Document:

Unassociated Document

    
       

      Exhibit
10.1

    

    FORM
OF INDEMNIFICATION AGREEMENT

    

    THIS INDEMNIFICATION AGREEMENT (the
“Agreement”) is
made and entered into as of August 17, 2010 by and between Avatech Solutions,
Inc., a Delaware corporation (the “Company”), and [Director/Officer] (“Indemnitee”).

     

    WITNESSETH
THAT:

     

    WHEREAS,
highly competent persons have become more reluctant to serve corporations as
directors, officers or in other capacities unless they are provided with
adequate protection through insurance or adequate indemnification against
inordinate risks of claims and actions against them arising out of their service
to and activities on behalf of the corporation;

     

    WHEREAS,
the Board of Directors of the Company (the “Board”) has
determined that, in order to attract and retain qualified individuals, the
Company will attempt to maintain on an ongoing basis, at its sole expense,
liability insurance to protect persons serving the Company and its subsidiaries
from certain liabilities.  Although the furnishing of such insurance has
been a customary and widespread practice among United States-based corporations
and other business enterprises, the Company believes that, given current market
conditions and trends, such insurance may be available to it in the future only
at higher premiums and with more exclusions.  At the same time, directors,
officers, and other persons in service to corporations or business enterprises
are being increasingly subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been
brought only against the Company or business enterprise itself.  The bylaws
of the Company requires indemnification of the officers and directors of the
Company.  Indemnitee may also be entitled to indemnification pursuant to
the General Corporation Law of the State of Delaware (“DGCL”).  The
bylaws and the DGCL expressly provide that the indemnification provisions set
forth therein are not exclusive, and thereby contemplate that contracts may be
entered into between the Company and members of the Board, officers and other
persons with respect to indemnification;

     

    WHEREAS,
the uncertainties relating to such insurance and to indemnification have
increased the difficulty of attracting and retaining such persons;

     

    WHEREAS,
the Board has determined that the increased difficulty in attracting and
retaining such persons is detrimental to the best interests of the Company's
stockholders and that the Company should act to assure such persons that there
will be increased certainty of such protection in the future;

     

    WHEREAS,
it is reasonable, prudent and necessary for the Company contractually to
obligate itself to indemnify, and to advance expenses on behalf of, such persons
and certain affiliates of such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified;

     

    WHEREAS,
this Agreement is a supplement to and in furtherance of the certificate of
incorporation and the bylaws of the Company and any resolutions adopted pursuant
thereto, and shall not be deemed a substitute therefor, nor to diminish or
abrogate any rights of Indemnitee thereunder; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    WHEREAS,
Indemnitee does not regard the protection available under the Company's
certificate of incorporation, bylaws and insurance as adequate in the present
circumstances, and may not be willing to serve as a director without adequate
protection, and the Company desires Indemnitee to serve in such capacity. 
Indemnitee is willing to serve, continue to serve and to take on additional
service for or on behalf of the Company on the condition that Indemnitee and,
under certain circumstances, investment funds affiliated with Indemnitee be so
indemnified.

     

    NOW,
THEREFORE, in consideration of Indemnitee’s agreement to serve as a director
after the date hereof, the parties hereto agree as follows:

     

    1.          Indemnity of
Indemnitee.  The Company hereby agrees to hold harmless and
indemnify Indemnitee to the fullest extent permitted by law, as such may be
amended from time to time.  In furtherance of the foregoing
indemnification, and without limiting the generality thereof:

     

    (a)  
        Proceedings Other Than
Proceedings by or in the Right of the Company.  Indemnitee shall be
entitled to the rights of indemnification provided in this Section l(a) if, by
reason of Indemnitee’s Corporate Status (as hereinafter defined), the Indemnitee
is, or is threatened to be made, a party to or participant in any Proceeding (as
hereinafter defined) other than a Proceeding by or in the right of the
Company.  Pursuant to this Section 1(a),
Indemnitee shall be indemnified against all Expenses (as hereinafter defined),
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by Indemnitee, or on Indemnitee’s behalf, in connection with
such Proceeding or any claim, issue or matter therein, if the Indemnitee acted
in good faith and in a manner the Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, and with respect to any criminal
Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was
unlawful.

     

    (b)          Proceedings by or in the
Right of the Company.  Indemnitee shall be entitled to the rights of
indemnification provided in this Section 1(b) if, by
reason of Indemnitee’s Corporate Status, the Indemnitee is, or is threatened to
be made, a party to or participant in any Proceeding brought by or in the right
of the Company.  Pursuant to this Section 1(b),
Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with
such Proceeding if the Indemnitee acted in good faith and in a manner the
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company; provided, however, if applicable law so provides, no
indemnification against such Expenses shall be made in respect of any claim,
issue or matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company with respect to the matter claimed for
indemnification unless and to the extent that the Court of Chancery of the State
of Delaware or the court in which such action or suit was brought shall
determine that such indemnification may be made.

     

    (c)          Indemnification for Expenses
of a Party Who is Successful on the Merits or Otherwise. 
Notwithstanding and in addition to any other provision of this Agreement, to the
extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a party
to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee
shall be indemnified to the maximum extent permitted by applicable law, as such
may be amended from time to time, against all Expenses actually and reasonably
incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. 
If Indemnitee is not wholly successful in such Proceeding but is successful, on
the merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s
behalf in connection with each successfully resolved claim, issue or
matter.  For purposes of this Section and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.

     

    
      
         

      

      
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    (d)          Indemnification of
Appointing Stockholders.   If (i) Indemnitee is or was
affiliated with one or more investment or venture capital funds that have
invested directly or indirectly in the Company (each, an “Appointing
Stockholder” and collectively, the “Appointing
Stockholders”), including, without limitation, Ampersand 2001 Companion
Fund Limited Partnership, Ampersand 2001 Limited Partnership, Ampersand 2006
Limited Partnership and/or Capstone Ventures SBIC, L.P., and (ii) any
Appointing Stockholder is, or is threatened to be made, a party to or a
participant in any Proceeding, and (iii) such Appointing Stockholder’s
involvement in the Proceeding results from any claim based on the Indemnitee’s
service to the Company (or one or more of the Company’s predecessors,
subsidiaries or acquired companies) as a director or other fiduciary of the
Company (or one or more of the Company’s predecessors, subsidiaries or acquired
companies), the Appointing Stockholder will be entitled to indemnification
hereunder for Expenses to the same extent as Indemnitee, and the terms of this
Agreement as they relate to procedures for indemnification of Indemnitee and
advancement of Expenses shall apply to any such indemnification of Appointing
Stockholder.  The Company and
Indemnitee agree that the Appointing Stockholders are express third party
beneficiaries of the terms of this Section 1(d).

     

    2.          Additional
Indemnity.  In addition to, and without regard to any limitations
on, the indemnification provided for in Section 1 of this
Agreement, the Company shall and hereby does indemnify and hold harmless
Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s
behalf if, by reason of Indemnitee’s Corporate Status, he is, or is threatened
to be made, a party to or participant in any Proceeding (including, without
limitation, a Proceeding by or in the right of the Company), including, without
limitation, all liability arising out of the negligence or active or passive
wrongdoing of Indemnitee.  The only limitation that shall exist upon the
Company’s obligations pursuant to this Agreement shall be that the Company shall
not be obligated to make any payment to Indemnitee that is finally determined
(under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 of this Agreement)
to be unlawful.

     

    3. 
         Contribution.

     

    (a)          Whether
or not the indemnification provided in Sections 1 and 2 of this Agreement
is available, in respect of any threatened, pending or completed action, suit or
proceeding in which the Company is jointly liable with Indemnitee (or would be
if joined in such action, suit or proceeding), the Company shall pay, in the
first instance, the entire amount of any judgment or settlement of such action,
suit or proceeding without requiring Indemnitee to contribute to such payment
and the Company hereby waives and relinquishes any right of contribution it may
have against Indemnitee.  The Company shall not enter into any settlement
of any action, suit or proceeding in which the Company is jointly liable with
Indemnitee (or would be if joined in such action, suit or proceeding) unless
such settlement provides for a full and final release of all claims asserted
against Indemnitee.

     

    
      
         

      

      
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    (b)          Without
diminishing or impairing the obligations of the Company set forth in the
preceding subparagraph, if, for any reason, Indemnitee shall elect or be
required to pay all or any portion of any judgment or settlement in any
threatened, pending or completed action, suit or proceeding in which the Company
is jointly liable with Indemnitee (or would be if joined in such action, suit or
proceeding), the Company shall contribute to the amount of Expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred and paid
or payable by Indemnitee in proportion to the relative benefits received by the
Company and all officers, directors or employees of the Company, other than
Indemnitee, who are jointly liable with Indemnitee (or would be if joined in
such action, suit or proceeding), on the one hand, and Indemnitee, on the other
hand, from the events or transaction from which such action, suit or proceeding
arose; provided, however, that the proportion determined on the basis of
relative benefit may, to the extent necessary to conform to law, be further
adjusted by reference to the relative fault of the Company and all officers,
directors or employees of the Company other than Indemnitee who are jointly
liable with Indemnitee (or would be if joined in such action, suit or
proceeding), on the one hand, and Indemnitee, on the other hand, in connection
with the events or transaction that resulted in such Expenses, judgments, fines
or settlement amounts, as well as any other equitable considerations which
applicable law may require to be considered.  The relative fault of the
Company and all officers, directors or employees of the Company, other than
Indemnitee, who are jointly liable with Indemnitee (or would be if joined in
such action, suit or proceeding), on the one hand, and Indemnitee, on the other
hand, shall be determined by reference to, among other things, the degree to
which their actions were motivated by intent to gain personal profit or
advantage, the degree to which their liability is primary or secondary and the
degree to which their conduct is active or passive.

     

    (c)          The
Company hereby agrees to fully indemnify and hold Indemnitee harmless from any
claims of contribution which may be brought by officers, directors or employees
of the Company, other than Indemnitee, who may be jointly liable with
Indemnitee.

     

    (d) 
         To the fullest extent permissible under
applicable law, if the indemnification provided for in this Agreement is
unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of
indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee,
whether for judgments, fines, penalties, excise taxes, amounts paid or to be
paid in settlement and/or for Expenses, in connection with any claim relating to
an indemnifiable event under this Agreement, in such proportion as is deemed
fair and reasonable in light of all of the circumstances of such Proceeding in
order to reflect (i) the relative benefits received by the Company and
Indemnitee as a result of the event(s) and/or transaction(s) giving cause to
such Proceeding; and/or (ii) the relative fault of the Company (and its
directors, officers, employees and agents) and Indemnitee in connection with
such event(s) and/or transaction(s).

     

    4.          Indemnification for Expenses
of a Witness or in Response to a Subpoena.  Notwithstanding any
other provision of this Agreement, to the extent that (i) Indemnitee, by reason
of Indemnitee’s Corporate Status, is a witness, or receives a subpoena, in any
Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified
against all Expenses paid or incurred by Indemnitee in connection therewith and
in the manner set forth in this Agreement, and (ii) any Appointing Stockholder,
by reason of its affiliation with an Indemnitee, is a witness, or receives a
subpoena, in any proceeding involving the Company to which the Appointing
Stockholder is not a party, the Appointing Stockholder shall be indemnified
against all Expenses paid or incurred by it in connection therewith and in the
manner set forth in this Agreement.

