REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement dated as of January 29, 1997, is between
PaperClip Software, Inc., a Delaware corporation (the "Company"), and Access
Solutions International, Inc. (the "Purchaser").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Convertible Promissory Note of even date
("Note"), the parties hereto have agreed to provide for the registration rights
set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
conditions contained herein, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement hereby agree as follows:
1. Definitions. For all purposes of this Agreement, the following terms
shall have the meanings set forth below:
Commission means the United States Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
Common Stock means the Common Stock, $.01 par value per share of the
Company and any shares of any other class of capital stock of the Company
hereafter issued which: (i) are not preferred in the Company's charter as to
dividends or assets over any class of stock of the Company, (ii) are not subject
to redemption in the Company's charter, or (iii) are issued to the holders of
shares of Common Stock upon any reclassification thereof.
Demand Registration means the registration requested by the Stockholders
pursuant to Section 2(a)(i).
Indemnified party. As defined in Section 8(c).
Person means an individual, partnership, corporation, limited liability
company, association, trust, joint venture, unincorporated organization, or any
government, governmental department or agency or political subdivision thereof.
Piggyback Registration. As defined in Section 3(a)(i).
Public Sale means any sale of Restricted Securities to the public pursuant
to a public offering registered under the Securities Act or to the public
through a broker or market-maker pursuant to the provisions of Rule 144 (or any
successor rule) adopted under the Securities Act or any other public offering
not required to be registered under the Securities Act.
Registration Expenses. As defined in Section 7(a).
registered and registration 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.
Restricted Securities means at any particular time all shares of Stock
issued or issuable to Stockholder upon the exercise of the conversion rights
pursuant to the Note, which shares have not been sold in a Public Sale, or which
are not able to be sold in a Public Sale pursuant to the provisions of Rule 144
of the Securities Act.
Securities Act means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
Stock means all shares of Common Stock or Preferred Stock now or hereafter
owned by the Stockholders.
Stockholders means initially, the Purchaser, and thereafter any Person who
becomes a party to this Agreement by executing an Instrument of Accession in
connection with the transfer to or acquisition by such Person of any Restricted
Securities from the Purchaser or any subsequent transferee of the Purchaser;
provided that a Person shall cease to be a Stockholder hereunder at such time as
such Person ceases to own Restricted Securities.
Underwriters Maximum Number means for any Piggyback Registration, Demand
Registration or other registration which is an underwritten registration, that
number of securities to which such registration should, in the opinion of the
managing underwriters of such registration in the light of marketing factors, be
limited.
2. Stockholder Demand Registration.
(a) Request for Demand Registration.
(i) Subject to the limitations contained in the following paragraphs
of this Section 2, the holders of fifty-one (51%) percent or more of the
Restricted Securities may at any time give to the Company, pursuant to this
clause (i), a written request for a Demand Registration of Restricted
Securities. Within 10 days after the receipt by the Company of any such
written request, the Company will give written notice of such registration
request to all Stockholders.
(ii) Subject to the limitations contained in the following paragraphs
of this Section 2, after the receipt of such written request for a Demand
Registration: (A) the Company will be obligated and required to include in
such Demand Registration all Restricted Securities with respect to which
the Company shall receive from Stockholders, within 30 days (the "Inclusion
Period") after the date on which the Company shall have given to all
Stockholders a written notice of registration request pursuant to Section
2(a)(i) hereof, the written requests of such Stockholders for inclusion of
their respective shares of Restricted Securities in such Demand
Registration, and (B) the Company will use its reasonable best efforts in
good faith to effect promptly (but in no event later than ninety-five (95)
days from the end of the Inclusion Period, provided, however, that such
ninety-five (95) day period shall be extended for up to sixty (60)
additional days in the event of a material development that shall hinder
the Company from effecting such registration) the registration of all such
Restricted Securities; provided, that, the Company shall not be obligated
to cause the effectiveness of a Demand Registration of any convertible
Restricted Securities unless and until such convertible Restricted
Securities included in a Demand Registration shall have been converted into
Common Stock of the Company prior to or simultaneously with the
effectiveness of a Demand Registration; and provided, further, that each
Stockholder shall be entitled to convert any Common Stock so converted back
into convertible Restricted Securities in the event such Demand
Registration is not declared effective. All written requests made by
Stockholders pursuant to this clause (ii) will specify the number of shares
of Restricted Securities to be registered and will also specify the
intended method of disposition thereof. Such method of disposition shall,
in any case, be an underwritten offering if an underwritten offering is
requested by holders of 51% or more of the Restricted Securities to be
included in such Demand Registration.
(iii) Any Stockholder shall be permitted to withdraw all or any part
of the Restricted Securities of such Stockholder from any Demand
Registration at any time prior to the effective date of such Demand
Registration, but in the case of an underwritten public offering, only if
such Stockholder is permitted to do so by the managing underwriters or
pursuant to any agreement therewith. Upon such withdrawal, subject to
Section 2(b)(ii), such Restricted Securities shall count as being part of a
Demand Registration for purposes of Section 7(a) hereof unless the
withdrawing Stockholder bears one-half of its pro rata share of the costs
associated with such Demand Registration.
(b) Limitations on Demand Registration.
(i) The Stockholders will not be entitled to require the Company to
effect any Demand Registration pursuant to Section 2(a) hereof more
frequently than once during the term hereof, or within six months after the
effective date of any Piggyback Registration pursuant to Sections 2 or 3
hereof. Registrations pursuant to this Section 2 shall be on Form S-1 or
S-2 or Form SB-1 or SB-2 or, if any Demand Registration would be eligible
for registration on Form S-3, the Company may effect such Demand
Registration pursuant to Form S-3.
(ii) Any registration initiated pursuant to Section 2(a) hereof shall
not count as a Demand Registration for purposes of Section 7(a) hereof
unless and until such registration shall have become effective and
seventy-five percent (75%) of the number of shares that count as part of
the Demand Registration shall have been actually sold.
(iii) The Company shall not be obligated or required to effect the
Demand Registration of any Restricted Securities pursuant to Section 2(a)
hereof during the period commencing on the date falling 60 days prior to
the Company's estimated date of filing of, and ending on the date 180 days
following the effective date of, any registration statement pertaining to
any underwritten registration initiated by the Company, for the account of
the Company, if the written request of Stockholders for such Demand
Registration pursuant to Section 2(a)(i) hereof shall have been received by
the Company after the Company shall have given to all Stockholders a
written notice stating that the Company is commencing an underwritten
registration initiated by the Company; provided, however, that the Company
will use its reasonable best efforts in good faith to cause any such
registration statement to be filed and to become effective as expeditiously
as shall be reasonably possible. The Company shall not be required to
maintain the effectiveness of any Demand Registration beyond the earlier to
occur of (i) the consummation of the distribution by Stockholders of the
Restricted Securities included therein or (ii) 120 days after the effective
date thereof.
(c) Priority on Demand Registrations. If the managing underwriters in any
Demand Registration pursuant to this Section 2 shall give written advice to the
Company and the Stockholders that, in their opinion, there is an Underwriters'
Maximum Number of shares of Restricted Securities that may successfully be
included in such registration, then: (i) if the Underwriters' Maximum Number is
less than the number of shares of Restricted Securities requested to be included
in such registration, the Company will be obligated and required to include in
such registration that number of shares of Restricted Securities which does not
exceed the Underwriters' Maximum Number, and such number of shares of Stock
shall be allocated pro rata among such Stockholders on the basis of the number
of shares of Restricted Securities requested to be included therein by each such
Stockholder; and (ii) if the Underwriters' Maximum Number exceeds the number of
shares of Restricted Securities requested to be included in such registration,
then the Company will be entitled to include in such registration that number of
securities which shall have been requested by the Company to be included in such
registration for the account of the Company and which shall not be greater than
such excess. Neither the Company nor any of its security holders (other than the
Stockholders) shall be entitled to include any securities in any underwritten
Demand Registration unless the Company or such security holders (as the case may
be) shall have agreed in writing to sell such securities on the same terms and
conditions as shall apply to the Restricted Securities to be included in such
Demand Registration.
