EXHIBIT 10.5
F O R M
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[PROSOFT DEVELOPMENT, INC. LETTERHEAD]
September , 1996
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[SHAREHOLDER NAME]
[SHAREHOLDER ADDRESS]
Re: Registration and Lock-Up Agreement
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Dear :
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ProSoft Development, Inc. (the "Company") is currently in the process
of registering shares of its common stock with the United States Securities and
Exchange Commission ("SEC"). The Company is obligated to register shares
purchased by certain of its stockholders in a private placement by the Company
in July and August 1996 at a purchase price of $10 per share ("Private Placement
3"). As the Company is already required to register shares purchased in Private
Placement 3, the Company has decided to offer stockholders, such as yourself,
who purchased common stock (and/or warrants to purchase common stock) of the
Company in March 1996 at $1 per share ("Private Placement 1") or in April and
May 1996 at $3.50 per share ("Private Placement 2") the opportunity to also
register their shares, on the terms and conditions set forth below. Only those
shares purchased, or shares issuable pursuant to warrants purchased, in Private
Placements 1, 2 or 3, may be registered. In consideration of the registration of
such shares, you will be required to give up certain rights you may have with
respect to your shares and to restrict your right to sell your shares, as more
fully described below. If you wish to have your shares registered, you will need
to sign and date the extra copy of this letter included herewith, signifying
your acceptance of the Company's offer to register your shares on the terms set
forth below, and return it to the Company no later than October 7, 1996.
Agreement to Register Shares
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In consideration of the registration of the number of shares of common
stock, par value $.001 per share, of the Company set forth below your signature
on the signature page of this letter agreement (the "Shares") with the SEC under
the Securities Act of 1933, as amended (the "Act"), pursuant to a registration
statement on Form S-1 filed by the Company (the "Registration Statement") with
the SEC, you hereby represent, covenant and certify as follows:
Authority
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If you are (i) a corporation, a partnership or a trust, or (ii) an
individual acting in a representative capacity or as an agent, you have full
power and authority to make the representations, covenants and certifications
specified herein and to consummate the transactions
contemplated in the Registration Statement. If you are a corporation or a
partnership, you are in good standing under the laws of the jurisdiction of your
organization.
Share Ownership
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The exact name in which the Shares are, or will be, held as such name
should appear in the Registration Statement is " ". As of
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the date hereof, you are the owner of record of the shares of Common Stock, and
warrants and options to purchase shares of Common Stock, set forth on Exhibit A
hereto.
You hereby request that the Shares be registered by the Company
pursuant to the Registration Statement.
Lock-Up of Shares
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Unless you receive the written consent of the Company, you agree to
sell no more than one percent (1%) of your Shares under the Registration
Statement during any one month period following the date of initial
effectiveness of the Registration Statement. This limitation shall be
cumulative such that if you do not sell the full one percent (1%) during any
month, any unsold portion shall be added to the one percent (1%) limitation for
the following month.
To the extent the Company allows stockholders who are parties to a
Registration and Lock-Up Agreement to sell shares in excess of the percentages
set forth above, the Company agrees to do so only on a pro rata basis among all
such stockholders, except that the Company may, in its sole discretion, allow
stockholders to sell amounts of less than 1,000 shares without regard to the
percentage of that stockholder's shares.
You also agree that, in the event of any future underwritten public
offering of the Company's securities, upon the written request of the Company or
the managing underwriter, you will not sell, sell short, grant an option to buy,
or otherwise dispose of shares of the Company's Common Stock for a period of 180
days after the closing of such offering.
Waiver of Certain Rights
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If you purchased Shares in Private Placement 2, you hereby agree that,
upon the Registration Statement being declared effective by the SEC, (i) your
right of first refusal with respect to future sales of shares by the major
shareholders of the Company or by the Company itself as set forth in Section 4
of your Stock and Warrant Purchase Agreement and (ii) your rights relating to
the election of a member of the Board of Directors as set forth in Section 5.2
of your Stock and Warrant Purchase Agreement.
Information and Execution of Documents
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You shall furnish to the Company such information regarding yourself,
the Shares, and the intended method of disposition of the Shares as the Company
shall reasonably request
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and as shall be required in connection with the registration of the Shares under
the Act pursuant to the Registration Statement. You agree to complete and
execute all questionnaires and other documents required by the Company in
connection with the offering.
Distribution
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The distribution of your Shares will be affected in one or more
transactions that may take place in the over-the-counter market, including
ordinary brokers' transactions, privately negotiated transactions or through
sales to one or more dealers for resale of such Shares as principals, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. You agree to notify the Company
immediately upon any change in your intended method of distribution of the
Shares.
Prospectus Delivery
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You hereby acknowledge that you must deliver a currently effective
prospectus in connection with any sale of the Shares. The sale of the Shares by
you is not, and will not be, prompted by any information concerning the Company
not set forth in the then current prospectus contained in the Registration
Statement and delivered in connection with the sale of such Shares. The Company
agrees to furnish you such number of copies of the prospectus, and of any
supplement or amendment thereto, as you may reasonably request in order to
facilitate the sale of your Shares.
