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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
on April 20, 1999 between Project Software & Development, Inc., a Massachusetts
corporation (the "Company"), and X.X. Xxxxxxxx, Inc., an Illinois corporation
(the "Investor").
WHEREAS, Investor has requested that the Company issue and sell
Investor an aggregate of 500,000 Shares of the Company's common stock, par value
$.01 per share (the "Common Stock"), pursuant to a stock purchase agreement
dated as of even date herewith (the "Stock Purchase Agreement"); and
WHEREAS, the Investor has requested and the Company is willing to grant
certain registration rights to the Investor as contemplated by the Stock
Purchase Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under direct or indirect common control with such
Person, and any Person in which such Person owns 50% or more of the voting
equity interests.
"Overhang Risk" means a substantial risk that the offering and sale of
some or all shares sought to be sold in a Piggyback Registration will
substantially reduce the proceeds or price per unit to be derived from a
registration by the Person on whose behalf a registration statement is filed.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust, governmental authority or other entity or
association.
"Registrable Shares" means any shares of Common Stock acquired pursuant
to the Stock Purchase Agreement and held by the Investor. As to any particular
Registrable Shares, such shares will cease to be Registrable Shares when and to
the extent that: (i) they are sold pursuant
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to a public offering registered under the Securities Act or (ii) the holder of
such Registrable Shares sells them to the public in compliance with Rule 144
under the Securities Act (or any similar rule then in force) or (iii) all of
such Shares may be sold in a three month period under Rule 144.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
ARTICLE II
PIGGYBACK REGISTRATIONS
SECTION 2.1 RIGHT TO PIGGYBACK. If the Company proposes to undertake an
underwritten offering of Common Stock for its account or the account of others
and the registration form to be used for such offering may be used for the
registration of Registrable Shares (a "Piggyback Registration"), the Company
will give prompt written notice to all holders of Registrable Shares of its
intention to effect such a registration (a "Piggyback Notice"). Subject to
SECTIONS 2.2 and 2.3, the Company will include in such registration all
Registrable Shares with respect to which the Company has received written
requests for inclusion therein. The holders of Registrable Shares shall be
entitled to an unlimited number of Piggyback Registrations. The Company hereby
represents that no person is entitled by any agreement with the Company (or
otherwise except as reflected in Section 2.2 (b) and (c) below) to any demand or
piggyback rights to register shares of the Company's common stock, other than
the Massachusetts Capital Resource Company ("MCRC"), which is entitled to
certain demand and piggyback registration rights with respect to approximately
111,750 shares of Common Stock pursuant to Article V of that certain
Subordinated Note and Warrant Purchase Agreement dated December 10, 1992 between
the Company and MCRC.
SECTION 2.2 PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriter(s) advise(s) the Company and the Investor in
writing that in its/their opinion the number of securities requested to be
included in such registration would create an Overhang Risk, the Company will
include in such registration: (a) first, the securities the Company proposes to
sell; (b) second, up to 400,000 shares owned beneficially by Xxxxx X. Xxxxxxx;
(c) third, on a pro rata basis based on the number of shares beneficially owned
by each as to which registration has been requested, the Registrable Shares
requested to be included therein and any other shares requested to be included
in such registration that are owned beneficially by Xxxxxx X. Xxxxxxx and by
MCRC; (d) fourth by Persons other than the holders of Registrable Shares
pursuant to registration rights granted after the date of this Agreement; and
(e) fifth, such other securities as to which registration is requested on the
basis of the number of shares of such securities owned by each such holder.
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SECTION 2.3 PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is a secondary registration on behalf of holders of the Company's
securities other than the Registrable Shares, and the managing underwriter(s)
advise(s) the Company and the Investor in writing that in its/their opinion the
number of securities requested to be included in the registration would create
an Overhang Risk, the Company will include in the registration: (a) first, the
securities requested to be included therein by the holders requesting such
registration pursuant to demand registration rights; (b) second, up to 400,000
shares owned beneficially by Xxxxx X. Xxxxxxx; (c) third, on pro rata basis
based on the number of shares beneficially owned by each as to which
registration has been requested, the Registrable Shares requested to be included
therein and any other shares requested to be included in such registration that
are owned beneficially by Xxxxxx X. Xxxxxxx and by MCRC; and (d) fourth, all
other shares as to which registration is requested.
