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 Investors named on the signature page hereof (each, an
"Investor" and collectively, the "Investors").
R E C I T A L S
WHEREAS, this Agreement is being entered into pursuant to that
certain Financing Agreement (the "Financing Agreement") of even date herewith by
and among the Company, UltraData Corporation, Meca Software, L.L.C., Moneyscape
Holdings, Inc., the Lenders (as such term is defined therein), Foothill Capital
Corporation, as administrative agent for the Lenders, and Ableco Holdings LLC,
as collateral agent for the Lender Group (as such term is defined therein); and
WHEREAS, in connection with the Financing Agreement, the
Company has agreed to issue to the Investors warrants (the "Warrants") to
purchase in the aggregate 381,822 shares of Common Stock representing five
percent (5%) of shares of the Company as of Closing on a fully diluted basis.
NOW THEREFORE, in consideration of these premises, and the
respective promises and covenants contained herein, the parties hereto agree as
follows:
ARTICLE 1.
DEFINITIONS
"Act" means the United States Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission issued under the Act, as they each may, from time to time, be in
effect.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
to close.
"Commission" means the United States Securities and Exchange
Commission, or any other Federal agency at the time administering the Act.
"Common Stock" means the shares of common stock, no par value,
of the Company.
"Exchange Act" means the United States Securities Exchange Act
of 1934, as amended, or any similar Federal statute, and the rules and
regulations of the Commission issued under the Exchange Act, as they each may,
from time to time, be in effect.
"Holder" means any Investor who holds Registrable Securities
and any person or entity who holds Registrable Securities and to whom the rights
granted under this Agreement have been transferred in compliance with this
Agreement, and their Permitted Transferees (as defined in Section 2.9 hereof).
"Indemnified Party" has the meaning described in Section 2.5
(c) below.
"Indemnifying Party" has the meaning described in Section 2.5
(c) below.
"Registration Statement" means a registration statement filed
by the Company with the Commission in compliance with the Act and the rules and
regulations promulgated thereunder for a public offering and sale of its Common
Stock (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another entity).
"Registrable Securities" means shares of Common Stock issued
or issuable pursuant to the exercise of the Warrants. Registrable Securities
shall include any warrants, shares of capital stock or other securities of the
Company issued as a dividend or other distribution with respect to or in
exchange for or in replacement of such shares of Common Stock. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when (a) a Registration Statement with respect to the sale of such
securities shall have become effective under the Act and such securities shall
have been sold, transferred, disposed of or exchanged in accordance with such
Registration Statement, (b) such securities shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent public
distribution of them shall not require registration under the Act, (c) such
securities shall have ceased to be outstanding or (d) upon any sale, transfer or
other disposition in any manner to a person or entity which, by virtue of
Section 2.9 hereof, is not entitled to the rights provided by this Agreement.
ARTICLE 2.
REGISTRATION RIGHTS
Section 2.1 Shelf Registration of Registrable Securities.
(a) The Company shall mail as soon as practicable a questionnaire (the
"Questionnaire"), soliciting the information required by Items 507 and 508 of
Regulations S-K under the Act, to each of the Holders, and shall deliver a copy
of such Questionnaire to any
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Holder within five (5) days of it becoming available. As a condition to any
Registrable Securities being included in the Registration Statement referred to
below, such Holder shall submit a Questionnaire and shall amend and submit to
the Company a revised Questionnaire any time the information contained therein
ceases to be accurate and complete.
(b) The Company agrees to file with the Commission, a Registration
Statement (the "Shelf Registration") for an offering to be made on a continuous
basis pursuant to Rule 415 under the Act covering all Registrable Securities
held by the Holder, as soon as practicable from the date hereof, but in no event
more than ninety (90) days from the date hereof. The Holders shall be included
as selling securityholders in such Registration Statement promptly, and within
two (2) Business Days, after they have fully completed and returned to the
Company the Questionnaire. The Shelf Registration shall be on Form S-3 under the
Act or another appropriate form (including Form S-1, if applicable) permitting
registration of such Registrable Securities for resale by the Holders in the
manner or manners reasonably designated by them (including, without limitation,
one or more underwritten offerings). The Company shall cause the Shelf
Registration to be declared effective pursuant to the Act on or prior to the
date that is 180 days after the date of the Closing under the Financing
Agreement (the "Effectiveness Target Date") and to keep the Shelf Registration
continuously effective under the Act for 60 months (the "Effectiveness Period")
or such shorter period ending when there ceases to be outstanding any
Registrable Securities.
