Network Imaging Corporation
Registration Rights Agreement
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as
of July __, 1995, by and among Network Imaging Corporation, a Delaware
corporation (the "Company"), and the persons and entities listed on Exhibit A
attached hereto (the "Investors").
Recitals:
WHEREAS, pursuant to a subscription Agreement (the "Agreement"), by and among
the Company and the Investors, the Company has agreed to sell and the Investors
have agreed to purchase an aggregate of up to 1,800 shares of Series D Preferred
Stock (the "Preferred Shares") convertible into shares of the Company's Common
Stock, $.0001 par value (the "Shares");
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investors' agreement to enter into the Agreement, the Company has agreed to
provide the Investors with certain registration rights with respect to the
shares;
NOW THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in the Agreement and this
Registration Rights Agreement, the Company and the Investors agree as follows:
Agreement:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Company's Common Stock, $.0001 par value.
"Initiating Holders" shall mean holders of Preferred Shares having an
original issue price of $1 million or more.
"Other Registrable Securities" shall mean those shares of the Common
Stock heretofore or hereafter issued pursuant to one or more agreements granting
the purchasers of such securities the right to have the Company register such
securities or include such securities in any other registration of the Company's
equity securities.
"Registrable Shares" shall mean (i) the shares of Common Stock issued
upon conversion of the Preferred Shares issued pursuant to the Agreement, (ii)
the Warrant Shares, and (iii) any Common Stock of the Company issued or issuable
in respect of the Preferred Shares or the Warrant Shares or upon any stock
split, stock dividend, recapitalization or similar event, provided, however,
that shares of Common Stock or other securities shall no longer be treated as
Registrable Shares if (A) they have been sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction, (B)
they have been sold in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act so that all transfer restrictions
and restrictive legends with respect thereto are removed upon consummation of
such sale or (C) in the case of a Holder who, together with all persons with
whom he is required to aggregate under Rule 144, then holds less than one
percent (1%) of the then outstanding Common Stock, the shares are available for
sale, in the opinion of counsel to the Company, without compliance with the
registration and prospectus delivery requirements of the Securities Act so that
all transfer restrictions and restrictive legends with respect thereto may be
removed upon the consummation of such sale.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expense incurred by the Company
in compliance with Section 2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, reasonable fees and
disbursements of one counsel for all the selling holders of Registrable Shares
for a "due diligence" examination of the Company, and the expense of any special
audits incident to or required by any such registration (but excluding the
compensation of regular employees of the Company, which shall be paid in any
event by the Company).
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Shares and all fees and
disbursements of one counsel for the selling holders of Registrable Shares
(other than the fees disbursements of such counsel included in Registration
Expenses).
"Warrant Shares" shall mean the shares of Common Stock issuable on
exercise of Warrant(s) issued to Xxxxxx Investments, Inc., in connection with
the issuance of the Preferred Shares.
2. Requested Registration.
The following rights will apply only if at any time prior to expiration
of these rights, the Commission's Regulation S is rescinded or modified so as to
preclude non-United States persons from reselling in United States public
securities markets shares received from the Company:
(a) Request for Registration. If the Company shall receive
from Initiating Holders, at any time after four (4) months following the closing
of the sale of Preferred Shares pursuant to the Agreement, a written request
that the Company effect any registration with respect to all or a part of the
Registrable Shares, the Company shall:
(i) promptly give written notice of the proposed
registration to all other holders of Registrable Shares; and
(ii) as soon as practicable use its best efforts
to effect such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Shares as are specified in such request,
together with all or such portion of the Registrable Shares of any holder or
holders of Registrable Shares joining in such request as are specified in a
written request given within thirty (30) days after receipt of such written
notice from the Company; provided that the Company shall not be obligated to
effect, or to take any action to effect, any such registration pursuant to this
Section 2:
(A) after the Company has effected one such
registration pursuant to this Section 2(a) and such
registration has been declared or ordered effective
by the Commission and the sale of such Registrable
Shares shall have been completed or shall be
continuing pursuant to an effective registration
statement; or
(B) after a registration statement has been
filed with the Commission for and within 180 days
following the effective date of any registered
offering of the Company's securities to the general
public.