SECTION 2.4 UNDERWRITING AGREEMENT. The right of any holder of
Registrable Securities to participate in such distribution shall be conditioned
upon such holder's agreement to enter into a written agreement with the managing
underwriter in such form and containing such provisions as are customary in the
securities business for such an arrangement between such underwriter and
companies of the Company's size and investment stature.
ARTICLE III
REGISTRATION PROCEDURES
Whenever the holders of Registrable Shares request that any Registrable
Shares be registered pursuant to this Agreement, the Company will use its best
efforts to effect the registration and the sale of such Registrable Shares in
accordance with the intended method of disposition thereof, and pursuant thereto
the Company as expeditiously as possible will:
SECTION 3.1 NOTICE. Give the Investor written notice, no less than 10
days prior to the filing of the registration statement, of the Company's
intention to conduct a public offering pursuant to which the Investor's
registration rights would apply. Within 7 days of receipt of such notice, the
Investor will advise the Company whether the Investor wishes to include
Registrable Shares in such registration statement, and if so, the number of
shares it wishes to include.
SECTION 3.2 REGISTRATION STATEMENT. Prepare and file with the
Securities and Exchange Commission (the "SEC") a registration statement with
respect to such Registrable Shares and use its reasonable efforts to cause such
registration statement to become effective; provided, however, that the Company
may delay the filing or effectiveness of such registration statement or suspend
sales at any time under the registration statement immediately upon notice to
the undersigned at the last known address of the undersigned, for a period or
periods of time not to exceed in the aggregate 90 days during any 12-month
period, if there then exists material, non-public information relating to the
Company and, in the reasonable opinion of the Board of
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Directors of the Company, disclosure of such information would jeopardize an
important corporate objective and is not otherwise required by law; provided,
further, that the Company shall have the right to withdraw the registration
statement should it decide that it no longer wishes to pursue such offering.
SECTION 3.3 AMENDMENTS AND SUPPLEMENTS. Prepare and file with the SEC
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as are necessary to keep the
registration statement effective for the period required by the intended method
of disposition or to describe the terms of any offering made from an effective
Shelf Registration, and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement.
SECTION 3.4 COPIES OF STATEMENT. Furnish to each seller of Registrable
Shares and to its underwriter the number of copies of the registration
statement, each amendment and supplement thereto, the prospectus included in the
registration statement (including each preliminary prospectus) and any other
documents that the seller reasonably requests to facilitate the disposition of
its Registrable Shares.
SECTION 3.5 BLUE SKY LAWS. Use its reasonable efforts to register or
qualify such Registrable Shares under the securities or "blue sky" laws of any
jurisdiction(s) that any seller reasonably requests and do any and all other
acts and things that reasonably are necessary or advisable to enable such seller
to consummate the disposition in such jurisdiction(s) of its Registrable Shares;
provided, that the Company will not be required to: (a) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section, (b) subject itself to taxation in any such jurisdiction,
(c) consent to general service of process in any such jurisdiction or (d)
qualify such Registrable Shares in any jurisdiction where expressions of
investment interest are not sufficient reasonably to justify the expense of
qualification in that jurisdiction or where such qualification would require the
Company to register as a broker or dealer in such jurisdiction.
SECTION 3.6 ANTIFRAUD RULES. Notify each seller of such Registrable
Shares: (a) when a prospectus relating thereto is required to be delivered under
the Securities Act, or (b) of the happening of any event as a result of which
the prospectus contains an untrue statement of a material fact or omits any
material fact necessary to make the statements therein not misleading, and in
such event, at the request of any seller, the Company will prepare a supplement
or amendment to the prospectus so that, as thereafter delivered to the
purchasers or offerees of such Registrable Shares, 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.
SECTION 3.7 SECURITIES EXCHANGE LISTINGS. Cause all such Registrable
Shares to be
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listed on each securities exchange or quotation system on which similar
securities issued by the Company are then listed and to be qualified for trading
on each system on which similar securities issued by the Company from time to
time are qualified.
SECTION 3.8 TRANSFER AGENT AND REGISTRAR. Provide a transfer agent and
registrar for all such Registrable Shares not later than the effective date of
such registration statement and thereafter maintain a transfer agent and
registrar.
SECTION 3.9 DUE DILIGENCE. Permit the Investor, and its accountants and
counsel to conduct a reasonable due diligence investigation of the Company which
shall include (if necessary in the opinion of Counsel to the Investor)
inspection of all financial and other records, pertinent corporate documents and
assets of the Company, and reasonable access to the Company's officers,
directors, employees and independent accountants who shall supply all
information, certificates, opinions and "comfort letters" reasonably requested
by the Investor, or such accountants or counsel.