(c) The Company shall use all reasonable best efforts to keep the Shelf
Registration continuously effective, for the period described in Section 2.1(b)
hereof, by supplementing and amending the Shelf Registration if required by the
rules, regulations or instructions applicable to the registration form used for
such Shelf Registration, if required by the Act or if reasonably requested by
the Holders of a majority in amount of Registrable Securities (determined on a
fully converted basis) covered by such Shelf Registration.
(d) In the event any adjustment in the Exercise Quantity (as defined in the
Warrants) would result in the issuance of additional Registrable Securities upon
exercise of the Warrants, the Company shall promptly, and within ten (10)
Business Days, amend or supplement the Shelf Registration in order to effect a
Shelf Registration of such additional Registrable Securities pursuant to the
terms of Section 2.1(b), provided, that notwithstanding anything to the contrary
in Section 2.1(b) or the Financing Agreement, the Effectiveness Target Date
shall be ninety (90) days from the date of the effective date of the adjustment
to the Exercise Quantity resulting in additional Registrable Securities becoming
issuable to the Holders.
(e) Notwithstanding anything to the contrary in this Section 2.1, the
Company may, by delivering written notice to the Holders, prohibit offers and
sales of Registrable Securities pursuant to the Shelf Registration at any time
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
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requirement to disclose such material non-public information to the public and
(iii) the Company determines in good faith that public disclosure of such
material non-public information would not be in the best interests of the
Company and its stockholders, or (B)(i) the Company has made a public
announcement relating to an acquisition or business combination transaction
including the Company and/or one or more of its subsidiaries that is material to
the Company and its subsidiaries taken as a whole and (ii) the Company
determines in good faith that (x) offers and sales of Registrable Securities
pursuant to the Shelf Registration prior to the consummation of such transaction
(or such earlier date as the Company shall determine) would not be in the best
interests of the Company and its shareholders or (y) it would be impracticable
at the time to obtain any financial statements relating to such acquisition or
business combination transaction that would be required to be set forth in the
Shelf Registration; provided, however, that upon (i) the public disclosure by
the Company of the material non-public information described in clause (A) of
this paragraph or (ii) the consummation, abandonment or termination of, or the
availability of the required financial statements with respect to, a transaction
described in clause (B) of this paragraph, the suspension of the use of the
Shelf Registration pursuant to this Section 2.1(e) shall cease and the Company
shall promptly comply, prior to the next Business Day, with Section 2.3 hereof
and notify the Holders that dispositions of Registrable Securities may be
resumed. In the event that during the Effectiveness Period the prospectus under
the Shelf Registration becomes not usable as a result of the Company's
notification under this Section, the Company shall use its reasonable best
efforts to provide the Holders a usable prospectus as soon as practicable, and
in no event shall sales of Registrable Securities under the Shelf Registration
be suspended for more than 30 days in any 365-day period.
Section 2.2 [Reserved]
Section 2.3 Registration Procedures.
(a) The Company shall, at its expense:
(i) file with the Commission within 90 days a Registration Statement with
respect to such Registrable Securities and use its best efforts to cause that
Registration Statement to become and remain effective prior to the Effectiveness
Target Date and for the duration of the Effectiveness Period;
(ii) prepare and file with the Commission any amendments and supplements to
the Registration Statement and the prospectus included in the Registration
Statement as may be necessary to keep the Registration Statement effective for
the period described in Section 2.3(a)(i) above and comply with the provisions
of the Act with respect to the disposition of all securities covered by such
Registration Statement;
(iii) furnish to each selling Holder such reasonable numbers of copies of
the Registration Statement, preliminary prospectus, final prospectus and any
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amendments and supplements and such other documents as each selling Holder may
reasonably request in order to facilitate the public offering of such
securities;
(iv) promptly and prior to the next Business Day, furnish to each selling
Holder written notice of any stop order or similar notice issued by the
Commission or any state agency charged with the regulation of securities and of
any notice from the Nasdaq National Market or other securities exchange then
listing the Registrable Securities covered by such Registration Statement;
(v) register or qualify the Registrable Securities covered by the
Registration Statement under the securities or Blue Sky laws of such states as
shall be reasonably appropriate for the distribution of the Registrable
Securities; provided, however, that the Company shall not for any purpose be
required to qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified;
(vi) use its best efforts to make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve 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 the Registrable Securities are freely tradeable thereon upon
