SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
March 15, 1996 by and among Network Imaging Corporation, a Delaware corporation,
with headquarters located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Company"), and the undersigned (collectively, the "Buyer").
WHEREAS:
A. The Company and the Buyer are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 under Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act");
B. The Buyer wishes to purchase, in the amounts and upon the
terms and conditions stated in this Agreement, shares of the Company's common
stock, par value 4.0001 per share (the "Common Stock"); and
C. Contemporaneous with the closing pursuant to this
Agreement, the Company is issuing to the Buyer certain warrants to purchase
shares of the Common Stock (the "warrants"), and the parties hereto are
executing and delivering a Registration Rights Agreement (the "Registration
rights Agreement") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws;
NOW THEREFORE, the Company and the Buyer hereby agree as
follows:
1. PURCHASE AND SALE OF COMMON STOCK
(a) Purchase of Common Stock. The Company shall issue and
sell to the Buyer and the Buyer shall purchase 934,634 shares of Common Stock
(the "Common Shares"), which number of shares shall not result in beneficial
ownership (as that term is defined under Rule 13d-3 promulgated under the 1934
Act (as hereinafter defined)) by the Buyer or more than four and ninety
five-hundredths percent (4.95%) of the outstanding shares of Common Stock. The
per share purchase price for the Common Shares shall be $3.4238, which is equal
to eighty-three percent (83%) of the average (rounded to the nearest thousandth)
closing bid price for the Common Stock as reported on the National Association
of Securities Dealers Automated Quotation National Market System ("NASDAQ-NMS")
during the five (5) consecutive trading days ending March 14, 1996 (the "Closing
Date Average Market Price").
(b) Issuance of the Warrants. In consideration of the Buyer's
purchase of the Common Shares, the Company agrees to issue to the Buyer at the
closing, without separate consideration, the Warrants to purchase 64,000 shares
of Common Stock (the "Warrant Shares"). The exercise price of the Warrants shall
be $4.5375 per Warrant Share, subject to adjustment as provided therein. The
Warrants shall expire one year from the date the registration statement required
to be filed by the Company pursuant to Section 2(a) of the Registration Rights
Agreement, is declared effective by the SEC and shall be in the form attached
hereto as Exhibit A. The Common Shares and the Warrants are hereafter
collectively referred to as the "Securities."
(c) Form of Payment. The Buyer shall pay the $3,200,000
purchase price for the Common Shares (the "Purchase Price") by wire transfer of
United States Dollars to the Company on the Closing Date (as defined below). The
Company shall promptly deliver stock certificates, duly executed on behalf of
the Company, representing the Common Shares (the "Stock Certificates") and the
Warrants on the Closing Date.
(d) Closing Date. The date and time of the issuance and sale
of the Common Shares (the "Closing Date") shall be no later than 4:00 p.m.
Eastern Standard Time on March 19, 1996.
2. BUYER'S REPRESENTATIONS AND WARRANTIES
The Buyer represents and Warrants to the Company that:
(a) Investment Purpose. The Buyer is purchasing the Common
Shares and accepting the Warrants for its own account for investment only and
not with a view towards the public sale or distribution thereof except pursuant
to sales registered under the 1933 Act.
(b) Accredited Investor Status. The Buyer is an "accredited
investor" as that term is defined in rule 501(a)(3) of Regulation D.
(c) Reliance on Exemptions. The Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.
(d) Information. The Buyer and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
securities which have been requested by the Buyer. The Buyer and its advisors,
if any, have been afforded the opportunity to ask questions of the Company and
have received complete and satisfactory answers to any such inquiries. The Buyer
understands that its investment in the Securities involves a high degree of
risk.
(e) Government Review. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities.
(f) Transfer or Resale. The Buyer understands that (i) except
as provided in the Registration Rights Agreement, the Common Shares, the
Warrants, the Warrant Shares, and the shares of Common Stock that may be issued
to the Buyer pursuant to Section 2(c) of the Registration Rights Agreement (the
"Damage Shares") have not been and are not being registered under the 1933 Act
or any state Securities laws, and may not be transferred unless (a) subsequently
registered thereunder, or (b) the Buyer shall have delivered to the Company an
opinion of counsel, reasonably satisfactory in form, scope and substance to the
Company, to effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; (ii) any sale of
such securities made in reliance on rule 144 promulgated under the 1933 Act may
be made only in accordance with the terms of said Rule and further, if said Rule
is not applicable, any resale of such securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the ▇▇▇▇ ▇▇▇) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities (other than pursuant to the Registration
rights Agreement) under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
(g) Legends. The Buyer understands that the Warrants and,
until such time as the Common Shares, the Warrant Shares, and the Damage Shares
(collectively, the "Registrable Securities") have been sold pursuant to an
effective registration statement under the 1933 Act as contemplated by the
Registration Rights Agreement, the stock certificates for the Registrable
Securities may bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of such stock
certificates):
The Securities represented by this certificate have not been
registered under the Securities act of 1933, as amended. The
securities have been acquired for investment and may not be
sold, transferred or assigned in the absence of an effective
registration statement for the securities under said Act, or
an opinion of counsel, reasonably satisfactory in form, scope
and substance to the Company, that registration is not
required under said Act.
(h) Authorization; Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of the Buyer and is a
valid and binding agreement of the Buyer enforceable in accordance with its
terms, subject as to enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally.