     

    
      
         

      

      
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    5.          Advancement of
Expenses.  Notwithstanding any other provision of this Agreement,
the Company shall advance all Expenses incurred by or on behalf of Indemnitee in
connection with any Proceeding by reason of Indemnitee’s Corporate Status within
thirty (30) days after the receipt by the Company of a statement or statements
from Indemnitee requesting such advance or advances from time to time, whether
prior to or after final disposition of such Proceeding.  Such statement or
statements shall reasonably evidence the Expenses incurred by Indemnitee and
shall include or be preceded or accompanied by an undertaking by or on behalf of
Indemnitee to repay any Expenses advanced if it shall ultimately be determined
that Indemnitee is not entitled to be indemnified against such Expenses. 
Any advances and undertakings to repay pursuant to this Section 5 shall be
unsecured and interest free and made without regard to Indemnitee’s ability to
repay such advances.

     

    6.          Procedures and Presumptions
for Determination of Entitlement to Indemnification.  It is the
intent of this Agreement to secure for Indemnitee rights of indemnity that are
as favorable as may be permitted under the DGCL and public policy of the State
of Delaware.  Accordingly, the parties agree that the following procedures
and presumptions shall apply in the event of any question as to whether
Indemnitee is entitled to indemnification under this Agreement:

     

    (a)          To
obtain indemnification under this Agreement, Indemnitee shall submit to the
Company a written request, including therein or therewith such documentation and
information as is reasonably available to Indemnitee and is reasonably necessary
to determine whether and to what extent Indemnitee is entitled to
indemnification.  The Secretary of the Company shall, promptly upon receipt
of such a request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.

     

    (b)          Upon
written request by Indemnitee for indemnification pursuant to the first sentence
of Section 6(a)
of this Agreement, a determination, if required by applicable law, with respect
to Indemnitee’s entitlement thereto shall be made in the specific case by one of
the following four methods, which shall be at the election of the Board: 
(i) by a majority vote of the Disinterested Directors (as hereinafter defined),
even though less than a quorum, (ii) by a majority vote of a committee of
Disinterested Directors designated by a majority vote of the Disinterested
Directors, even though less than a quorum, or (iii) if there are no
Disinterested Directors or if the Disinterested Directors so direct, by
Independent Counsel (as hereinafter defined) in a written opinion to the Board,
a copy of which shall be delivered to the Indemnitee.

     

    
      
         

      

      
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    (c)          If
the determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 6(b) of this
Agreement, the Independent Counsel shall be selected as provided in this Section 6(c). 
The Independent Counsel shall be selected by the Board.  Indemnitee may,
within 10 days after such written notice of selection shall have been given,
deliver to the Company a written objection to such selection; provided, however,
that such objection may be asserted only on the ground that the Independent
Counsel so selected does not meet the requirements of “Independent Counsel” as
defined in this Agreement, and the objection shall set forth with particularity
the factual basis of such assertion.  Absent a proper and timely objection,
the person so selected shall act as Independent Counsel.  If a reasonable
written objection is made and substantiated, the Independent Counsel selected
may not serve as Independent Counsel unless and until such objection is
withdrawn or a court has determined that such objection is without merit. 
If, within 20 days after submission by Indemnitee of a written request for
indemnification pursuant to Section 6(a) of this
Agreement, no Independent Counsel shall have been selected and not objected to,
either the Company or Indemnitee may petition the Court of Chancery of the State
of Delaware or other court of competent jurisdiction for resolution of any
objection which shall have been made by the Indemnitee to the Company’s
selection of Independent Counsel and/or for the appointment as Independent
Counsel of a person selected by the court or by such other person as the court
shall designate, and the person with respect to whom all objections are so
resolved or the person so appointed shall act as Independent Counsel under Section 6(b) of this
Agreement.  The Company shall pay any and all reasonable fees and expenses
of Independent Counsel incurred by such Independent Counsel in connection with
acting pursuant to Section 6(b) of this
Agreement, and the Company shall pay all reasonable fees and expenses incident
to the procedures of this Section 6(c),
regardless of the manner in which such Independent Counsel was selected or
appointed.

     

    (d)          In
making a determination with respect to entitlement to indemnification hereunder,
the person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement.  Anyone
seeking to overcome this presumption shall have the burden of proof and the
burden of persuasion by clear and convincing evidence.  Neither the failure
of the Company (including by its directors or Independent Counsel) to have made
a determination prior to the commencement of any action pursuant to this
Agreement that indemnification is proper in the circumstances because Indemnitee
has met the applicable standard of conduct, nor an actual determination by the
Company (including by its directors or Independent Counsel) that Indemnitee has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that Indemnitee has not met the applicable standard of
conduct.

     

    (e)          Indemnitee
shall be deemed to have acted in good faith if Indemnitee’s action is based on:
(i) the records or books of account of the Enterprise (as hereinafter defined)
(including, without limitation, financial statements); (ii) information supplied
to Indemnitee by the officers of the Enterprise in the course of their duties;
(iii) the advice of legal counsel for the Enterprise: or (iv) information or
records given or reports made to the Enterprise by an independent certified
public accountant or by an appraiser or other expert selected with reasonable
care by the Enterprise.  In addition, the knowledge and/or actions, or
failure to act, of any director, officer, agent or employee of the Enterprise
shall not be imputed to Indemnitee for purposes of determining the right to
indemnification under this Agreement.  Whether or not the foregoing
provisions of this Section 6(e) are
satisfied, it shall in any event be presumed that Indemnitee has at all times
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company.  Anyone seeking to overcome
this presumption shall have the burden of proof and the burden of persuasion by
clear and convincing evidence.

     

    (f)          If
the person, persons or entity empowered or selected under this Section 6 to
determine whether Indemnitee is entitled to indemnification shall not have made
a determination within sixty (60) days after receipt by the Company of the
request therefor, the requisite determination of entitlement to indemnification
shall be deemed to have been made and Indemnitee shall be entitled to such
indemnification absent (i) a misstatement by Indemnitee of a material fact, or
an omission of a material fact necessary to make Indemnitee’s statement not
materially misleading, in connection with the request for indemnification, or
(ii) a prohibition of such indemnification under applicable law; provided,
however, that such 60-day period may be extended for a reasonable time, not to
exceed an additional thirty (30) days, if the person, persons or entity making
such determination with respect to entitlement to indemnification in good faith
requires such additional time to obtain or evaluate documentation and/or
information relating thereto.

     

    
      
         

      

      
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    (g)          Indemnitee
shall cooperate with the person, persons or entity making such determination
with respect to Indemnitee’s entitlement to indemnification, including providing
to such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected from
disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination.  Any Independent Counsel or member of the
Board of the Company shall act reasonably and in good faith in making a
determination regarding the Indemnitee’s entitlement to indemnification under
this Agreement.  Any Expenses incurred by Indemnitee in so cooperating with
the person, persons or entity making such determination shall be borne by the
Company (irrespective of the determination as to Indemnitee’s entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.

     

    (h)          The
Company acknowledges that a settlement or other disposition short of final
judgment may be successful if it permits a party to avoid expense, delay,
distraction, disruption and uncertainty.  In the event that any action,
claim or proceeding to which Indemnitee is a party is resolved in any manner
other than by adverse judgment against Indemnitee (including, without
limitation, settlement of such action, claim or proceeding with or without
payment of money or other consideration) it shall be presumed that Indemnitee
has been successful on the merits or otherwise in such action, suit or
proceeding.  Anyone seeking to overcome this presumption shall have the
burden of proof and the burden of persuasion by clear and convincing
evidence.

     

    (i)     
     The termination of any Proceeding or of any claim,
issue or matter therein, by judgment, order, settlement or conviction, or upon a
plea of nolo contendere or its equivalent, shall not (except as otherwise
expressly provided in this Agreement) of itself adversely affect the right of
Indemnitee to indemnification or create a presumption that Indemnitee did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any criminal
Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s
conduct was unlawful.

     

    7. 
         Remedies of
Indemnitee.

     

    (a)          In
the event that (i) a determination is made pursuant to Section 6 of this
Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this
Agreement, (iii) no determination of entitlement to indemnification is made
pursuant to Section
6(b) of this Agreement within ninety (90) days after receipt by the
Company of the request for indemnification, (iv) payment of indemnification is
not made pursuant to this Agreement within ten (10) days after receipt by the
Company of a written request therefor or (v) payment of indemnification is not
made within ten (10) days after a determination has been made that Indemnitee is
entitled to indemnification or such determination is deemed to have been made
pursuant to Section
6 of this Agreement, Indemnitee shall be entitled to an adjudication in
an appropriate court of the State of Delaware, or in any other court of
competent jurisdiction, of Indemnitee’s entitlement to such
indemnification.  Indemnitee shall commence such proceeding seeking
adjudication within one (1) year following the date on which Indemnitee first
has the right to commence such proceeding pursuant to this Section 7(a). 
The Company shall not oppose Indemnitee’s right to seek any such
adjudication.

     

    
      
         

      

      
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    (b)          In
the event that a determination shall have been made pursuant to Section 6(b) of this
Agreement that Indemnitee is not entitled to indemnification, any judicial
proceeding commenced pursuant to this Section 7 shall be
conducted in all respects as a de novo trial on the merits, and Indemnitee shall
not be prejudiced by reason of the adverse determination under Section 6(b) of this
Agreement.

     

    (c)          If
a determination shall have been made pursuant to Section 6(b) of this
Agreement that Indemnitee is entitled to indemnification, the Company shall be
bound by such determination in any judicial proceeding commenced pursuant to
this Section 7,
absent (i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee’s misstatement not materially
misleading in connection with the application for indemnification, or (ii) a
prohibition of such indemnification under applicable law.

     

    (d)          In
the event that Indemnitee, pursuant to this Section 7, seeks a
judicial adjudication of Indemnitee’s rights under, or to recover damages for
breach of, this Agreement, or to recover under any directors’ and officers’
liability insurance policies maintained by the Company, the Company shall pay on
Indemnitee’s behalf, in advance, any and all expenses (of the types described in
the definition of Expenses in this Agreement) actually and reasonably incurred
by Indemnitee in such judicial adjudication, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, advancement of
expenses or insurance recovery.

     

    (e)          The
Company shall be precluded from asserting in any judicial proceeding commenced
pursuant to this Section 7 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court that the Company is bound by
all the provisions of this Agreement.  The Company shall indemnify
Indemnitee against any and all Expenses and, if requested by Indemnitee, shall
(within ten (10) days after receipt by the Company of a written request
therefore) advance, to the extent not prohibited by law, such expenses to
Indemnitee, which are incurred by Indemnitee in connection with any action
brought by Indemnitee for indemnification or advance of Expenses from the
Company under this Agreement or under any directors' and officers' liability
insurance policies maintained by the Company, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, advancement of
Expenses or insurance recovery, as the case may be.

     

    (f)          Notwithstanding
anything in this Agreement to the contrary, no determination as to entitlement
to indemnification under this Agreement shall be required to be made prior to
the final disposition of the Proceeding.

     

    
      
         

      

      
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    8. 
         Non-Exclusivity; Survival of
Rights; Insurance; Subrogation.

    (a)          The
rights of indemnification as provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled
under applicable law, the certificate of incorporation and the bylaws of the
Company, any agreement, a vote of stockholders, a resolution of the Board or
otherwise.  No amendment, alteration or repeal of this Agreement or of any
provision of this Agreement shall limit or restrict any right of Indemnitee
under this Agreement in respect of any action taken or omitted by such
Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration
or repeal.  To the extent that a change in the DGCL, whether by statute or
judicial decision, permits greater indemnification than would be afforded
currently under the certificate of incorporation, the bylaws of the Company and
this Agreement, it is the intent of the parties hereto that Indemnitee shall
enjoy by this Agreement the greater benefits so afforded by such change. 
No right or remedy herein conferred is intended to be exclusive of any other
right or remedy, and every other right and remedy shall be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise.  The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other right or remedy.

     

    (b)          To
the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, employees, or agents or fiduciaries
of the Company or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise that such person serves at the request
of the Company, the Company shall obtain coverage for Indemnitee under such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any director, officer, employee, agent or
fiduciary under such policy or policies.  If, at the time of the receipt of
a notice of a claim pursuant to the terms of this Agreement, the Company has
director and officer liability insurance in effect, the Company shall give
prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies.  The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of
such proceeding in accordance with the terms of such policies.

     

    (c)          The
Company hereby acknowledges that Indemnitee may have certain rights to
indemnification, advancement of expenses and/or insurance provided by one or
more of the Appointing Stockholders (collectively, the “Fund
Indemnitors”).  The Company hereby agrees that it: (i) is the
indemnitor of first resort (i.e., its obligations to Indemnitee are primary and
any obligation of the Fund Indemnitors to advance expenses or to provide
indemnification for the same expenses or liabilities incurred by Indemnitee are
secondary); (ii) shall be required to advance the full amount of Expenses
incurred by Indemnitee and shall be liable for the full amount of all Expenses,
judgments, penalties, fines and amounts paid in settlement to the extent legally
permitted and as required by the terms of this Agreement and the certificate of
incorporation or bylaws of the Company (or any other agreement between the
Company and Indemnitee), without regard to any rights Indemnitee may have
against the Fund Indemnitors; and (iii) irrevocably waives, relinquishes and
releases the Fund Indemnitors from any and all claims against the Fund
Indemnitors for contribution, subrogation or any other recovery of any kind in
respect thereof.  The Company further agrees that no advancement or payment
by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for
which Indemnitee has sought indemnification from the Company shall affect the
foregoing and that the Fund Indemnitors shall have a right of contribution
and/or be subrogated to the extent of such advancement or payment to all of the
rights of recovery of Indemnitee against the Company.  The Company and
Indemnitee agree that the Fund Indemnitors are express third party beneficiaries
of this Section 8(c).

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (d)          Except
as provided in paragraph (c) above, in the event of any payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee (other than against the Fund
Indemnitors), who shall execute all papers required and take all action
necessary to secure such rights, including execution of such documents as are
necessary to enable the Company to bring suit to enforce such
rights.

     

    (e)          Except
as provided in paragraph (c) above, the Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder if
and to the extent that Indemnitee has otherwise actually received such payment
under any insurance policy, contract, agreement or otherwise.

     

    (f)          Except
as provided in paragraph (c) above, the Company's obligation to indemnify or
advance Expenses hereunder to Indemnitee who is or was serving at the request of
the Company as a director, an officer, an employee, an agent or a fiduciary of
any other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise shall be reduced by any amount Indemnitee has actually
received as indemnification or advancement of expenses from such other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise.

     

    9.          Exception to Right of
Indemnification. Notwithstanding any provision in this Agreement, the
Company shall not be obligated under this Agreement to make any indemnity in
connection with any claim made against Indemnitee:

     

    (a)          for
which payment has actually been made to or on behalf of Indemnitee under any
insurance policy or other indemnity provision, except with respect to any excess
beyond the amount paid under any insurance policy or other indemnity provision,
provided, that the foregoing shall not affect the rights of Indemnitee or the
Fund Indemnitors set forth in Section 8(c) above; or

     

    (b)          for
an accounting of profits made from the purchase and sale (or sale and purchase)
by Indemnitee of Company securities pursuant to Section 16(b) of the
Securities Exchange Act of 1934, as amended, or similar provisions of state
statutory law or common law; or

     

    (c)          subject
to Section 7(d), in connection with any Proceeding (or any part of any
Proceeding) initiated by Indemnitee (including, without limitation, any
Proceeding (or any part of any Proceeding) initiated by Indemnitee against the
Company or its directors, officers, employees or other indemnitees), unless (i)
the Board authorized the Proceeding (or any part of any Proceeding) prior to its
initiation or (ii) the Company provides the indemnification, in its sole
discretion, pursuant to the powers vested in the Company under applicable
law.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    10.        Duration of
Agreement.  All agreements and obligations of the Company contained
herein shall continue during the period Indemnitee is a director of the Company
(or is or was serving at the request of the Company as a director, an officer,
an employee, an agent or a fiduciary of another corporation, partnership, joint
venture, trust or other enterprise) and shall continue thereafter for (i) an
additional three (3) years or (ii) so long as Indemnitee or any Appointing
Stockholder shall be subject to any Proceeding (or any proceeding commenced
under Section 7
of this Agreement) in respect of which indemnification can be provided under
this Agreement by reason of Indemnitee’s Corporate Status, whether or not
Indemnitee is acting or serving in any such capacity at the time any liability
or Expense is incurred for which indemnification can be provided under this
Agreement, whichever such additional term is longer.  This Agreement shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors (including, without limitation, any
direct or indirect successor by purchase, merger, consolidation or otherwise to
all or substantially all of the business or assets of the Company), assigns,
spouses, heirs, executors and personal and legal representatives.

     

    11.        Security.  To
the extent requested by Indemnitee and approved by the Board, the Company may at
any time and from time to time provide security to Indemnitee for the Company’s
obligations hereunder through an irrevocable bank line of credit, funded trust
or other collateral.  Any such security, once provided to Indemnitee, may
not be revoked or released without the prior written consent of the
Indemnitee.

     

    12. 
       Enforcement.

     

    (a)          The
Company expressly confirms and agrees that it has entered into this Agreement
and assumes the obligations imposed on it hereby in order to induce Indemnitee
to serve as a director of the Company, and the Company acknowledges that
Indemnitee is relying upon this Agreement in serving as a director and/or an
officer of the Company.

     

    (b)          This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter of this Agreement and supersedes all prior
agreements and understandings, oral, written and implied, between the parties
hereto with respect to the subject matter of this Agreement.

     

    (c)          The
Company shall not seek from a court, or agree to, a "bar order" which would have
the effect of prohibiting or limiting the Indemnitee's rights to receive
advancement of expenses under this Agreement.

     

    13. 
       Definitions. 
For purposes of this Agreement:

     

    (a)          “Corporate Status”
means the status of a person who is or was a director or an officer of the
Company, or is or was a director, an officer, an employee, an agent or a
fiduciary of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise that such person is or was serving at the
express written request of the Company.

     

    (b)          “Disinterested
Director” means a director of the Company who is not and was not a party
to the Proceeding in respect of which indemnification is sought by
Indemnitee.

     

    (c)          “Enterprise” means the
Company and any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise that Indemnitee is or was serving at the
express written request of the Company as a director, an officer, an employee,
an agent or a fiduciary.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (d)          “Expenses” means all
reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of
experts, witness fees, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees and all other
disbursements or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating,
participating, or being or preparing to be a witness in a Proceeding. 
Expenses also shall include Expenses incurred in connection with any appeal
resulting from any Proceeding, including, without limitation, the premium,
security for, and other costs relating to any cost bond, supersede as bond, or
other appeal bond or its equivalent.  Expenses, however, shall not include
amounts paid in settlement by Indemnitee or the amount of judgments or fines
against Indemnitee.

     

    (e)          “Independent Counsel”
means a law firm, or a member of a law firm, that is experienced in matters of
corporation law and neither presently is, nor in the past five years has been,
retained to represent:  (i) the Company or Indemnitee in any matter
material to either such party (other than with respect to matters concerning
Indemnitee under this Agreement, or of other indemnitees under similar
indemnification agreements), or (ii) any other party to the Proceeding giving
rise to a claim for indemnification hereunder.  Notwithstanding the
foregoing, the term “Independent Counsel” shall not include any person who,
under the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or Indemnitee in
an action to determine Indemnitee’s rights under this Agreement.  The
Company agrees to pay the reasonable fees of the Independent Counsel referred to
above and to fully indemnify such counsel against any and all Expenses, claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.

     

    (f)          “Proceeding” means any
threatened, pending or completed action, suit, arbitration, alternate dispute
resolution mechanism, investigation, inquiry, administrative hearing or any
other actual, threatened or completed proceeding, whether brought by or in the
right of the Company or otherwise and whether civil, criminal, administrative or
investigative, in which Indemnitee was, is or will be involved as a party or
otherwise, by reason of the fact that Indemnitee is or was a director or an
officer of the Company, by reason of any action taken by Indemnitee or of any
inaction on Indemnitee’s part while acting as a director or an officer of the
Company, or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a director, an officer, an employee, an agent or a
fiduciary of another corporation, partnership, joint venture, trust or other
Enterprise; in each case whether or not Indemnitee is acting or serving in any
such capacity at the time any liability or Expense is incurred for which
indemnification can be provided under this Agreement; but excluding any such
proceeding initiated by an Indemnitee pursuant to Section 7 of this
Agreement to enforce Indemnitee’s rights under this Agreement.

     

    14.     
   Severability. 
The invalidity or unenforceability of any provision of this Agreement shall in
no way affect the validity or enforceability of any other provision. 
Further, the invalidity or unenforceability of any provision hereof as to either
Indemitee or Appointing Stockholder shall in no way affect the validity or
enforceability of any provision hereof as to the other.  Without limiting
the generality of the foregoing, this Agreement is intended to confer upon
Indemnitee and the Appointing Stockholders indemnification rights to the fullest
extent permitted by applicable laws.  In the event any provision of this
Agreement conflicts with any applicable law, such provision shall be deemed
modified, consistent with the aforementioned intent, to the extent necessary to
resolve such conflict.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    15.        Modification and
Waiver.  No supplement, modification, termination or amendment of
this Agreement shall be binding unless executed in writing by all of the parties
hereto.  No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions of this Agreement
(whether or not similar) nor shall such waiver constitute a continuing
waiver.

     

    16.        Notice by Indemnitee or
Appointing Stockholder.  Indemnitee agrees, and agrees to cause its
affiliated Appointing Stockholder, promptly to notify the Company in writing
upon being served with or otherwise receiving any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification covered hereunder.  The
failure to so notify the Company shall not relieve the Company of any obligation
which it may have to Indemnitee or any Appointing Stockholder under this
Agreement or otherwise unless and only to the extent that such failure or delay
materially prejudices the Company.

     

    17.        Notices.  All
notices and other communications given or made pursuant to this Agreement shall
be in writing and shall be deemed effectively given:  (a) upon personal
delivery to the party to be notified, (b) when sent by confirmed electronic mail
or facsimile if sent during normal business hours of the recipient, and if not
so confirmed, then on the next business day, (c) five (5) days after having been
sent by registered or certified mail, return receipt requested, postage prepaid,
or (d) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt.  All
communications shall be sent:

     

    (a)          To
Indemnitee at his or her address set forth on the signature page
hereto.

     

    
      	
               
      

            	
              (b)

            	
              To
      the Company at:

            

    

     

    Avatech
Solutions, Inc.