(d) Selection of Underwriters. If any Demand Registration or any
registration effected pursuant to Section 2 hereof is an underwritten offering,
or a best efforts underwritten offering, the investment bankers and managing
underwriters in such registration will be selected by the Company, subject to
the approval of the holders of 51% or more of the Restricted Securities to be
included in such registration.
3. Piggyback Registrations.
(a) Rights to Piggyback.
(i) If (and on each occasion that) the Company proposes to register
any of its equity securities or any other securities convertible into
equity securities under the Securities Act for its own account (other than
a registration statement on Form S-4 or S-8 or any substitute form that
may, from time to time, be adopted by the Commission) (each such
registration not withdrawn or abandoned prior to the effective date thereof
being herein called a "Piggyback Registration"), the Company will give
written notice to all Stockholders of such proposal not later than 20 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 3 and in the last sentence of this clause (ii): (A) the
Company will be obligated and required to include in each Piggyback
Registration all Restricted Securities with respect to which the Company
shall receive from holders of fifty-one (51%) percent or more of the
Restricted Securities, within 15 days (the "Piggyback Inclusion Period")
after the date on which the Company shall have given written notice of such
Piggyback Registration to all Stockholders pursuant to Section 3(a)(i)
hereof, the written requests of such Stockholders for inclusion in such
Piggyback Registration, and (B) the Company will use its reasonable best
efforts in good faith to effect promptly (but in no event later than
ninety-five (95) days from the end of the Piggyback Inclusion Period,
provided, however, that such ninety-five day period shall be extended for
up to sixty additional days in the event of a material development that
shall hinder the Company from effecting such registration) the registration
of all such Restricted Securities; provided, that the Company shall not be
obligated to cause the effectiveness of a Piggyback Registration of any
convertible Restricted Securities unless and until such convertible
Restricted Securities included in a Piggyback Registration shall have been
converted into Common Stock of the Company prior to or simultaneously with
the effectiveness of a Piggyback Registration; and provided, further, that
each Stockholder shall be entitled to convert any Common Stock so converted
back into convertible Restricted Securities in the event such Piggyback
Registration is not declared effective. Any Stockholder shall be permitted
to withdraw all or any part of the Restricted Securities of such
Stockholders from any Piggyback Registration at any time prior to the
effective date of such Piggyback Registration, but in the case of an
underwritten offering only if such Stockholder is permitted to do so by the
managing underwriters or pursuant to any agreement therewith. The Company
shall not be required to maintain the effectiveness of any Piggyback
Registration beyond the consummation of the distribution by holders of
Restricted Securities included in such Piggyback Registration.
(b) Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration initiated by the Company, and the managing
underwriters shall give written advice to the Company that, in their opinion,
there is an Underwriters' Maximum Number of securities that may successfully be
included in such registration, then: (i) the Company shall be entitled to
include in such registration that number of securities which the Company
proposes to offer and sell for its own account in such registration and which
does not exceed the Underwriters' Maximum Number; and (ii) the Company will be
obligated and required to include in such registration that number of shares of
Restricted Securities which shall have been requested by the holders thereof to
be included in such registration and which does not exceed the difference
between the Underwriters' Maximum Number and that number of securities which the
Company is entitled to include therein pursuant to clause (i) above and such
number of shares of Restricted Securities shall be allocated pro rata among such
Stockholders on the basis of the number of shares of Restricted Securities
requested to be included therein by each such Stockholder.
(c) Selection of Underwriters. In any Piggyback Registration, the
Company, in its sole discretion, shall (unless the Company shall otherwise
agree) have the right to select the investment bankers and managing underwriters
in such registration.
4. Lockup Agreements.
(a) Restrictions on Public Sale by Stockholders. Each Stockholder, if
the managing underwriters so request in connection with such registration, will
not, without the prior written consent of such underwriters, effect any public
sale or other distribution of any equity securities of the Company, including
any sale pursuant to Rule 144, during the seven days prior to, and during the
ninety-day period commencing on the effective date of such underwritten
registration, except in connection with such underwritten registration.