(i) No Conflicts. The execution, delivery and performance of
this Agreement by the Buyer and the consummation by the Buyer of the
transactions contemplated hereby will not (i) result in a violation of the
Buyer's charter documents or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Buyer is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations) applicable
to the Buyer or by which any property or asset of the Buyer is bound or affected
(except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect). The business of the Buyer is not being
conducted in violation of any law, ordinance or regulation of any governmental
entity, except for possible violations which either singly or in the aggregate
do not have a Material Adverse Effect. Except as required under the 1933 Act and
any applicable state securities laws, the Buyer is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform any
of its obligations under this Agreement in accordance with the terms hereof.
(j) Residency. The Buyer is a resident of the country
specified in its address on the signature page hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and Warrants to the Buyer that:
(a) Organization and Qualification. Each of the Company and
its subsidiaries is a corporation duly organized and existing in good standing
under the laws of the jurisdiction in which it is incorporated, except, in the
case of any such subsidiaries, as would not have a Material Adverse Effect (as
defined below), and has the requisite corporate power to own its properties and
to carry on its business as now being conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary and where the failure so to
qualify would have a Material Adverse Effect. "Material Adverse Effect" means
any material adverse effect on the operations, properties or financial condition
of the Company and its subsidiaries taken as a whole.
(b) Authorization Enforcement. (i) The Company has the
requisite corporate power and authority to enter into and perform this Agreement
and the Registration Rights Agreement, and to issue the Registrable Securities
and the Warrants, in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement by the Company and the consummation by
it of the transactions contemplated hereby have been duly authorized by the
Company's Board of Directors and no further consent or authorization of the
Company, its Board or Directors, or its stockholders is required, (iii) this
Agreement has been duly executed and delivered by the Company, and (iv) this
Agreement constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies or by other equitable principles of general
application.
(c) Capitalization. As of March 8, 1996, the amortized
capital stock of the Company consists of (i) 50,000,000 shares of Common Stock
of which 19,044,264 shares were issued and outstanding, and (ii) 20,000,000
shares of preferred stock, $.0001 par value, of which 3,397,413 shares were
issued and outstanding. All of such outstanding shares have been validly issued
and are fully paid and nonassessable. No shares of Common Stock or preferred
stock are subject to preemptive rights or any other similar rights of the
stockholders of the Company or any liens or encumbrances. Except as disclosed in
Schedule 3(c), as of March 8, 1996, (i) there are no outstanding options,
warrants, script, rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, or arrangements by which the Company or any
of its subsidiaries is or may become bound to issue additional shares of capital
stock of the Company or any of its subsidiaries is obliged to register the sale
of any of its or their securities under the 1993 Act (except the Registration
Rights Agreement). The Company has furnished to the Buyer true and correct
copies of the Company's Certificate of Incorporation as in effect on the date
hereof ("Certificate of Incorporation") and the Company's By-laws, as in effect
on the date hereof (the "By-laws"). The Company shall provide the Buyer with a
written update of this representation signed by the Company's Chief Executive or
Chief Financial Officer on behalf of the Company as of the Closing Date.
(d) Issuance of Shares. The Registrable Securities and the
Warrants are duly authorized and, upon issuance in accordance with the terms
hereof and thereof, shall be validly issued, fully paid and non-assessable, and
free from all taxes, liens and charges with respect to the issue thereof.
(e) No Conflicts. The execution, delivery and performance of
this agreement by the Company and the consummation by the Company of the
transactions contemplated hereby will not (i) result in a violation of the
Certificate of Incorporation or By-laws or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others, any rights of termination, amendment,
acceleration or cancellation or, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or result in a violation of
any law, rule, regulation , order, judgment or decree (including federal and
state securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). The
businesses of the Company and its subsidiaries are not being conducted, and
shall not be conducted through the date of the expiration of any unexercised
Warrants issued to the Buyer, in violation of any law, ordinance or regulation
of any governmental entity, except for possible violations which either singly
or in the aggregate do not have a Material Adverse Effect. Except as required
under the 1933 Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in the United states in
order for it to execute, deliver or perform any of its obligations under this
Agreement in accordance with the terms hereof.
(f) SEC Documents, Financial Statements. Since January 1,
1993, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act of 1934, as amended (the "1934 Act") (all of
the foregoing filed prior to the date hereof and all exhibits included therein
and financial statements and schedules thereto and documents (other than
exhibits) incorporated by reference therein, being hereinafter referred to
herein as the "SEC Documents"). The Company has delivered to the Buyer true and
complete copies of the SEC Documents, the SEC Documents as of their respective
dates, complied in all material respects with the requirements of the 1934 Act
and the rules and regulations of the SEC promulgated thereunder applicable to
the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein in light of the circumstances under which they were
made, not misleading. Except as disclosed in the documents referred to in
Section 2(d) hereof or in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyer and referred to
in Section 2(d) of this Agreement, when made, contained any untrue statement of
a material fact or omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstance under which they were
made, not misleading. In the aggregate, the information provided by or on behalf
of the Company to the Buyer and referred in Section 29d), including without
limitation the SEC Documents, does not omit or state a material fact or contain
material inaccuracies.
(g) Absence of Certain Changes. Since September 30, 1995,
there has been no material adverse change and no material adverse development in
the business, properties, operations, financial condition, results of operations
or prospects of the Company, except as disclosed in the documents referred to in
Section 2(d) hereof or in the SEC Documents.
(h) Absence of Litigation. Except as disclosed in Schedule
3(h), there is no action, suit, proceeding, inquiry or investigation before or
by any court, public board or body pending or, to the knowledge of the Company
or any of its subsidiaries, threatened against or affecting the Company or any
of its subsidiaries, wherein an unfavorable decision, ruling or finding would
have a Material Adverse Effect or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of the documents contemplated herein.