    10715 Red
Run Boulevard, Suite 101

    Owings
Mills, MD 21117

    Attention:
Corporate Secretary

     

    or to
such other address as may have been furnished to Indemnitee by the Company or to
the Company by Indemnitee, as the case may be.

     

    18.        Counterparts. 
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same Agreement.  This Agreement may also be executed and delivered by
facsimile signature and in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

     

    19.        Headings.  The
headings of the paragraphs of this Agreement are inserted for convenience only
and shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    20.        Governing Law and Consent to
Jurisdiction.  This Agreement and the legal relations among the
parties shall be governed by, and construed and enforced in accordance with, the
laws of the State of Delaware, without regard to its conflict of laws rules. The
parties hereto hereby irrevocably and unconditionally (i) agree that any action
or proceeding arising out of or in connection with this Agreement shall be
brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and
not in any other state or federal court in the United States of America or any
court in any other country, (ii) consent to submit to the exclusive jurisdiction
of the Delaware Court for purposes of any action or proceeding arising out of or
in connection with this Agreement, (iii) appoint, to the extent such party is
not otherwise subject to service of process in the State of Delaware,
irrevocably The Corporation Trust Company, 1209 Orange Street, Wilmington,
Delaware 19801 as its agent in the State of Delaware as such party’s agent for
acceptance of legal process in connection with any such action or proceeding
against such party with the same legal force and validity as if served upon such
party personally within the State of Delaware, (iv) waive any objection to the
laying of venue of any such action or proceeding in the Delaware Court, and (v)
waive, and agree not to plead or to make, any claim that any such action or
proceeding brought in the Delaware Court has been brought in an improper or
inconvenient forum.  The Company shall use its reasonable best efforts to
ensure that The Corporation Trust Company maintains a current mail and e-mail
address for Indemnitee so it can promptly notify the Indemnitee of any action it
undertakes on behalf of the Indemnitee under (iii) above.  The Company
shall bear the cost of engaging The Corporation Trust Company to act as agent
for service of process for Indemnitee and any related costs or
expenses.

     

    [Remainder
of page intentionally left blank; signature page follows.]

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties hereto
have executed this Agreement on and as of the day and year first above
written.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	 
      	
                                  COMPANY

                                
	 
      	 
      
	 
      	
                                  AVATECH
      SOLUTIONS, INC.

                                
	 
      	 
      
	 
      	
                                  By:

                                	
                                    

                                
	 
      	
                                  Name:

                                
	 
      	
                                  Title:

                                
	 
      	 
      
	 
      	
                                  INDEMNITEE

                                
	 
      	 
      
	 
      	
                                     

                                
	 
      	
                                  [________]

                                
	 
      	 
      
	 
      	
                                  Address:

                                
	 
      	
                                  [________]

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    [Signature
page to Director Indemnification Agreement]Exhibit
10.2

    

    REGISTRATION
RIGHTS AGREEMENT

     

    BY
AND AMONG

     

    AVATECH
SOLUTIONS, INC.

     

    AND

     

    RWWI
HOLDINGS LLC

     

    
      
        

      

    

     

    Dated as
of August 17, 2010

     

      
        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

    

    
      
        
          
            	 
      	 
      	 
      	
                    Page

                  
	 
      	 
      	 
      	 
      
	
                    SECTION
      1.

                  	
                    CERTAIN
      DEFINITIONS

                  	 
      	
                      1

                  
	
                    SECTION
      2.

                  	
                    DEMAND
      REGISTRATION

                  	 
      	
                      4

                  
	
                    SECTION
      3.

                  	
                    PIGGYBACK
      EVENTS

                  	 
      	
                      6

                  
	
                    SECTION
      4.

                  	
                    SHELF
      REGISTRATION

                  	 
      	
                      7

                  
	
                    SECTION
      5.

                  	
                    SUSPENSION
      PERIODS

                  	 
      	
                      8

                  
	
                    SECTION
      6.

                  	
                    REGISTRATION
      PROCEDURES

                  	 
      	
                      8

                  
	
                    SECTION
      7.

                  	
                    REGISTRATION
      EXPENSES

                  	 
      	
                    13

                  
	
                    SECTION
      8.

                  	
                    INDEMNIFICATION

                  	 
      	
                    13

                  
	
                    SECTION
      9.

                  	
                    SECURITIES
      ACT RESTRICTIONS

                  	 
      	
                    15

                  
	
                    SECTION
      10.

                  	
                    TRANSFERS
      OF RIGHTS

                  	 
      	
                    15

                  
	
                    SECTION
      11.

                  	
                    MISCELLANEOUS

                  	 
      	
                    15

                  
	
                    ANNEX
      A – Plan of Distribution

                  	 
      	
                    A-1

                  
	
                    ANNEX
      B – Selling Securityholder Notice and Questionnaire

                  	 
      	
                    B-1

                  

          

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), is made
and entered into as of August 17, 2010, by and between Avatech Solutions, Inc.,
a Delaware corporation (the “Company”), and RWWI
Holdings LLC, a Delaware limited liability company (the “Investor”).

     

    WHEREAS,
on August 17, 2010, the Company, a wholly owned subsidiary of the Company
(“Merger Sub”),
Rand Worldwide, Inc. (“Merger Partner”) and
the Investor entered into an Agreement and Plan of Merger (the “Merger Agreement”),
pursuant to which upon consummation Merger Partner shall merge (the “Merger”) with Merger
Sub and be the surviving corporation, and the Company shall issue shares of its
Common Stock, par value  $0.01 per share (the “Common Shares”) as
the merger consideration to the Investor (the “Merger
Shares”),

     

    WHEREAS,
a condition to the consummation of the Merger is that the Company concurrently
enter into this Agreement with the Investor with respect to registration
rights,

     

    WHEREAS,
on August 17, 2010, the Merger was consummated and the Company issued an
aggregate of 34,232,682 Merger Shares to the Investor, and, as of the date
hereof, the Company and the Investor desire to enter into this
Agreement,

     

    NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valid consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:

     

    Section
1.             Certain
Definitions.

     

    In
addition to the terms defined elsewhere in this Agreement, the following terms
shall have the following meanings:

     

    “Affiliate” of any
Person means any other Person which directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such Person.  The term “control” (including the terms “controlling,”
“controlled” and “under common control with”) as used with respect to any Person
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

     

    “Agreement” means this
Registration Rights Agreement, including all amendments, modifications and
supplements and any exhibits or schedules to any of the foregoing, and shall
refer to this Registration Rights Agreement as the same may be in effect at the
time such reference becomes operative.

     

    “beneficially own”
means, with respect to any Person, securities of which such Person or any of
such Person’s Affiliates, directly or indirectly, has “beneficial ownership” as
determined pursuant to Rule 13d-3 and Rule 13d-5 of the Exchange Act,
including securities beneficially owned by others with whom such Person or any
of its Affiliates has agreed to act together for the purpose of acquiring,
holding, voting or disposing of such securities; provided that a Person shall
not be deemed to “beneficially own” (i) securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person’s Affiliates
until such tendered securities are accepted for payment, purchase or exchange,
or (ii) any security as a result of an oral or written agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (a) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable provisions of the Exchange Act, and
(b) is not also then reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor report).  Without
limiting the foregoing, a Person shall be deemed to be the beneficial owner of
all Registrable Shares owned of record by any majority-owned subsidiary of such
Person.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Closing Date” has the
meaning set forth in the Merger Agreement.

     

    “Common Shares” has
the meaning set forth in the first Recital hereto.

     

    “Company” has the
meaning set forth in the introductory paragraph.

     

    “Demand Registration”
has the meaning set forth in Section 2(a).

     

    “Demand Registration
Statement” has the meaning set forth in Section 2(a).

     

    “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

     

    “Form S-3 means a
registration statement on Form S-3 under the Securities Act or such
successor forms thereto permitting registration of securities under the
Securities Act.

     

    “Governmental Entity”
means any national, federal, state, municipal, local, territorial, foreign or
other government or any department, commission, board, bureau, agency,
regulatory authority or instrumentality thereof, or any court, judicial,
administrative or arbitral body or public or private tribunal.

     

    “Investor” has the
meaning set forth in the introductory paragraph.

     

    “Investor’s Counsel”
has the meaning set forth in Section 6(a)(i).

     

    “Merger Shares” has
the meaning set forth in the first Recital hereto.

     

    “Minimum Amount” means
Three Million Dollars ($3,000,000).

     

    “Person” means any
individual, sole proprietorship, partnership, limited liability company, joint
venture, trust, incorporated organization, association, corporation,
institution, public benefit corporation, Governmental Entity or any other
entity.

     

    “Piggyback Event” has
the meaning set forth in Section 3(a).

     

    “Prospectus” means the
prospectus or prospectuses (whether preliminary or final) included in any
Registration Statement and relating to Registrable Shares, as amended or
supplemented and including all material incorporated by reference in such
prospectus or prospectuses.

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    “Registrable Shares”
means, at any time, (i) the Merger Shares held of record by the Investor at
such time and (ii) any securities issued by the Company after the date
hereof in respect of the Shares referred to in clause (i) by way of a share
dividend or share split or other distribution thereon or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization, but excluding all such Common Shares and such other securities
held by the Investor at a time when such securities are eligible for resale by
the Investor pursuant to Rule 144 under the Securities Act without limitation
thereunder on volume or manner of sale.

     

    “Registration
Expenses” has the meaning set forth in Section 7(a).

     

    “Registration
Statement” means any registration statement of the Company which covers
any of the Registrable Shares pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all documents
incorporated by reference in such Registration Statement.

     

    “SEC” means the
Securities and Exchange Commission or any successor agency.

     

    “Securities Act” means
the Securities Act of 1933, as amended.

     

    “Shares” means any of
the Common Shares.  If at any time Registrable Shares include
securities of the Company other than Common Shares, then, when referring to
Shares other than Registrable Shares, “Shares” shall include the class or
classes of such other securities of the Company.

     

    “Shelf Registration”
has the meaning set forth in Section 4(a).

     

    “Shelf Registration
Statement” has the meaning set forth in Section 4(a).

     

    “Shelf Takedown” has
the meaning set forth in Section 3(a).

     

    “Suspension Period”
has the meaning set forth in Section 5.

     

    “Termination Date”
means the first date on which the Investor no longer owns any Registrable
Shares.

     

    “underwritten
offering” means a registered offering in which securities of the Company
are sold to one or more underwriters on a firm-commitment basis for reoffering
to the public, and “underwritten Shelf
Takedown” means an underwritten offering effected pursuant to a Shelf
Registration.

     

    In
addition to the above definitions, unless the context requires
otherwise:

     

    (i)           any
reference to any statute, regulation, rule or form as of any time shall mean
such statute, regulation, rule or form as amended or modified and shall also
include any successor statute, regulation, rule or form from time to
time;

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    (ii)          “including”
shall be construed as inclusive without limitation, in each case notwithstanding
the absence of any express statement to such effect, or the presence of such
express statement in some contexts and not in others;

     

    (iii)         references
to “Section” are references to Sections of this Agreement;

     

    (iv)         words
such as “herein”, “hereof”, “hereinafter” and “hereby” when used in this
Agreement refer to this Agreement as a whole;

     

    (v)    
     references to “business day” mean a business day
in The City of Boston, Massachusetts; and

     

    (vi)         references
to “dollars” and “$” mean U.S. dollars.

     

    Section
2.             Demand
Registration.