registration thereof under the Act;
(viii) provide, if one has not already been appointed by the Company, a
transfer agent and registrar for all Registrable Securities covered by such
Registration Statement not later than the effective date of such Registration
Statement;
(ix) enter into a cross-indemnity agreement, in customary form, with each
underwriter, if any;
(x) include in the Registration Statement filed with the Commission, all
Registrable Securities; and promptly, within two (2) Business Days after filing
of such a registration statement or prospectus or any amendments or supplements
thereto, the Company shall furnish to each Holder copies of all such documents
so filed including, if requested, documents incorporated by reference in the
registration statement; and notify each selling Holder of any stop order issued
or threatened by the Commission and use its best efforts to prevent the entry of
such stop order or to remove it if entered;
(xi) notify each selling Holder, at any time when a prospectus relating to
such selling Holder's Registrable Securities is required to be delivered under
the Act,
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of the occurrence of any event as a result of which the prospectus included in
such registration statement contains an untrue statement of a material fact or
omits to state any material fact necessary to make the statements therein not
misleading, and as soon as practicable prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(xii) cause all such Registrable Securities to be listed on the Nasdaq
National Market System (or on such other principal securities exchange on which
the equity securities issued by the Company are then quoted or listed and
traded);
(xiii) enter into an underwriting agreement in customary form and take all
such other actions that the selling Holders or their underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities;
(xiv) make available for inspection by each selling Holder and one (1) of
its counsel acting for them, any underwriter participating in any disposition
pursuant to such registration statement, and any counsel retained by any such
underwriter, all pertinent financial and other information and corporate
documents of the Company reasonably requested, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such selling Holder, underwriter or counsel in connection with such registration
statement and to participate in "road shows" or management presentations as may
be reasonably requested by any underwriter;
(xv) with respect to any underwritten offering, use its reasonable best
efforts to obtain a "cold comfort" letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by "cold comfort" letters as the selling Holders or any underwriter may
reasonably request;
(xvi) with respect to an underwritten offering, obtain an opinion of
counsel to the Company, addressed to the selling Holders and any underwriter, in
customary form and including such matters as are customarily covered by such
opinions in underwritten registered offerings of equity securities as the
selling Holders or any underwriter may reasonably request, such opinion to be
reasonably satisfactory in form and substance to each selling Holder; (xvii)
furnish to each selling Holder upon request of such selling Holder within three
(3) Business Days, copies of all correspondence between the Company, the
Commission and any applicable state securities regulatory agencies relating to
such registration;
(xviii) during the period that the Company is required to keep such
Registration Statement effective, promptly and prior to the next Business Day,
notify each selling Holder of Registrable Securities covered by such
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Act, of the happening of
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any event as a result of which the prospectus or any prospectus supplement
included in such registration statement, as then in effect, or any material
incorporated by reference therein, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, or if it is necessary to amend or supplement such
prospectus or any prospectus supplement or registration statement or material
incorporated by reference therein to comply with the law, and at the request of
any such selling Holder, prepare and furnish to such selling Holder a reasonable
number of copies of a supplement to or an amendment of such prospectus or any
prospectus supplement or material incorporated by reference therein as may be
necessary so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus or any prospectus supplement or material
incorporated by reference therein shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing and so that such prospectus or prospectus supplement
or registration statement or material incorporated by reference therein, as
amended or supplemented, will comply with the law;
(xix) upon the reasonable request of any selling Holder, to include in a
prospectus supplement or an amendment to a Registrable Securities Shelf
Registration any change in the information provided to the Company pursuant to
Rules 507 or 508 under Regulation S-K under the Act; and
(xx) upon delivery of the certificates with respect to the Registrable
Securities to be registered pursuant hereto, issue to any underwriter to which
the selling Holder may sell such Registrable Securities in connection with any
such registrations (and to any direct or indirect transferee of any such
underwriter) certificates evidencing such Registrable Securities without any
legend restricting the transferability of the Registrable Securities.