4. COVENANTS.
(a) Best Efforts. The parties shall use their best efforts
timely to satisfy each of the conditions described in Section 6 and 7 of this
Agreement.
(b) Form D: Blue Sky Laws. The Company agrees to file a Form
D with respect to the Securities as required under Regulation D and to provide a
copy thereof to the Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for, or obtain exemption for
the Securities for, sale to the Buyer at the closing pursuant to this Agreement
under applicable securities or "blue sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the Buyer on
or prior to the Closing Date.
(c) Reporting Status. Until such date as is the earlier of
(i) at least three (3) years after the date of the expiration of all the
Warrants, or (ii) the date on which (a) all of the Warrants have been exercised
or expired, and (b) no Registrable Securities are held by any Investor (the
"Registration Period"), the Company shall file all reports required to be filed
with the SEC pursuant to the 1934 Act, and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if the 1934
Act or the rules and regulations thereunder would permit such termination.
(d) Use of Proceeds. Without the consent of a majority in
interest of the Registrable Securities, the Company shall not use the proceeds
from the sale of the Common Shares for anything other than the Company's
internal working capital purposes and shall not, directly or indirectly, use
such proceeds for any loan to or investment in any other corporation,
partnership, enterprise or other person; provided that it is understood that the
Company may be required to pay a finder's fee in connection with the
transactions provided for herein.
(e) Expenses. The Company shall pay all expenses incurred in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the Registration Rights Agreement, including,
without limitation, Buyer's attorneys' fees and expenses.
(f) Financial Information. The Company agrees to send the
following reports to the Buyer until the Buyer transfers, assigns, or sells all
of the Registrable securities and Warrants: (i) within ten (10) days after the
filing with the SEC, a copy of its Annual Report on Form 10-K, its Quarterly
Reports on Form 10-Q and any Current Reports on Form 8-K; and (ii) within one
day after release, copies of all press releases issued by the Company or any of
its subsidiaries.
(g) Reservation of Shares. The Company shall at all times
have authorized, and reserves for the purpose of issuance, a sufficient number
of shares of Common Stock to provide for the exercise of the Warrants and
issuance of the Damage Shares.
(h) Listing. The Company shall promptly secure the listing of
the Registrable Securities upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all shares of
Registrable Securities from time to time issuable under the terms of this
Agreement and the Registration Rights Agreement.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall instruct its transfer agent to issue
certificates, registered in the name of the Buyer or its nominee, for the
Warrant Shares and Damage Shares in such amounts as specified from time to time
by the Company to the transfer agent in accordance with the terms of the
applicable security. Prior to sale of the Registrable Securities pursuant to an
effective registration statement, certificates for the Registrable Securities
shall bear the restrictive legend specified in Section 2(g) of this Agreement.
The Company shall provide instructions and opinions of counsel to its transfer
agent in accordance with Section 3(o) of the Registration Rights Agreement. The
company warrants that, except as may be required by applicable law, no
instruction other than such instructions referred to in this Section 5, and stop
transfer instructions to give effect to Section 2(f) hereof prior to
registration of the Registrable Securities under the 1933 Act, will be given by
the Company to its transfer agent and that the Warrants and the Registrable
Securities shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the Registration
Rights Agreement. Nothing in this Section shall affect in any way the Buyer's
obligations and agreement to comply with all applicable securities laws upon
resale of the securities and the Registrable Securities. If the Buyer provides
the Company with an opinion of counsel, reasonably satisfactory in form, scope
and substance to the Company, that registration of a resale by the Buyer or any
of the Warrants or the Registrable Securities is not required under the 1933
Act, the Company shall permit the transfer, and, in the case of the Common
Shares, the Warrant Shares or the Damage Shares, promptly instruct its transfer
agent to issue one or more certificates in such name and in such denominations
as specified by the Buyer.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to sell the Common
Shares and issue the Warrants is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion.
(a) The parties shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to each other.
(b) The Buyer shall have delivered the Purchase Price to the
Company.
(c) The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the Closing Date. The Company shall
have received a certificate, executed by the president of the Buyer, dated as of
the Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by the Company.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Common
Shares and accept the Warrants is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Buyer's sole benefit and may be waived by the Buyer at
any time in its sole discretion.
(a) The parties shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to each other.
(b) Until the Closing Date, the Common Stock shall be
authorized for quotation on NASDAQ-NMS, and trading in the Common Stock (or on
NASDAQ-NMS generally) shall not have been suspended by the SEC or NASDAQ.
(c) The representations and warranties of the Company shall
be true and correct in all material respects as of the date when made and as of
the Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. The Buyer shall
have received a certificate, executed by the chief executive officer of the
Company, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by the Buyer.
(d) The Buyer shall have received an opinion of the Company's
counsel, dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Buyer and in substantially the same form as Exhibit B
attached hereto.
(e) The Buyer shall have received the officer's certificate
described in Section 3(c) above, dated as of the Closing Date.
(f) The Company shall have delivered to the Buyer the Stock
Certificates and the Warrants.
8. GOVERNING LAW; MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Virginia without
regard to the principles of conflict of laws.
(b) Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same Agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause four
(4) additional original executed signature pages to be physically delivered to
the other party within five (5) days of the execution and delivery hereof.
(c) Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(d) Severability. If any provisions of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with enforcement.
