AGREEMENT
AGREEMENT (this "Agreement"), dated as of November 30, 1997, by and among
NETWORK IMAGING CORPORATION, a corporation organized under the laws of the state
of Delaware (the "Company"), and the undersigned (together with affiliates, the
"Initial Investors")
WHEREAS
A. In connection with that certain Securities Purchase Agreement, dated as of
July 28, 1997, by and among the Company and the initial Investors (the
"Securities Purchase Agreement') the Company issued and sold to
the Initial Investors 3,300 hares of the Company's Series K Convertible
Preferred Stock, par value $.0001 per share (the "Preferred Stock"). The rights,
preferences and privileges of the Preferred Stock are set forth in the
Certificate of Designations, Preferences and Rights of the Preferred Stock in
the form attached hereto as Exhibit A (the "Certificate of Designation").
Capitalized terms used and not otherwise defined herein shall have the meaning
ascribed thereto in the Certificate of Designation.
B. Pursuant to the Certificate of Designation, the Initial Investors have the
right to require the Company to redeem the shares of Preferred Stock held by
such Initial Investors in certain circumstances set forth in the Certificate of
Designation (the "Redemption Rights").
C. The Company desires to induce the Initial Investors to agree not to exercise
certain of the Redemption Rights as described herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledge, the Company and the
Initial Investors hereby agree as follows:
1. The Initial Investors agree not to exercise their right to require the
Company to effect a redemption of their outstanding shares of Preferred Stock
upon a Redemption Event specified in Article VIII.A.(i) of the Certificate of
Designation so long as the Company pays to each of the Initial Investors within
five (5) business days of the occurrence of such Redemption Event, as liquidated
damages for the decrease in the value of the Preferred Stock (and the shares of
the Company's Common Stock issuable upon conversion thereof) which will result
from the occurrence of such Redemption Event, an amount (the "Damages Amount")
equal to twenty-five percent (25%) of the aggregate Face Amount of the shares of
Preferred Stock then held by each such Initial Investor. The Damages Amount
shall be payable at the Company's option, in cash or shares of Common Stock that
have been registered by the Company under the Securities Act for resale by the
Initial Investors (based upon a price per share of Common Stock equal to fifty
percent (50%) of the lowest Closing Price of the Common Stock on any single
trading day during the ten (10) consecutive trading day period ending on the
trading day immediately preceding the date of such Redemption Event). The
Company represents and warrants that it has reserved, and agrees to keep
reserved, 3,000,000 shares of Common Stock to satisfy its obligation with
respect to the Damages Amount. In the event that the number of shares required
to be issued by the Company with respect to the Damages Amount exceeds 3,000,000
shares of Common Stock and the Company does not have a sufficient number of
shares of Common Stock authorized and available for issuance to satisfy its
obligation with respect to the Damages Amount, the Company shall issue and
deliver to the Initial Investors all 3,000,000 shares of Common Stock so
reserved for such purpose and, upon such issuance, the Initial Investors shall
have no right of redemption upon a Redemption Event specified in Article
VIII.A.(i) of the Certificate of Designation, but shall retain all other
remedies to which they may be entitled at law of in equity.
2. The Initial Investors agree not to exercise their right under Article V.B. of
the Certificate of Designation to require the Company to effect a redemption of
their outstanding shares of Preferred Stock so long as (i) the Company has not,
at any time, decreased the Reserved Amount below 12,500,000 shares of Common
Stock, (ii) the Company shall have taken immediate action following he
applicable Authorization Trigger Date (including, if necessary, seeking
shareholder approval to authorize the issuance of additional shares of Common
Stock) to increase the Reserved Amount to 200% of the number of shares of Common
Stock then issuable upon conversion of the outstanding Preferred Stock; and
(iii) the Company continues to use its good faith best efforts (including the
resolicitation of shareholder approval to authorize the issuance of additional
shares of Common Stock) to increase the Reserved Amount to 200% of the number of
shares of Common Stock then issuable upon conversion of the outstanding
Preferred Stock. The parties hereby agree that the Company will be deemed to be
using "its good faith best efforts" to increase the Reserved Amount so long as
it solicits shareholder approval to authorize the issuance of additional shares
of Common Stock not less than three (3) times during each twelve month period
following the applicable Authorization Trigger Date during which any shares of
Preferred Stock remain outstanding.
3. (a) Failure of any party to exercise any right or remedy under this Agreement
or otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed in the State of Delaware. The Company irrevocably consents to the
jurisdiction of the United States federal courts and the state courts located in
the City of New York in the State of New York in any suit or proceeding based on
or arising under this Agreement and irrevocably agrees that all claims in
respect of such suit or proceeding based on pr arising under this Agreement and
irrevocably agrees that all claims in respect of such suit or proceeding may be
determined in such courts. The Company irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The Company
further agrees that service of process upon the Company, mailed by first class
mail shall be deemed in every respect effective service of process upon the
Company in any such suit or proceeding. Nothing herein shall affect the Initial
Investor's right to serve process in any other manner permitted by law. The
Company agrees that a final non-appealable judgment in any such suit of
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
(c) Except as expressly provided herein, all of the terms and
provisions of the Certificate of Designation shall continue in full force and
effect and nothing contained herein shall be deemed to constitute a waiver by
the Initial Investors of any of their rights under the Certificate of
Designation, the Securities Purchase Agreement, the Registration Rights
Agreement or any other agreement among the Company and the Initial Investors.
(d) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
NETWORK IMAGING CORPORATION
By:
Name:
Title:
INITIAL INVESTORS:
ZANNETT LOMBARDIER, LTD.
By:
Name:
Title:
CAPITAL VENTURES INTERNATIONAL
By:
Name:
Title:
