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 the Note Purchasers listed on the signature page hereof (each, a
"Note Purchaser" and collectively, the "Note Purchasers").
R E C I T A L S
WHEREAS, this Agreement is being entered into pursuant to that certain
Note Purchase Agreement (the "Note Purchase Agreement") of even date herewith by
and among the Company, the subsidiaries of the Company listed on Exhibit A
thereto ("Guarantors") and the Note Purchasers; and
WHEREAS, in connection with the Note Purchase Agreement the Company has
agreed to issue to the Note Purchasers 10% Convertible Subordinated Discount
Notes (the "Notes"), convertible into shares of Common Stock (as such term is
defined below), at an initial Conversion Price of $12.34375 per share (such
shares issued or issuable upon conversion are referred to as "Note Shares"); and
WHEREAS, in order to induce the Note Purchasers to purchase the Notes,
the Company has agreed to provide the registration rights set forth in this
Agreement; and
WHEREAS, in connection with services provided to the Company, the
Company has granted warrants to purchase Common Stock of the Company to its
investment advisor (also a Note Purchaser) or its designees and as additional
consideration for such services is agreeing to provide the registration rights
set forth in this Agreement.
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.
"Commission" or "SEC" 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 per
share, 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.
"Holders" means the Note Purchasers, any person or entity to whom the
rights granted under this Agreement are validly transferred by any Note
Purchaser and their Permitted Transferees (as defined in Section 2.8 hereof).
"Indemnified Party" has the meaning described in Section 2.4(c) below.
"Indemnifying Party" has the meaning described in Section 2.4(c) below.
"Note Shares" means the (i) shares of Common Stock issuable or issued
to the Holders upon conversion of the Notes, as provided in the Notes, and any
such shares of Common Stock transferred in a private transaction (whether or not
Notes are also transferred therewith) to a Permitted Transferee, and (ii) the
shares of Common Stock issuable or issued upon exercise of the Warrants. Note
Shares 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 for the then-existing Note Shares pursuant to any
recapitalization of the Company. As to any particular Note Shares, such
securities shall cease to be Note Shares 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 or any state securities law, (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 2.8 hereof, is not entitled to
the rights provided by this Agreement.
"Registration Statement" means a registration statement filed by the
Company with the Commission in compliance with the Securities 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).
"Warrants" means the 58,000 warrants to purchase shares of Common Stock
issued by the Company to U.S. Bancorp Libra, a division of U.S. Bancorp
Investments, Inc., pursuant to a warrant agreement dated of even date herewith.
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ARTICLE 2.
REGISTRATION RIGHTS
Section 2.1 Shelf Registration of Note Shares.
(a) The Company shall mail as soon as practicable a
questionnaire (the "Questionnaire"), soliciting the information required by
Items 507 and 508 of Regulation S-K, to each of the Note Purchasers, and shall
deliver a copy of such Questionnaire to any Note Purchaser or Holder within five
(5) days of it becoming available. As a condition to any Note Purchaser's or
Holder's Note Shares being included in the Registration Statement referred to
below, such Purchaser shall submit a Questionnaire and shall amend and submit to
the Company a revised Questionnaire any time the information contained therein
ceases to be accurate and complete.
(b) The Company shall use its reasonable best efforts to file
with the Commission, a Registration Statement (the "Note Shares Shelf
Registration") for an offering to be made on a continuous basis pursuant to Rule
415 covering all Note Shares held by the Holder, as soon as practicable from the
date hereof, but in no event more than 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 Note Shares Shelf Registration
shall be on Form S-3 under the Securities Act or another appropriate form
(including Form S-1, if applicable) permitting registration of such Note Shares
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 use its reasonable best efforts to cause the Note Shares Shelf
Registration to be declared effective pursuant to the Securities Act on or prior
to the date that is 180 days after the date of the Closing under the Note
Purchase Agreement (the "Effectiveness Target Date") and to keep the Note Shares
Shelf Registration continuously effective under the Securities Act for 60 months
(the "Effectiveness Period") or such shorter period ending when there ceases to
be outstanding any Note Shares.