     

    (a)          Right to Request
Registration.  The following demand registration rights will
apply only if the Company fails to provide the resale registration rights set
forth in Section 4, as follows:  Subject to the provisions hereof and
until the Termination Date, if the Company has not filed, caused to be declared
effective, and maintained the effectiveness of a Shelf Registration Statement,
then the Investor may request in writing registration for resale under the
Securities Act of all or part of its Registrable Shares (a “Demand
Registration”); provided, however, that (based on the
then-current market prices) the Company shall have no obligations under this
Section 2(a) unless the number of Registrable Shares included in the Demand
Registration would, if fully sold, reasonably be expected to yield gross
proceeds of at least the Minimum Amount.  Subject to Section 2(d)
and Section 5 below, the Company shall use reasonable best efforts
(i) to file a Registration Statement registering for resale such number of
Registrable Shares as requested to be so registered pursuant to this
Section 2(a) (a “Demand Registration
Statement”) within twenty (20) days after the Investor’s request therefor
if such registration is to be effected using a Form S-3 and within forty (40)
days after the Investor’s request therefor in all other cases and (ii) to use
reasonable best efforts to cause such Demand Registration Statement to be
declared effective by the SEC as soon thereafter as is practicable.

     

    (b)          Number of Demand
Registrations.  Subject to the limitations of
Sections 2(a) and 2(d) below, until the Termination Date the Investor shall
be entitled to request, in the aggregate, three (3) Demand Registrations under
this Agreement but in no event more than one (1) Demand Registration in any
rolling period of 180 days.  A Registration Statement shall count as a
permitted Demand Registration only if and when it has become effective and the
Investor is able to register and sell the Registrable Shares requested to be
included in such registration under such Registration Statement.

     

    (c)          Priority on Demand
Registrations.  The Company shall not include Shares or other
securities of the Company other than Registrable Shares in a Demand
Registration.

     

    (d)          Restrictions on Demand
Registrations.  Notwithstanding anything to the contrary
contained in this Section 2, the Company shall not be obligated to proceed with
a Demand Registration if the offering to be effected pursuant to such
registration can be effected at that time pursuant to a then currently effective
Shelf Registration previously filed by the Company in accordance with
Section 4.

    
      
         

      

      
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    (e)          Underwritten
Offerings.  At the request of the Investor, the Company shall
use reasonable best efforts to cause a Demend Registration to be an underwritten
offering, but only if (i) the number of Registrable Shares to be sold in the
offering would reasonably be expected to yield gross proceeds of at least the
Minimum Amount (based on then-current market prices), and (ii) the request is
made more than sixty (60) days after the Investor has sold Shares in another
underwritten registered offering pursuant to Section 2 or Section 4
hereof.  If any of the Registrable Shares covered by a Demand
Registration are to be sold in an underwritten offering, then the Investor shall
have the right to select the managing underwriter or underwriters to lead the
offering, subject to the Company’s consent, not to be unreasonably withheld,
conditioned or delayed.

     

    (f)          Effective Period of Demand
Registrations.  Upon the date of effectiveness of any Demand
Registration for an underwritten offering (the “Effective Date”) and
if such offering is priced promptly on or after the Effective Date, the Company
shall use reasonable best efforts to keep such Demand Registration Statement
effective for a period (the “Effective Period”)
equal to the lesser of (i) one hundred twenty (120) days from the Effective Date
or (ii) that number of days between the Effective Date and the date on which all
of the Registrable Shares covered by such Demand Registration have been sold by
the Investor pursuant to such Demand Registration.  If the Company
withdraws any Demand Registration pursuant to Section 5 before the
expiration of the Effective Period and before all of the Registrable Shares
covered by such Demand Registration have been sold pursuant thereto, then the
Investor shall be entitled to a replacement Demand Registration which shall be
subject to all of the provisions of this Agreement.  A Demand
Registration shall not count against the limit on the number of such
registrations set forth in Section 2(b) if (i) after the applicable
Registration Statement has become effective, such Registration Statement or the
related offer, sale or distribution of Registrable Shares thereunder becomes the
subject of any stop order, injunction or other order or restriction imposed by
the SEC or any other governmental agency or court for any reason not directly
attributable to the Investor or its Affiliates (other than the Company and its
controlled Affiliates) and such interference is not thereafter eliminated so as
to permit the completion of the contemplated distribution of Registrable Shares
or (ii) in the case of an underwritten offering, the conditions specified
in the related underwriting agreement, if any, are not satisfied or waived for
any reason not directly attributable to the Investor or its Affiliates (other
than the Company and its controlled Affiliates), and as a result of any such
circumstances described in clause (i) or (ii), less than all of the
Registrable Shares covered by the Registration Statement are sold by the
Investor pursuant to such Registration Statement.

    
      
         

      

      
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    Section
3.             Piggyback
Events.

     

    (a)          Right to
Piggyback.  Whenever prior to the Termination Date the Company
proposes (i) to register any Shares under the Securities Act (other than on a
registration statement on Form S-8, F-8, S-4 or F-4), whether for its own
account or for the account of one or more holders of Shares, and the form of
registration statement to be used may be used for any registration of
Registrable Shares or (ii) to sell Shares that have already been registered “off
the shelf” by means of a prospectus supplement (a “Shelf Takedown”)
(each a “Piggyback
Event”), the Company shall give prompt written notice to the Investor of
its intention to effect such a registration and/or Shelf Takedown and, subject
to Sections 3(b) and 3(c), shall include in such registration statement and
in any offering of Shares to be made pursuant to that registration statement
and/or Shelf Takedown all Registrable Shares with respect to which the Company
has received a written request for inclusion therein from the Investor within
twenty (20) days after the Investor’s receipt of the Company’s notice
(provided that only
Registrable Shares of the same class or classes as the Shares being registered
and/or taken-down may be included).  The Company shall have no
obligation to proceed with any Piggyback Event and may abandon, terminate and/or
withdraw such registration and/or Shelf Takedown for any reason at any time
prior to the pricing thereof.  If the Company proposes to register an
offering of any Shares for cash by the Company or for the account of any Person
other than the Investor in an underwritten offering pursuant to a registration
statement under the Securities Act (other than on a registration statement on
Form S-8, F-8, S-4 or F-4), such offering shall be treated as a primary or
secondary underwritten offering pursuant to a Piggyback Event.

     

    (b)          Priority on Primary
Piggyback Events.  If a Piggyback Event is initiated as a
primary underwritten offering on behalf of the Company and the managing
underwriter(s) advise the Company and the Investor that in their opinion the
number of Shares proposed to be included in such offering exceeds the number of
Shares (of any class) which can be sold in such offering without materially
delaying or jeopardizing the success of the offering (including the price per
share of the Shares proposed to be sold in such offering), the Company shall
include in such registration and offering (i) first, the number of Shares
that the Company proposes to sell and (ii) second, the number of Shares
requested to be included therein by the Investor; provided that the
number of Registrable Shares permitted to be included therein shall in any event
be at least 50% of the total securities included therein.

     

    (c)          Priority on Secondary
Registrations.  If a Piggyback Event is initiated as an
underwritten registration on behalf of a holder of Shares, and the managing
underwriter(s) advise the Company that in their opinion the number of Shares
proposed to be included in such registration exceeds the number of Shares (of
any class) (the “Secondary Maximum Number of
Shares”) which can be sold in such offering without materially delaying
or jeopardizing the success of the offering (including the price per share of
the Shares to be sold in such offering), then the Company shall include in such
registration (i) first, the number of Shares requested to be included
therein by holder(s) requesting such registration, (ii) second, the number
of Shares requested to be included therein by the Investor, and
(iii) third, the number of Shares that the Company proposes to sell; provided that the number of
Registrable Shares permitted to be included therein shall in any event be at
least 50% of the total securities included therein.

     

    (d)          Selection of
Underwriters.  If any Piggyback Event is a primary or secondary
underwritten offering, the Company (or if the Person or Persons initiating the
Piggyback Event in the context of a secondary underwritten offering have such
right, such Person(s)) shall have the right to select the managing underwriter
or underwriters to administer any such offering.

     

    (e)          Basis of
Participations.  The Investor may not sell Registrable Shares
in any offering on account of a Piggyback Event unless it (a) agrees to
sell such Shares on the basis provided in the underwriting or other distribution
arrangements approved by the Company and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements,
lockups and other documents reasonably required of other participants under the
terms of such arrangements.

    
      
         

      

      
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    Section
4.             Shelf
Registration.

     

    (a)          Shelf
Registration.  The Company shall (i) file with the SEC a
Registration Statement on Form S-3 (except if the Company is not then
eligible to register for resale the Registrable Shares on Form S-3, in which
case such registration shall be on another appropriate form in accordance
herewith (it being understood by the parties hereto that at the date of this
Agreement, the Company is not eligible to register for resale the Registrable
Shares on Form S-3)), with a “Plan of Distribution” substantially in the form
set forth as Annex
A (a “Shelf
Registration Statement”), for a public offering of all or such portion of
the Registrable Shares designated by any Investor pursuant to Rule 415
promulgated under the Securities Act or otherwise (a “Shelf Registration”)
as soon as is practicable, but no later than seventy-five (75) calendar days
from the Closing Date and (ii) use reasonable best efforts to cause such
Shelf Registration Statement to be declared effective as soon as is practicable
following the Closing Date and to thereafter remain effective.  The
Shelf Registration Statement shall only include Registrable
Shares.  Subject to Section 5 hereof and any applicable Lock-up
Agreement, the Investor shall be entitled to sell its Registrable Shares at any
time and in any amount in accordance with any of the sale methods set forth in
the “Plan of Distribution” section. However, in the case of a Shelf Takedown
from the Shelf Registration Statement (an “Investor Shelf
Takedown”), the provisions of Section 4(b), (c) and (d) shall govern, as
applicable.

     

    (b)          Right to Effect Shelf
Takedowns.  The Investor shall be entitled, at any time and
from time to time when a Shelf Registration Statement is effective to sell such
Registrable Shares as are then registered pursuant to an Investor Shelf
Takedown, but only upon not less than two (2) business days’ prior written
notice to the Company, during which period the Company shall be entitled to
implement a Suspension Period to the extent then permitted pursuant to
Section 5.  The Investor shall give the Company prompt written
notice of the consummation of each Investor Shelf Takedown (whether or not
underwritten).  For the avoidance of doubt, the parties agree that an
Investor Shelf Takedown is a non-exclusive means to effectuate the offer and
sale of Registrable Shares under the Shelf Registration
Statement.  Subject to Section 5 hereof, the Investor shall have the
benefit of all the selling means permitted in the Shelf Registration Statement
“Plan of Distribution,” including those that do not constitute Investor Shelf
Takedowns (and therefore are not subject to Sections 4(b) and (c) hereof)
because they are offerings that do not require the filing of a prospectus
supplement based on the existing disclosure in the “Plan of Distribution”, such
as ordinary brokerage transactions in the open market (the foregoing being only
an example).

     

    (c)          Underwritten Shelf
Takedowns.  The Investor shall be entitled to, in the
aggregate, six (6) underwritten Investor Shelf Takedown(s) under this Agreement,
but only if (i) the number of Registrable Shares to be sold in the offering
would reasonably be expected to yield gross proceeds to the Investor of at least
the Minimum Amount (based on then-current market prices), and (ii) without the
Company’s consent, such consent not to be unreasonably withheld, conditioned or
delayed, the request is made more than sixty (60) days after the Investor has
sold Shares in another underwritten registered offering pursuant to Section 2 or
Section 4 hereof.  For the avoidance of doubt, the if the Company uses
reasonable best efforts to cause an offering to be underwritten, the Company
shall not be in breach of this Section 4(c) because of its inability to cause
such offering to be underwritten.