(b) Restrictions on Public Sale by the Company. The Company agrees,
unless it obtains the consent of the managing underwriter(s) of any underwritten
offering of Restricted Securities pursuant to Sections 2 or 3 hereof, not to
effect any public sale or distribution of its equity securities, or any
securities convertible into or exchangeable or exercisable for such equity
securities, during the period commencing on the seventh day prior to, and ending
on the ninetieth day (or such longer period as shall be required by the managing
underwriters) following, the effective date of any underwritten Demand or
Piggyback Registration, except in connection with any such underwritten
registration, pursuant to any employee benefit plan or as part of a business
combination transaction.
5. Registration Procedures. If (and on each occasion that) the Company
shall become obligated to effect any registration of any Restricted Securities
hereunder, the Company will use its reasonable best efforts in good faith to
effect promptly the registration of such Restricted Securities under the
Securities Act and to permit the public offering and sale of such Restricted
Securities in accordance with the intended method of disposition thereof, and,
in connection therewith, the Company, as expeditiously as shall be reasonably
possible, will:
(a) prepare and file with the Commission a registration statement with
respect to such Restricted Securities, and use its reasonable best efforts in
good faith to cause such registration statement to become and remain effective
as provided herein;
(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 to comply in all 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 as provided herein;
(c) as soon as reasonably practicable, furnish to each seller of
Restricted 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, all as any such seller may
reasonably request in order to facilitate the disposition of the Restricted
Securities held by such seller;
(d) enter into such customary agreements (provided they do not require
the issuance of securities at a discount to any underwriter) and take all such
other customary actions in connection therewith as the Stockholders holding 51%
or more of the Restricted Securities being registered reasonably request in
order to expedite or facilitate the disposition of such Restricted Securities;
(e) use its reasonable best efforts in good faith to register and
qualify the Restricted Securities covered by such registration statement under
such securities or blue sky laws of such jurisdictions as any seller (or the
managing underwriter, in the case of any underwritten offering) shall reasonably
request in light of the intended plan of disposition, and do any and all such
other acts and things as may be reasonably necessary or advisable to permit the
disposition in such jurisdictions of the Restricted Securities covered by such
registration statement; provided, however that the Company shall not be required
in connection therewith to qualify to do business or file a general consent to
service of process in any such jurisdiction or subject itself to taxation in any
jurisdiction where the Company is not already subject to taxation; and
(f) furnish to each prospective seller a signed counterpart, addressed
to the prospective sellers, (or to the underwriters, in the case of any
underwritten offering) of (i) an opinion of counsel for the Company, dated the
effective date of the registration statement, and (ii) a "comfort" letter signed
by the independent public accountants who have certified the Company's financial
statements included in the registration statement, covering substantially the
same matters with respect to the registration statement (and the prospectus
included therein) and, in the case of the "comfort" letter, with respect to
events subsequent to the date of the financial statements, as are customarily
covered (at the time of such registration) in opinions of issuer's counsel and
in "comfort" letters delivered to the underwriters in underwritten public
offerings of securities.
6. Cooperation by Prospective Sellers, Etc.
(a) Each prospective seller of Restricted Securities will furnish to
the Company in writing such information as the Company may reasonably require
and which is customary in such transactions from such seller, and otherwise
reasonably cooperate with the Company in connection with any registration
statement with respect to such Restricted Securities and the Company may exclude
from such Registration Statement the Restricted Securities of any prospective
seller who fails to furnish such reasonably requested information within 30 days
after receiving such request.
(b) The failure of any prospective seller of Restricted Securities to
furnish any information or documents in accordance with any provision contained
in this Agreement shall 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) The Stockholders included in any registration statement will not
(until receipt of a notice to the contrary) effect sales of Restricted
Securities included in any registration statement after receipt of written
notice from the Company 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 shall be extended by a period of days equal to the period such
suspension is 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 herein (and
any extensions thereof required by the preceding paragraph (c) of this Section
6), the Stockholders included in such registration statement shall discontinue
sales of shares pursuant to such registration statement upon receipt of notice
from the Company of its intention to remove from registration the shares covered
by such registration statement which remain unsold, and such Stockholders shall
notify the Company of the number of shares registered which remain unsold
promptly after receipt of such notice from the Company.
