Exhibit 10.6
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") dated as of
November 2, 2000, is by and between PaperClip Software, Inc. (the "Company"), a
Delaware corporation and Access Solutions International, Inc., a Delaware
corporation ("Purchaser").
WHEREAS, the Company and Purchaser have entered into a Series A
Preferred Stock Purchase Agreement (the "Purchase Agreement") dated as of
November 2, 2000, pursuant to which the Company will issue and sell certain
securities to Purchaser on the terms and conditions set forth in the Purchase
Agreement; and
WHEREAS, but for the Company's execution and delivery of this
Agreement, the Purchaser would not be willing to enter into the Purchase
Agreement or to consummate the transactions thereby contemplated, which
transactions will benefit the Company.
NOW THEREFORE, in consideration of the foregoing and of the mutual
agreements and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, each intending to be legally bound, do hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined in
this Agreement have the respective meanings ascribed to them in the Purchase
Agreement. In addition, as used in this Agreement:
"Commission" means the Securities and Exchange Commission.
"Holders" means the Purchaser and all persons to whom any Registrable
Securities are transferred in accordance with the provisions of the Purchase
Agreement, and "Holder" means any one of the Holders. Unless the context
otherwise requires, for all purposes of this Agreement, a Holder will be deemed
to hold, at any particular time, all shares of Common Stock issued or issuable
upon conversion of shares of Series A Preferred Stock held by such Holder at
such time.
"Registered" and "registration" (regardless of whether capitalized)
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and the declaration or ordering
by the Commission of the effectiveness of such registration statement.
"Registrable Securities" means, at any particular time, all shares of
Common Stock issued or issuable in respect of (i) Purchased Securities and/or
(ii) other shares of Series A Preferred Stock held by parties to this Agreement
(except the Company). Securities will cease to be Registrable Securities when
they have been sold pursuant to an effective registration statement under the
Securities Act, or eligible to be sold pursuant to Rule 144 under the Securities
Act, or any other exemption from the registration requirements of the Securities
Act under which the transferee receives securities that are not "restricted
securities" within the meaning of that term as defined in Rule 144(a)(3).
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"Underwriters' Maximum Number" means, with respect to an underwritten
registration, that number of securities to which such registration should be
limited, in the written opinion of the managing underwriters of such
registration in the light of marketing factors.
2. Piggyback Registrations.
(a) Rights to Piggyback.
(i) If (and on each occasion that) the Company proposes to
register any of its securities under the Securities Act (except registrations of
securities in connection with (i) an employee benefit plan or dividend
reinvestment plan or (ii) debt securities which are not convertible into equity
securities of the Company), either for the Company's own account or for the
account of any of its security holders (each such registration not withdrawn or
abandoned prior to the effective date thereof, a "Piggyback Registration"), the
Company will give written notice to each of the Holders of Registrable
Securities of such proposal not later than the earlier to occur of (A) the tenth
day following the receipt by the Company of notice of exercise of any
registration rights by any persons, and (B) 30 days prior to the anticipated
filing date of such Piggyback Registration.
(ii) Subject to the provisions contained in paragraphs (b) and
(c) of this Section 2 and in the last sentence of this clause (ii): (A) the
Company will be obligated to include in each Piggyback Registration all
Registrable Securities with respect to which the Company receives, within 20
days after the date on which the Company has given written notice of such
Piggyback Registration to Holders of Registrable Securities pursuant to Section
2(a)(i) hereof, the written requests of such Holders for inclusion in such
Piggyback Registration, and (B) the Company will use its best efforts in good
faith to effect promptly the registration of all such Registrable Securities.
Holders will be permitted to withdraw all or any part of their Registrable
Securities from any Piggyback Registration at any time prior to the effective
date of such Piggyback Registration.
(b) Priority in Piggyback Registrations. If a Piggyback Registration is
an underwritten registration, and the managing underwriters thereof give written
advice to the Company of an Underwriters' Maximum Number, then: (i) the Company
will be entitled to include in such registration that number of securities that
the Company proposes to offer and sell for its own account in such registration
and which does not exceed the Underwriters' Maximum Number; (ii) the Company
will be obligated to include in such registration that number of Registrable
Securities that have been requested by Holders and which is not more than the
difference between the Underwriters' Maximum Number and the number of securities
that the Company includes in such registration under clause (i) above, and such
number of Registrable Securities will be allocated pro rata among such Holders
on the basis of the number of Registrable Securities held by each such Holder;
and (iii) if the Holders have been permitted to include in such registration all
shares that they have requested so to include and the Underwriters' Maximum
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Number exceeds the sum of the number of Registrable Securities that the Company
has been requested to include in such registration for the account of Holders
and the number of securities that the Company proposes to offer and sell for its
own account in such registration, then the Company may include in such
registration that number of other securities that persons other than Holders
have requested be included in such registration and which is not greater than
such excess.
(c) Selection of Underwriters. In any Piggyback Registration, the
Company will have the right to select the investment bankers and managing
underwriters in such registration.
3. Lockup Agreements.
(a) Restrictions on Public Sale by Holders of Registrable Securities.
Each Holder of Registrable Securities, any of whose Registrable Securities are
included in any underwritten registration of the Company's securities, if the
Company or the managing underwriters so request of such Holders in connection
with such registration, will not, without the prior written consent of the
Company or such underwriters, effect any public sale or other distribution of
any Registrable Securities, including any sale pursuant to Rule 144, during the
seven days prior to, and during the 90-day period following the effective date
of such underwritten registration, except in connection with such underwritten
registration; provided that each officer and director of the Company and each
other person who is also an Affiliate of the Company enter into similar
agreements with respect to all equity securities of the Company held by them,
and provided, further, that to the extent that any such officer, director, or
other Affiliate of the Company is released (in whole or in part) from such
lock-up agreement prior to its scheduled termination date, each Holder will have
a proportionate percentage of its Registrable Securities released from such
lock-up agreement.
(b) Restrictions on Public Sale by Company. The Company will not effect
any public sale or other distribution of equity securities, or securities
exercisable or exchangeable for, or convertible into, equity securities, during
the seven days prior to, and during the 90-day period following the effective
date of such underwritten registration, except in connection with such
underwritten registration.
4. Registration Procedures. If (and on each occasion that) the
Company becomes obligated to effect any registration of any Registrable
Securities hereunder, the Company will use its best efforts in good faith to
effect promptly the registration of such Registrable Securities under the
Securities Act and to permit the public offering and sale of such Registrable
Securities in accordance with the Holders' intended methods of disposition
thereof, and, in connection therewith, the Company, as expeditiously as is
reasonably possible, will:
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Securities, and use its best efforts in good faith
to cause such registration statement to become and remain effective as provided
in this Agreement;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus included in such
registration statement as may be necessary or advisable to comply in all
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material respects with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement or as may
be necessary to keep such registration statement effective and current;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus), and such other
documents as any such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities held by such seller;
(d) enter into such customary agreements and take all such other action
in connection therewith as any Holder may reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities; and
(e) use its best efforts in good faith (i) to list the Registrable
Securities to be registered in such registration on each securities exchange or
quotation system on which similar securities of the Company are then listed, and
(ii) to register and qualify the Registrable Securities covered by such
registration statement under such securities or Blue Sky laws of such
jurisdictions as any Holder may reasonably request and do any and all such other
acts and things as may be reasonably necessary or advisable to enable such
Holder to consummate the disposition in such jurisdictions of the Registrable
Securities held by such Holder.
5. Cooperation by Holders, Etc.
(a) Each Holder requesting registration of Registrable Securities will
furnish to the Company in writing such information as the Company may reasonably
require from such Holder, and otherwise reasonably cooperate with the Company in
connection with any registration statement with respect to such Registrable
Securities.
(b) The failure of any prospective seller of Registrable Securities to
furnish any information or documents in accordance with any provision contained
in this Agreement will not affect the obligations of the Company under this
Agreement to any remaining sellers who furnish such information and documents
unless in the reasonable opinion of counsel to the Company or the underwriters,
such failure impairs or may impair the viability of the offering or the legality
of the registration statement or the underlying offering.
(c) Each Holder of Registrable Securities included in any registration
statement will not (until further notice) effect sales thereof after receipt of
telegraphic or written notice from the Company to such Holder to suspend sales
to permit the Company to correct or update such registration statement or
prospectus; but the obligations of the Company with respect to maintaining any
registration statement current and effective will be extended by a period of
days equal to the aggregate period any such suspensions are in effect.
(d) At the end of any period during which the Company is obligated to
keep any registration statement current and effective as provided by Section 4
hereof (and any extensions thereof required by the preceding paragraph (c) of
this Section 5), the Holders of Registrable Securities included in such
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registration statement will discontinue sales of shares pursuant to such
registration statement upon notice from the Company to such Holders of its
intention to remove from registration the shares covered by such registration
statement which remain unsold, and such Holders will notify the Company of the
number of shares registered that remain unsold promptly after receipt of such
notice from the Company.
6. Registration Expenses.
(a) The Company will be responsible for and will pay all costs and
expenses incurred or sustained in connection with or arising out of each
registration pursuant to this Agreement, including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
Blue Sky laws (including reasonable fees and disbursements of counsel for the
underwriters in connection with the Blue Sky qualification of Registrable
Securities), printing expenses, messenger, telephone, and delivery expenses,
fees and disbursements of counsel for the Company, fees and disbursements of all
independent certified public accountants for the Company (including the expenses
relating to the preparation and delivery of any special audit or comfort letters
required by or incident to such registration), and fees and disbursements of
underwriters (excluding discounts and commissions), the reasonable fees and
expenses of any special experts retained by the Company on its own initiative or
at the request of the managing underwriters in connection with such
registration, and fees and expenses of all (if any) other persons retained by
the Company, provided that the Holders (and not the Company) shall be
responsible for and will pay all fees, expenses and disbursement of all (if any)
counsel and other persons retained by the Holders (all such costs and expenses
that are the responsibility of the Company as aforesaid, collectively,
"Registration Expenses"). The Company will, in any case, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, and the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities exchange or
quotation system on which similar securities of the Company are then listed.
(b) The Company will not bear the cost of nor pay for any stock
transfer taxes imposed in respect of the transfer of any Registrable Securities
to any purchaser thereof by any Holder of Registrable Securities in connection
with any registration of Registrable Securities pursuant to this Agreement.
(c) To the extent that Registration Expenses incident to any
registration are, under the terms of this Agreement, not required to be paid by
the Company, each Holder of Registrable Securities included in such registration
will pay all Registration Expenses that are clearly solely attributable to the
registration of such Holder's Registrable Securities so included in such
registration, and all other Registration Expenses not so attributable to one
Holder will be borne and paid by all sellers of securities included in such
registration pro rata in proportion to the number of securities so included by
each such seller.
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7. Indemnification.
(a) Indemnification by Company. The Company will indemnify each Holder
joining in a registration and each underwriter of the securities so registered,
the officers, directors, and partners of each such person and each person who
controls (within the meaning of the Securities Act) any of the foregoing, and
their respective successors and assigns, against any and all damages arising out
of or based on any untrue statement (or alleged untrue statement) of any
material fact contained in any prospectus, offering circular or other document
incident to any registration, qualification or compliance (or in any related
registration statement, notification or the like) or any omission (or alleged
omission) to state therein any material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of any rule or regulation promulgated under the Securities Act
applicable to the 'Company and relating to any action or inaction required of
the Company in connection with any such registration, qualification, or
compliance; provided, however, that the Company will not be liable in any such
case to the extent that any such damages arise out of or are based on any untrue
statement or omission based upon written information furnished to the Company in
an instrument duly executed by any Holder or any such underwriter, officer,
director, partner, or controlling person and stated to be specifically for use
in such prospectus, offering circular, or other document.