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    (d)          Selection of
Underwriters.  In connection with an underwritten Investor
Shelf Takedown, the Investor shall have the right to select the managing
underwriter or underwriters to lead the offering, subject to the Company’s
consent, not to be unreasonably withheld.

     

    (e)          Effective Period of Shelf
Registrations.  Subject to Section 5 of this Agreement,
the Company shall use reasonable best efforts to keep any Shelf Registration
Statement continuously effective until the Termination Date.

     

    Section
5.             Suspension
Periods

     

    (a)          Suspension
Periods.  The Company may delay the filing or
effectiveness of, or by written notice to the Investor suspend the use of, a
Registration Statement in conjunction with a Demand Registration or a Shelf
Registration (and, if reasonably required, withdraw any registration statement
that has been filed), but in each such case only if the board of directors of
the Company determines in good faith that (x) such delay would enable the
Company to avoid disclosure of material information, the disclosure of which at
that time would be materially adverse to the Company’s best interests (including
by materially interfering with, or jeopardizing the success of, any pending or
proposed material acquisition, disposition or reorganization) or
(y) obtaining any financial statements (including required consents)
required to be included in any such Registration Statement would be
impracticable.  Any period during which the Company has delayed a
filing, an effective date or the use of a Registration Statement pursuant to
this Section 5 is herein called a “Suspension
Period”.  In no event shall there be more than four (4)
Suspension Periods during any rolling period of three hundred sixty five
(365) days, and the number of days covered by any one Suspension Period
shall not exceed thirty (30) days, and the number of days covered by all
Suspension Periods shall not exceed seventy-five (75) days in the aggregate
during any rolling period of three hundred sixty five
(365) days.  If pursuant to this Section 5 the Company
delays or withdraws a Demand Registration or underwritten Investor Shelf
Takedown requested by the Investor, the Investor shall be entitled to withdraw
such request and, if it does so, such request shall not count against the
limitation on the number of such registrations set forth in Section 2 or
Section 4.  The Company shall provide prompt written notice to the
Investor of the commencement and termination of any Suspension Period (and any
withdrawal of a registration statement pursuant to this Section 5), but
shall not be obligated under this Agreement to disclose the reasons
therefor.  The Investor shall keep the existence of each Suspension
Period confidential.

     

    Section
6.             Registration
Procedures.

     

    (a)          In
connection with the Shelf Registration provided for in Section 4 and
otherwise whenever the Investor requests that any Registrable Shares be
registered pursuant to this Agreement, the Company shall use reasonable best
efforts to effect, as soon as practical as provided herein, the registration and
the sale of such Registrable Shares in accordance with the intended methods of
disposition thereof, and, pursuant thereto, the Company shall, as soon as is
practicable as provided herein:

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    (i)           subject
to the other provisions of this Agreement, use reasonable best efforts to
prepare and file with the SEC a Registration Statement with respect to such
Registrable Shares and cause such Registration Statement to become effective
(unless it is automatically effective upon filing); and before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
furnish to the Investor and the underwriters or other distributors, if any,
identified by the Investor copies of all such documents proposed to be filed,
including documents incorporated by reference in the Prospectus and one set of
the exhibits incorporated by reference, and the Investor and a single counsel
selected by the Investor (“Investor’s Counsel”)
shall have a reasonable opportunity to review and comment on the Registration
Statement and each such Prospectus (and each amendment or supplement thereto)
before it is filed with the SEC, and the Investor shall have the opportunity to
object to any information pertaining to the Investor that is contained therein
and the Company will make the corrections reasonably requested by the Investor
with respect to such information prior to filing any Registration Statement or
Prospectus or any amendment or supplement thereto;

     

    (ii)          use
reasonable best efforts to prepare and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in connection
therewith as may be necessary to comply with the applicable requirements of the
Securities Act and to keep such Registration Statement effective for the
relevant period required hereunder, but no longer than is necessary to complete
the distribution of the Shares covered by such Registration Statement, and to
comply with the applicable requirements of the Securities Act with respect to
the disposition of all the Shares covered by such Registration Statement during
such period in accordance with the intended methods of disposition set forth in
such Registration Statement;

     

    (iii)         use
reasonable best efforts to obtain the withdrawal of any order suspending the
effectiveness of any Registration Statement, or the lifting of any suspension of
the qualification or exemption from qualification of any Registrable Shares for
sale in any jurisdiction in the United States;

     

    (iv)         furnish
to the Investor and each managing underwriter, if any, without charge, conformed
copies of each Registration Statement and amendment thereto and copies of each
supplement thereto promptly after they are filed with the SEC (but only one set
of exhibits thereto need be provided); and deliver, without charge, such number
of copies of the preliminary and final Prospectus and any supplement thereto as
the Investor may reasonably request in order to facilitate the disposition of
the Registrable Shares of the Investor covered by such Registration Statement in
conformity with the requirements of the Securities Act;

     

    (v)          use
reasonable best efforts to register or qualify such Registrable Shares under
such other securities or blue sky laws of such U.S. jurisdictions as the
Investor reasonably requests and continue such registration or qualification in
effect in such jurisdictions for as long as the applicable Registration
Statement may be required to be kept effective under this Agreement (provided that the Company
will not be required to (I) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subparagraph (v), (II) subject itself to taxation in any such
jurisdiction or (III) consent to general service of process in any such
jurisdiction);

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    (vi)         notify
the Investor and each distributor of such Registrable Shares identified by the
Investor, at any time when a Prospectus relating thereto would be required under
the Securities Act to be delivered by such distributor, of the occurrence of any
event as a result of which the Prospectus included in such Registration
Statement contains an untrue statement of a material fact or omits a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and, at the request of the Investor,
the Company shall use reasonable best efforts to prepare, as soon as is
practicable, a supplement or amendment to such Prospectus so that, as thereafter
delivered to any prospective purchasers of such Registrable Shares, such
Prospectus shall not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;

     

    (vii)        in
the case of an underwritten offering in which the Investor participates pursuant
to a Demand Registration, Piggyback Event or a Shelf Registration, enter into an
underwriting agreement containing such provisions (including provisions for
indemnification, lockups, opinions of counsel and comfort letters) as are
customary and reasonable for an offering of such kind, and take all such other
customary and reasonable actions as the managing underwriters of such offering
may request in order to facilitate the disposition of such Registrable Shares
(including making members of senior management of the Company available at
reasonable times and places to participate in “road-shows” and investor calls,
provided that any reasonable travel and accommodation expenses in connection
with any such road shows shall be borne by the Investor);

     

    (viii)      
in the case of an underwritten offering in which the Investor participates
pursuant to a Demand Registration, Piggyback Event or a Shelf Registration, and
to the extent not prohibited by applicable law or pre-existing applicable
contractual restrictions, (A) make reasonably available, for inspection by
the Investor, Investor’s Counsel, the managing underwriter(s) of such offering
and counsel and accountants acting for such managing underwriter(s), pertinent
corporate documents and financial and other records of the Company and its
subsidiaries and controlled Affiliates, (B) use reasonable best efforts to cause
the Company’s officers and employees to supply information reasonably requested
by the Investor or such managing underwriter(s) or attorney in connection with
such offering, (C) use reasonable best efforts to cause the Company’s
independent registered public accounting firm to make itself available for any
such managing underwriter’s due diligence and to cause such accounting firm to
provide customary “cold comfort” letters to such underwriters in connection
therewith, and (D) use reasonable best efforts to cause the Company’s
counsel to furnish customary legal opinions to such underwriters in connection
therewith; provided,
however, that such
records and other information shall be subject to such confidential treatment as
is customary for underwriters’ due diligence reviews;

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    (ix)         use
reasonable best efforts to cause all such Registrable Shares to be listed on
each securities exchange (if any) on which securities of the same class issued
by the Company are then listed;

     

    (x)          provide
a transfer agent and registrar for all such Registrable Shares not later than
the effective date of such Registration Statement and, a reasonable time before
any proposed sale of Registrable Shares pursuant to a Registration Statement,
provide the transfer agent with printed certificates for the Registrable Shares
to be sold, subject to the provisions of Section 11;

     

    (xi)         in
the case of an underwritten offering, make generally available to its
stockholders a consolidated earnings statement (which need not be audited) for a
period of twelve (12) months beginning after the effective date of the
Registration Statement as soon as reasonably practicable after the end of such
period, which earnings statement shall satisfy the requirements of an earnings
statement under Section 11(a) of the Securities Act and Rule 158
thereunder; and

     

    (xii)        promptly
notify the Investor and the managing underwriter(s) of any underwritten
offering, if any:

     

    (1)          when
the Registration Statement, any pre-effective amendment, the Prospectus or any
Prospectus supplement or any post-effective amendment to the Registration
Statement has been filed and, with respect to the Registration Statement or any
post-effective amendment, when the same has become effective;

     

    (2)          of
any request by the SEC for amendments or supplements to the Registration
Statement or the Prospectus or for any additional information regarding the
Investor;

     

    (3)          of
the notification to the Company by the SEC of its initiation of any proceeding
with respect to the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement; and

     

    (4)          of
the receipt by the Company of any notification with respect to the suspension of
the qualification of any Registrable Shares for sale under the applicable
securities or blue sky laws of any jurisdiction; and keep Investor’s Counsel
reasonably apprised as to the intention and progress of the Company with respect
to any Registration Statement hereunder.

     

    For the
avoidance of doubt, the provisions of clauses (vii), (viii) and
(xi) of this Section 7(a) shall apply only if (based on market prices
at the time the offering is requested by the Investor) the number of Registrable
Shares to be sold in the offering would reasonably be expected to yield gross
proceeds to the Investor of at least the Minimum Amount.

     

    (b)          No
Registration Statement (including any amendments thereto) and no Prospectus
(including any supplements thereto) shall contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except for any untrue statement or alleged
untrue statement of a material fact or omission or alleged omission of a
material fact made in reliance on and in conformity with written information
furnished to the Company by or on behalf of the Investor or any underwriter or
other distributor specifically for use therein.

    
      
         

      

      
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    (c)          Until
the Termination Date, the Company shall use reasonable best efforts to file all
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder, all to the extent
required to enable the Investor to be eligible to sell Registrable Shares (if
any) pursuant to Rule 144 under the Securities Act.

     

    (d)          The
Company may require the Investor and each distributor of Registrable Shares as
to which any registration is being effected to furnish to the Company any other
information regarding such Person and the distribution of such securities as the
Company may from time to time reasonably request.

     

    (e)           Subject
to the limitations on the Company’s ability to delay the use or effectiveness of
a Registration Statement as provided by the Suspension Periods set forth in
Section 5(a), the Investor agrees by having its Shares treated as
Registrable Shares hereunder that, upon being advised in writing by the Company
of the occurrence of an event pursuant to Section 6(a)(vi) when the Company
is entitled to do so pursuant to Section 5, the Investor will immediately
discontinue (and direct any other Persons making offers and sales of Registrable
Shares to immediately discontinue) offers and sales of Registrable Shares
pursuant to any Registration Statement (other than those pursuant to a plan that
is in effect and that complies with Rule 10b5-1 of the Exchange Act) until it is
advised in writing by the Company that the use of the Prospectus may be resumed
and is furnished with a supplemented or amended Prospectus as contemplated by
Section 6(a)(vi), and, if so directed by the Company, the Investor will
deliver to the Company all copies, other than permanent file copies then in the
Investor’s possession, of the Prospectus covering such Registrable Shares
current at the time of receipt of such notice.