(b) Each selling Holder of Registrable Securities agrees that, upon receipt
of any written notice from the Company of (i) any request by the Commission for
amendments or supplements to a Registration Statement or related prospectus
covering any of such selling Holder's Registrable Securities, (ii) the issuance
by the Commission of any stop order suspending the effectiveness of a
Registration Statement covering any of such selling Holder's Registrable
Securities or the initiation of any proceedings for that purpose, (iii) the
receipt by the Company of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (iv) the happening
of any event that requires the making of any changes in the Registration
Statement covering any of such selling Holder's Registrable Securities so that
it will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or that any related prospectus will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (v) the Company's reasonable
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determination that a post-effective amendment to a Registration Statement
covering any of such selling Holder's Registrable Securities or a supplement to
any related prospectus is required under the Act; such selling Holder will
forthwith discontinue disposition of such Registrable Securities until it is
advised in writing by the Company that the use of the applicable prospectus (as
amended or supplemented, as the case may be) and disposition of the Registrable
Securities covered thereby pursuant thereto may be resumed, provided, however,
(x) that such selling Holder shall not resume its disposition of Registrable
Securities pursuant to such Registration Statement or related prospectus unless
it has received notice from the Company that such Registration Statement or
amendment has become effective under the Act and has received a copy or copies
of the related prospectus (as then amended or supplemented. as the case may be)
unless the Registrable Securities are then listed on a national securities
exchange and the Company has advised such selling Holder that the Company has
delivered copies of the related prospectus, as then amended or supplemented, in
transactions effected upon such exchange, subject to any subsequent receipt by
such selling Holder from the Company of written notice of any of the events
contemplated by clauses (i) through (v) of this paragraph, and, (y) if so
directed by the Company, such holder will deliver to the Company all copies,
other than permanent file copies then in such Holder's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice. In the event the Holders are required to refrain from
disposition of Registrable Securities for more than 30 days in any 365-day
period, the Company shall be deemed in breach of this Agreement.
Section 2.4 Registration Expenses. The Company shall bear all expenses
incident to the Company's performance of or compliance with this Agreement,
including, without limitation, all fees and expenses relating to the listing of
any Registrable Securities with the Nasdaq National Market System (or on such
other principal securities exchange on which the equity securities issued by the
Company are then quoted or listed and traded), fees and expenses of compliance
with securities or Blue Sky laws in jurisdictions reasonably requested by any
selling Holder or underwriter pursuant to Section 2.3(b) (including reasonable
fees and disbursements of counsel in connection with Blue Sky qualifications of
the Registrable Securities), all word processing, duplicating and printing
expenses, messenger and delivery expenses, fees and disbursements of counsel for
the Company and one (1) counsel for the selling Holders (selected by Holders
holding a majority of the Registrable Securities), independent public
accountants (including the expenses of any special audit or "cold comfort"
letters required by or incident to such performance) and underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals attributable to the securities
being registered, which discounts, commissions or fees with respect to any
selling Holder's respective Registrable Securities shall be paid by such selling
Holder), all the Company's internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), fees of the National Association of Securities Dealers,
Inc., the expense of any annual audit, the expenses of any special audit
incident to or required by any registration, the expense of any liability
insurance (if the Company determines to obtain such insurance) and the
reasonable fees and expenses of any special experts
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(including attorneys) retained by the Company (if it so desires) in connection
with such registration and fees and expenses of other persons retained by the
Company.
Section 2.5 Indemnification.
(a) In the event of any registration of any of the Registrable Securities
under the Act pursuant to this Agreement, the Company will indemnify and hold
harmless the selling Holder of such Registrable Securities, each of its
officers, directors, partners, legal counsel and accountants, each underwriter
(if any) and each other person, if any, who controls such selling Holder or such
underwriter within the meaning of the Act, against any expenses, losses, claims,
damages or liabilities, joint or several, arising out of or based upon any
untrue statement (or alleged untrue statement) of a material fact contained in
any Registration Statement under which such Registrable Securities were
registered under the Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arising out of or based upon any
omission (or alleged omission) to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Act or any rule or regulation promulgated
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration; and, subject to Section
2.5(c) below, the Company will reimburse such selling Holder, each of its
officers, directors, partners, legal counsel and accountants, each underwriter,
if any, and each such controlling person for any legal and any other expenses
reasonably incurred by such selling Holder or controlling person in connection
with investigating and defending any such expense, loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such expense, loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in such Registration Statement, preliminary prospectus, final prospectus, or
summary prospectus, or any such amendment or supplement, made in reliance upon
and in conformity with information furnished to the Company, in writing, by such
selling Holder and stated to be specifically for use therein.
(b) Each selling Holder of Registration Securities will, severally, and not
jointly and severally, in the event that any Registrable Securities held by such
selling Holder as to which any registration is being effected under the Act
pursuant to this Agreement, indemnify and hold harmless the Company, each of its
directors and officers and each underwriter (if any), and each other person, if
any, who controls the Company or any such underwriter within the meaning of the
Act, against any losses, claims, damages or liabilities, joint or several,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of a material fact
contained in any Registration Statement under which such Registrable Securities
were registered under the Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any
omission to state a material fact required to be stated therein or necessary to
make the statement therein not misleading, if the statement or omission was made
in
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reliance upon and in conformity with information furnished in writing to the
Company by such selling Holder and stated to be specifically for use therein,
and shall reimburse the Company, its directors and officers, and each such
controlling person for any legal or other expenses reasonably incurred by any of
them in connection with investigation or defending any such loss, claim, damage,
liability or action. This indemnity shall remain in full force and effect for
the applicable statute of limitation period regardless of any investigation made
by or on behalf of the Company or such controlling person and shall survive the
transfer of shares. No selling Holder shall be liable to the Company and the
other indemnified parties under this Section 2.5(b) for any amount in excess of
the net proceeds received from the Registrable Securities sold by it pursuant to
the Registration Statement.
(c) Each party entitled to indemnification under this Section 2.5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any loss, claim, action, damage or liability as to which
indemnity may be sought, and shall permit the Indemnified Party to assume the
defense of any such claim or any litigation resulting therefrom; provided, that
counsel for the Indemnifying Party who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party whose approval shall
not be unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnified Party of its obligations under this Section 2.5, except to the
extent that such failure to give notice prejudices the Indemnifying Party or
such Indemnifying Party is damaged by such delay. The Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
Indemnifying Party shall pay such expense (but in no event shall the
Indemnifying Party be obligated to pay the fees and expenses of more than one
counsel for the Indemnified Party or Parties) if representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would, in
the reasonable judgment of the Indemnified Party, be inappropriate due to actual
or potential conflict of interests between the Indemnified Party and any other
party represented by such counsel in such proceeding. If, in the Indemnified
Party's reasonable judgment, a conflict of interest between such Indemnified and
Indemnifying Parties may exist in respect of such claim, the Indemnified Party
may assume the defense of such claim, jointly with any other Indemnified Party
that reasonably determines such conflict of interest to exist, and the
Indemnifying Party shall be liable to such Indemnified Parties for the
reasonable legal fees and expenses of one counsel for all such Indemnified
Parties and for other expenses reasonably incurred in connection with the
defense thereof incurred by the Indemnified Parties. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party (which consent shall not be unreasonably withheld),
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation, and no Indemnified Party shall consent to entry of any
judgment or settle such claim or litigation without the prior written consent of
the Indemnifying Party.
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(d) If the indemnification provided for in this Section 2.5 is finally
determined by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage, or expense
referred to therein or contribution is required under the Act in circumstances
for which indemnification is provided under this Section 2, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative benefits received by the Indemnifying
Party on the one hand and the Indemnified Party on the other and also the
relative fault of the Indemnifying Party and the Indemnified Party as well as
any other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact related to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission; provided, however, that, in any such case,
(A) no Holder will be required to contribute any amount in excess of the net
proceeds received from the Registrable Securities sold by it pursuant to such
Registration Statement, and (B) no person or entity guilty of fraudulent
misrepresentation, within the meaning of Section 11(f) of the Act, shall be
entitled to contribution from any person or entity who is not guilty of such
fraudulent misrepresentation.
(e) Indemnification and contribution similar to that specified in this
Section 2.5(e) (with appropriate modifications) shall be given by the Company
and each selling Holder with respect to any required registration or other
qualification of Registrable Securities under any Federal or state law or
regulation of any governmental authority, other than the Act.
(f) The indemnification required by this Section 2.5 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or expense, loss, damage or liability
is incurred.
(g) The obligations under this Section 2.5 shall survive the completion of
any offering of Registrable Securities in a Registration Statement.
Section 2.6 Indemnification with Respect to Underwritten Offering.
(a) In the event that Registrable Securities are sold pursuant to a
Registration Statement in an underwritten offering, the Company agrees to enter
into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of the Company and
customary covenants and agreements to be performed by the Company, including
without limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering.