(b) Indemnification by Each Holder. Each Holder requesting or joining
in a registration will indemnify each underwriter of the securities so
registered, the Company and its officers and directors and each person, if any,
who controls (within the meaning of the Securities Act) any of the foregoing,
and their respective successors and assigns, against any and all damages arising
out of or based on any untrue statement (or alleged untrue statement) of any
material fact contained in any prospectus, offering circular, or other document
incident to any registration, qualification or compliance (or in any related
registration statement, notification or the like) or any omission (or alleged
omission) to state therein any material fact required to be stated therein or
necessary to make the statement therein not misleading, but only if and to the
extent that such statement or omission was made in reliance upon written
information furnished to such underwriter or the Company in an instrument duly
executed by such Holder (or, with the knowledge of such Holder, duly executed on
behalf of such Holder) and stated to be specifically for use in such prospectus,
offering circular, or other document (or related registration statement,
notification, or the like) or any amendment or supplement thereto.
(c) Indemnification Proceedings. Each party entitled to indemnification
pursuant to this Section 7 (the "indemnified party") will give notice to the
party required to provide indemnification pursuant to this Section 7 (the
"indemnifying party") promptly after such indemnified party acquires actual
knowledge of any claim as to which indemnity may be sought, and will permit the
indemnifying party (at its expense) to assume the defense of any claim or any
litigation resulting therefrom; provided that counsel for the indemnifying
party, who will conduct the defense of such claim or litigation, must be
acceptable to the indemnified party, and the indemnified party may participate
in such defense at such party's expense; and provided, further, that the failure
by any indemnified party to give notice as provided in this paragraph (c) will
not relieve any indemnifying party of its obligations under this Section 7
except if and to the extent that such failure results in a failure of actual
notice to the indemnifying party and such indemnifying party is actually
prejudiced solely as a result of such failure to give notice. No indemnifying
party, in the defense of any such claim or litigation, will, except with the
consent of each indemnified party, consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
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giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation. The reimbursement required
by this Section 7 will be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses incurred,
and may be conditioned upon an undertaking by the indemnified party to reimburse
the indemnifying party in the event the indemnified party is finally determined
by a court of competent jurisdiction not to be entitled to indemnification.
8. Contribution in Lieu of Indemnification. If the indemnification
provided for in Section 7 hereof is unavailable to a party that would have been
an indemnified party in respect of any damages referred to therein, then each
party that would have been an indemnifying party thereunder will, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such damages in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and such
indemnified party, respectively, in connection with the statements or omissions
which resulted in such damages. Relative fault will 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 or, with its knowledge, on behalf of the
indemnifying party or such indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each Holder of Registrable Securities
agree that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to above in this Section 8. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
9. Rule 144 Requirements. The Company will take all steps necessary to
make publicly available and available to the Holders, pursuant to Rule 144 of
the Commission under the Securities Act, such current public information as is
necessary to enable the Holders of Registrable Securities to make sales of
Registrable Securities pursuant to that Rule. The Company will furnish to the
Holders, upon request at any time, a written statement signed by the Company,
addressed to each Holder, describing briefly the action the Company has taken or
proposes to take to comply with the current public information requirements of
Rule 144. Upon receipt of a certificate certifying (i) that such Holder has held
such Purchased Securities for a period of not less than two years (or such
lesser period after which the exemption from registration pursuant to which Rule
144(k) may be available), and (ii) that such Holder has not been an affiliate
(as defined in Rule 144) of the Company during the preceding three months, the
Company will, at the request of any Holder of Purchased Securities, remove from
the stock certificates representing such Purchased Securities any restrictive
legend (or portion thereof) relating to the registration provisions of the
Securities Act.