(f) Notices. Notices required or permitted to be given
hereunder shall be in writing and shall be deemed to be sufficiently given when
personally delivered (by hand, by courier, by telephone line facsimile
transmission or other means) or sent by certified mail, return receipt
requested, properly addressed and with proper postage pre-paid,
If to the Company:
Network Imaging Corporation
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Bernardie
With copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to the Buyer, at the addresses on the signature page
With copy to:
Genessee Advisers
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
And:
Klehr, Harrison, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
and shall be effective, when personally delivered, upon receipt and, when so
sent by certified mail, four days after deposit with the United States Postal
Service. Each party shall provide notice to the other party of any change in
address.
(g) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent to the other (which
consent may be withheld for any reason in the sole discretion of the party from
whom consent is sought). Notwithstanding the foregoing, the Buyer may assign its
rights hereunder to any of its "affiliates," as that term is defined under the
1934 Act, with the consent of the Company.
(h) Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
(i) Survival. The representations and warranties of the
Company and the Buyer contained in Sections 2 and 3 and the agreements and
covenants set forth in Section 4, 5 and 8 shall survive the closing.
(j) Publicity. The Company and the Buyer shall have the right
to approve before issuance and press releases, SEC or NASD filings, or any other
public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of the Buyer, to make any press release or SEC or NASD filings with
respect to such transactions as is required by applicable law and regulations
(although the Buyer shall be consulted by the Company in connection with any
such press release prior to its release and shall be provided with a copy
thereof.).
(k) Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(l) Termination. In the event that the closing shall not have
occurred on or before thirty (30) days from the date hereof, this Agreement
shall terminate at the close of business on such date.
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed under seal.
NETWORK IMAGING CORPORATION
By:
Name:
Its:
GFL PERFORMANCE FUND LTD.
By:
Name:
Its:
Address: Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ Antilles
Exhibit A
to
Securities Purchase
Agreement
WARRANT TO PURCHASE 64,000 SHARES OF COMMON STOCK. VOID AFTER
5:00 P.M. EASTERN STANDARD TIME ON THE DATE THAT IS ONE YEAR AFTER THE EFFECTIVE
DATE (AS DEFINED HEREIN). THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON THE EXERCISE HEREOF HAVE BEEN AND WILL BE ISSUED IN TRANSACTIONS WHICH HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER ANY STATE SECURITIES OR BLUE SKY LAWS. THIS WARRANT AND SUCH SHARES MAY
NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT AND APPLICABLE STATE LAW, OR AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
NO.______________________ 64,000 SHARES
NETWORK IMAGING CORPORATION
This certifies that, for value received, GFL Performance Fund
Ltd., the registered holder hereof, or assigns (the "Warrantholder") is entitled
to purchase from Network Imaging Corporation, a Delaware corporation (the
"Company"), at any time on and after the "Effective Date", which is the date the
Registration Statement (filed with the Securities and Exchange Commission (the
"SEC") pursuant to Section 2(a) of a certain Registration Rights Agreement of
even date herewith by and among the parties hereto) is declared effective by the
SEC, and before 5:00 P.M., Eastern Standard Time, on the date that is one year
after the Effective Date (the "Termination Date"), at the purchase price of
$4.5375 per share (the "Exercise Price"), the number of shares of Common Stock,
par value 4.0001 per share (the "Common Stock"), of the Company set forth above
(the "Warrant Stock"); provided, however, that in no event shall the
Warrantholder be entitled to exercise this Warrant if, after giving effect to
such exercise, the number of shares of Common Stock beneficially owned by the
Warrantholder and all other holders of Common Stock whose holdings would be
aggregated with the Warrantholder for purposes of calculating beneficial
ownership in accordance with Section 13(d) and 16 of the Securities Exchange Act
of 1934, as amended, and the regulations thereunder ("Sections 13(d) and 16"),
including without limitation any person serving as an adviser to any holder
(collectively, the "Related Persons"), would exceed four and ninety-five
hundredths percent (4.95%) of the outstanding shares of Common Stock (calculated
in accordance with Section 13(d) and 16). The Common Stock issuable upon
exercise of Warrants for the purchase of Common Stock held by the Warrantholder
or the Related Persons shall not be deemed to be beneficially owned by the
Warrantholder or such Related Persons for this purpose. The number of shares of
Warrant Stock, the Termination Date and the Exercise Price per share of this
Warrant shall be subject to adjustment from time to time as set forth below.
SECTION I. TRANSFER OR EXCHANGE OF WARRANT
The Company shall be entitled to treat the Warrantholder as
the owner in fact hereof for all purposes and shall not be bound to recognize
any equitable or other claim to or interest in this Warrant on the part of any
other person. This Warrant shall be transferable only on the books of the
Company, maintained at its principal office, upon delivery of this Warrant
Certificate duly endorsed by the Warrantholder or by its duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer. Upon any registration of transfer, the
Company shall deliver a new Warrant Certificate or Certificates to the persons
entitled thereto.
SECTION II. TERM OF WARRANT; EXERCISE OF Warrants
A. Termination. The Company, in its sole discretion, may
extend the Termination date with respect to the exercise of this Warrant upon
notice to the Warrantholder. As sued herein, "Termination Date" shall be deemed
to include any such extensions.
B. Exercise. This Warrant shall be exercised by surrender to
the Company, at its principal office, of this Warrant Certificate, together with
the Purchase Form attached hereto duly completed and signed, and upon payment to
the Company of the Exercise Price for the number of shares of Warrant Stock in
respect of which this Warrant is then exercised. Payment of the aggregate
Exercise Price shall be made in cash or certified or official bank check.
