REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of August 13, 1999
(this "Agreement"), by and among CFI ProServices, Inc., an Oregon corporation
(the "Company"), and U.S. Bancorp Libra, a Division of U.S. Bancorp Investments,
Inc., a Minnesota corporation (the "Investor").
R E C I T A L S
WHEREAS, this Agreement is being entered into pursuant to that
certain letter agreement dated May 14, 1999, as amended (the "Letter
Agreement"), of even date herewith by and between the Company and the Investor;
and
WHEREAS, in connection with the Letter Agreement, the Company
has agreed to issue to the Investor warrants (the "Warrants") to purchase in the
aggregate 58,000 shares of Common Stock representing one percent (1%) of shares
of the Company as of the date hereof on a fully diluted basis.
NOW, THEREFORE, in consideration of these premises and the
respective promises and covenants contained herein, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
"Act" means the United States Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission issued under the Act, as they each may, from time to time, be in
effect.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
to close.
"Commission" means the United States Securities and Exchange
Commission, or any other Federal agency at the time administering the Act.
"Common Stock" means the shares of common stock, no par value,
of the Company.
"Exchange Act" means the United States Securities Exchange Act
of 1934, as amended, or any similar Federal statute, and the rules and
regulations of the Commission issued under the Exchange Act, as they each may,
from time to time, be in effect.
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"Holder" means the Investor who holds Registrable Securities
and any person or entity who holds Registrable Securities and to whom the rights
granted under this Agreement have been transferred in compliance with this
Agreement, and their Permitted Transferees (as defined in Section 2.9 hereof).
"Indemnified Party" has the meaning described in Section 2.5
(c) below.
"Indemnifying Party" has the meaning described in Section 2.5
(c) below.
"Registration Statement" means a registration statement filed
by the Company with the Commission in compliance with the Act and the rules and
regulations promulgated thereunder for a public offering and sale of its Common
Stock (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another entity).
"Registrable Securities" means shares of Common Stock issued
or issuable pursuant to the exercise of the Warrants. Registrable Securities
shall include any warrants, shares of capital stock or other securities of the
Company issued as a dividend or other distribution with respect to or in
exchange for or in replacement of such shares of Common Stock. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when (a) a Registration Statement with respect to the sale of such
securities shall have become effective under the Act and such securities shall
have been sold, transferred, disposed of or exchanged in accordance with such
Registration Statement, (b) such securities shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent public
distribution of them shall not require registration under the Act, (c) such
securities shall have ceased to be outstanding or (d) upon any sale, transfer or
other disposition in any manner to a person or entity which, by virtue of
Section 2.9 hereof, is not entitled to the rights provided by this Agreement.
ARTICLE 2
REGISTRATION RIGHTS
Section 2.1 Shelf Registration of Registrable Securities.
(a) The Company shall mail as soon as practicable a
questionnaire (the "Questionnaire"), soliciting the
information required by Items 507 and 508 of
Regulations S-K under the Act, to each of the
Holders, and shall deliver a copy of such
Questionnaire to any Holder within five (5) days of
it becoming available. As a condition to any
Registrable Securities being included in the
Registration Statement referred to below, such Holder
shall submit a Questionnaire and shall amend and
submit to the Company a revised
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Questionnaire any time the information contained
therein ceases to be accurate and complete.
(b) The Company agrees to file with the Commission, a
Registration Statement (the "Shelf Registration") for an
offering to be made on a continuous basis pursuant to Rule
415 under the Act covering all Registrable Securities held
by the Holder, as soon as practicable from the date hereof,
but in no event more than ninety (90) days from the date
hereof. The Holders shall be included as selling
securityholders in such Registration Statement promptly, and
within two (2) Business Days, after they have fully
completed and returned to the Company the Questionnaire. The
Shelf Registration shall be on Form S-3 under the Act or
another appropriate form (including Form S-1, if applicable)
permitting registration of such Registrable Securities for
resale by the Holders in the manner or manners reasonably
designated by them (including, without limitation, one or
more underwritten offerings). The Company shall cause the
Shelf Registration to be declared effective pursuant to the
Act on or prior to the date that is one hundred eighty (180)
days after the date of this Agreement (the "Effectiveness
Target Date") and to keep the Shelf Registration
continuously effective under the Act for sixty (60) months
(the "Effectiveness Period") or such shorter period ending
when there ceases to be outstanding any Registrable
Securities.