10. Participation in Underwritten Registrations. No person may
participate in any underwritten registration pursuant to this Agreement unless
such person (a) agrees to sell such person's securities on the basis provided in
any underwriting arrangements approved by the persons entitled, under the
provisions hereof, to approve such arrangements, and (b) completes and executes
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all questionnaires, powers of attorney, custody agreements, indemnities,
underwriting agreements, and other documents reasonably required by the terms of
such underwriting arrangements. Any Holder of Registrable Securities to be
included in any underwritten registration will be entitled at any time to
withdraw such Registrable Securities from such registration prior to its
effective date in the event that such Holder disapproves of any of the terms of
the related underwriting agreement.
11. Termination. This Agreement shall terminate at such time as the
Holders are eligible to sell the Registrable Securities under Rule 144 and as to
any Registrable Security on the date the Registrable Security is sold pursuant
to an effective registration statement or pursuant to Rule 144.
12. Miscellaneous Provisions.
(a) Entire Agreement; Amendments, Consents, Waivers, Etc. This
Agreement, together with the Purchase Agreement, contains the entire
understanding and agreement among the parties, or between or among any of them,
and supersedes and terminates any prior understandings or agreements between or
among any of them, with respect to the subject matter hereof. This Agreement or
any provision hereof may be amended or terminated by agreement of the Company
and the Majority Holders, and the observance of any provision of this Agreement
that is for the benefit of the Holders may be waived (either generally or in a
particular instance, and either retroactively or prospectively), and any
consent, approval, or other action to be given or taken by the Holders pursuant
to this Agreement may be given or taken by the consent of the Majority Holders;
provided, however, that any Holder may in writing waive, as to himself, herself,
or itself only, the benefits of any provision of this Agreement.
(b) Notices. All notices, requests, payments, instructions or other
documents to be given hereunder will be in writing or by written
telecommunication, and will be deemed to have been duly given if delivered in
accordance with the Purchase Agreement.
(c) Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered will be an
original, but all of which together will constitute one and the same instrument.
In pleading or proving this Agreement, it will not be necessary to produce or
account for more than one such counterpart.
(d) Captions. The captions of sections or subsections of this Agreement
are for reference only and will not affect the interpretation or construction of
this Agreement.
(e) Binding Effect and Benefits. This Agreement will bind and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Except as otherwise provided in this Agreement, the provisions of this
Agreement that are for the Holders' benefit will inure to the benefit of all
permitted transferees of Registrable Securities. Nothing in this Agreement will
confer any rights or remedies on any person other than the parties hereto and
their respective successors and permitted assigns.
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(f) Construction. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction will be applied against any party.
(g) Severability. No invalidity or unenforceability of any section of
this Agreement or any portion thereof will affect the validity or enforceability
of any other section or the remainder of such section.
(h) Equitable Relief. Each of the parties acknowledges that any breach
by such party of his, her, or its obligations under this Agreement would cause
substantial and irreparable damage to one or more of the other parties and that
money damages would be an inadequate remedy therefor. Accordingly, each party
agrees that the other parties or any of them will be entitled to an injunction,
specific performance, and/or other equitable relief to prevent the breach of
such obligations.
(i) Governing Law and Choice of Exclusive Forum. This Agreement will be
governed by and interpreted and construed in accordance with the substantive
laws of the State of Delaware, without reference to conflicts of law issues. The
parties also agree that any and all actions concerning or related to this
Agreement and the subject matter hereof shall only be brought in the courts of
the State of Rhode Island, including the federal courts for the District of
Rhode Island, and that said courts shall have exclusive jurisdiction with
respect to such actions.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as
an agreement under seal on and as of the date first above written.
PAPERCLIP SOFTWARE, INC.
By:
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PURCHASER: ACCESS SOLUTIONS INTERNATIONAL, INC.
By:
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