     

    (f)          The
Company may prepare and deliver an issuer free-writing prospectus (as such term
is defined in Rule 405 under the Securities Act) in lieu of any supplement
to a prospectus, and references herein to any “supplement” to a Prospectus shall
include any such issuer free-writing prospectus.  No seller of
Registrable Shares may use a free-writing prospectus to offer or sell any such
shares without the Company’s prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed).

     

    (g)          It
is further understood and agreed that the Company shall not have any obligations
under this Section 6 at any time on or after the Termination Date, unless
an underwritten offering in which the Investor participates has been priced but
not completed prior to the Termination Date, in which event the Company’s
obligations under this Section 6 shall continue with respect to such
offering until it is completed.

    
      
         

      

      
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    Section
7.             Registration
Expenses.

     

    (a)          All
expenses incident to the Company’s performance of or compliance with this
Agreement, including all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, Financial Industry Regulatory
Authority fees, listing application fees, printing expenses, transfer agent’s
and registrar’s fees, cost of distributing Prospectuses in preliminary and final
form as well as any supplements thereto, and fees and disbursements of counsel
for the Company and all independent registered public accounting firm and other
Persons retained by the Company, together with the reasonable documented fees
and expenses of the Investor’s Counsel (all such expenses being herein called
“Registration
Expenses”) (but not including any underwriting discounts or commissions
attributable to the sale of Registrable Shares), shall be borne by the
Company.  The Investor shall bear the cost of all underwriting
discounts and commissions associated with any sale of Registrable
Shares.

     

    (b)          The
obligation of the Company to bear the expenses described in Section 7(a)
shall apply irrespective of whether a registration, once properly demanded or
requested, becomes effective or is withdrawn or suspended, unless the Investor
elects to pay the Registration Expenses, in which event such registration shall
not count against the limit on the number of registrations set forth in Section
2(b).

     

    Section
8.             Indemnification.

     

    (a)          The
Company shall indemnify, to the fullest extent permitted by law, the Investor
and each Person who controls the Investor (within the meaning of the Securities
Act) against all losses, claims, damages, liabilities, judgments, costs
(including reasonable costs of investigation) and expenses (including reasonable
attorneys’ fees) arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus or any amendment thereof or supplement thereto or arising out of or
based upon any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are made in reliance and in conformity with
information furnished in writing to the Company by or on behalf of the Investor
or to the Company by or on behalf of any participating underwriter, in each case
expressly for use therein.  In connection with an underwritten
offering in which the Investor participates conducted pursuant to a registration
effected hereunder, the Company shall indemnify each participating underwriter
and each Person who controls such underwriter (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the Investor.

     

    (b)          In
connection with any Registration Statement in which the Investor is
participating, the Investor shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with any
such Registration Statement or Prospectus, or amendment or supplement thereto,
and shall indemnify to the fullest extent permitted by law the Company, its
officers and directors and each Person who controls the Company (within the
meaning of the Securities Act), against all losses, claims, damages,
liabilities, judgments, costs (including reasonable costs of investigation) and
expenses (including reasonable attorneys’ fees) arising out of or based upon any
untrue or alleged untrue statement of material fact contained in the
Registration Statement or Prospectus, or any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that the same are made in reliance and in
conformity with information furnished in writing to the Company by or on behalf
of the Investor expressly for use therein.  In connection with an
underwritten offering conducted pursuant to a registration effected hereunder,
the Investor shall indemnify each participating underwriter and each Person who
controls such underwriter (within the meaning of the Securities Act) to the same
extent as provided above with respect to the indemnification of the
Company.

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

     

    (c)          Any
Person entitled to indemnification hereunder shall (i) give prompt written
notice to the indemnifying Person of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying Person to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
Person.  Failure so to notify the indemnifying Person shall not
relieve it from any liability that it may have to an indemnified Person except
to the extent that the indemnifying Person is materially and adversely
prejudiced thereby.  The indemnifying Person shall not be subject to
any liability for any settlement made by the indemnified Person without its
consent (but such consent will not be unreasonably withheld).  An
indemnifying Person who is entitled to, and elects to, assume the defense of a
claim shall not be obligated to pay the fees and expenses of more than one
counsel (in addition to one local counsel) for all Persons indemnified
(hereunder or otherwise) by such indemnifying Person with respect to such claim
(and all other claims arising out of the same circumstances), unless in the
reasonable judgment of any indemnified Person there may be one or more legal or
equitable defenses available to such indemnified Person which are in addition to
or may conflict with those available to another indemnified Person with respect
to such claim, in which case each such indemnified Person shall be entitled to
use separate counsel.  The indemnifying Person shall not consent to
the entry of any judgment or enter into or agree to any settlement relating to a
claim or action for which any indemnified Person would be entitled to
indemnification by any indemnified Person hereunder unless such judgment or
settlement imposes no ongoing obligations on any such indemnified Person and
includes as an unconditional term the giving, by all relevant claimants and
plaintiffs to such indemnified Person, a release, reasonably satisfactory in
form and substance to such indemnified Person, from all liabilities in respect
of such claim or action for which such indemnified Person would be entitled to
such indemnification.  The indemnifying Person shall not be liable
hereunder for any amount paid or payable or incurred pursuant to or in
connection with any judgment entered or settlement effected with the consent of
an indemnified Person unless the indemnifying Person has also consented to such
judgment or settlement.

     

    (d)          The
indemnification provided for under this Agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified
Person or any officer, director or controlling Person of such indemnified Person
and shall survive the transfer of securities and the Termination Date but only
with respect to offers and sales of Registrable Shares made before the
Termination Date or during the period following the Termination Date referred to
in Section 6(g).

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    (e)          If
the indemnification provided for in or pursuant to this Section 8 is due in
accordance with the terms hereof, but is held by a court to be unavailable or
unenforceable in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then each applicable indemnifying Person, in lieu of
indemnifying such indemnified Person, shall contribute to the amount paid or
payable by such indemnified Person as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying Person on the one hand and of the indemnified
Person on the other in connection with the statements or omissions which result
in such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations.  The relative fault of the
indemnifying Person, on the one hand, and of the indemnified Person, on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying Person or by the indemnified Person, and by such Person’s relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.  In no event shall the liability of the
indemnifying Person be greater in amount than the amount for which such
indemnifying Person would have been obligated to pay by way of indemnification
if the indemnification provided for under Section 8(a) or 8(b) hereof had
been available under the circumstances.

     

    Section
9.             Securities Act
Restrictions.

     

    (a)          The
Investor agrees that all certificates or other instruments representing the
Merger Shares will bear a legend substantially to the following
effect:

     

    THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS.

     

    (b)          Upon
the reasonable request of the Investor, at a time when such legend is no longer
required under the Securities Act and applicable state laws, the Company shall
promptly cause the legend to be removed from any certificate for any Merger
Shares to be Transferred by the Investor upon the receipt by the Company of an
opinion of counsel, certification and/or other information reasonably
satisfactory to the Company.  The Investor acknowledges that the
Merger Shares have not been registered under the Securities Act or under any
state securities laws and agrees that it will not sell or otherwise dispose of
any of the Merger Shares, except in compliance with the registration
requirements or exemption provisions of the Securities Act and any other
applicable securities laws.

     

    Section
10.           Miscellaneous.

     

    (a)          Notices.  Except
as otherwise provided herein, all notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
hand delivered, mailed (postage prepaid) by registered or certified mail or sent
by e-mail or facsimile transmission (with telephone confirmation promptly
thereafter),

     

    If to
Investor:

     

    RWWI
Holdings LLC

    c/o
Ampersand Ventures

    55
William St., Ste. 240

    Wellesley,
MA 02481

    Attention:
J. David Jacobs, Esq.

    Fax:  (781)
239-0824

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    

    With a
copy to:

    

    Edwards
Angell Palmer & Dodge LLP

    111
Huntington Avenue

    Boston,
MA 02199-7613

    Attention:  James
T. Barrett, Esq.

    Fax:  (617)
227-4420

    

    If to the
Company:

     

    Avatech
Solutions, Inc.

    10715 Red
Run Boulevard, Suite 101

    Owings
Mills, MD 21117

    Attention:  Lawrence
Rychlak

    Fax:  (410)
753-1591

    

    With a
copy to:

    

    Gordon,
Feinblatt, Rothman, Hoffberger & Hollander, LLC

    The
Garrett Building

    233 East
Redwood Street

    Baltimore,
Maryland  21202-3332

    Attention:  Abba
David Poliakoff, Esq.

        Andrew D. Bulgin,
Esq.

    Fax:  (410)
576-4196

    

    or at
such other address as any such party hereto may specify by written notice to the
others, and, except as otherwise provided herein, each such notice, request,
consent and other communication shall for all purposes of the Agreement be
treated as being effective or having been given when delivered personally or by
mail or, in the case of e-mail or facsimile delivery, upon receipt of e-mail or
facsimile confirmation of delivery and telephonic confirmation.

     

    (b)          No
Waivers.  No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.

     

    (c)          Successors and
Assigns.  The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, it being understood that there are no intended third-party
beneficiaries hereof.

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

     

    (d)          Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to conflict of
law principles that would result in the application of any law other than the
law of the State of Delaware.

     

    (e)          Jurisdiction.  Any
suit, action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby must be brought in any federal or state court located in the
non-exclusive jurisdiction of any Delaware State or Federal court sitting
in New Castle County, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient forum.  Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court.  Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Section 13(a) shall be deemed effective service of process
on such party.

     

    (f)           Waiver of Jury
Trial.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     

    (g)          Counterparts;
Effectiveness.  This Agreement may be executed in any number of
counterparts (including by e-mail or facsimile) and by different parties hereto
in separate counterparts, with the same effect as if all parties had signed the
same document.  All such counterparts shall be deemed an original,
shall be construed together and shall constitute one and the same
instrument.  This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto.

     

    (h)          Entire
Agreement.  This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes and replaces all other prior agreements, written or oral, among the
parties hereto with respect to the subject matter hereof.

     

    (i)           Captions.  The
headings and other captions in this Agreement are for convenience and reference
only and shall not be used in interpreting, construing or enforcing any
provision of this Agreement.

     

    (j)           Severability.  If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.  Upon such a determination, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

     

    (k)          Amendments.

     

    (i)           The
provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given without the prior written consent of the
Company and the Investor.

     

    (ii)          The
Company has not entered into, and will not, from and after the date hereof,
enter into, any agreements or arrangements that grant to any other holders of
its securities any rights that violate or conflict with this Agreement or impede
the Company’s ability to fulfill and comply with its obligations set forth
herein.

     

    (l)           Lock-Up.  The
Investor shall, in connection with any underwritten offering of the Company’s
securities, in each case, in which the Investor is selling Registrable Shares
pursuant to its rights under Section 3, upon the request of the Company or
the managing underwriter(s), agree in writing not to effect any sale,
disposition or distribution of any Registrable Shares (other than those included
in such offering) without the prior written consent of the Company or such
managing underwriter(s), as the case may be, for such period of time prior to
and/or following the completion of the sale of the Company’s securities in such
underwritten offering as the Company or the managing underwriter(s) may specify;
provided, however, that all executive officers and directors of the Company
shall also have agreed not to effect any sale, disposition or distribution of
any such securities under the circumstances and pursuant to the terms set forth
in this Section 10(l).