C. Warrant Certificate. Subject to section III hereof, upon
such surrender of this Warrant Certificate and payment of the Exercise Price as
aforesaid, the Company shall issue and cause to be delivered to or upon the
written order of the Warrantholder, by the second trading day after exercise, a
certificate or certificates for the number of full shares of Warrant Stock so
purchased upon the exercise of such Warrant, together with cash, as provided in
Section VI hereof, in respect of any fractional shares of Warrant Stock
otherwise issuable upon such surrender. Such certificate or certificates
representing the Warrant Stock shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a holder
of record of such shares of Warrant Stock as of the date of receipt by the
Company of this Warrant Certificate and payment of the Exercise Price as
aforesaid. The rights of purchase represented by this Warrant shall be
exercisable, at the election of the Warrantholder, either in full or from time
to time in part, and, in the event that this Warrant is exercised in respect of
fewer than all of the shares of Warrant Stock purchasable on such exercise at
any time prior to the Termination Date, a new Warrant Certificate evidencing the
remaining Warrant or Warrants will be issued, and the Company shall deliver the
new Warrant Certificate or Certificates pursuant to the provisions of this
Section.
SECTION III. PAYMENT OF TAXES
The Company will pay all documentary stamp taxes, if any,
attributable to the initial issuance of the shares of Warrant Stock upon the
exercise of this Warrant; provided, however, that the Warrantholder shall pay
any tax or taxes which may be payable in respect of any transfer involved in the
issue or delivery of Warrant Certificates or the certificates for the shares of
Warrant Stock in a name other than that of the Warrantholder in respect of which
this Warrant or shares of Warrant Stock are issued.
SECTION IV. MUTILATED OR MISSING WARRANT CERTIFICATES
In case this Warrant Certificate shall be mutilated, lost,
stolen or destroyed, the Company shall, at the request of the Warrantholder,
issue and deliver, in exchange and substitution for and upon cancellation of
this certificate if mutilated, or in lieu of and in substitution for this
certificate if lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent right or interest, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction of this Warrant Certificate and indemnity, if requested, also
reasonably satisfactory to the Company.
SECTION V. RESERVATION OF SHARES OF WARRANT STOCK
There has been reserved, and the Company shall at all times
keep reserved so long as this Warrant remains outstanding, out of its authorized
Common Stock a number of shares of Common Stock sufficient to provide for the
exercise of the rights of purchase represented by this Warrant. The transfer
agent for the Common Stock and every subsequent transfer agent for any shares of
the Company's capital stock issuable upon the exercise of this Warrant will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be requisite for such purpose.
SECTION VI. FRACTIONAL SHARES.
No fractional shares or script representing fractional shares
shall be issued upon the exercise of this Warrant. With respect to any fraction
of a share called for upon the exercise of this Warrant, the Company shall pay
to the Warrantholder an amount in cash equal to such fraction multiplied by the
Exercise Price then in effect.
SECTION VII. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES.
A. Stock Dividends, Splits and Combinations. In case the
Company shall hereafter (i) pay a dividend in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock, or (iii) combine its
outstanding shares of Common Stock into a smaller number of shares, then, and in
each case, the number of shares of Common Stock which the Warrantholder is
entitled to purchase pursuant to this Warrant immediately prior to the happening
of any such events shall be adjusted so that the Warrantholder shall be entitled
to receive upon exercise of this Warrant the number of shares of Common Stock
which the Warrantholder would have owned or would have been entitled to receive
immediately following the happening of such event had this Warrant been
exercised immediately prior thereto, and the Exercise Price shall be
correspondingly adjusted. An adjustment made pursuant to this provision shall
become effective immediately after the record date in the case of a dividend and
immediately after the effective date in the case of a subdivision or
combination.
B. Reclassification, Consolidation, Merger, etc. In case of
any reclassification or change of the outstanding shares of Common Stock (other
than a change in par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of all
or substantially all of the property of the Company, the Warrantholder shall
thereafter have the right to purchase upon the exercise of this Warrant the kind
and number of shares of stock and other securities and property receivable upon
such reclassification, change, consolidation, merger, sale or conveyance as if
the Warrantholder were the owner of the shares of Warrant Stock underlying this
Warrant immediately prior to any such events at the Exercise Price in effect
immediately prior to the record date for such reclassification, change,
consolidation, merger, sale or conveyance as if such Warrantholder had exercised
this Warrant.
SECTION VII. NOTICES OF WARRANTHOLDERS.
So long as this Warrant shall be outstanding and unexercised
(a) if the Company shall pay any dividend or make any distribution upon the
Common Stock or (b) if the Company shall offer to the holders of Common Stock
for subscriptions or purchase by them any shares of stock of any class or any
other rights or (c) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of the
Company t another corporation, or voluntary or involuntary dissolution,
liquidation or winding up of the Company shall be effected, then, in any such
case, the Company shall cause to be delivered to the Warrantholder, at least ten
(10) days prior to the date specified in (i) or (ii) below, as the case may be,
a notice containing a brief description of the proposed action and stating the
date on which (i) a record is to be taken for the purpose of such dividend or
distribution, or (ii) such reclassification, reorganization, consolidation,
merger, conveyance, lease, dissolution, liquidation or winding up is to take
place and the date, if any, as of which the holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.
SECTION IX. DELIVERY OF NOTICES
Any notice pursuant to this Warrant by the Company or by the
Warrantholder shall be in writing and shall be deemed to have been duly given if
delivered or mailed certified mail, return receipt requested, (a) if to the
Company, to it at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
Bernardie, and (b) if to the Warrantholder to it at the address set forth on the
signature page hereto. Each party hereto may from time to time change the
address to which such party's notices are to be delivered or mailed hereunder by
notice in accordance herewith to the other party.