(c) The Company shall use all reasonable best efforts to keep
the Note Shares Shelf Registration continuously effective, for the period
described in Section 2.1(b) hereof, by supplementing and amending the Note
Shares Shelf Registration if required by the rules, regulations or instructions
applicable to the registration form used for such Note Shares Shelf
Registration, if required by the Securities Act or if reasonably requested by
the Holders of a majority in amount of Note Shares (determined on a fully
converted basis) covered by such Note Shares Shelf Registration.
(d) In the event any adjustment in the Conversion Price (as
defined in the Notes) would result in the issuance of additional Note Shares
upon conversion of the Notes, the Company shall promptly, and within ten (10)
Business Days, amend or supplement the Note Shares Shelf Registration in order
to effect a Shelf Registration of such additional Note Shares
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pursuant to the terms of Section 2.1(b), provided, that notwithstanding anything
to the contrary in Section 2.1(b) or the Note Purchase Agreement, the
Effectiveness Target Date shall be ninety (90) from the date of the effective
date of the adjustment to the Conversion Price resulting in additional Note
Shares becoming issuable to the Holders.
(e) Notwithstanding anything to the contrary in this Section
2.1, but subject to compliance with Section 7.14 of the Note Purchase Agreement,
the Company may, by delivering written notice to the Note Purchasers, prohibit
offers and sales of Note Shares pursuant to the Note Shares Shelf Registration
at any time 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 Note Shares pursuant to
the Note Shares 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 stockholders 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
Note Shares 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 Note Shares Shelf Registration pursuant to this
Section 2.1(e) shall cease and the Company shall promptly, prior to the next
Business Day, comply with Section 2.2 hereof and notify the Note Purchasers that
dispositions of Note Shares may be resumed. In the event that during the
Effectiveness Period the prospectus under the Note Shares 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 Note
Shares under the Note Shares Shelf Registration be suspended for more than 30
days in any 365-day period.
(f) In the event that the Company shall (i) fail to cause the
Note Shares Shelf Registration to be declared effective on or prior to the
Effectiveness Target Date or (ii) fail to keep the Note Shares Shelf
Registration effective for the duration of the Effectiveness Period (subject to
the rights of the Company under the preceding Section (e)), the Company shall
pay the Holders Liquidated Damages for its breach hereof, in the amounts set
forth and defined in the Note Purchase Agreement.
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Section 2.2 Registration Procedures.
(a) The Company shall at its expense:
(i) file with the Commission within ninety (90)
days of the date hereof a Registration Statement with respect to Note Shares and
use its reasonable 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;
(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 2.2(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 SEC or any state agency charged with the regulation of
securities, and any notice from the Nasdaq National Market or other securities
exchange then listing Note Shares covered by such Registration Statement;
(v) register or qualify Note Shares 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 Note Shares
covered by such Registration Statement; 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 months, but not more than eighteen
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 Note Shares are freely
tradeable thereon upon registration thereof under the Act;
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(viii) provide, if one has not already been appointed
by the Company, a transfer agent and registrar for all Note Shares 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 SEC all Note Shares; and promptly, and, 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 SEC 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 Note Shares 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 Note 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;
(xii) cause all such Note Shares 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);
(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 Note Shares;
(xiv) make available for inspection by each selling
Holder and one (1) 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"
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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 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 SEC 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 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 Note Shares, 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 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 Note Shares
Shelf Registration any change in the information provided to the Company
pursuant to Rules 507 or 508 under Registration S-K; and
(xx) upon delivery of the certificates with
respect to Note Shares to be registered pursuant hereto, issue to any
underwriter to which the selling Holder may sell such Note Shares in connection
with any such registrations (and to any direct or indirect transferee of any
such underwriter) certificates evidencing such Note Shares without any legend
restricting the transferability of Note Shares.