     

    (m)         Limitations on Subsequent
Registration Rights.  From and after the date of this
Agreement, the Company shall not, without the prior written consent of the
Investor, enter into any agreement with any holder or prospective holder of any
securities of the Company that (i) would allow such holder or prospective holder
(i) to include such securities in any registration unless, under the terms of
such agreement, such holder or prospective holder may include such securities in
any such registration only to the extent that the inclusion of such securities
will not reduce the number of the Registrable Securities of the Holders that are
included or (ii) allow such holder or prospective holder to initiate a demand
for registration of any securities held by such holder or prospective
holder.

     

    [Execution
Page Follows]

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, this Registration Rights Agreement has been duly executed by
each of the parties hereto as of the date first written above.

    

    
      
        	
                COMPANY:

              
	 
      
	
                AVATECH
      SOLUTIONS, INC.

              
	 
      	 
      
	
                By:

              	
                /s/ Lawrence Rychlak

              
	
                Name:

              	
                Lawrence
      Rychlak

              
	
                Title:

              	
                President
      and Chief Financial Officer

              
	 
      	 
      
	
                INVESTOR:

              
	 
      
	
                RWWI
      HOLDINGS LLC

              
	 
      	 
      
	
                By:

              	
                Ampersand
      2006 Limited Partnership, its

              
	 
      	
                Manager

              
	
                By:

              	
                AMP-06
      Management Company Limited

              
	 
      	
                Partnership,
      its General Partner

              
	
                By:

              	
                AMP-06
      MC LLC, its General Partner

              
	 
      	 
      
	
                By:

              	
                /s/ Richard A. Charpie

              
	 
      	
                Richard
      A. Charpie

              
	 
      	
                Principal
      Managing Member

              

      

    

     

    [Signature
Page to Registration Rights Agreement]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Annex A

     

    PLAN OF
DISTRIBUTION

     

    Each
selling stockholder, and any of their pledgees, assignees and
successors-in-interest (the “Selling Stockholders”) may from time to time offer
and sell, separately or together, some or all of the shares of Common Stock
covered by this Registration Rights Agreement. Registration of shares of common
stock covered by the Registration Rights Agreement does not mean, however, that
those shares necessarily will be offered or sold.

     

    The
Company will not receive any proceeds from the sale of the common shares by the
Selling Stockholders.

     

    The
Selling Stockholder may sell shares in one or more of the following ways (or in
any combination) from time to time:

     

    
      	
               
      

            	
              ·

            	
              through
      underwriters or dealers;

            

    

     

    
      	
               
      

            	
              ·

            	
              directly
      to one or more purchasers;

            

    

     

    
      	
               
      

            	
              ·

            	
              through
      agents; or

            

    

     

    
      	
               
      

            	
              ·

            	
              through
      any other methods described in a prospectus
  supplement.

            

    

     

    Neither
the Company nor the Selling Stockholders have entered into any agreements,
understandings or arrangements with any underwriters or dealers regarding the
sale of shares covered by the Registration Rights Agreement.  At any
time a particular offer of the shares covered by the Registration Rights
Agreement is made, a revised prospectus or prospectus supplement, if required,
will be distributed which will set forth the aggregate amount of shares of
common stock covered by the Registration Rights Agreement being offered and the
terms of the offering, including the name or names of any underwriters, dealers
or agents. In addition, to the extent required, any discounts, commissions,
concessions and other items constituting underwriters’ or agents’ compensation,
as well as any discounts, commissions or concessions allowed or re-allowed or
paid to dealers, will be set forth in such revised prospectus or prospectus
supplement. Any such required prospectus or prospectus supplement, and, if
necessary, a post-effective amendment to any registration statement, will be
filed with the SEC to reflect the disclosure of additional information with
respect to the distribution of the Common Shares covered by the Registration
Rights Agreement.

     

    The
shares may also be sold in one or more of the following transactions, or in any
transactions described in a prospectus or prospectus supplement:

     

    
      	
               
      

            	
              ·

            	
              block
      transactions in which a broker-dealer may sell all or a portion of the
      shares as agent but may position and resell all or a portion of the block
      as principal to facilitate the
transaction;

            

    

     

    
      	
               
      

            	
              ·

            	
              purchase
      by a broker-dealer as principal and resale by the broker-dealer for its
      own account;

            

    

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              ·

            	
              ordinary
      brokerage transactions and transactions in which a broker-dealer solicits
      purchasers;

            

    

     

    
      	
               
      

            	
              ·

            	
              sales
      “at the market” to or through a market maker or into an existing trading
      market, on an exchange or
otherwise;

            

    

     

    
      	
               
      

            	
              ·

            	
              through
      the writing of options; or

            

    

     

    
      	
               
      

            	
              ·

            	
              sales
      in other ways not involving market makers or established trading markets,
      including direct sales to
purchasers.

            

    

     

    The
shares that the Selling Stockholder sell by any of the methods described above
may be sold to the public, in one or more transactions, either:

     

    
      	
               
      

            	
              ·

            	
              at
      a fixed public offering price or prices, which may be
    changed;

            

    

     

    
      	
               
      

            	
              ·

            	
              at
      market prices prevailing at the time of
sale;

            

    

     

    
      	
               
      

            	
              ·

            	
              at
      prices related to prevailing market
prices;

            

    

     

    
      	
               
      

            	
              ·

            	
              at
      varied prices determined at the time of sale;
or

            

    

     

    
      	
               
      

            	
              ·

            	
              at
      negotiated prices.

            

    

     

    Underwriters
and agents may be entitled under agreements entered into with the Selling
Stockholders to indemnification by the Company and/or the Selling Stockholders
against certain civil liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments which the underwriters or
agents may be required to make. Underwriters and agents may engage in
transactions with, or perform services for, the Company, the Company’s
affiliates, the Selling Stockholders and their affiliates in the ordinary course
of business.

     

    The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended (the “Securities Act”), if available, rather than under
this prospectus.

     

    Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales.  Broker-dealers may receive commissions or
discounts from the Selling Stockholders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be negotiated,
but, except as set forth in a supplement to this Prospectus, in the case of an
agency transaction not in excess of a customary brokerage commission in
compliance with FINRA Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with FINRA IM-2440.

     

    In
connection with the sale of the common stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

     

    The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In no
event shall any broker-dealer receive fees, commissions and markups which, in
the aggregate, would exceed eight percent (8%).

     

    The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

     

    Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. There is no underwriter or
coordinating broker acting in connection with the proposed sale of the resale
shares by the Selling Stockholders.

     

    The
Company has agreed to keep this prospectus effective until the earlier of
(i) the date on which the shares may be resold by the Selling Stockholders
without registration by reason of Rule 144 under the Securities Act or any other
rule of similar effect or (ii) all of the shares have been sold pursuant to
this prospectus or Rule 144 under the Securities Act or any other rule of
similar effect. The resale shares will be sold only through registered or
licensed brokers or dealers if required under applicable state securities laws.
In addition, in certain states, the resale shares may not be sold unless they
have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with.

     

    Under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholders or any other
person. The Company will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).

     

    * *
*

    
      
         

      

      
        A-3

        
          

        

      

      
         

      

    

    Annex B

     

    AVATECH
SOLUTIONS, INC.

     

    Selling
Securityholder Notice and Questionnaire

     

    The
undersigned beneficial owner of common stock (the “Registrable
Securities”) of Avatech Solutions, Inc., a Delaware corporation (the
“Company”),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “SEC”) a registration
statement (the “Registration
Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of
the Registrable Securities, in accordance with the terms of the Registration
Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed. A copy of the Registration
Rights Agreement is available from the Company upon request at the address set
forth below. All capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Registration Rights Agreement.

     

    Certain
legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus. Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Registration Statement and the related
prospectus.

     

    NOTICE

     

    The
undersigned beneficial owner (the “Selling
Securityholder”) of Registrable Securities hereby elects to include the
Registrable Securities owned by it in the Registration Statement.

     

    The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    
      	
              1.

            	
              Name.

            

    

     

    (a)          Full
Legal Name of Selling Securityholder

     

    
      
        	
                 
      

              

      

       

    

    (b)          Full
Legal Name of Registered Holder (if not the same as (a) above) through which
Registrable Securities are held:

     

    
      
        	
                 
      

              

      

    

    
      
         

      

      
        B-1

        
          

        

      

      
         

      

    

    

    (c)          Full
Legal Name of Natural Control Person (which means a natural person who directly
or indirectly alone or with others has power to vote or dispose of the
securities covered by the Questionnaire):

     

    
      
        	
                 
      

              

      

    

     

    
      	
              2.

            	
              Address
      for Notices to Selling
Securityholder:

            

    

     

    
      
        
          
            
              
                
                  	 
      
	 
      
	
                               
      

                        

                

              

            

          

        

      

    

    
      
        
          
            	
                    Telephone: 

                  	 
      

          

        

      

      
        
          
            	
                    Fax: 

                  	 
      

          

        

      

      
        
          
            	
                    Contact
      Person: 

                  	 
      

          

        

      

    

     

    
      	
              3.

            	
              Broker-Dealer
      Status:

            

    

     

    (a)          Are
you a broker-dealer?

     

    Yes    ̈                      No    ̈

     

    (b)          If
“yes” to Section 3(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company.

     

    Yes    ̈                      No    ̈

     

    
      	
            	
              Note:

            	
              If
      “no” to Section 3(b), the SEC’s staff has indicated that you should be
      identified as an underwriter in the Registration
  Statement.

            

    

     

    (c)          Are
you an affiliate of a broker-dealer?

     

    Yes    ̈                      No    ̈

     

    (d)          If
you are an affiliate of a broker-dealer, do you certify that you purchased the
Registrable Securities in the ordinary course of business, and at the time of
the purchase of the Registrable Securities to be resold, you had no agreements
or understandings, directly or indirectly, with any person to distribute the
Registrable Securities?

     

    Yes    ̈                      No    ̈

     

    
      	
            	
              Note:

            	
              If
      “no” to Section 3(d), the SEC’s staff has indicated that you should be
      identified as an underwriter in the Registration
  Statement.

            

    

     

    
      	
              4.

            	
              Beneficial
      Ownership of Securities of the Company Owned by the Selling
      Securityholder.

            

    

    
      
         

      

      
        B-2

        
          

        

      

      
         

      

    

     

    Except
as set forth below in this Item 4, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.

     

    (a)           Type
and Amount of other securities beneficially owned by the Selling
Securityholder:

     

    
      
        	 
      
	
                      

              

      

    

    

    
      	
              5.

            	
              Relationships
      with the Company:

            

    

     

    Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.

     

    
      State any
exceptions here:

    

     

    
      
        	
                 
      

              
	 
      

      

    

     

    The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
at any time while the Registration Statement remains effective.

     

    By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto. The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.

    
      
         

      

      
        B-3

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
and Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

     

    
      
        
          
            
              	
                      Dated: 

                    	 
      	 
      	
                      Beneficial
      Owner:

                    
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                      By:

                    	 
      
	 
      	 
      	 
      	 
      	
                      Name:

                    
	 
      	 
      	 
      	 
      	
                      Title:

                    

            

          

        

      

    

     

    PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:

    
      
         

      

      
        B-4

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