

 

“Registration Period” shall mean the period (i) beginning upon the earlier of
declaration of effectiveness of the Registration Statements provided for in
Section 2 hereof or declaration of effectiveness of any Registration Statement
provided for in Section 3 hereof that includes Registrable Securities and
(ii) ending on the earlier of the date that all Registrable Securities have
ceased to be Registrable Securities and the second anniversary of the date of
this Agreement.

 

“Registration Statement” shall mean any registration statement filed or to be
filed by the Company with the SEC.

 

“SEC” shall mean the United States Securities and Exchange Commission, or any
successor agency or agencies performing the functions thereof.

 

“Warrant Registrable Securities” shall mean the shares of Common Stock issuable
upon exercise of the Warrants or any shares issued in exchange for or
replacement thereof, from time to time.

 

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2.                                       Registration.

 

(a)                                  Mandatory Registration.  The Company shall
prepare, and, within fifteen (15) calendar days from the earlier to occur of:
(i) the exercise in full of the ComVest Option, or (ii) the expiration of the
ComVest Option (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 the Registrable
Securities, subject to the consent of ComVest, which consent will not be
unreasonably withheld) covering the resale of the Registrable Securities, which
Registration Statement, to the extent allowable under the 1933 Act and the
rules and regulations promulgated thereunder (including Rule 416), shall state
that such Registration Statement also covers such indeterminate number of
additional shares of Common Stock as may become issuable upon conversion of or
otherwise pursuant to the Preferred Stock and exercise of the Warrants to
prevent dilution resulting from stock splits, stock dividends or similar
transactions.  The number of shares of Common Stock initially included in such
Registration Statement shall be no less than an amount equal to the sum of the
number of shares of Common Stock that are then issuable upon conversion of the
Preferred Stock (based on the Conversion Price), and the number of shares of
Common Stock that are then issuable upon exercise of the Warrants, without
regard to any limitation on ComVest’s ability to convert the Preferred Stock or
exercise the Warrants but in each case that relates to Registrable Securities. 
The Company acknowledges that the number of shares initially included in the
Registration Statement represents a good faith estimate of the maximum number of
shares issuable upon conversion of the Preferred Stock and upon exercise of the
Warrants but in each case that relates to Registrable Securities.  ComVest
acknowledges and agrees that such initial Registration Statement to be filed on
or prior to the Filing Date shall include shares in accordance with the
registration rights set forth in subsection (ii) and (iii) of the definition of
Existing Registration Rights Agreements, subject to the Lock-Up Agreements being
entered into by such parties.

 

(b)                                 Payments by the Company.  The Company shall
use its best efforts to obtain effectiveness of the Registration Statement as
soon as practicable.  If (i) the Registration Statement(s) covering the
Registrable Securities required to be filed by the Company pursuant to
Section 2(a) hereof is not filed by the Filing Date or declared effective by the
SEC within three months from the Filing Date, or (ii) after the Registration
Statement has been declared effective by the SEC, sales of all of the
Registrable Securities cannot be made pursuant to the Registration Statement,
subject to Section 2(d) below, then the Company will make payments to ComVest in
such amounts and at such times as shall be determined pursuant to this
Section 2(c) as partial relief for the damages to ComVest 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).  The Company shall pay to ComVest a cash fee of $100,000 per month, or
part thereof, until such time as the Registration Statement is declared
effective by the SEC, or the suspension is lifted by the SEC.  Such amounts
shall be paid in cash.

 

(c)                                  Eligibility for Form S-3, SB-2 or S-1;
Conversion to Form S-3.  The Company represents and warrants that it meets the
requirements for the use of Form S-3, SB-2 or S-1 for registration of the resale
by the Purchasers.  The Company agrees to file all reports required to be filed
by the Company with the SEC in a timely manner so as to remain eligible or
become eligible, as the case may be, and thereafter to maintain its eligibility,
for the use of Form S-3.  If the Company is not currently eligible to use
Form S-3, not later than five (5) business

 

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days after the Company first meets the registration eligibility and transaction
requirements for the use of Form S-3 (or any successor form) for registration of
the offer and sale by the Purchasers, the Company shall file a Registration
Statement on Form S-3 (or such successor form) with respect to the Registrable
Securities covered by the Registration Statement on Form SB-2 or Form S-1,
whichever is applicable, filed pursuant to Section 2(a) (and include in such
Registration Statement on Form S-3 the information required by Rule 429 under
the 1933 Act) or convert the Registration Statement on Form SB-2 or Form S-1,
whichever is applicable, filed pursuant to Section 2(a) to a Form S-3 pursuant
to Rule 429 under the 1933 Act and cause such Registration Statement (or such
amendment) to be declared effective no later than six (6) months after the
Filing Date.  In the event of a breach by the Company of the provisions of this
Section 2(c), the Company will be required to make payments pursuant to
Section 2(b) hereof.