Subject to the foregoing limitations in clauses (A)
and (B) above, the Company shall file a registration statement covering the
Registrable Shares so requested to be registered as soon as practicable after
receipt of the request or requests of the Initiating Holders, but no later than
90 days following receipt of such request or requests; provided, however, that
if the Company shall furnish to such holders of Registrable Shares a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board of Directors it would be seriously detrimental to the Company and
its stockholders for such registration statement to be filed within such 90-day
period and it is therefore essential to defer the filing of such registration
statement, the Company shall have an additional period of not more than 90 days
after the expiration of such initial 90-day period within which to file such
registration of such initial 90-day period, provided that during such time the
Company may not file a registration statement for securities to be issued and
sold for its own account.
(b) Underwriting. If the Initiating Holders intend to distribute the
Registrable Shares covered by their request by means of an underwriting, they
shall so advise the Company as a part of their request made pursuant to Section
2 and the Company shall include such information in the written notice referred
to in Section 2(a)(i) above. The right of any holder of Registrable Shares to
registration pursuant to Section 2 shall be conditioned upon such holder's
participation in such underwriting and the inclusion of such holder's
Registrable Shares in such underwriting (unless otherwise mutually agreed by a
majority in interest of the Initiating Holders and such holder with respect to
such participation and inclusion) to the extent provided herein. A holder of
Registrable Shares may elect to include in such underwriting all or a part of
the Registrable Shares it holds.
(i) If the Company shall request inclusion in any registration
pursuant to Section 2 of securities being sold for its own account, or if
officers or directors of the Company holding other securities of the Company or
other holders of registration rights, shall request inclusion in any
registration pursuant to Section 2, the Initiating Holders shall, on behalf of
all holders of Registrable Shares, offer to include Other Registrable Securities
and the securities of the Company, such officers and directors, such other
holders of registration rights in the underwriting and may condition such offer
on their acceptance of the further applicable provisions of this Agreement. The
Company shall (together with all holders of Registrable Shares, officers and
directors, other holders of registration rights proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or representative of the underwriters
selected for such underwriting by the Company, which underwriter(s) shall be
reasonably acceptable to a majority in interest of the Initiating Holders.
(ii) Notwithstanding any other provision of this Section 2, if
the representative of the underwriters advises the Company in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the Company shall so advise all holders of Registrable Shares and
other shareholders whose securities would otherwise be underwritten pursuant
hereto, and the number of Registrable Shares and other securities that may be
included in the registration and underwriting shall be allocated in the
following manner: the securities of the Company held by officers and directors
of the Company (other than Registrable Shares) shall be excluded from such
registration and underwriting to the extent required by such limitation, and, if
a limitation on the number of shares is still required, the Other Registrable
Securities shall be excluded pro rata with Registrable Shares, unless another
method of determining such exclusion is specified in the agreements governing
the Other Registrable Securities, according to the relative number of Other
Registrable Securities requested to be included in such registration and
underwriting, from such registration and underwriting to the extent required by
such limitation, and, if a limitation on the number of shares is still required,
the number of Registrable Shares that may be included in the registration and
underwriting shall be allocated among all holders of Registrable Shares in
proportion, as nearly as practicable, to the respective amounts of Registrable
Shares which they had requested to be included in such registration at the time
of filing the registration statement. No Registrable Shares or any other
securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall also be included in such registration.
(iii) If the Company or any officer, director or holder of
Registrable Shares or Other Registrable Securities who has requested inclusion
in such registration and underwriting as provided above disapproves of the terms
of the underwriting, such person may elect to withdraw therefrom by written
notice to the Company, the underwriter and the Initiating Holders. The
securities so withdrawn shall also be withdrawn from registration.
3. Expenses of Registration. The Company shall bear all Registration
Expenses incurred in connection with any registration, qualification or
compliance of the Registrable Shares pursuant to this Agreement. All Selling
Expenses shall be borne by the holder of the securities so registered pro rata
on the basis of the number of their shares so registered.
4. Registration Procedures. Pursuant to this Agreement, the Company
will keep each holder of Registrable Shares advised in writing as to the
initiation of a registration under this Agreement and as to the completion
thereof. At its expense, the Company will:
(a) Use reasonable efforts to keep such registration effective
for a period of 180 days or until the holder or holders of Registrable Shares
have completed the Distribution described in the registration statement relating
thereto, whichever first occurs;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of securities
covered by such registration statement; and
(c) Furnish such number of prospectuses and other documents
incidental thereto, including any amendment of or supplement to the prospectus,
as a holder of Registrable Securities from time to time may reasonably request.
