Exhibit 9
COMMUNICATION INTELLIGENCE CORPORATION
FORM OF REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
November 25, 1997, is made by and among Communication Intelligence Corporation,
a Delaware corporation (the "Company"), and those parties listed on the
signature page hereto (the "Purchasers").
R E C I T A L S
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WHEREAS, pursuant to the terms of Subscription Agreements between the
Company and the Purchasers (the "Subscription Agreements"), the Purchasers have
purchased from the Company on the date hereof 240,000 shares of Series B 5%
Cumulative Convertible Preferred Stock, par value $0.01 per share, of the
Company (the "Preferred Shares"); and
WHEREAS, the Preferred Shares are convertible into shares (the "Common
Shares") of the Company's common stock, par value $0.01, pursuant to the terms
and provisions set forth in the Certificate of Designations (the "Designation")
for such Preferred Shares; and
WHEREAS, as further inducement for the Purchasers to purchase the
Preferred Shares from the Company, the Company desires to undertake to register
the Common Shares, under the Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations thereunder, in accordance with, and subject
to, the terms hereof;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions herein the Purchasers and
the Company covenant and agree, upon the terms and subject to the conditions set
forth herein, as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed thereto in the Subscription Agreement
or the Designation. As used in this Agreement, the following terms shall have
the following respective meanings:
(a) "Closing" and "Closing Date" shall have the meanings
ascribed to such terms in the Subscription Agreement.
(b) "Holder" and "Holders" shall include a Purchaser or the
Purchasers, respectively, and any transferee of the Preferred Shares or Common
Shares or Registrable Securities which have not been sold to the public to whom
the registration rights conferred by this Agreement have been transferred in
compliance with this Agreement.
(c) "Registrable Securities" shall mean: (i) the Common Shares
issued to each Holder or its permitted transferee or designee upon conversion of
the Preferred Shares or upon any stock split, stock dividend, recapitalization
or similar event with respect to such Common Shares; (ii) any securities issued
or issuable to each Holder upon the exchange or conversion of any Preferred
Shares or Common Shares; (iii) any other security of the Company issued as a
dividend or other distribution with respect to, in exchange for or in
replacement of Registrable Securities.
(d) 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.
(e) "SEC" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
2. HOLDERS' REGISTRATION.
(a) OBLIGATION FOR REGISTRATION. Within 45 days of the Closing
Date (as defined in the Subscription Agreements), the Company shall prepare and
file a Registration Statement on Form S-3 with the SEC to register the public
sale of the Registrable Securities by the Holders under the Securities Act. The
Company shall use its best efforts to (i) cause such Registration Statement to
become effective under the Securities Act within 180 days of the Closing Date;
and (ii) keep such Registration Statement continuously effective until the
earlier of the Forced Conversion Date or the date on which none of the Preferred
Shares are outstanding. Each Holder shall notify the Company in writing within
ten (10) days after the sale of the last of its Registrable Securities to enable
the Company to determine when its obligation to continue effectiveness of the
Registration Statement terminates.
(b) NOTICE OF REGISTRATION. Within fifteen (15) days prior to
the proposed filing date of the Registration Statement referred to in
Section 2(a), the Company shall give written notice to the Holders of its
intention to file the Registration Statement, which notice shall state that the
Holders shall have five days from the receipt of such notice to notify the
Company of an election not to have such Holder's Registrable Securities included
in the Registration Statement. Within five days after the receipt of such
notice, each Holder shall notify the Company if it elects not to have its
Registrable Securities included in the Registration Statement. In such event,
the Company shall have no further obligations to such Holder under this
Agreement. The right of any Holder to have Registrable Securities included in
the Registration Statement pursuant to this Section 2 shall
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be conditioned upon such Holder's compliance in all material respects with all
of the terms and provisions of this Agreement.
(c) ADDITIONAL REGISTRATION. If the Holders become entitled,
pursuant to an event described in clause (iii) of the definition of Registrable
Securities, to receive any securities in respect of Registrable Securities that
were already included in a Registration Statement, subsequent to the date such
Registration Statement is declared effective, and the Company is unable under
the securities laws to add such securities to the then effective Registration
Statement, the Company shall promptly file, in accordance with the procedures
more particularly set forth in Section 2 hereof, an additional Registration
Statement with respect to any such new Registrable Securities. The Company
shall use its best efforts to (i) cause any such additional Registration
Statement, when filed, to become effective under the Securities Act; and (ii)
keep such additional Registration Statement effective during the period
described in clause (ii) of Section 2(a).