(c) The Company shall use all reasonable best efforts to keep
the Shelf Registration continuously effective, for the
period described in Section 2.1(b) hereof, by supplementing
and amending the Shelf Registration if required by the
rules, regulations or instructions applicable to the
registration form used for such Shelf Registration, if
required by the Act or if reasonably requested by the
Holders of a majority in amount of Registrable Securities
(determined on a fully converted basis) covered by such
Shelf Registration.
(d) In the event any adjustment in the Exercise Quantity (as
defined in the Warrants) would result in the issuance of
additional Registrable Securities upon exercise of the
Warrants, the Company shall promptly, and within ten (10)
Business Days, amend or supplement the Shelf Registration in
order to effect a Shelf Registration of such additional
Registrable Securities pursuant to the terms of Section
2.1(b), provided, that notwithstanding anything to the
contrary in Section 2.1(b), the Effectiveness Target Date
shall be ninety (90) days from the date of the effective
date of the adjustment to the Exercise Quantity resulting in
additional Registrable Securities becoming issuable to the
Holders.
(e) Notwithstanding anything to the contrary in this Section
2.1, the Company may, by delivering written notice to the
Holders, prohibit offers and sales of Registrable Securities
pursuant to the Shelf Registration at any time
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if (A)(i) the Company is in possession of material
non-public information relating to the Company, (ii)
the Company determines (based on advice of counsel)
that such prohibition is necessary in order to avoid
a requirement to disclose such material non-public
information to the public and (iii) the Company
determines in good faith that public disclosure of
such material non-public information would not be in
the best interests of the Company and its
stockholders, or (B)(i) the Company has made a public
announcement relating to an acquisition or business
combination transaction including the Company and/or
one or more of its subsidiaries that is material to
the Company and its subsidiaries taken as a whole and
(ii) the Company determines in good faith that (x)
offers and sales of Registrable Securities pursuant
to the Shelf Registration prior to the consummation
of such transaction (or such earlier date as the
Company shall determine) would not be in the best
interests of the Company and its shareholders or (y)
it would be impracticable at the time to obtain any
financial statements relating to such acquisition or
business combination transaction that would be
required to be set forth in the Shelf Registration;
provided, however, that upon (i) the public
disclosure by the Company of the material non-public
information described in clause (A) of this paragraph
or (ii) the consummation, abandonment or termination
of, or the availability of the required financial
statements with respect to, a transaction described
in clause (B) of this paragraph, the suspension of
the use of the Shelf Registration pursuant to this
Section 2.1(e) shall cease and the Company shall
promptly comply, prior to the next Business Day, with
Section 2.3 hereof and notify the Holders that
dispositions of Registrable Securities may be
resumed. In the event that during the Effectiveness
Period the prospectus under the Shelf Registration
becomes not usable as a result of the Company's
notification under this Section, the Company shall
use its reasonable best efforts to provide the
Holders a usable prospectus as soon as practicable,
and in no event shall sales of Registrable Securities
under the Shelf Registration be suspended for more
than thirty (30) days in any three hundred sixty-five
(365) day period.
Section 2.2 [Reserved]
Section 2.3 Registration Procedures.