 

(d)                                 Allowed Delay.  If (i) there is material
non-public information regarding the Company which the Company’s Board of
Directors (the “Board”) reasonably determines not to be in the Company’s best
interest to disclose and which the Company is not otherwise required to
disclose, or (ii) there is a significant business opportunity (including, but
not limited to, the acquisition or disposition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer or other
similar transaction) available to the Company which the Board reasonably
determines not to be in the Company’s best interest to disclose and which the
Company would be required to disclose under a Registration Statement, then the
Company may postpone or suspend filing or effectiveness of such Registration
Statement for a period not to exceed thirty (30) consecutive days, provided that
the Company may not postpone or suspend its obligation under this
Section 2(d) for more than sixty (60) days in the aggregate during any twelve
(12) month period (each, an “Allowed Delay”).

 

3.                                       Registration Procedures.  In the case
of each Registration effected by the Company in which Registrable Securities or
Optional Registrable Securities are to be sold for the account of ComVest, the
Company will use its good faith reasonable efforts to:

 

(a)                                  furnish to Greenberg Traurig LLP (counsel
to ComVest) copies of all Registration Statements or prospectuses or any
amendments or supplements thereto proposed to be filed with the SEC, which
documents will be subject to review by such counsel before filing solely with
regard to any information contained therein which pertains to ComVest;

 

(b)                                 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 keep such Registration
Statement effective during the Registration Period (or, with respect to
Registration Statement filed in accordance with Section 3 hereof, for such
shorter or longer period covered thereby) and to comply with the provisions of
the Act with respect to the disposition of all securities covered by such
Registration Statement during such period;

 

(c)                                  furnish to ComVest electronic copies of
such Registration Statement, each amendment and supplement thereto, the
prospectus included in such Registration Statement (including each preliminary
prospectus) and such other documents as the Purchasers may reasonably require in
order to facilitate the disposition of the Registrable Securities held by the
Purchasers;

 

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(d)                                 register or qualify such Registrable
Securities or Optional Registrable Securities under such other securities or
blue sky laws of such states as may be reasonably required and do any and all
other acts and things which may be reasonably necessary or advisable to enable
the Purchasers to consummate the disposition of the Registrable Securities in
such jurisdictions (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, (ii) subject itself
to taxation in any such jurisdiction, or (iii) consent to general service of
process in any such jurisdiction);

 

(e)                                  notify the Purchasers , at any time when a
prospectus relating to a Registration Statement is required to be delivered
under the Act, of the happening of any event as a result of which the prospectus
included in a Registration Statement contains an untrue statement of a material
fact or omits to state any fact necessary to make the statements therein not
materially misleading, and prepare a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchaser(s) of Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any fact necessary to make the statements therein not materially
misleading; and

 

(f)                                    effective not later than the
effectiveness of the subject Registration Statement, cause all subject
Registrable Securities to be listed for trading on each national securities
exchange or automated quotation system on which the Common Stock is then listed,
if any.

 

4.                                       Indemnification by the Company.

 

(a)                                  In the event that the Company has failed to
use its reasonable best efforts and has otherwise failed to act in good faith to
effect the registration of the Registrable Securities or Optional Registrable
Securities in accordance with Section 2(a) and (b) hereof and the SEC has failed
to declare effective any such Registration Statement by the Effective Date, then
the Company shall pay ComVest a cash payment in accordance with Section 2(b). 
In the event the Company otherwise materially breaches or materially fails to
perform, as applicable, any representation, warranty or covenant contained in
this Agreement, the Company shall indemnify the Purchasers from and against any
expenses, claims, losses, costs, charges or liabilities of any kind, including
amounts paid in settlement and reasonable attorneys’ fees (collectively, the
“Losses”), which may be incurred by the Purchasers as a result of any such
failure or breach, with such indemnification to be made within thirty (30) days
of receipt of written request therefor.