SECTION X. SUCCESSORS.
All the covenants and provisions of this Agreement by or for
the benefit of the Company or the Warrantholder shall bind and inure to the
benefit of their respective successors and assigns hereunder.
SECTION XI. APPLICABLE LAW.
This Warrant shall be deemed to be a contract made under the
laws of the Commonwealth of Virginia to agreements made and to be performed
entirely in Virginia for all purposes shall be construed in accordance with the
internal laws of Virginia giving effect to the conflicts of laws principles
thereof.
SECTION XII. BENEFITS OF THIS Agreement.
Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company and the Warrantholder any legal or
equitable right, remedy or claim under this Warrant and this Warrant shall be
for the sole and exclusive benefit of the Company and the Warrantholder.
IN WITNESS WHEREOF, the parties hereto have executed this
Warrant Certificate or caused this Warrant Certificate to be duly executed as of
the 19th day of March, 1996.
NETWORK IMAGING CORPORATION
By:
Name:
Title:
GFL PERFORMANCE FUND LTD.
By:
Name:
Title:
Address of Warrantholder:
Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ Antilles
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the
Warrant represented by this Warrant Certificate to the extent of ______ shares
of Common Stock, par value $.0001 per share, of Network Imaging Corporation and
hereby makes payment of $_________ in payment of the actual exercise price
thereof.
[----------------------]
By:___________________________
Name:
Title:
Employer Taxpayer
Identification Number:
Address for delivery of Stock
Certificate:
ASSIGNMENT FORM
FOR VALUED RECEIVED, ________________ hereby sells, assigns
and transfers unto ________________________ address _________________ the right
to purchase Common Stock, par value $.0001 per share, Network Imaging
Corporation represented by this Warrant Certificate to the extent of _____
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint _____________, to transfer the same on the books of the
Company with full power of substitution in the premises.
-----------------
Signature
Dated: ___________
Notice: The signature of this agreement must
correspond with the name as it appears upon
the face of this Warrant Certificate in every
particular, without alteration or enlargement
or any change whatever.
SIGNATURE GUARANTEED:
--------------------------
Exhibit B
to
Securities Purchase
Agreement
[Date of Closing]
[Name of Buyer]
Re: Network Imaging Corporation
Ladies and Gentlemen:
We have acted as counsel to Network Imaging Corporation, a
Delaware corporation (the "Company"), in connection with the Securities Purchase
Agreement, dated as of __________, 1966, between you and the Company (the
"Agreement") and the transactions contemplated therein. Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings
assigned to such terms in the Agreement. The Agreement, the Warrants, and the
Registration Rights Agreement are herein referred to collectively as the
"Documents."
In so acting, we have examined the Documents, and we have
examined and considered such corporate records, certificates and matters of law
as we have deemed appropriate as a basis for our opinions set forth below.
Based upon the foregoing and subject to the assumptions,
limitations, qualifications and exceptions stated herein, we are of the opinion
that as of the date hereof:
(1) The Company is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, has all requisite
corporate power and authority to conduct its business now being conducted.
(2) The Company has the requisite corporate power and
authority to enter into and perform the Agreement and the Registration Rights
Agreement, and to issue the Registrable Securities and the Warrants, in
accordance with the terms of the Documents, (ii) the execution and delivery of
the Documents by the Company and the consummation by it of the transactions
contemplated therein have been duly authorized by the Company's Board of
Directors and no further consent or authorization of the Company, its Board of
Directors, or its stockholders is required, (iii) the Documents have been duly
executed and delivered by the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies or by other equitable principles of general application and
except as rights to indemnity or contribution may be limited by applicable law.
(3) The Registrable Securities and the Warrants are dully
authorized and, upon issuance and delivery in accordance with the terms of the
Documents, will be validly issued, fully paid and non-assessable.
(4) As of March 8, 1996, the authorized capital stock of the
Company consists of (I) 50,000,000 shares of Common Stock, $.0001 par value of
which 19,044,264 shares were issued and outstanding, and (ii) 20,000,000 shares
of Preferred Stock $.0001 per value, of which 3,397,413 shares were issued and
outstanding. All of such outstanding shares have been validly issued and are
fully paid and nonassessable. No shares of Common Stock or Preferred Stock are
subject to preemptive rights or any other similar rights of the stockholders of
the Company pursuant to the Company's Certificate of Incorporation or Bylaws or
by statute. Except as disclosed in Schedule 3(a) of the Agreement, as of March
8, 1996, to our knowledge, (I) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, or arrangements by which the
Company or any of its subsidiaries is or may become bound to issue additional
shares of capital stock of the Company or any of its subsidiaries, and (ii)
there are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of its or their securities
under the 1933 Act (except the Registration Rights Agreement).
(5) Based upon your representations, warranties and covenants
set forth in the Agreement, the Securities may be issued to you pursuant to the
Agreement without registration under the ▇▇▇▇ ▇▇▇.
(6) No authorization approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization or stock
exchange or market, or the stockholders of the Company, or, to our knowledge,
any third party is required to be obtained by the Company for the issuance and
sale of the Registrable Securities and the Warrants to you as contemplated by
the Documents, except that we express no opinion on the securities or blue sky
laws of any state or territory of the United States or any jurisdiction outside
the United States.
(7) Except as disclosed in Schedule 3(h) of the Agreement or
the SEC documents, to our knowledge, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending or
threatened against or affecting the Company or any of its subsidiaries, wherein
an unfavorable decision, ruling or finding would have a material adverse effect
on the property, business, financial condition, results of operations or
prospects of the Company and its subsidiaries taken as a whole or which would
adversely affect the validity or enforceability of or the authority or ability
of the Company to perform its obligations under the Documents.