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(b) No Holder may participate in any underwritten registration pursuant to
Section 2 hereunder unless such Holder (i) agrees to sell the Registrable
Securities which it proposes to sell in such underwritten registration on the
basis provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, reasonable and customary indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements and provides such other information and documentation
as the Company or the underwriters may reasonably request in connection with
such underwritten registration.
Section 2.7 Information by Holder. Each holder of Registrable Securities
included in any Registration shall furnish to the Company such information
regarding such holder and the distribution in proposed by such holder as the
Company may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Article
2.
Section 2.8 Termination. All of the Company's obligations to register
Registrable Securities under this Agreement pursuant to this Agreement shall
terminate on the earlier of (x) when there are no Registrable Securities as
defined herein and (y) seven years from the date hereof.
Section 2.9 Transfer of Rights.
(a) The rights and obligations of each Holder (or assignee thereof) under
this Agreement may be transferred or assigned by such Holder (or assignee
thereof), in whole or in part, without the consent of the Company or any other
Holder, (i) to any Affiliate of the Holder or (ii) any person or entity
acquiring at least five hundred (500) Registrable Securities (as adjusted for
stock splits, stock dividends, recapitalization or similar events) (all of such
parties, collectively, the "Permitted Transferees"). The Company may not assign
this Agreement or any of its rights or obligations hereunder or under the
Warrant without the prior written consent of each Holder and each Warrant holder
(which consent may be withheld for any reason in the sole discretion of such
Holder or Holders).
(b) Any transferee (other than a Holder who is already a party to an
agreement in form and substance similar to this Agreement) to whom rights under
this Agreement are transferred shall, as a condition to such transfer, deliver
to the Company a written instrument by which such transferee identifies itself,
gives the Company notice of the transfer of such rights, indicates the
Registrable Securities owned by it and agrees to be bound by the obligations
imposed upon the Investors under this Agreement.
(c) A transferee to whom rights or obligations are transferred pursuant to
this Section 2.9 may not again transfer such rights or obligations to any other
person or entity, other than as provided in this Section 2.9.
12
Section 2.10 Rule 144. The Company will file the reports required to be
filed by it under the Act and the Exchange Act, and will take such further
action as any Holder of Registrable Securities may reasonably request, all to
the extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Act within the limitations of the
exemptions provided by (a) Rule 144 under the Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the written request of any Holder of Registrable
Securities, the Company will deliver to such Holder, within five days of
delivery of such request, a written statement as to whether it has complied with
such filing requirements. In connection with any sale of Registrable Securities
that will result in such securities no longer being "restricted securities" (as
defined in Rule 144 promulgated under the Act), the Company shall cooperate with
the selling Holders and the underwriter(s), if any, and facilitate the
preparation and delivery of certificates representing such securities to be sold
which do not bear any restrictive legends to permit delivery of such securities.
Section 2.11 Information Reports. The Company covenants that, except at
such times as the Company is a reporting company under Section 13 or 15(d) of
the Exchange Act, the Company shall, upon the written request of any Holder of
Registrable Securities, provide to any such Holder and to any prospective
institutional transferee of Registrable Securities designated by such Holder,
within five Business Days after delivery of such written request, such financial
and other information as is available to the Company and as such Holder may
reasonably determine is required to permit a transfer of such Registrable
Securities to comply with the requirements of Rule 144A promulgated under the
Act.
Section 2.12 Investor Representations. In connection with the acquisition
of the Warrants, each of the Investors hereby represents that it has such
knowledge and experience in financial and business matters that such Investor is
capable of evaluating the merits and risks of its investment contemplated by
this Agreement and has the capacity to protect its own interests. Each Investor
acknowledges that investment in the Warrant and the shares of Company common
stock issuable upon exercise of such Warrant ("Warrant Shares") is highly
speculative and involves a substantial and high degree of risk of loss of the
entire investment. Each Investor has adequate means of providing for current and
anticipated financial needs and contingencies, is able to bear the economic risk
of its investment in the Warrant and Warrant Shares and could afford complete
loss of such investment. Each Investor is an "accredited investor" (as such term
is defined in Rule 501 of Regulation D under the Act).
Section 2.13 Market Stand-off Agreement. Each Holder agrees, in connection
with any underwritten public offering that, upon request of the Company or the
underwriters managing any underwritten public offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any Common Stock of the Company (other than
those shares of Common Stock included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed one hundred twenty (120) days) from the
effective date of
13
such registration as may be requested by the underwriters. The Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
ARTICLE 3.