 

(b)                                 The Company shall indemnify and hold
harmless each Purchaser and, each of their respective directors, legal counsel
and accountants for ComVest, and any underwriter (as defined in the Act) for any
Losses to which any Purchaser or any other such indemnified person becomes
subject, under the Act or any rule or regulation thereunder, insofar as such
Losses (i) are caused by any untrue statement or alleged untrue statement of any
material fact contained in any preliminary prospectus (if used prior to the
Effective Date of the Registration Statement), or contained, on the Effective
Date thereof, in any Registration Statement of which Registrable Securities were
the subject, the prospectus contained therein, any amendment or supplement
thereto, or (ii) arise out of or are based upon the omission or alleged

 

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omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iii) arise out of
any violation by the Company of the Act or any rule or regulation thereunder
applicable to the Company and relating to actions or omissions otherwise
required of the Company in connection with such Registration Statement.  The
Company shall reimburse the Purchasers and any such other indemnified person for
any legal or other expenses reasonably incurred by the Purchasers or such other
indemnified person in connection with investigating, defending or settling any
such Loss; provided, however, that the Company shall not be liable to any such
Persons in any such case to the extent that any such Loss arises out of or is
based upon (i) any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with information
furnished to the Company in writing by such person expressly for inclusion in
any of the foregoing documents or (ii) the use by the Purchasers of an outdated
or defective prospectus after the delivery to the Purchasers of written notice
from the Company that the prospectus is outdated or defective.  This indemnity
shall not apply to amounts paid in settlement of any such Loss if such
settlement is effected without the consent of the Company.

 

5.                                       Indemnification by the Purchasers.  The
Purchasers shall indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed a Registration Statement, legal counsel and
accountants for the Company, each person (if any) who controls the Company
within the meaning of the Act and any underwriter (as defined in the Act) for
the Company, against any Losses to which the Company or any other such
indemnified person may become subject under the Act or any rule or regulation
thereunder or otherwise to the extent that such Losses (or related actions)
(i) are caused solely by any untrue statement or alleged untrue statement of any
material fact contained in any preliminary prospectus (if used prior to the
effective date of the Registration Statement), or contained, on the Effective
Date thereof, in any Registration Statement of which such Purchaser’s
Registrable Securities were the subject, the prospectus contained therein, any
amendment or supplement thereto, or (ii) arise out of or are based solely upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with information furnished to the Company by the
respective Purchaser, in writing, expressly for inclusion in any of the
foregoing documents; provided, however, that the aggregate liability of any
Purchaser shall not be greater than the net proceeds received by such Purchaser
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.  This indemnity shall not apply to amounts paid in settlement of any
such Loss or related Action if such settlement is effected without the consent
of such Purchaser.

 

6.                                       Additional Provisions.

 

(a)                                  Each Purchaser and each other person
indemnified pursuant to Section 5 above shall, in the event that it receives
notice of the commencement of any Action against it which is based upon an
alleged act or omission which, if proven, would result in the Company’s having
to indemnify it pursuant to Section 5 above, promptly notify the Company, in
writing, of the commencement of such Action and permit the Company, if the
Company so notifies such Purchaser or other indemnified person within thirty
(30) days after receipt by the Company of notice of the commencement of the
Action, to assume the defense of such Action with counsel

 

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reasonably satisfactory to such Purchaser; provided, however, that such
Purchaser or other indemnified person shall be entitled to retain its own
counsel at its own expense.  The omission to notify the Company promptly of the
commencement of any such Action shall not relieve the Company of any liability
to indemnify such Purchaser or such other indemnified person, as the case may
be, under Section 6 above, from and after the Company’s receipt of such notice,
except to the extent that the Company shall suffer any Losses by reason of such
failure to give notice, and shall not relieve the Company of any other
liabilities which it may have under this or any other agreement.

 

(b)                                 The Company and each other person
indemnified pursuant to Section 6 above shall, in the event that it receives
notice of the commencement of any Action against it which is based upon an
alleged act or omission which, if proven, would result in any Purchaser having
to indemnify it pursuant to Section 6 above, promptly notify each Purchaser or
other indemnified person, in writing, of the commencement of such Action and
permit each Purchaser, if such Purchaser so notifies the Company within thirty
(30) days after receipt by such Purchaser of notice of the commencement of the
Action, to assume the defense of such Action with counsel reasonably
satisfactory to the Company; provided, however, that the Company or other
indemnified person shall be entitled to retain its own counsel at the Company’s
expense.  The omission to notify any Purchaser promptly of the commencement of
any such Action shall not relieve the Purchasers of liability to indemnify the
Company or such other indemnified person, as the case may be, under Section 6
above, from and after such Purchaser’s receipt of such notice, except to the
extent that the subject Holder shall suffer any Losses by reason of such failure
to give notice, and shall not relieve such Purchaser of any other liabilities
which it may have under this or any other agreement.

 

(c)                                  No indemnifying party, in the defense of
any such Action, shall, except with the consent of each indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
Action.  Each indemnified party shall furnish such information regarding itself
or the Action in question as an indemnifying party may reasonably request in
writing and as shall be reasonably required in connection with defense of such
Action resulting therefrom.

 

(d)                                 If a court of competent jurisdiction
determines that the foregoing indemnity provided under Sections 5 and 6 above is
unavailable, or is insufficient to hold harmless an indemnified party, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such Losses (A) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
on the one hand and the indemnified party on the other, or (B) if the allocation
provided by clause (A) above is not permitted by applicable law, or provides a
lesser sum to the indemnified party than the amount hereinafter calculated, in
such proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party on the one hand and the indemnified party on
the other, 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 Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.

 

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7.                                       Notices.  All notices, requests,
demands and other communications required or permitted under this Agreement
shall be given in accordance with Section 5.5 of the Purchase Agreement.

 

8.                                       Waiver and Amendment.  No waiver,
amendment or modification of this Agreement or of any provision hereof shall be
valid unless evidenced by a writing duly executed by the Company and each
Purchaser.  No waiver of any default hereunder shall be deemed a waiver of any
other, prior or subsequent default hereunder.

 

9.                                       Governing Law.  This Agreement shall be
governed by, construed under and interpreted and enforced in accordance with the
laws of the State of New York, without giving effect to principles of choice of
law.  Any Action arising out of or relating to this Agreement shall be commenced
in a federal or state court having competent jurisdiction in the State of New
York, and for the purpose of any such Action, each of the parties and any
assignees thereof submits to the personal jurisdiction of the State of New
York.  The parties hereby irrevocably consent to the exclusive personal
jurisdiction of any state or federal court for New York County in the State of
New York or the Southern District of New York.  The parties hereby waive any
objection to venue and any objection based on a more convenient form in any
Action instituted under this Agreement.

 

10.                                 Captions.  The captions and Section headings
used in this Agreement are for convenience only, and shall not affect the
construction or interpretation of this Agreement or any of the provisions
hereof.

 

11.                                 Entire Agreement.  This Agreement
constitutes the sole and entire agreement and understanding between the parties
hereto as to the subject matter hereof, and supersedes all prior discussions,
agreements and understandings of every kind and nature between them as to such
subject matter.

 

12.                                 No Third Party Beneficiaries.  Except as
expressly provided herein, this Agreement is not intended to confer upon any
person any rights or remedies hereunder.

 

13.                                 Successors and Assigns.         The Company
may not sell, assign, transfer or otherwise convey any of its rights or delegate
any of its duties under this Agreement, except to a corporation which has
succeeded to substantially all of the business and assets of the Company and has
assumed in writing its obligations under this Agreement, and this Agreement
shall be binding on the Company and such successor. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the Purchasers
and their respective successors and assigns. Without limiting the generality of
the foregoing, any transferee of Registrable Securities shall have the rights
set forth in this Agreement, and such rights shall be enforceable against the
Company by such transferees as third-party beneficiaries.

 

14.                                 Execution.  This Agreement may be executed
in two (2) or more counterparts, all of which when taken together shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party, it
being understood that both parties need not sign the same counterpart.  In the
event that any signature is delivered by facsimile transmission, such signature
shall create a valid and binding

 

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obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature
page were an original thereof.

 

15.                                 Term.                  This Agreement shall
terminate upon the expiration of the Registration Period; provided, however,
that the parties’ rights and obligations under Sections 5 and 6 shall survive
any termination of this Agreement.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the 9th day
of November 2005.

 

 

 

COMPANY:

 

 

 

IT & E INTERNATIONAL GROUP

 

 

 

 

 

By:

/s/ Peter Sollenne

 

 

 

Name:  Peter Sollenne

 

 

Title:  CEO

 

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PURCHASER:

 

 

 

COMVEST INVESTMENT PARTNERS II
LLC

 

 

 

 

 

By:

/s/ Michael Falk

 

 

 

Name:  Michael Falk

 

 

Title:  Managing Partner

 

 

 

 

 

By:

/s/ Charles McCall

 

 

 

Name:  Charles McCall

 

 

 

 

 

By:

 

 

 

 

Name: Matthew Dontzin

 

 

Title:

 

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