7. Registration Expenses.
(a) Except as otherwise provided herein, all out of pocket costs and
expenses incurred or sustained by the Company in connection with or arising out
of the Demand Registration pursuant to Section 2 hereof and each registration
pursuant to Section 3 hereof, including, without limitation, all registration
and filing fees, fees and expenses of compliance with federal and state
securities or blue sky laws (including reasonable fees and disbursements of
counsel for the underwriters in connection with the blue sky qualification of
Restricted Securities), printing expenses, messenger, telephone and delivery
expenses, fees and disbursements of counsel for the Company, reasonable fees and
disbursements of one counsel representing any or all of the holders of
Restricted Securities (selected by the holders of fifty-one (51%) percent or
more of the Restricted Securities), reasonable fees and disbursements of all
independent certified public accountants of the Company (including the expenses
relating to the preparation and delivery of any special audit or "cold comfort"
letters required by or incident to such registration), and fees and
disbursements of underwriters (excluding discounts, commissions and expenses
representing disguised commissions), the reasonable fees and expenses of any
special experts retained by the Company of 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 (all such costs
and expenses being herein called, collectively, the "Registration Expenses"),
will be borne and paid by the Company; provided, however, that the Company shall
not pay nor otherwise be responsible for any legal fees or disbursements of
additional counsel other than as set forth above. 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 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 Restricted Securities
to any purchaser thereof by any Stockholder in connection with any registration
of Restricted Securities pursuant to this Agreement.
(c) To the extent that expenses reasonably incurred by the Company
incident to any registration are, under the terms of this Agreement, not
required to be paid by the Company, each Stockholder included in such
registration will pay all such expenses which are clearly solely attributable to
the registration of such Stockholder's Restricted Securities so included in such
registration, and all other such expenses not so attributable to one Stockholder
will be borne and paid by all sellers of securities included in such
registration in proportion to the number of securities so included by each such
seller.
8. Indemnification.
(a) Indemnification by the Company. To the full extent permitted by
law, the Company will indemnify each Stockholder requesting or joining in a
registration and each underwriter of the securities so registered, the officers,
directors, agents, employees and partners of each such Person and each Person,
if any, who controls any thereof (within the meaning of the Securities Act)
against any and all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of any material fact contained in any registration statement,
prospectus or any amendment or supplement thereto, or any document filed
pursuant to state securities laws (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, and the Company will
reimburse each such Stockholder, underwriter, and each other Person indemnified
pursuant to this paragraph (a) for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission (or alleged untrue statement or omission) made in reliance upon and in
conformity with written information furnished to the Company in an instrument
duly executed by such Stockholder, underwriter, officer, director, partner or
controlling person and stated to be specifically for use therein. provided,
however, that the Company shall not be liable to any such Stockholder to the
extent that any such claim, loss, damage, liability or action arise out of or
are based upon any untrue statement or omission made in any preliminary
prospectus if: (i) having previously been furnished by or on behalf of the
Company with copies of such final prospectus, such Stockholder failed to send or
deliver a copy of the final prospectus with or prior to the delivery of written
confirmation of the sale by such Stockholder to the person asserting the claim
from which such claim, loss, damage, liability or action arise, and (ii) the
final prospectus would have corrected such untrue statement or such omission;
provided, further, that the Company shall not be liable to any Stockholder in
any such case to the extent that any such claim, loss, damage, liability or
action arise out of or are based upon any untrue statement or omission in any
prospectus if: (x) such untrue statement or omission is corrected in an
amendment or supplement to such prospectus, and (y) having previously been
furnished by or on behalf of the Company with copies of such prospectus as so
amended or supplemented, such Stockholder thereafter fails to deliver such
prospectus as so amended or supplemented prior to or concurrently with the sale
of a Restricted Security to the person asserting the claim from which such
claim, loss, damage, liability or action arise.