These opinions are limited to the matters expressly stated
herein and are rendered solely for your benefit and may not be quoted or relied
upon for any other purpose or by an other person, except that the opinions
expressed in paragraphs (3) and (5) above may be relied upon by American Stock
Transfer & Trust Company as Transfer Agent.
The opinions expressed herein are subject to the following
assumptions, limitations, qualifications and exceptions:
(a) We have relied upon the factual representations
of the Company in the Documents and of officers of the Company in certificates
furnished to us and we have not undertaken any independent investigation to
determine the existence or absence of those facts; and no inference as to our
knowledge of the existence of those facts should be drawn from our
representation of the Company.
(b) We have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
with originals of all documents submitted to us as copies, the authenticity of
certificates of public officials and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Documents).
(c) We have assumed that each of the parties to the
Documents other than the Company (the "Other Parties") has the legal right,
capacity and power to enter into, enforce and perform all of its obligations
under the Documents. Furthermore, we have assumed the due authorization by each
of the Other Parties of all requisite action and the due execution and delivery
of the Documents by each of the Other Parties, and that the Documents are valid
and binding upon each of the other Parties and are enforceable against (each
Other Party in accordance with their terms.
(d) Certain rights, remedies and waivers contained
in the Documents may be rendered ineffective, or may be limited, by applicable
laws or judicial decisions governing such provisions but such law and judicial
decisions do not, in our opinion, make the Documents inadequate for the
practical realization of the benefits which the Documents purport to provide,
other than in respect of the adverse economic consequences of any delay in such
realization which may result from applicable judicial decisions relating
thereto.
(e) Requirements in any of the Documents specifying
that provisions thereof may be amended or waived only in writing may not be
enforceable.
(f) No opinion is expressed as to the enforceability
of any choice of law provisions.
(g) Whenever a statement herein is qualified by the
phrases "to our knowledge," or similar phrases, it in intended to indicate that
during the course of our representation of the Company in the transactions
contemplated by the Documents, and having made inquiry of certain officers of
the Company as to such matters, no information that would give us current actual
knowledge of the inaccuracy of such statement has come to the attention of those
attorneys presently in this firm who have rendered legal services in connection
with the representation described in the introductory paragraph of this opinion
letter. However, we have not undertaken any independent investigation or review
to determine the accuracy of any such statements and any limited inquiry
undertaken by us during the preparation of this opinion letter should not be
regarded as such an investigation or review. No inference as to our knowledge of
any matter bearing on the accuracy of any such statement should be drawn from
the fact of our representation of the Company.
(h) In the process of our review of the Company's An-
nual Report on Form 10-K for the fiscal year ended December 31, 1994 (the "Form
10-K"), and any of the other reports filed by the Company pursuant to Sections
13 or 15(d) of the Securities Exchange Act of 1934, as amended, since the date
of the filing of the Form 10-K, although we have not engaged in any independent
investigation, and do not assume any responsibility for the accuracy or
completeness of the information contained therein, nothing has come to our
attention that would lead us to believe that any of such reports contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of circumstances
under which they were made, not misleading, as of its filing date.
(i) Our examination of law relevant to the maters
covered by this opinion is limited to the laws of Delaware and the federal law
of the United States, and we express no opinion as to the effect on the matters
covered by this opinion of the laws of any other jurisdiction. To the extent
that the governing law with respect to any matters covered by this opinion is
the law of a jurisdiction other than Delaware or federal law, we have assumed
that the law of such other jurisdiction in identical to Delaware law. In
furnishing the opinion regarding the valid existence and good standing of the
Company, we have relied solely upon a good standing certificate issued by the
Secretary of State of Delaware on March 13, 1996.
This opinion is given as of the date hereof and we assume no
obligation, to update or supplement this opinion to reflect any facts or
circumstances which may hereafter come to our attention or any changes in laws
which may hereafter occur.
Very truly yours,
▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
Schedule 3(c)
Network Imaging Corporation Outstanding Options,
Warrants, Convertible Securities and Registration Rights
Stock Options
Plan Options:
1994 Key Employee Incentive Stock Option Plan
Shares Subject to Plan: 5,000,000
Shares for Which Options Are Outstanding: 3,781,901
1993 Key Employee Incentive Stock Option Plan B
Shares Subject to Plan: 1,000,000
Shares for Which Options Are Outstanding: 727,060
1993 Key Employees Incentive Stock Option Plan
Shares Subject to Plan: 1,000,000
Shares for Which Options Are Outstanding: 981,269
1992 Key Employees Incentive Stock Option Plan B
Shares Subject to Plan: 300,000
Shares for Which Options Are Outstanding: 218,994
1992 Key Employees Incentive Stock Option Plan
Shares Subject to Plan: 200,000
Shares for Which Options Are Outstanding: 103,250
Executive Officer Stock Option Plan:
Options Subject to Plan: 600,000
Shares for Which Options Are Outstanding: 600,000
Non-Plan Options:
Shares for Which Options Are Outstanding: 51,800
Warrants
Registration Number of
Warrant Rights Warrants*
------- ------ ---------
Bridge Loan Warrants (Pre-IPO) (1) 86,996
Warrants (NASDAQ Symbol "IMGXW") (1) 554,392
IPO Representative (2) 81,000
▇▇▇▇ ▇▇▇▇▇▇▇ (3) 50,000
P. Le Menestral (1) 25,000
▇▇▇▇ ▇▇▇▇▇▇▇ (3) 33,334
Placement Agent (12/92 Reg. S offering) (1) 20,700
Redington, Inc. (1) 30,000
Placement Agent (3/95 Reg. S offering) (1) 33,214
Placement Agent (5/93 Reg. S offering) (4) 8,558
Placement Agent (8/93 Reg. S offering) (5) 50,000
Placement Agent (4 holders) (6) 45,000
(10/93 Reg. S offering)
Finder (10/93 Reg. S offering) (3) 5,000
Series A Representative (2 holders) (9) **
Placement Agent (Series D) None 227,068
Placement Agent (Series E) None 34,400
▇▇ ▇▇▇▇▇▇▇ None 25,000
12/95 Private Placement Warrants (9 holders) (7) 179,400
Series G Preferred Warrants (2 holders) (8) 40,000
▇▇▇▇ ▇▇▇▇▇▇▇▇ None 4,000
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ None 4,000
* Each of the Warrants issued to the IPO Representative and to the Placement
Agents in connection with the 12/92, 3/93 and 5/93 Reg S offerings are
exercisable for units consisting of one share of Common Stock and one warrant to
purchase a share of Common Stock. The warrants listed on this schedule are
subject to adjustment in the case of applicable antidilution provisions.