(d) DEFAULT PAYMENT. (i) In the event that such Registration
Statement described in Section 2(a) has not been declared effective within 180
days from the Closing Date, then CIC shall pay to each Holder a default payment
in an amount equal to two and one-half percent (2.5%) of the Liquidation
Preference for the Preferred Shares held by such Holder for each 30-day period
from and after the 180th day following the Closing Date during any part of which
such Registration Statement is not effective
(ii) All default payments required to be made in connection
with the above provision shall be paid by the tenth (10th) day of each calendar
month, in additional Preferred Shares (with each new Preferred Share valued at
$25 per share) or, at the Company's option, in cash.
(iii) The Company acknowledges that any failure, refusal or
inability by it to meet its obligations under this Section 2 will cause the
Holders to suffer damages in an amount that will be difficult to ascertain,
including, without limitation, damages resulting from the loss of liquidity in
the Registrable Securities and the additional investment risk in holding the
Registrable Securities, whether or not such Holders ultimately achieve the
return on investment contemplated in the Designation. Accordingly, the parties
agree that it is appropriate to include in this Agreement the foregoing
provision for default payments in order to compensate the Holders for such
damages. The parties acknowledge and agree that the default payment provision
set forth above represents the parties' good faith effort to quantify such
damages and, as such, agree that the form and amount of such default payment is
reasonable and will not constitute a penalty. The default payment provided for
above is in addition to and not in lieu or limitation of any other rights the
Holders may have at law, in equity or under the terms of the Designation, the
Subscription Agreement or this Agreement, including without limitation the right
to specific performance. Each Holder shall be entitled to specific performance
of any and all obligations of the Company in connection with the registration
rights of the Holders hereunder.
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3. OBLIGATIONS OF THE COMPANY. In connection with the registration
of the Registrable Securities pursuant to Section 2 of this Agreement, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a Registration Statement with
respect to all Registrable Securities included therein, and use its best efforts
to cause the Registration Statement to become effective as soon as reasonably
possible after such filing, and to keep the Registration Statement effective for
the period specified in Section 2 hereof, which Registration Statement shall not
contain during such period any untrue statement of a material fact or omit to
state during such period a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective for the period specified
in Section 2 hereof and as may be required by the Securities Act, and during
such period to comply in all material respects with the provisions of the
Securities Act with respect to the Registration Statement.
(c) Furnish promptly to each Holder whose Registrable Securities
are included in the Registration Statement such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as such Holder may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by such Holder.
(d) Use reasonable efforts to register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as shall be reasonably
requested by the Holders and prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements and to take
such other actions as may be necessary to maintain such registration and
qualification in effect at all times during which it has agreed to use its best
efforts to keep a Registration Statement effective under the Securities Act
pursuant to the terms of this Agreement, and to take all other actions necessary
or advisable to enable the disposition of such securities in such jurisdictions,
PROVIDED that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business, to file a general consent to
service of process, to subject itself to general taxation in any such states or
jurisdictions or to make any change in its charter or bylaws which the Board of
Directors determines to be contrary to the best interest of the Company and its
shareholders.
(e) Notify the Holders who hold Registrable Securities being
sold of the happening of any event as a result of which the prospectus included
in the Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The Company
shall promptly amend or supplement the Registration Statement to correct any
such untrue statement of a material fact or omission of a material fact.
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(f) Notify the Holders who hold Registrable Securities being
sold of the issuance by the SEC or any state securities commission or agency of
any stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. The Company will use its best
efforts to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible time.
(g) Furnish to the Holders, on the effective date of the
Registration Statement, an opinion, dated such date, of the counsel representing
the Company for the purposes of such registration, in form and substance as is
customarily given in such an offering, addressed to the Company, on which the
Holders shall be permitted to rely (and a copy of which shall be delivered to
the Holders).
(h) Make available for inspection by the Holders (provided that
all of such persons agree to be bound by confidentiality agreements acceptable
to the Company), all pertinent financial and other records, corporate documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such party in
connection with the Registration Statement.
(i) Use its best efforts to cause the Registrable Securities
being sold to be listed on the NASDAQ SmallCap Market or any other market or
exchange on which the Company's Common Stock is then traded.
(j) Take all actions reasonably necessary to facilitate the
timely preparation and delivery of certificates representing the Registrable
Securities to be sold pursuant to the Registration Statement and to enable such
certificates to be in such denominations and registered in such names as the
Holders of the Registrable Securities being sold.
(k) Take all other actions reasonably necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities being sold
pursuant to the Registration Statement.
4. OBLIGATIONS OF THE HOLDERS. In connection with the registration
of the Registrable Securities, the Holders covenant and agree to the following:
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to each
Holder that such Holder shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended methods of
disposition of such securities as shall be reasonably required to effect the
registration of the Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. The
Company shall notify each Holder of the information the Company requires from
each such Holder if it elects to have any of his Registrable Securities included
in the Registration Statement.
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(b) Each Holder by his purchase of the Preferred Shares agrees
to cooperate with the Company in connection with the preparation and filing of
any Registration Statement hereunder, unless such Holder has notified the
Company in writing of its election to exclude all of its Registrable Securities
from the Registration Statement.