(a) The Company shall, at its expense:
(i) file with the Commission within ninety (90)
days a Registration Statement with respect
to such Registrable Securities and use its
best efforts to cause that Registration
Statement to become and remain effective
prior to the Effectiveness Target Date and
for the duration of the Effectiveness
Period;
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(ii) prepare and file with the Commission any
amendments and supplements to the
Registration Statement and the prospectus
included in the Registration Statement as
may be necessary to keep the Registration
Statement effective for the period described
in Section 2.3(a)(i) above and comply with
the provisions of the Act with respect to
the disposition of all securities covered by
such Registration Statement;
(iii) furnish to each selling Holder such
reasonable numbers of copies of the
Registration Statement, preliminary
prospectus, final prospectus and any
amendments and supplements and such other
documents as each selling Holder may
reasonably request in order to facilitate
the public offering of such securities;
(iv) promptly and prior to the next Business Day,
furnish to each selling Holder written
notice of any stop order or similar notice
issued by the Commission or any state agency
charged with the regulation of securities
and of any notice from the Nasdaq National
Market or other securities exchange then
listing the Registrable Securities covered
by such Registration Statement;
(v) register or qualify the Registrable
Securities covered by the Registration
Statement under the securities or Blue Sky
laws of such states as shall be reasonably
appropriate for the distribution of the
Registrable Securities; provided, however,
that the Company shall not for any purpose
be required to qualify to do business as a
foreign corporation in any jurisdiction
wherein it is not so qualified;
(vi) use its best efforts to make available to
its security holders, as soon as reasonably
practicable, an earnings statement covering
the period of at least twelve (12) months,
but not more than eighteen (18) months,
beginning with the first month after the
effective date of the Registration
Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of
the Act and Rule 158 thereunder;
(vii) use its best efforts to comply with all
rules and regulations of the Nasdaq National
Market, or such other principal securities
exchange on which the equity securities
issued by the Company are then quoted or
listed and traded, to ensure that the
Registrable Securities are freely tradeable
thereon upon registration thereof under the
Act;
(viii) provide, if one has not already been
appointed by the Company, a transfer agent
and registrar for all Registrable Securities
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covered by such Registration Statement not
later than the effective date of such
Registration Statement;
(ix) enter into a cross-indemnity agreement, in
customary form, with each underwriter, if
any;
(x) include in the Registration Statement filed
with the Commission, all Registrable
Securities; and promptly, within two (2)
Business Days after filing of such a
registration statement or prospectus or any
amendments or supplements thereto, the
Company shall furnish to each Holder copies
of all such documents so filed including, if
requested, documents incorporated by
reference in the registration statement; and
notify each selling Holder of any stop order
issued or threatened by the Commission and
use its best efforts to prevent the entry of
such stop order or to remove it if entered;
(xi) notify each selling Holder, at any time when
a prospectus relating to such selling
Holder's Registrable Securities is required
to be delivered under the Act, 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 to state any material
fact necessary to make the statements
therein not misleading, and as soon as
practicable prepare a supplement or
amendment to such prospectus so that, as
thereafter delivered to the purchasers of
such Registrable Securities, such prospectus
will not contain an untrue statement of a
material fact or omit to state any material
fact necessary to make the statements
therein not misleading;
(xii) cause all such Registrable Securities to be
listed on the Nasdaq National Market System
(or on such other principal securities
exchange on which the equity securities
issued by the Company are then quoted or
listed and traded);
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(xiii) enter into an underwriting agreement in
customary form and take all such other
actions that the selling Holders or their
underwriters, if any, reasonably request in
order to expedite or facilitate the
disposition of such Registrable Securities;
(xiv) make available for inspection by each
selling Holder and one (1) of its counsel
acting for them, any underwriter
participating in any disposition pursuant to
such registration statement, and any counsel
retained by any such underwriter, all
pertinent financial and other information
and corporate documents of the Company
reasonably requested, and cause the
Company's officers, directors and employees
to supply all information reasonably
requested by any such selling Holder,
underwriter or counsel in connection with
such registration statement and to
participate in "road shows" or management
presentations as may be reasonably requested
by any underwriter;
(xv) with respect to any underwritten offering,
use its reasonable best efforts to obtain a
"cold comfort" letter from the Company's
independent public accountants in customary
form and covering such matters of the type
customarily covered by "cold comfort"
letters as the selling Holders or any
underwriter may reasonably request;
(xvi) with respect to an underwritten offering,
obtain an opinion of counsel to the Company,
addressed to the selling Holders and any