SECTION 3.10 EARNING STATEMENT. Use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earning statement covering the
period of at least twelve months beginning with the first day of the Company's
first full calendar quarter after the effective date of the registration
statement, which earning statement shall satisfy the provisions of Section 11(a)
of the Securities Act and Rule 158 thereunder.
SECTION 3.11 MANAGEMENT AVAILABILITY. In connection with underwritten
offerings, make available appropriate management personnel for participation in
the preparation and drafting of the registration statement, in due diligence
meetings and in a series of "road show" meetings located in various cities.
SECTION 3.12 STOP ORDERS. In the event of the issuance of any stop
order suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any equity securities included in such registration statement
for sale in any jurisdiction, the Company will use its reasonable best efforts
to obtain the withdrawal of such order promptly.
SECTION 3.13 COMFORT LETTER. Obtain a "comfort letter" from the
Company's independent public accountants addressed to the selling holders of
Registrable Shares and the underwriters in customary form and covering such
matters of the type customarily covered by comfort letters as the holders of a
majority of the Registrable Shares being sold reasonably request.
The Investor on behalf of itself and any transferees of Registrable
Shares severally agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind
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described in SECTION 3.6 or 3.12, the holders of Registrable Shares promptly
will discontinue any disposition of Registrable Shares pursuant to a Piggyback
Registration until receipt of copies of an appropriate supplement or amendment
to the prospectus under SECTION 3.6 or until the withdrawal of the stop order
under SECTION 3.12, as appropriate.
ARTICLE IV
REGISTRATION EXPENSES
SECTION 4.1 EXPENSES BORNE BY COMPANY. Except as specifically otherwise
provided in SECTION 4.2, the Company will be responsible for the payment of all
expenses incident to any Piggyback Registration, including, without limitation,
all registration and filing fees, fees and expenses of compliance with
securities or "blue sky" laws, printing expenses, messenger and delivery
expenses, the fees and disbursements of counsel for the Company, and all
independent certified public accountants and other Persons retained by the
Company (all such expenses being the "Registration Expenses").
SECTION 4.2 EXPENSES BORNE BY SELLING SHAREHOLDERS. The selling
shareholders will be responsible for the payment of underwriting discounts,
commissions and other sales expenses incident to any Piggyback Registration and
for the fees and expenses of their counsel, if any.
ARTICLE V
INDEMNIFICATION
SECTION 5.1 INDEMNIFICATION BY COMPANY. The Company agrees to
indemnify, to the extent permitted by law, each holder of Registrable Shares
sold in an offering pursuant to a registration statement hereunder, its
officers, directors and trustees and each Person who controls (within the
meaning of the Securities Act) such holder against all losses, claims, damages,
liabilities or expenses caused by any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus relating to such offering, or any amendment or supplement thereto, or
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 caused by or contained in any information furnished in
writing to the Company by such holder or by the underwriters expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus, or any amendments or supplements thereto, after the
Company has furnished it with a sufficient number of copies of the same.
SECTION 5.2 INDEMNIFICATION BY HOLDERS. In connection with any
registration statement in which a holder of Registrable Shares is participating,
each such holder will furnish to the Company in writing any information that the
Company reasonably requests for use in
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connection with the registration statement or prospectus and, to the extent
permitted by law, will indemnify the Company, its directors and officers and
each Person who controls (within the meaning of the Securities Act) the Company
against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus, or any amendment
or supplement thereto, or 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 such untrue statement or omission is
contained in any information so furnished in writing by such holder; provided,
that the obligation to indemnify will be individual to each holder and will be
limited to the proceeds received by such holder from the sale of Registrable
Shares pursuant to the registration statement. In connection with an
underwritten offering, each such holder will indemnify the underwriter(s),
its/their officers and directors and each Person who controls (within the
meaning of the Securities Act) the underwriter(s) at least to the same extent as
provided above with respect to the indemnification of the Company.
SECTION 5.3 ASSUMPTION OF DEFENSE BY INDEMNIFYING PARTY. Any Person
entitled to indemnification hereunder will: (a) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks
indemnification and (b) unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
with respect to such claim, permit such indemnifying party to assume the defense
of such claim with counsel reasonably satisfactory to the indemnified party. In
no event will the indemnifying party be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
will not be withheld unreasonably). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
SECTION 5.4 BINDING EFFECT. The indemnification provided for under this
Agreement will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director or
controlling person of such indemnified party and will survive the transfer of
securities.