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(b) Each selling Holder of Note Shares, respectively, 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 Note Shares, (ii) the
issuance by the Commission of any stop order suspending the effectiveness of a
Registration Statement covering any of such selling Holder's Note Shares 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
Note Shares, 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 Note Shares 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 Note Shares or a
supplement to any related prospectus is required under the Act; such selling
Holder will forthwith discontinue disposition of such Note Shares 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 Note Shares
covered thereby pursuant thereto may be resumed, provided, however, (x) that
such selling Holder shall not resume its disposition of Note Shares 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 Note
Shares 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, 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 Note Shares
current at the time of receipt of such notice. In the event the Holders are
required to refrain from disposition of Note Shares for more than 30 days in any
365-day period, the Company shall be in breach of this Agreement and shall pay
Liquidated Damages to the Holders pursuant to the Note Purchase Agreement.
Section 2.3 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 Note Shares 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 2.2(a)(v) (including
reasonable fees and disbursements of counsel in connection with Blue Sky
qualifications of Note Shares), all word processing, duplicating and printing
expenses, messenger and delivery expenses, fees and disbursements of
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counsel for the Company and one (1) counsel for the selling Holders (selected by
Holders holding a majority of the Note Shares), 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 Note Shares 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 expense of any special audits 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 2.4 Indemnification.
(a) In the event of any registration of any Note Shares under
the Act pursuant to this Agreement, the Company will indemnify and hold harmless
the selling Holder of such Note Shares, each of its officers, directors,
employees, 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 Note Shares 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 connection
with any such registration; and, subject to Section 2.4(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, 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 Note Shares will, severally, and
not jointly and severally, in the event that any Note Shares held by such
selling Holder are those as to which any
9
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
expenses, losses, claims, damages or liabilities, joint or several, insofar as
such expenses, 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 Note Shares 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
based reliance upon and made 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 2.4(b) for any
amount in excess of the net proceeds received from the Note Shares sold by it
pursuant to the Registration Statement.
(c) Each party entitled to indemnification under this Section
2.4 (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 Indemnifying 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
Indemnifying Party of its obligations under this Section 2.4, except to the
extent that such failure to give notice prejudices the Indemnifying Party or
such Indemnifying Party 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
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thereof incurred by the Indemnified Party. 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 2.4 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 2.4, 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 Note Shares 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 2.4 (with appropriate modifications) shall be given by the
Company and each selling Holder with respect to any required registration or
other qualification of Note Shares under any Federal or state law or regulation
of any governmental authority, other than the Act.
(f) The indemnification required by this Section 2.4 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 2.4 shall survive the
completion of any offering of Note Shares in a Registration Statement.
Section 2.5 Indemnification with Respect to Underwritten Offering.
(a) In the event that Note Shares are sold pursuant to a
Registration Statement in an underwritten offering, the Company agrees to enter
into an underwriting agreement
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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 this Section 2.5 hereunder unless such Holder (i) agrees to sell
Note Shares 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 2.6 Information by Holder. Each holder of Note Shares included
in any Registration shall furnish to the Company such information regarding such
holder and the distribution 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 2.7 Termination. All of the Company's obligations to register
Note Shares pursuant to this Agreement shall terminate thirty (30) days after
the end of the Effectiveness Period or any extension thereof.
Section 2.8 Transfer of Rights.
(a) The rights and obligations of each Note Purchaser (or
assignee thereof) under this Agreement may be transferred or assigned by such
Note Purchaser (or assignee thereof), in whole or in part, without the consent
of the Company or any other Note Purchaser, to (i) another person or entity that
is then a Holder of Note Shares or Notes, (ii) any affiliate of the Holder,
(iii) any person or entity acquiring an interest in a Note in a transaction
permitted under the Note, or (iv) any person or entity acquiring in a private
transaction, including a distribution by a partnership to its partners, 500 or
more Note Shares (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 without the prior written consent of each
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
Note Shares owned by it and agrees to be bound by the obligations imposed upon
the Note Purchasers under this Agreement.
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(c) A transferee to whom rights or obligations are transferred
pursuant to this Section 2.8 may not again transfer such rights or obligations
to any other person or entity, other than as provided in this Section 2.8.