underwriter, in customary form and including
such matters as are customarily covered by
such opinions in underwritten registered
offerings of equity securities as the
selling Holders or any underwriter may
reasonably request, such opinion to be
reasonably satisfactory in form and
substance to each selling Holder;
(xvii) furnish to each selling Holder upon request
of such selling Holder within three (3)
Business Days, copies of all correspondence
between the Company, the Commission and any
applicable state securities regulatory
agencies relating to such registration;
(xviii) during the period that the Company is
required to keep such Registration Statement
effective, promptly and prior to the next
Business Day, notify each selling Holder of
Registrable Securities covered by such
Registration Statement at any time when a
prospectus relating thereto is required to
be delivered under the Act, of the happening
of any event as a result of which the
prospectus or any prospectus supplement
included in such registration statement, as
then in effect, or any material incorporated
by reference therein, includes an untrue
statement of a material fact or omits to
state any material fact required to be
stated therein or necessary to make the
statements therein not misleading in light
of the circumstances then existing, or if it
is necessary to amend or supplement such
prospectus or any prospectus supplement or
registration statement or material
incorporated by reference therein to comply
with the law, and at the request of any such
selling Holder, prepare and furnish to such
selling Holder a reasonable number of copies
of a supplement to or an amendment of such
prospectus or any prospectus supplement or
material incorporated by reference therein
as may be necessary so that, as thereafter
delivered to the purchasers of such
Registrable Securities, such prospectus or
any prospectus supplement or material
incorporated by reference therein shall not
include an untrue statement of a material
fact or omit to state a material fact
required to be stated therein or necessary
to make the
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statements therein not misleading in light
of the circumstances then existing and so
that such prospectus or prospectus
supplement or registration statement or
material incorporated by reference therein,
as amended or supplemented, will comply with
the law;
(xix) upon the reasonable request of any selling
Holder, to include in a prospectus
supplement or an amendment to a Registrable
Securities Shelf Registration any change in
the information provided to the Company
pursuant to Rules 507 or 508 under
Regulation S-K under the Act; and
(xx) upon delivery of the certificates with
respect to the Registrable Securities to be
registered pursuant hereto, issue to any
underwriter to which the selling Holder may
sell such Registrable Securities in
connection with any such registrations (and
to any direct or indirect transferee of any
such underwriter) certificates evidencing
such Registrable Securities without any
legend restricting the transferability of
the Registrable Securities.
(b) Each selling Holder of Registrable Securities agrees that,
upon receipt of any written notice from the Company of (i) any request by the
Commission for amendments or supplements to a Registration Statement or related
prospectus covering any of such selling Holder's Registrable Securities, (ii)
the issuance by the Commission of any stop order suspending the effectiveness of
a Registration Statement covering any of such selling Holder's Registrable
Securities or the initiation of any proceedings for that purpose, (iii) the
receipt by the Company of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (iv) the happening
of any event that requires the making of any changes in the Registration
Statement covering any of such selling Holder's Registrable Securities so that
it will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or that any related prospectus will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (v) the Company's reasonable
determination that a post-effective amendment to a Registration Statement
covering any of such selling Holder's Registrable Securities or a supplement to
any related prospectus is required under the Act; such selling Holder will
forthwith discontinue disposition of such Registrable Securities until it is
advised in writing by the Company that the use of the applicable prospectus (as
amended or supplemented, as the case may be) and disposition of the Registrable
Securities covered thereby pursuant thereto may be resumed, provided, however,
(x) that such selling Holder shall not resume its disposition of Registrable
Securities pursuant to such Registration Statement or related prospectus unless
it has received notice from the Company that such Registration Statement or
amendment has become effective under the Act and has received a copy or copies
of the related prospectus (as then amended or supplemented. as the case may be)
unless the Registrable Securities are then listed on a national securities
exchange and the Company has advised such selling Holder that the Company has
delivered copies of the related prospectus, as then amended or supplemented, in
transactions effected upon such exchange, subject to any subsequent receipt by
such selling Holder from the Company of written notice of any of the events
contemplated by clauses (i) through (v) of this paragraph, and, (y) if so
directed by the Company,
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such holder will deliver to the Company all copies, other than permanent file
copies then in such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Holders are required to refrain from disposition of Registrable
Securities for more than thirty (30) days in any three hundred sixty-five (365)
day period, the Company shall be deemed in breach of this Agreement.