(c) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e),
such Holder will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(e) and, if so requested in writing by the
Company, such Holder shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of such
destruction) all copies, other than the permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities at
the time of receipt of such notice.
5. EXPENSES OF REGISTRATION. All expenses incurred in connection
with registration, filings or qualifications required pursuant to Sections 2 and
3, including, without limitation, all registration, listing, filing and
qualification fees, printers and accounting fees, and fees and disbursements of
counsel for the Company, shall be borne by the Company. Notwithstanding the
foregoing, the Company shall not be liable for all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for Holders.
6. INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the fullest extent permitted by law, the Company will
indemnify and hold each Holder, its partners and their respective directors,
officers, employees and representatives, and each person who controls any such
Holder within the meaning of Section 15 of the Securities Act or Section 20 of
the Securities Exchange Act of 1934, as amended (the "1934 Act") (each such
person being referred to as an "Indemnified Person") harmless from and against
any and all losses, claims, damages, liabilities and expenses arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in a Registration Statement, or in any amendment or supplement
thereto, or arising out of or based upon 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 in light of the circumstances under which
they were made, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
allegation thereof based upon information furnished in writing to the Company by
such Indemnified Person for use therein. Notwithstanding the foregoing, the
Company shall not be obligated to so indemnify any such Holder, officer,
director or controlling person with respect to any loss, claim, damage,
liability or expense arising out of the failure by such person to comply with
the prospectus delivery requirements under the Securities Act and the rules and
regulations thereunder.
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(b) If any action or proceeding (including any governmental
investigation) shall be brought, threatened or asserted against any Indemnified
Person in respect of which indemnity may be sought from the Company, such
Indemnified Person shall promptly notify the Company in writing, and the Company
shall assume the defense thereof, including employment of counsel and the
payment of all expenses related thereto. Any such Indemnified Person shall have
the right to employ separate counsel in any such action and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless (i) the Company has agreed to pay such
fees and expenses; or (ii) the Company shall have failed to assume the defense
of such action or proceeding and employ counsel in such action or proceeding; or
(iii) the named parties to any such action or proceeding (including any
impleaded parties) include both such Indemnified Person and the Company, and
such Indemnified Person shall have been advised by counsel that there may be one
or more legal defenses available to such Indemnified Person which are different
from or additional to those available to the Company (in which case, if such
Indemnified Person notifies the Company in writing that it elects to employ
separate counsel at the expense of the Company, the Company will not have the
right to assume the defense of such action or proceeding on behalf of such
Indemnified Person); provided, however, that the Company will not, in connection
with any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys at any time for all such Indemnified
Persons, which firm shall be designated in writing by a majority in interest of
such Indemnified Persons. The Company shall not be liable for any default
judgment caused by any Indemnified Person or settlement of any such action or
proceeding or confession of judgment without its prior written consent, but if
settled with its written consent (which consent shall not be unreasonably
withheld), or if there be a final judgment (other than such default judgment)
for the plaintiff in any such action or proceeding, the Company agrees to
indemnify and hold harmless such Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Subject to the following
sentence, if the Company agrees to a settlement of an action or proceeding
against an Indemnified Person which does not involve any finding or admission of
liability or wrongdoing on the part of the Indemnified Person and stands ready,
willing and able to pay such settlement and the Indemnified Person refuses to
settle, then the Indemnified Person shall continue the defense at its own
expense and the Company shall be responsible to indemnify only the lesser of the
amount of the settlement accepted by the Company or the cost of the final
disposition of the claim. The Company will not, without the prior written
consent of any Indemnified Person, settle or compromise or consent to the entry
of any judgment in or otherwise seek to terminate any pending or threatened
action, claim, suit or proceeding in respect to which indemnification or
contribution may be sought hereunder unless such settlement, compromise, consent
or termination includes an express unconditional release of all Indemnified
Persons from all liability arising out of such action, claim, suit or
proceeding.
(c) Each Holder, severally and not jointly, agrees to indemnify
and hold harmless the Company, its directors and officers, and each person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the 1934 Act, to the same extent as the
indemnity from the Company to each Indemnified Person set forth in Section 6(a),
but only (i) with respect to untrue statements, alleged untrue
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statements, omissions or alleged omissions relating to such Holder or an
Indemnified Person who is such by reason of such person's relationship to such
Holder, furnished in writing by such Holder or such person to the Company for
use in the Registration Statement or the Prospectus, or any amendment or
supplement thereto; and (ii) with respect to any failure by such Holder to
comply with the prospectus delivery requirements under the Securities Act and
the rules and regulations thereunder. In case any action or proceeding shall be
brought against the Company or its officers or directors or any such controlling
person in respect of which indemnity may be sought against a Holder under the
provisions of this Section 6(c), such Holder shall have the rights and duties
given to the Company and each of the Company or its directors or its officers or
its controlling persons shall have the rights and duties given to each Holder
and other Indemnified Persons, under the terms of Section 6(b) above.