5. Indemnification.
(a) The Company will indemnify each holder of Registrable
Shares, each of its officers, directors and partners, and each person
controlling such holder of Registrable Shares, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any and each person who controls any
underwriter, and their respective counsel against all claims, losses, damages
and liabilities (or actions, proceedings or settlements in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any
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
any violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company in connection with any such registration,
qualification or compliance, and will reimburse each such holder of Registrable
Shares, each of its officers, directors and partners, and each person
controlling such holder of Registrable Shares, each such underwriter and each
person who controls any such underwriter, for any legal and any other expenses
as they are reasonably incurred in connection with investigating and defending
any such claim, loss, damage, liability or action, provided that the Company
shall 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 based upon written information furnished to the Company by such
holder of Registrable Shares or underwriter and stated to be specifically for
use therein.
(b) Each holder of Registrable Shares will, if Registrable
Shares held by it are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers and each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of the Securities Act and the
rules and regulations thereunder, each other such holder of Registrable Shares
and each of its officers, directors and partners, and each person controlling
such holder of Registrable Shares, and their respective counsel against 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 a
material fact relating to such Holder contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
relating to such holder or necessary to make the statements therein relating to
such holder not misleading, and will reimburse the Company, such holders of
Registrable Shares, directors, officers, partners, persons, underwriters or
control persons for any legal or any other expense reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) relating to such holder is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such holder of
Registrable Shares and stated to be specifically for use therein; provided,
however, that the obligations of such holders of Registrable Shares hereunder
shall be limited to an amount equal to the proceeds to each such holder of
Registrable Shares of securities sold under such registration statement,
prospectus, offering circular or other document as contemplated herein and
provided further that such indemnification obligations shall not apply if the
Company modifies or changes to a material extent written information furnished
by such Holder.
(c) Each party entitled to indemnification under this Section
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 claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld or delayed), and the Indemnified Party may participate
in such defense at such indemnified party's expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement. 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. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
6. Information by Holder of Registrable Shares. Each holder of
registrable Shares shall furnish to the Company such information regarding such
holder of Registrable Shares and the distribution proposed by such holder of
Registrable Shares as the Company may reasonably request in writing and as shall
be reasonably required in connection with any registration referred to in this
Agreement.
7. No transfer or Assignment of Registration Rights. Each Investor's
rights under this Registration Rights Agreement to cause the Company to register
the Shares may be transferred or assigned by an Investor (other than to
affiliates of such Investors) only to a purchaser of Preferred Shares for which
the original issue price is at least $200,000 or at least 40,000 shares of
common stock issued upon conversion of Preferred Shares and such assignment
shall only be effective upon delivery of written notice of such assignment to
the Company within thirty (30) days of the assignment.
8. Miscellaneous.
8.1 Governing Law. This agreement shall be governed and con-
strued in accordance with the laws of the Commonwealth of Virginia.
8.2 Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
8.3 Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.
8.4 Notices, etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
first-class mail, postage prepaid, or delivered by hand or by messenger or
courier delivery service, addressed (a) if to an Investor, at such Investor's
address set forth on Exhibit A hereof, or at such other address as such Investor
shall have furnished to the Company in writing, or (b) if to the Company, at the
address set forth on the signature page hereof or at such other address as the
Company shall have furnished to each Investor and each such other holder in
writing.
8.5 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any holder of any Registrable Shares, upon
any breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach of default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any holder of any breach or default under
this Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
8.6 Counterparts. This agreement may be executed in any number
of counterparts, each of which may be executed by less than all of the
Investors, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
8.7 Severability. In the case any provision of this agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
8.8 Amendments. The provisions of this Agreement may be
amended at any time and from time to time, and particular provisions of this
Agreement may be waived, with and only with an agreement or consent in writing
signed by the Company and by the Investors currently holding eighty percent
(80%) of the Registrable Shares as of the date of such amendment or waiver.
8.9 Termination of Registration Rights. This Agreement shall
terminate at the earlier of three years from July ___, 1995 (the Preferred
Shares closing date) or at such time as there cease to be any outstanding shares
which constitute Registrable Shares as defined herein.
The foregoing Registration Rights Agreement is hereby executed as of the date
first above written.
Network Imaging Corporation Investors
By: ___________________________ _________________________________
Title: ___________________________ By: ______________________________
Name: ____________________________
Title: ___________________________