** In connection with the Company's offering of its Series A Cumulative
Convertible Preferred Stock warrants were issued to the representative of the
underwriters which are exercisable for 140,000 shares of Series A Preferred
Stock at $41.25 per share or 253,624 shares of common stock at $22.77 per share
or some combination of those securities.
Securities which are Convertible into Capital Stock of the Company:
Number of Shares
Series A Cumulative Convertible Preferred Stock
Shares Authorized: 1,750,000
Shares Outstanding 1,605,025
Series B-I through B-4 Convertible Preferred Stock
Shares Authorized: 2,092,186
Shares Outstanding: 1,792,186
Series C-1 through C-5 Convertible Preferred Stock***
Shares Authorized: 1,792,186
Shares Outstanding: None
Series D Preferred Stock
Shares Authorized: 84
Shares Outstanding: None
Series E Convertible Preferred Stock
Shares Authorized: 544
Shares Outstanding: 2
Series G Convertible Preferred Stock
Shares Authorized: 200
Shares Outstanding: 200
*** The Company and the holder of Series B have agreed to an exchange of Series
B for Series C.
Registration Rights
Registration Rights Referred to in Preceding Notes
(1) Included in Registration Statement No. 33-64046
(2) May piggyback on any Company registration statement until May
8, 1997; may twice demand Company file a registration
statement covering common stock or warrants in period from May
8, 1993 to May 8, 1997; included in Registration Statement No.
33-64046.
(3) Included in Registration Statement No. 33-84482
(4) May piggyback on any Company registration statement until
April 26, 2000; included in Registration Statement No.33-66046
(5) May piggyback on any Company registration statement until
October 1, 1998; included in Registration Statement No.
33-64046
(6) May piggyback on any Company registration statement until
October 5, 1998; included in Registration Statement No.
33-64046
(7) Included in Registration Statement No. 33-84482; obligation
to maintain in effect until December 31, 1997
(8) If regulation S rescinded or modified and request by Holder of
$1,000,000 of Series G Preferred after four months after the
closing, Company to, as soon as possible, use best efforts to
file and have registration statement declared effective and
thereafter to maintain it in effect for 180 days.
(9) A majority of the holders of the Warrants and/or Warrant
Shares have the right to require the Company to file one
registration statement until December 7, 1998. May piggyback
on any Company registration statement until December 7, 2000.
Other
In connection with the acquisition of Dorotech France SA, in October
1993, Societe Civile Doro-Parts was issued 2,241,147 shares of Common Stock of
the Company and Altus Finance SA ("Altus") was issued 2,092,186 shares of Series
B Preferred Stock of the Company of which 300,000 shares have been converted
into Common Stock. The shares issued to Societe Civile Doro-Parts were
registered in Registration Statement No. 33-73164. In July 1994, Altus agreed to
exchange the shares of Series B Preferred Stock for shares of Series C Preferred
Stock. The shares issued to Altus have not been registered and its right to
require the Company to file a registration statement upon demand terminates on
August 30, 1997.
In January 1994, in connection with the product acquisition from RDS
Information Systems, four individuals were issued an aggregate of 20,000 shares
of Common Stock of the Company of which 4,500 are included in Registration
Statement No. 33-84482.
An aggregate of 669,285 shares of Common Stock of the Company were
issued to five individuals in connection with the acquisition of DCR
Technologies, Inc. ("DCR") in February 1994. Two former DCR stockholders were
issued an aggregate of 175,000 shares of Common Stock of the Company in
connection with a Settlement Agreement in June 1995. All the shares are included
in Registration Statement No. 33-84482. The Company's obligation to maintain the
Registration Statement ends on February 24, 1997.
In connection with the acquisition of IBZ Digital Production AG, IBZ
Vermoegens-und Interessenverwaltung was issued 994,619 shares of Common Stock of
the Company. The shares are included in Registration Statement No. 33-84482. The
Company's obligation to maintain the Registration Statement ends on November 14,
1996.
In connection with their employment or consulting agreements with the
Company, each of Messrs. ▇▇▇▇▇▇▇▇, ▇▇▇▇ and Sterling has the right to require
the Company to file a registration Statement covering any or all shares of the
Company's Common Stock held by him or issuable to him upon exercise of options.
The demand for registration may be made at any time prior to or within one year
of termination of the applicable employment or consulting agreement.
Schedule 3(h)
None, except as set forth in the SEC Documents.