(b) Indemnification by Each Stockholder. Each Stockholder requesting
or joining in a registration will severally and not jointly indemnify each
underwriter of the securities so registered, the Company and the officers,
agents, employees and directors and partners of each such Person and each
Person, if any, who controls any thereof, together with the officers, agents,
employees, directors and partners of such controlling person (within the meaning
of the Securities Act) and their respective successors in title and assigns
against any and all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of any material fact contained in any registration statement,
prospectus, or any amendment or supplement thereto, or any document filed
pursuant to state securities laws (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 such Stockholder of any
rule or regulation promulgated under the Securities Act applicable to such
Person and relating to any action or inaction required of such Person in
connection with any such registration, qualification or compliance, and such
Stockholder will reimburse each underwriter, the Company and each other Person
indemnified pursuant to this paragraph (b) for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action; provided, however, that this paragraph
(b) shall apply only if (and only to the extent that) such statement or omission
(or alleged untrue statement or omission) was made in reliance upon and in
conformity with written information furnished to such underwriter or the Company
in an instrument duly executed by any such Stockholder or any officer, director,
partner or controlling person of such Stockholder and stated to be specifically
for use therein, and provided further that each Stockholder's liability
hereunder (including, without limitation, Section 9) with respect to any
particular registration shall be limited to an amount equal to the proceeds
received by such Stockholder from the Restricted Securities sold by such
Stockholder in such registration. The Company and the Stockholders shall be
entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities professionals, participating in any distribution
of Restricted Securities to the same extent as provided above with respect to
information so furnished in writing by such underwriters expressly for use in
any prospectus or registration statement.
(c) Indemnification Proceedings. Each party entitled to
indemnification pursuant to this Section 8 (the "indemnified party") shall give
notice to the party required to provide indemnification pursuant to this Section
8 (the "indemnifying party") promptly after such indemnified party acquires
actual knowledge of any claim as to which indemnity may be sought, and shall
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 shall conduct the defense of such claim or litigation,
shall be reasonably acceptable to the indemnified party, and the indemnified
party may participate in such defense at the indemnified party's expense; and
provided, further, that the failure by any indemnified party to give notice as
provided in this paragraph (c) shall not relieve the indemnifying party of its
obligations under this Section 8 except to the extent that the failure results
in a failure of actual notice to the indemnifying party and such indemnifying
party is prejudiced solely as a result of the failure to give notice. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, 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 to such claim or litigation. The
reimbursement required by this Section 8 shall be made by periodic payments
during the course of the investigation or defense, as and when bills are
received or expenses incurred.
9. Contribution in Lieu of Indemnification. If the indemnification provided
for in Section 8 hereof is unavailable to a party that would have been an
indemnified party under any such section in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each party that would have been an indemnifying party thereunder shall, in lieu
of indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the one hand and such
indemnified party on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof). The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying 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 Stockholder
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation or by any other method of
allocation which does not take account the equitable considerations referred to
above in this Section 9. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this Section 9 shall include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to indemnification or contribution from any
Person who was not guilty of such fraudulent misrepresentation.
10. Rule 144 Requirements; Form S-3. The Company will use its reasonable
best efforts in good faith to take all steps necessary to ensure that the
Company will be eligible to register securities on Form X-0, X-0, XX-0, XX-0 or
S-3 (or any comparable forms adopted by the Commission) and to file all reports
required to be filed by it under the Securities Exchange Act of 1934 in order
that there will be publicly available current public information concerning the
Company within the meaning of Rule 144(c) of the Commission under the Securities
Act. The Company will furnish to any Stockholder, upon request made by such
Stockholder, a written statement signed by the Company, addressed to such
Stockholder, describing briefly the action the Company has taken or proposes to
take to comply with the current public information requirements of Rule 144. The
Company will, at the request of any Stockholder, upon receipt from such
Stockholder of: (x) a certificate certifying: (i) that such Stockholder has held
such Restricted Securities for a period of not less than three (3) consecutive
years (or such shorter period as may be permitted by Rule 144 from time to time)
within the meaning of Rule 144, (ii) that such Stockholder has not been an
affiliate (as defined in Rule 144) of the Company for more than the ninety-two
(92) preceding days, (or such shorter period as may be permitted by Rule 144
from time to time) and (iii) as to such other matters as may be appropriate in
accordance with such Rule; and (y) if not waived in writing by the Company, an
unqualified written opinion of counsel knowledgeable in securities law matters
as to clauses (i) and (ii) above, addressed to the Company and reasonably
acceptable in form and substance to the Company, remove from the stock
certificates representing such Restricted Securities that portion of any
restrictive legend which relates to the registration provisions of the
Securities Act, and, thereupon, such Restricted Securities will cease to be
Restricted Securities for purposes of this Agreement.