Section 2.9 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 Note Shares may reasonably request, all to the extent
required from time to time to enable such Holder to sell Note Shares 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 SEC. Upon the
written request of any Holder of Note Shares, 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 Note Shares 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 2.10 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
Note Shares, provide to any such Holder and to any prospective institutional
transferee of Note Shares designated by such Holder, within five (5) days of
delivery of such 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 Note Shares to comply with the requirements of Rule 144A
promulgated under the Act.
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
in the Note Purchase Agreement (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 hours after confirmation of receipt, if delivered by facsimile
transmission, or (iii) two days after being delivered in the United States
(properly addressed and all fees paid) 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.
13
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, when so executed and delivered, shall be deemed to be an original
and all of which, 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.
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 THE RIGHT TO TRIAL
BY JURY (WHICH THE NOTE PURCHASERS HEREBY ALSO WAIVE) IN ANY ACTION, SUIT,
PROCEEDING, OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE NOTE OR THE NOTE PURCHASE AGREEMENT. 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 a
majority in principal amount of the Notes (treating Note Shares held by a Holder
as if they had not been converted); provided, that this Agreement may be amended
with the consent of the Holders of less than all Notes (but not less than 51% of
such shares) only in a manner which affects all Holders, as the case may be, 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
2.3, without the Consent of each Holder affected thereby. No waivers of
14
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 CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE. ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE PURCHASE AGREEMENT, THE NOTES OR
ANY OTHER RELATED DOCUMENT MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX
IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT
OR A JOINDER HERETO, THE COMPANY HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT
OF ANY OF THE AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE COMPANY AT ITS ADDRESS FOR NOTICES AS SET FORTH IN SECTION 14.6 OF THE
PURCHASE AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE HOLDERS TO SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY OR ANY GUARANTOR IN ANY OTHER
JURISDICTION. THE COMPANY AND EACH GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE
COMPANY OR ANY GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY AND EACH
GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THE PURCHASE AGREEMENT, THE NOTES AND ANY OTHER RELATED DOCUMENT.
Section 3.10 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.
15
Section 3.11 Entire Agreement. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter hereof.
Section 3.12 Attorneys' Fees. Any holder of a Note, or Note Shares,
shall be entitled to recover from the Company the reasonable attorneys' fees and
expenses incurred by such holder in connection with enforcement by such holder
of any obligation of the Company hereunder or under the Note or the Note
Purchase Agreement.
Section 3.13 No Impairment of 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 3.14 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 Notes, (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 Holders acknowledge and
agree that comparable registration rights have been granted concurrently
herewith to 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., Monescape Holdings, Inc.,
the Lenders (as such term is defined therein), 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 therein).
[Signature Pages Follow]
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY: CFI PROSERVICES, INC.,
an Oregon corporation
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Registration Rights Agreement
S-1
NOTE PURCHASERS: XXXXXX XXXXXXXXX CAPITAL PARTNERS II, L.P.,
a California limited partnership
By: LLCP California Equity Partners II, L.P.,
a California limited partnership
Its: General Partner
By: Xxxxxx Xxxxxxxxx Capital Partners, Inc.,
a California corporation
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
Registration Rights Agreement
S-2
BAY STAR CAPITAL, L.P.
By: Bay Star Management, LLC
By: /s/ Xxxxx X. Xxxxx
------------------
Name: Xxxxx X. Xxxxx
Title: Managing Director
Registration Rights Agreement
S-3
U.S. BANCORP LIBRA,
a division of U.S. Bancorp Investments, Inc.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxxx
Title: President
Registration Rights Agreement
S-4
SOUNDSHORE HOLDINGS LTD.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
Director of SoundShore Holdings Ltd.
Registration Rights Agreement
S-5
SOUNDSHORE OPPORTUNITY HOLDING FUND
LTD.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
Director of SoundShore Opportunity
Holding Fund Ltd.
Registration Rights Agreement
S-6