MISCELLANEOUS
Section 3.1 Notices. All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing delivered to the parties at the addresses set forth
on the signature page hereof (or such other address as may be provided by one
party in a notice to the other). Notice delivered in accordance with the
foregoing shall be effective (i) when delivered, if delivered personally, (ii)
three 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) for by overnight delivery service to a
courier (such as Federal Express) which regularly provides such service and
regularly obtains executed receipts evidencing delivery. Notices shall not be
given via U.S. Mail.
Section 3.2 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by (i) the parties hereto; (ii) the
Permitted Transferees; and (iii) the respective successors of the foregoing,
including those resulting by operation of law.
Section 3.3 Headings. Article and Section headings used in this Agreement
are for convenience of reference only and shall not constitute a part of this
Agreement for any purpose or affect the construction of this Agreement.
Section 3.4 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
one and the same Agreement. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
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.
14
Section 3.6 Survival of Agreements, Representations and Warranties. All
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement.
Section 3.7 WAIVER OF JURY TRIAL. THE COMPANY WAIVES (A) THE RIGHT TO TRIAL
BY JURY (WHICH EACH INVESTOR HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING, OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE WARRANT OR THE WARRANT CERTIFICATE. THE COMPANY WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVER WITH ITS LEGAL COUNSEL AND
HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 3.8 Amendment and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
least 51% of the Registrable Securities; provided, that this Agreement may be
amended with the consent of the holders of less than all Registrable Securities
(but not less than 51% of such shares) only in a manner which affects all
Registrable Securities in the same fashion. In no event may this Agreement be
amended to (i) shorten the Effectiveness Period, (ii) extend the Effectiveness
Target Date or (iii) require a Holder to pay expenses otherwise borne by the
Company under Section 2.4, without the prior written consent of each Holder
affected thereby. No waivers of or exceptions to any term, condition or
provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
Section 3.9 Availability of Equitable Remedies. Each party acknowledges
that a breach of the provisions of this Agreement could not adequately be
compensated by money damages. Accordingly, any party shall be entitled, in
addition to any other right or remedy available to it, to an injunction
restraining such breach or a threatened breach and to specific performance of
any such provision of this Agreement, and in either case no bond or other
security shall be required in connection therewith, and the parties hereby
consent to such injunction and to the ordering of specific performance.
Section 3.10 Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof.
Section 3.11 Attorneys Fees. Any holder of the Warrant 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 Warrant.
15
Section 3.12 No Impairment Rights. The Company will not, by amendment of
its Certificate of Incorporation or through any other means, avoid or seek to
avoid the observance or performance of any of the terms of this Agreement, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Agreement against impairment.
Section 3.13 No Inconsistent or Superior Registration Rights.
(a) From and after the date of this Agreement, the Company shall not,
without the prior written consent of the Holders of a majority in principal
amount of Registrable Securities, (i) enter into any agreement granting
registration rights with respect to the Common Stock or other securities which
are inconsistent with or superior to the rights granted to the Holders
hereunder; or (ii) amend any agreement, in effect as of the date hereof, so as
to grant registration rights to any other person or entity which causes such
registration rights to be inconsistent with those granted to the Holders
hereunder or to otherwise adversely affect the registration rights granted to
the Holders hereunder.
(b) Notwithstanding the foregoing, the Investors acknowledge and agree that
comparable registration rights have been granted concurrently herewith to (i)
the holders of the 10% Convertible Subordinated Discount Notes issued pursuant
to that certain Note Purchase Agreement dated of even date herewith by and among
the Company the subsidiaries of the Company listed on Exhibit A thereto and the
purchasers of such notes listed on the signature page thereof and (ii) the
holders of 58,000 warrants to purchase shares of Common Stock issued to U.S.
Bancorp Investments, Inc., pursuant to a warrant agreement dated of even date
herewith.
[Signature Page Follows.]
16
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
CFI PROSERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Address: 000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
INVESTORS:
ABLECO HOLDINGS LLC, a Delaware limited liability
company
By: /s/ Xxxxxx Xxxxxxxx
-------------------
Name: Xxxxxx Xxxxxxxx
Title: Chief Executive Officer
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. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: President
[Signature page continues]
FOOTHILL PARTNERS III, L.P., a Delaware limited
partnership, as a Lender
By: /s/ Xxxxxxx Xxxxx
-----------------
Name: Xxxxxxx Xxxxx
Title: Vice President