SECTION 5.5 CONTRIBUTION. (a) If the indemnification provided for in
SECTION 5.1 or 5.2 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any losses, claims, damages,
liabilities and expenses, then the indemnifying party, in lieu of indemnifying
the indemnified party, shall contribute to the amount paid or payable by the
indemnified party 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 party on the one hand and of the indemnified party on the other
hand in connection with the statement or omission that resulted in such losses,
claims, damages, liabilities or expenses as well as any other relevant
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equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether such statement or omission relate
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.
(b) Notwithstanding CLAUSE (a), the amount any shareholder(s) shall be
obligated to contribute pursuant to CLAUSE (a) shall be limited to the proceeds
to such shareholder(s) of the Registrable Shares sold pursuant to the
registration statement that gives rise to the obligation to contribute (less the
amount of any monies that the shareholder(s) otherwise has/have been required to
pay in respect of such losses, claims, damages, liabilities or expenses or any
substantially similar losses, claims, damages, liabilities or expenses arising
from the sale of such Registrable Shares).
SECTION 5.6 SURVIVAL OF INDEMNITY. The indemnification provided by
ARTICLE V shall be a continuing right to indemnification and shall survive the
registration and sale of any Registrable Shares by any Person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
ARTICLE VI
PARTICIPATION IN UNDERWRITTEN REGISTRATION
No Person may participate in any registration hereunder that is
underwritten unless such Person: (a) agrees to sell its securities on the basis
provided in any underwriting arrangements approved by the Person(s) entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 NO INCONSISTENT AGREEMENTS. The Company hereafter will not
enter into any agreement with respect to its securities that violates the rights
granted to the holders of Registrable Shares in this Agreement.
SECTION 7.2 REMEDIES. Any Person having rights under any provision of
this Agreement will be entitled to enforce its rights specifically to recover
damages caused by reason of any breach of this Agreement and to exercise all
other rights granted by law.
SECTION 7.3 EXPIRATION. Except as specifically otherwise provided
herein, this
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Agreement shall terminate on the earlier to occur of: (a) such time as all
Registrable Shares have ceased to be Registrable Shares hereunder and (b) such
time as the holders of Registrable Shares own, in the aggregate, one percent or
less of the total outstanding shares of Common Stock.
SECTION 7.4 AMENDMENTS AND WAIVERS. Except as specifically otherwise
provided herein, this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of a majority of the then outstanding
Registrable Shares.
SECTION 7.5 NOT BINDING ON SUCCESSORS AND ASSIGNS. The Purchaser shall
have the right to transfer to a wholly-owned subsidiary the Registrable Shares
and its rights and obligations under this Agreement. Except as set forth in the
previous sentence, the parties shall not assign their rights and obligations, in
whole or in part, whether by operation of law or otherwise, without the prior
written consent of the other party hereto.
SECTION 7.6 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, that provision will be
ineffective only to the extent of the prohibition or invalidity, without
invalidating the remainder of this Agreement.
SECTION 7.7 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, and all of which taken together will constitute one and the
same Agreement.
SECTION 7.8 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are included for convenience only and do not constitute a part of this
Agreement.
SECTION 7.9 GOVERNING LAW. The laws of the State of Delaware will
govern the construction, validity and interpretation of this Agreement without
regard to any choice of law or conflict of law provision or rule.
SECTION 7.10 NOTICES. All communications, notices and consents provided
for in this Agreement shall be in writing and be deemed given (a) on delivery if
given in person, (b) on the date of transmission if sent by telex, facsimile or
other means of wire transmission (receipt confirmed), (c) one (1) day after
being delivered to a nationally recognized overnight courier or (d) four (4)
business days after being deposited in the United States mails, with proper
postage and documentation, for first-class registered or certified mail,
prepaid.
Notices shall be addressed as follows:
If to Investor:
Prior to June 1, 1999 After June 1, 1999
X.X. Xxxxxxxx, Inc. X.X. Xxxxxxxx, Inc.
000 Xxxxxxxxxxxxx Xxxxxxx 000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000 Xxxx Xxxxxx, Xxxxxxxx 00000
Attn: Secretary Attn: Secretary
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If to the Company, to:
Project Software & Development, Inc
000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chief Financial Officer
provided, that if any party shall have designated a different address by notice
to the others, then to the last address so designated.
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
PROJECT SOFTWARE & DEVELOPMENT, INC
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
Its: President and CEO
X.X. XXXXXXXX, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Its: Senior Vice-President