Section 2.4 Registration Expenses. The Company shall bear all expenses
incident to the Company's performance of or compliance with this Agreement,
including, without limitation, all fees and expenses relating to the listing of
any Registrable Securities with the Nasdaq National Market System (or on such
other principal securities exchange on which the equity securities issued by the
Company are then quoted or listed and traded), fees and expenses of compliance
with securities or Blue Sky laws in jurisdictions reasonably requested by any
selling Holder or underwriter pursuant to Section 2.3(b) (including reasonable
fees and disbursements of counsel in connection with Blue Sky qualifications of
the Registrable Securities), all word processing, duplicating and printing
expenses, messenger and delivery expenses, fees and disbursements of counsel for
the Company and one (1) counsel for the selling Holders (selected by Holders
holding a majority of the Registrable Securities), independent public
accountants (including the expenses of any special audit or "cold comfort"
letters required by or incident to such performance) and underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals attributable to the securities
being registered, which discounts, commissions or fees with respect to any
selling Holder's respective Registrable Securities shall be paid by such selling
Holder), all the Company's internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), fees of the National Association of Securities Dealers,
Inc., the expense of any annual audit, the expenses of any special audit
incident to or required by any registration, the expense of any liability
insurance (if the Company determines to obtain such insurance) and the
reasonable fees and expenses of any special experts (including attorneys)
retained by the Company (if it so desires) in connection with such registration
and fees and expenses of other persons retained by the Company.
Section 2.5 Indemnification.
(a) In the event of any registration of any of the Registrable
Securities under the Act pursuant to this Agreement, the Company will indemnify
and hold harmless the selling Holder of such Registrable Securities, each of its
officers, directors, partners, legal counsel and accountants, each underwriter
(if any) and each other person, if any, who controls such selling Holder or such
underwriter within the meaning of the Act, against any expenses, losses, claims,
damages or liabilities, joint or several, arising out of or based upon any
untrue statement (or alleged untrue statement) of a material fact contained in
any Registration Statement under which such Registrable Securities were
registered under the Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arising out of or based upon any
omission (or alleged omission) to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Act or any rule or regulation promulgated
thereunder applicable to the Company and relating to action or inaction required
of the Company in
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connection with any such registration; and, subject to Section 2.5(c) below, the
Company will reimburse such selling Holder, each of its officers, directors,
partners, legal counsel and accountants, each underwriter, if any, and each such
controlling person for any legal and any other expenses reasonably incurred by
such selling Holder or controlling person in connection with investigating and
defending any such expense, loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such expense, loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission made in such Registration Statement,
preliminary prospectus, final prospectus, or summary prospectus, or any such
amendment or supplement, made in reliance upon and in conformity with
information furnished to the Company, in writing, by such selling Holder and
stated to be specifically for use therein.
(b) Each selling Holder of Registration Securities will,
severally, and not jointly and severally, in the event that any Registrable
Securities held by such selling Holder as to which any registration is being
effected under the Act pursuant to this Agreement, indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any),
and each other person, if any, who controls the Company or any such underwriter
within the meaning of the Act, against any losses, claims, damages or
liabilities, joint or several, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement of a material fact contained in any Registration Statement
under which such Registrable Securities were registered under the Act, any
preliminary prospectus, final prospectus or summary prospectus contained in the
Registration Statement, or any amendment or supplement to the Registration
Statement, or arise out of or are based upon any omission to state a material
fact required to be stated therein or necessary to make the statement therein
not misleading, if the statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company by such selling
Holder and stated to be specifically for use therein, and shall reimburse the
Company, its directors and officers, and each such controlling person for any
legal or other expenses reasonably incurred by any of them in connection with
investigation or defending any such loss, claim, damage, liability or action.
This indemnity shall remain in full force and effect for the applicable statute
of limitation period regardless of any investigation made by or on behalf of the
Company or such controlling person and shall survive the transfer of shares. No
selling Holder shall be liable to the Company and the other indemnified parties
under this Section 2.5(b) for any amount in excess of the net proceeds received
from the Registrable Securities sold by it pursuant to the Registration
Statement.