11. 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 all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required by the terms of such underwriting
arrangements. Any Stockholder to be included in any underwritten registration
shall be entitled at any time to withdraw such Restricted Securities from such
registration prior to the execution of the related underwriting agreement in the
event that such Stockholder shall disapprove of any of the terms of such
agreement.
12. Miscellaneous.
(a) No Inconsistent Agreements. The Company hereby represents and
warrants that it is not a party to or bound in any manner under, and covenants
that it will not enter into at any time after the date hereof, any agreement or
contract (whether written or oral) with respect to any of its securities which
grants to any securityholder (other than under this Agreement) any demand
registration rights or prevents the Company from complying in any respect with
the registration rights granted by the Company to the Stockholders hereunder.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this paragraph (b), may not be amended, modified or
supplemented, and any waiver or consent to or any departure from any of the
provisions of this Agreement may not be given and shall not become or be
effective, unless and until (in each case) the Company shall have received the
prior written consent of the holders of at least 66 2/3% of the Restricted
Securities then outstanding to any such amendment, modification, supplement,
waiver or consent; provided however, that any amendment, modification or waiver
of any provision of this Agreement that affects only one or more particular
parties hereto to this Agreement may become effective only with the written
approval of such party or parties.
(c) Restricted Securities Held by the Company. Whenever the consent or
approval of Stockholders is required pursuant to this Agreement, Restricted
Securities held by the Company shall not be counted in determining whether such
consent or approval was duly and properly given by such Stockholders.
(d) Term. The agreements of the Company contained in this Agreement
shall continue in full force and effect so long as any Stockholder holds any
Restricted Securities.
(e) Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing (or in the form of a
telex or telecopy) addressed as provided below (a) when actually delivered, in
person, (b) when telexed or telecopied to said address, confirmed by registered
or certified mail, (c) when received if delivered by overnight courier, or (d)
in the case of delivery by mail, three business days shall have elapsed after
the same shall have been deposited in the United States mails, postage prepaid
and registered or certified:
(i) if to a Stockholder, at such Stockholder's address on the
stock transfer books of the Company (which the Company shall make
available for determining the address of any Stockholder for
notification purposes hereunder) with a copy to:
Xxxx X. Xxxxxxxxx, Esq.
Xxxxxxx & Xxxxxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
(ii) if to the Company, at:
Xxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, CEO
with a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Shereff, Friedman, Xxxxxxx & Xxxxxxx, L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 13(e).
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including, without limitation, subsequent holders of Stock agreeing to be bound
by all of the terms and conditions of this Agreement by executing an Instrument
of Accession in the form set forth in attached Exhibit A.
(g) Counterparts. This Agreement may be executed in one or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect the meaning, construction or effect of any of the terms of this
Agreement.
(i) Governing Law. The validity, performance, construction and effect
of this Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York, without giving effect to principles of
conflicts of law.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Facsimile Execution. To evidence the fact that it has executed
this Agreement, a party may send a copy of its executed counterpart to the other
party by facsimile transmission. That party shall be deemed to have executed
this Agreement on the date it sent such facsimile transmission. In such event,
such party shall deliver to the other party the counterpart of this Agreement
executed by such party for receipt on the next business day.
(l) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
PAPERCLIP SOFTWARE, INC.
By/s/Xxxxxxx Xxxxx
__________________________________
Xxxxxxx Xxxxx
CEO
PURCHASER:
ACCESS SOLUTIONS INTERNATIONAL, INC.
By:/s/Xxxxxx X. Xxxxx
_________________________________
Xxxxxx X. Xxxxx
President and CEO