Suspension of Disposition of the Shares
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The Company hereby agrees to promptly notify you in writing, at the
address set forth below (or such other address as you shall notify the Company
of in writing), of the need for a supplement or amendment to any prospectus
pertaining to the Shares included in the Registration Statement and, upon
receipt of such notice, you agree to immediately discontinue disposition of the
Shares until you receive copies of a supplemented or amended prospectus, or
until you are advised in writing by the Company that the use of the prospectus
may be resumed, and have received copies of any additional or supplemental
filings which are incorporated by reference in the prospectus.
Expenses
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All expenses incurred in connection with the registration of the
Shares pursuant to the Registration Statement will be borne by the Company;
provided, however, that you shall bear all of your own costs, including the
costs of your counsel and shall pay any commissions and discounts pertaining to
the sale of the Shares pursuant to the Registration Statement.
Indemnification
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The Company will indemnify and hold harmless, you and each other
person or entity (a "Person"), if any, who controls you within the meaning of
the Act, against any losses,
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claims, damages or liabilities, joint or several, to which you or such
controlling Person may become subject under the Act or otherwise, insofar as
such loses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in the Registration
Statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
arise out of or are based upon the failure by the Company to file any amendment
or supplement thereto that was required to be filed under the Act, and will
reimburse you and each such controlling Person for any legal or any other
expenses reasonably incurred by you and each such controlling Person in
connection with investigating or defending any such 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 loss, claim, damage or liability
arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
preliminary prospectus, final prospectus or amendment or supplement in reliance
upon and in conformity with written information furnished by you to the Company
specifically for use in the preparation thereof or (ii) your failure to deliver
a copy of the Registration Statement, preliminary prospectus, final prospectus
or amendment or supplement after the Company has furnished you with a sufficient
number of copies of the same.
You agree to indemnify and hold harmless (in the same manner and to
the same extent as set forth above) the Company, each director of the Company,
each officer of the Company who shall sign the Registration Statement, any
Persons who control the Company within the meaning of the Act, with respect to
any statement or omission from the Registration Statement, preliminary
prospectus or any final prospectus contained therein, or any amendment or
supplement thereto, if such statement or omission was made in reliance upon and
in conformity with written information furnished by you to the Company,
specifically for use in the preparation of the Registration Statement,
preliminary prospectus or amendment or supplement.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to above, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to then indemnifying party of the commencement of
such action. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified,
to the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the indemnified party in connection with
the defense thereof.
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Obligation to Maintain Effectiveness of Registration Statement
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The Company shall have the right to terminate or withdraw the
Registration Statement at any time before or after it becomes effective. In the
event of such termination or withdrawal of the Registration Statement, the lock-
up obligations with respect to your shares set forth above, other than those
lock-up provisions relating to an underwritten public offering of the Company's
securities, shall terminate.
Blue Sky Laws
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In addition to the registration of the sale of the Shares under the
Act, the sale of the Shares must also be registered, qualified, or exempt from
such registration or qualification under the securities or Blue Sky laws of the
states or jurisdictions in which the offer and sale of the Shares will occur.
You acknowledge that, prior to any sale of the Shares, you must comply with such
laws. The Company shall be under no obligation to register or qualify the
Shares in any such jurisdictions.
Market Manipulation
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You have been informed that the anti-manipulation provisions of Rules
10b-6 and 10b-7 under the Securities Exchange Act of 1934 may apply to your sale
of the Shares and have been furnished with a copy of these Rules, as well as a
copy of certain interpretations thereof by the SEC. You have not taken and will
not take, directly or indirectly, any action designed to, or which has
constituted, or which might reasonably be expected to cause or result in,
stabilization or manipulation of the price of the Company's Common Stock.
Updating
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You agree to immediately notify the Company by telephone (Attention:
Xxxx X. Xxxxxxxxxx, General Counsel, telephone (000) 000-0000, ext. 243),
confirmed in writing at ProSoft Development, Inc., 0000 Xxxxx Xxxxxx, Xxxxx
Xxxx, XX 00000, of any changes in the information, representations and
certifications contained herein (including the sale of Shares pursuant to the
Registration Statement) from the date set forth below until either all of the
Shares have been sold by you pursuant to the Registration Statement or all
unsold Shares have been withdrawn from registration. In the absence of any such
notice, the Company may rely on the fact that the information, representations
and certifications contained herein remain complete and accurate.
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PROSOFT DEVELOPMENT, INC.
By:
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Xxxxx X. Xxxxxxxxx,
Chief Executive Officer
ACKNOWLEDGED AND AGREED:
Date: , 1996
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STOCKHOLDER:
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(Signature)
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(Name)
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(Title)
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(Address)
Shares of Common Stock to be
Registered:
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EXHIBIT A
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TO BE INCLUDED IN
TOTAL REGISTRATION STATEMENT
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Shares of Company Common Stock
Shares of Company Common Stock
issuable upon exercise of Warrants
Shares of Company Common Stock -0-
issuable upon exercise of Stock Options ------ -------
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