Notwithstanding anything contained herein, no Holder shall be liable for an
amount which is greater than the proceeds received by such Holder from the sale
of Registrable Securities.
(d) If the indemnification provided for under Section 6(a) or
Section 6(c) hereof is unavailable to an indemnified party thereunder in respect
of any losses, claims, damages, liabilities or expenses referred to therein,
then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and of the applicable Holders on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand and
of the applicable Holders on the other 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 relates to information supplied by
the Company or information supplied by the applicable Holder in writing for use
in the Registration Statement, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Subsection 11(f) of the Securities Act) or of gross negligence, willful
misconduct or bad faith shall be entitled to contribution from any person who is
not guilty of such fraudulent misrepresentation, gross negligence, willful,
misconduct or bad faith. Notwithstanding anything contained herein, no Holder
shall be liable for an amount which is greater than the proceeds received by
such Holder from the sale of Registrable Securities.
7. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of SEC Rule 144 promulgated under
the Securities Act and any other rule or regulation of the SEC that may at any
time permit the Holders to sell securities of the Company to the public without
registration, the Company agrees to timely file with the SEC all reports and
documents required to be filed by it under the Securities Act and the 1934 Act
and the rules and regulations promulgated thereunder, and to furnish to each
Holder (upon request), so long as such Holder owns any Registrable Securities, a
copy of the most recent annual or quarterly report of the Company, such other
reports and documents filed by the Company with the SEC, and such other
information as
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may be reasonably requested in availing the Holders of any rule or regulation of
the SEC which permits the selling of any such securities without registration.
8. ASSIGNMENTS OF REGISTRATION RIGHTS. The rights of a Holder
pursuant to this Agreement may be assigned by a Holder to transferees or
assignees of Registrable Securities provided that (i) the Company is furnished
with written notice of the name and address of such transferee or assignee and
the securities with respect to which such registration rights are being
assigned; (ii) the transfer or assignment of such Registrable Securities has
been made in compliance with the Securities Act and applicable state securities
laws and, immediately following such transfer or assignment, the further
disposition of such Registrable Securities is restricted under the Securities
Act; and (iii) the notice provided in this Section 8 contains a written
agreement by the transferee or assignee to be bound by the terms and provisions
of this Agreement as if such transferee were a signatory hereto .
9. MISCELLANEOUS.
(a) Notices required or permitted to be given hereunder shall be
in writing and shall be deemed to be sufficiently given when personally
delivered or sent by registered mail, return receipt requested, addressed (i) if
to the Company, at 000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxxx,
Xxxxxxxxxx 00000, Attention: President, with a copy to Xxxxxx X. Xxxxxxxx,
Esq., Xxxx Marks & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; or
(ii) if to a Holder, at the address set forth on the signature pages of the
Subscription Agreements, or at such other address as any such party furnishes by
notice given in accordance with this Section 9.
(b) 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, will not operate as a waiver thereof.
(c) This Agreement shall be enforced, governed and construed in
all respects in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of law applied in such State. In the
event that any provision of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof
which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.
(d) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by a writing executed by the Company and a majority of the
Holders. Any amendment or waiver effected in accordance with this Section 9
shall be binding upon the Holders and the Company.
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(e) Any person or entity is deemed to be a Holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall be entitled to act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(f) This Agreement may be executed in counterparts, each of
which shall be an original, but all of which shall constitute one instrument.
(g) The parties hereto agree that irreparable harm would occur
to the Holders in the event that any of the provisions of this Agreement were
not performed by the Company, and that money damages are an inadequate remedy
for breach of this Agreement because of the difficulty of ascertaining the
amount of damage that would be suffered by the Holders in the event that this
Agreement is not performed in accordance with its terms or conditions or is
otherwise breached. It is accordingly agreed that the Holders shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement by the
Holders and to enforce specifically the terms and provisions hereof in any court
of the United States or any state having jurisdiction, this being in addition to
any other remedy to which the Holders are entitled at law or in equity or
otherwise.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed on its behalf as of the date first set forth above.
COMMUNICATION INTELLIGENCE CORPORATION
By:_______________________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman of the Executive Committee
INVESTORS:
INDIVIDUAL: ______________________________________
Address:___________________ Name:
___________________________
TRUST: Trust Name:
Address:___________________
___________________________
By:___________________________________
Name & Title:
PARTNERSHIP: Partnership Name:
Address:___________________
___________________________
By:______________________________________
Name & Title:
CORPORATION: Corporation Name:
Address:___________________
___________________________
By:___________________________________
Name & Title:
RETIREMENT PLAN Plan Name:
Address:___________________
___________________________
By:___________________________________
Name & Title:
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