(c) Each party entitled to indemnification under this Section
2.5 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any loss, claim, action, damage or liability as to which
indemnity may be sought, and shall permit the Indemnified Party to assume the
defense of any such claim or any litigation resulting therefrom; provided, that
counsel for the Indemnifying Party who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party whose approval shall
not be unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnified Party of its obligations under this Section 2.5, except to the
extent that such failure to give notice prejudices the Indemnifying Party or
such Indemnifying Party
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is damaged by such delay. The Indemnified Party may participate in such defense
at such party's expense; provided, however, that the Indemnifying Party shall
pay such expense (but in no event shall the Indemnifying Party be obligated to
pay the fees and expenses of more than one counsel for the Indemnified Party or
Parties) if representation of such Indemnified Party by the counsel retained by
the Indemnifying Party would, in the reasonable judgment of the Indemnified
Party, be inappropriate due to actual or potential conflict of interests between
the Indemnified Party and any other party represented by such counsel in such
proceeding. If, in the Indemnified Party's reasonable judgment, a conflict of
interest between such Indemnified and Indemnifying Parties may exist in respect
of such claim, the Indemnified Party may assume the defense of such claim,
jointly with any other Indemnified Party that reasonably determines such
conflict of interest to exist, and the Indemnifying Party shall be liable to
such Indemnified Parties for the reasonable legal fees and expenses of one
counsel for all such Indemnified Parties and for other expenses reasonably
incurred in connection with the defense thereof incurred by the Indemnified
Parties. No Indemnifying Party, in the defense of any such claim or litigation
shall, except with the consent of each Indemnified Party (which consent shall
not be unreasonably withheld), consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation, and no Indemnified Party
shall consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the Indemnifying Party.
(d) If the indemnification provided for in this Section 2.5 is
finally determined by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage, or expense
referred to therein or contribution is required under the Act in circumstances
for which indemnification is provided under this Section 2, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative benefits received by the Indemnifying
Party on the one hand and the Indemnified Party on the other and also the
relative fault of the Indemnifying Party and the Indemnified Party as well as
any other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact related to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission; provided, however, that, in any such case,
(A) no Holder will be required to contribute any amount in excess of the net
proceeds received from the Registrable Securities sold by it pursuant to such
Registration Statement, and (B) no person or entity guilty of fraudulent
misrepresentation, within the meaning of Section 11(f) of the Act, shall be
entitled to contribution from any person or entity who is not guilty of such
fraudulent misrepresentation.
(e) Indemnification and contribution similar to that specified
in this Section 2.5(e) (with appropriate modifications) shall be given by the
Company and each selling Holder with respect to any required registration or
other qualification of Registrable Securities under any Federal or state law or
regulation of any governmental authority, other than the Act.
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(f) The indemnification required by this Section 2.5 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
(g) The obligations under this Section 2.5 shall survive the
completion of any offering of Registrable Securities in a Registration
Statement.
Section 2.6 Indemnification with Respect to Underwritten Offering.
(a) In the event that Registrable Securities are sold pursuant
to a Registration Statement in an underwritten offering, the Company agrees to
enter into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of the Company and
customary covenants and agreements to be performed by the Company, including
without limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering.
(b) No Holder may participate in any underwritten registration
pursuant to Section 2 hereunder unless such Holder (i) agrees to sell the
Registrable Securities which it proposes to sell in such underwritten
registration on the basis provided in any underwriting arrangements approved by
the persons entitled hereunder to approve such arrangements and (ii) completes
and executes all questionnaires, powers of attorney, reasonable and customary
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements and provides such other information and
documentation as the Company or the underwriters may reasonably request in
connection with such underwritten registration.
Section 2.7 Information by Holder. Each holder of Registrable
Securities included in any Registration shall furnish to the Company such
information regarding such holder and the distribution in proposed by such
holder as the Company may reasonably request in writing and as shall be required
in connection with any registration, qualification or compliance referred to in
this Article 2.
Section 2.8 Termination. All of the Company's obligations to register
Registrable Securities under this Agreement pursuant to this Agreement shall
terminate on the earlier of (x) when there are no Registrable Securities as
defined herein and (y) seven years from the date hereof.
Section 2.9 Transfer of Rights.
(a) The rights and obligations of each Holder (or assignee
thereof) under this Agreement may be transferred or assigned by such Holder (or
assignee thereof), in whole or in part, without the consent of the Company or
any other Holder, (i) to any Affiliate of the Holder or (ii) any person or
entity acquiring at least two hundred fifty (250) Registrable Securities (as
adjusted for stock splits, stock dividends, recapitalization or similar events)
(all of such parties, collectively, the "Permitted Transferees"). The Company
may not assign this Agreement or any of its rights or obligations hereunder or
under the Warrant without the prior written consent of each Holder and
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each Warrant holder (which consent may be withheld for any reason in the sole
discretion of such Holder or Holders).
(b) Any transferee (other than a Holder who is already a party
to an agreement in form and substance similar to this Agreement) to whom rights
under this Agreement are transferred shall, as a condition to such transfer,
deliver to the Company a written instrument by which such transferee identifies
itself, gives the Company notice of the transfer of such rights, indicates the
Registrable Securities owned by it and agrees to be bound by the obligations
imposed upon the Investor under this Agreement.
(c) A transferee to whom rights or obligations are transferred
pursuant to this Section 2.9 may not again transfer such rights or obligations
to any other person or entity, other than as provided in this Section 2.9.
Section 2.10 Rule 144. The Company will file the reports required to be
filed by it under the Act and the Exchange Act, and will take such further
action as any Holder of Registrable Securities may reasonably request, all to
the extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Act within the limitations of the
exemptions provided by (a) Rule 144 under the Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the written request of any Holder of Registrable
Securities, the Company will deliver to such Holder, within five (5) days of
delivery of such request, a written statement as to whether it has complied with
such filing requirements. In connection with any sale of Registrable Securities
that will result in such securities no longer being "restricted securities" (as
defined in Rule 144 promulgated under the Act), the Company shall cooperate with
the selling Holders and the underwriter(s), if any, and facilitate the
preparation and delivery of certificates representing such securities to be sold
which do not bear any restrictive legends to permit delivery of such securities.
Section 2.11 Information Reports. The Company covenants that, except at
such times as the Company is a reporting company under Section 13 or 15(d) of
the Exchange Act, the Company shall, upon the written request of any Holder of
Registrable Securities, provide to any such Holder and to any prospective
institutional transferee of Registrable Securities designated by such Holder,
within five (5) Business Days after delivery of such written request, such
financial and other information as is available to the Company and as such
Holder may reasonably determine is required to permit a transfer of such
Registrable Securities to comply with the requirements of Rule 144A promulgated
under the Act.
Section 2.12 Investor Representations. In connection with the
acquisition of the Warrants, the Investor hereby represents that it has such
knowledge and experience in financial and business matters that the Investor is
capable of evaluating the merits and risks of its investment contemplated by
this Agreement and has the capacity to protect its own interests. The Investor
acknowledges that investment in the Warrant and the shares of Company common
stock issuable upon exercise of such Warrant ("Warrant Shares") is highly
speculative and involves a substantial and high degree of risk of loss of the
entire investment. The Investor has adequate means of providing for current and
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anticipated financial needs and contingencies, is able to bear the economic risk
of its investment in the Warrant and Warrant Shares and could afford complete
loss of such investment. The Investor is an "accredited investor" (as such term
is defined in Rule 501 of Regulation D under the Act).
Section 2.13 Market Stand-off Agreement. Each Holder agrees, in
connection with any underwritten public offering that, upon request of the
Company or the underwriters managing any underwritten public offering of the
Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Common Stock of the
Company (other than those shares of Common Stock included in the registration)
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time (not to exceed one hundred twenty (120)
days) from the effective date of such registration as may be requested by the
underwriters. The Company may impose stop-transfer instructions with respect to
the Registrable Securities of each Holder (and the shares or securities of every
other person subject to the foregoing restriction) until the end of such period.
ARTICLE 3
MISCELLANEOUS
Section 3.1 Notices. All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing delivered to the parties at the addresses set forth
on the signature page hereof (or such other address as may be provided by one
party in a notice to the other). Notice delivered in accordance with the
foregoing shall be effective (i) when delivered, if delivered personally, (ii)
three (3) hours after confirmation of receipt, if delivered by facsimile
transmission, or (iii) two (2) days after being delivered in the United States
(properly addressed and all fees paid) for by overnight delivery service to a
courier (such as Federal Express) which regularly provides such service and
regularly obtains executed receipts evidencing delivery. Notices shall not be
given via U.S. Mail.
Section 3.2 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by (i) the parties hereto; (ii) the
Permitted Transferees; and (iii) the respective successors of the foregoing,
including those resulting by operation of law.
Section 3.3 Headings. Article and Section headings used in this
Agreement are for convenience of reference only and shall not constitute a part
of this Agreement for any purpose or affect the construction of this Agreement.
Section 3.4 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
one and the same Agreement. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
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Section 3.5 Governing Law. This Agreement shall be deemed to have been
made in the State of New York and the validity of this Agreement, the
construction, interpretation and enforcement thereof, and the rights of the
parties thereto shall be determined under, governed by, and construed in
accordance with the internal laws of the State of New York, without regard to
principles of conflicts of law.
Section 3.6 Survival of Agreements, Representations and Warranties. All
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement.
Section 3.7 WAIVER OF JURY TRIAL. THE COMPANY WAIVES (A) THE RIGHT TO
TRIAL BY JURY (WHICH INVESTOR HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING, OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE WARRANT OR THE WARRANT CERTIFICATE. THE COMPANY WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVER WITH ITS LEGAL COUNSEL AND
HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 3.8 Amendment and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
least 51% of the Registrable Securities; provided, that this Agreement may be
amended with the consent of the holders of less than all Registrable Securities
(but not less than 51% of such shares) only in a manner which affects all
Registrable Securities in the same fashion. In no event may this Agreement be
amended to (i) shorten the Effectiveness Period, (ii) extend the Effectiveness
Target Date or (iii) require a Holder to pay expenses otherwise borne by the
Company under Section 2.4, without the prior written consent of each Holder
affected thereby. No waivers of or exceptions to any term, condition or
provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
Section 3.9 Availability of Equitable Remedies. Each party acknowledges
that a breach of the provisions of this Agreement could not adequately be
compensated by money damages. Accordingly, any party shall be entitled, in
addition to any other right or remedy available to it, to an injunction
restraining such breach or a threatened breach and to specific performance of
any such provision of this Agreement, and in either case no bond or other
security shall be required in connection therewith, and the parties hereby
consent to such injunction and to the ordering of specific performance.
Section 3.10 Entire Agreement. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter hereof.
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Section 3.11 Attorney's Fees. Any holder of the Warrant shall be
entitled to recover from the Company the reasonable attorney's fees and expenses
incurred by such holder in connection with enforcement by such holder of any
obligation of the Company hereunder or under the Warrant.
Section 3.12 No Impairment Rights. The Company will not, by amendment
of its Certificate of Incorporation or through any other means, avoid or seek to
avoid the observance or performance of any of the terms of this Agreement, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Agreement against impairment.
Section 3.13 No Inconsistent or Superior Registration Rights.
(a) From and after the date of this Agreement, the Company
shall not, without the prior written consent of the Holders of a majority in
principal amount of Registrable Securities, (i) enter into any agreement
granting registration rights with respect to the Common Stock or other
securities which are inconsistent with or superior to the rights granted to the
Holders hereunder; or (ii) amend any agreement, in effect as of the date hereof,
so as to grant registration rights to any other person or entity which causes
such registration rights to be inconsistent with those granted to the Holders
hereunder or to otherwise adversely affect the registration rights granted to
the Holders hereunder.
(b) Notwithstanding the foregoing, the Investor acknowledges
and agrees that comparable registration rights have been granted concurrently
herewith to (i) the holders of the Company's warrants issued pursuant to that
certain Financing Agreement dated of even date herewith by and among the
Company, Ultradata Corporation, MECA Software, L.L.C., MoneyScape Holdings,
Inc., the Lenders (as such term is defined in the Financing Agreement), Foothill
Capital Corporation, as administrative agent for the Lenders, and Ableco Finance
LLC, as collateral agent for the Lender Group (as such term is defined in the
Financing Agreement) and (ii) the holders of the 10% Convertible Subordinated
Discount Notes issued pursuant to that certain Note Purchase Agreement dated of
even date herewith by and among the Company, the subsidiaries of the Company
listed on Exhibit A thereto, and the purchasers of such notes listed on the
signature page thereof.
[Signature Page Follows.]
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[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
COMPANY: CFI PROSERVICES, INC.
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: Vice President and Chief
Financial Officer
Address: 000 XX Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
INVESTOR: U.S. BANCORP LIBRA, A DIVISION OF U.S.
BANCORP INVESTMENTS, INC.
By: /s/ Xxxx Xxxxxxx
----------------
Name: Xxxx Xxxxxxx
Title: General Counsel
Address:
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