PURCHASE AGREEMENT
WHEREAS, Network Imaging Corporation ("Network Imaging"), with its
principal offices located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
issued a class of Series F Preferred Stock (the "Preferred Stock") to CDR
Enterprises ("CDRE"), with its principal offices located at ▇▇/▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, for a certain sum of money; and
WHEREAS, the Preferred Stock consists of one million seven hundred
ninety-two thousand one hundred eighty-six (1,792,186) shares;
WHEREAS, CDRE wishes to sell the class of Series F Preferred Stock and
Network Imaging desires to purchase the Preferred Stock;
NOW, THEREFORE, in consideration of the foregoing and of the covenants,
promises and agreements set forth herein, Network Imaging and CDRE agree as
follows:
1. Purchase and Sale of the Preferred Stock. On the terms and conditions
provided in this Agreement, CDRE agrees to sell, and Network Imaging agrees to
purchase the shares of Preferred Stock. The price of each of the shares sold and
purchased hereunder is as follows:
a. Three dollars and fifty cents ($3.50) per share, payable upon transfer
(the "First Cash Payment"); and
b. the Additional Consideration as defined in Section 2 below.
This Agreement shall become effective upon execution (the "Closing Date").
From the Closing Date forward, CDRE shall transfer to Network Imaging, and
Network Imaging shall receive from CDRE, the Preferred Stock on the
following installments: no less than five hundred thousand (500,000) shares
of Preferred Stock on or before January 31, 1997; no less than five hundred
thousand (500,000) shares of Preferred Stock on or before March 31, 1997;
no less than five hundred thousand (500,000) shares of Preferred Stock on
or before May 31, 1997; and the balance no later than June 30, 1997.
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For each installment, Network Imaging shall notify CDRE of the number of
shares of Preferred Stock it intends to receive, however in no event shall
Network Imaging request less than the number of shares described in the
paragraph above, and CDRE shall transfer to Network Imaging the same number
of shares upon payment by Network Imaging to CDRE, by means of a wire
transfer, of the First Cash Payment in an amount equal to $3.50 multiplied
by the same number of shares.
2. Additional Consideration. On the Closing Date, CDRE shall elect, at its sole
option, one of the following additional payments:
(i) the sum of two dollars ($2.00) in cash for each of the one million
seven ninety-two thousand one hundred eighty-six (1,792,186) shares
delivered to Network Imaging, and such payment shall be due and
payable upon the earlier of (a) the sale of Dorotech, S.A. and the
receipt of proceeds by Network Imaging therefrom and (b) January 31,
1998 (the "Second Cash Payment"); or
(ii) a warrant to subscribe for one million seven hundred ninety-two
thousand one hundred eighty-six (1,792,186) shares of Network Imaging
Common Stock at an exercise price of three dollars and fifty cents
($3.50) per share (the "Warrant"), in the form as attached as Exhibit
A hereto and incorporated herein by reference, and upon election such
Warrant shall be issued by Network Imaging to CDRE as soon as
practicable thereafter.
In addition, in the event that CDRE elects to receive payment under this
Section 2 in the form of a Warrant, and to the extent that CDRE has not fully
exercised its right to purchase shares under the Warrant, Network Imaging, upon
the earlier of the sale of Dorotech, S.A. or January 31, 1998, shall pay to CDRE
in the form of a cash payment, an amount equal to one dollar and fifty cents
($1.50) per share and shall raise the strike price of the Warrant to five
dollars ($5.00) per share (the "Alternate Second Cash Payment"). In the event
that CDR elects at Closing to take a Warrant for 1,792,186 shares of Network
Imaging Common Stock or any portion thereof and then at some point in the
future, determines that it would like to modify the election, Network Imaging
shall, at its sole discretion, determine whether it chooses to accept or reject
any such modification proposal.
Notwithstanding anything to the contrary contained in the Agreement, CDRE
understands that the issuance of the Warrant to CDRE may result in an ownership
interest as that term is defined in the Foreign Bank Holding Company Act (the
"Holding Company Act"). If CDRE is deemed to be subject to the Holding Company
Act, CDRE shall undertake to complete such actions as are necessary to comply
with the Holding Company Act. If CDRE is subject to the Holding Company Act,
CDRE may elect to receive a Warrant for only the number of shares that would
result in an ownership interest of equal to or less than five percent (5%) of
the total number of outstanding shares of Network Imaging; in that case, an
amount equal to two dollars ($2.00) multiplied by the number of shares which
would have been covered by the Warrant and exceed such percentage of ownership
shall be payable in accordance with the payment terms as described in Section
1(b) herein.
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CDRE understands that registration rights for such Warrant shall not attach
until such time as described in the Registration Rights Agreement attached as
Exhibit B hereto and incorporated herein by reference. Further, CDRE agrees that
Network Imaging has a right of first refusal for any sale of the Warrant and/or
the shares underlying the Warrant (the "Right of First Refusal"). CDRE agrees
that, in the event of a proposed sale of the Warrant (including any part
thereof) or any of the underlying shares that it shall inform Network Imaging of
the proposed sale and the terms of such proposed sale, and Network Imaging shall
have at least thirty (30) days from the date it receives written notification of
those terms to determine whether it shall purchase the Warrant and/or the
underlying shares. In the event that Network Imaging does not purchase the
Warrant and/or the underlying shares or does not notify CDRE of its election
within the thirty (30) day period described in this section, CDRE may proceed
with the terms of that sale as presented to Network Imaging. If, for any reason,
the terms of the proposed sale by CDRE should change, then those terms must be
presented to Network Imaging in accordance with the procedures set forth in this
Section. Notwithstanding the foregoing, Network Imaging agrees, upon the written
request of CDRE, to use its reasonable best efforts to assist CDRE in locating
and securing a purchaser for all or any part of the Warrant and/or any of the
shares underlying the Warrant.
3. Interest Payments. Network Imaging shall pay to CDRE interest payments on the
aggregate principal amounts of the First Cash Payment, or part thereof, and the
Second Cash Payment in the amount of eight percent (8%) per annum commencing on
October 1, 1996 and continuing until such time as the date of the First Cash
Payment, or part thereof, and the Second Cash Payment under Section 1 herein.
Such interest is payable to CDRE by the fifteenth day of the month following the
end of each calendar quarter.
4. Sale of Dorotech, S.A. Network Imaging and CDRE agree that it is contemplated
that at some point in the near future, Network Imaging will sell its wholly
owned subsidiary, Dorotech, S.A. As the terms of this Agreement contain payment
terms related to the sale of Dorotech, S.A., Network Imaging agrees that it
shall use its reasonable best efforts to sell Dorotech, S.A. to an unrelated
third party on or before January 31, 1998.
5. Security Relating to Payments from Network Imaging. In the event of a default
pursuant to the agreement for payment contained in this Agreement and if such
default has not been cured by Network Imaging within five (5) business days
after the payment due date, CDRE has the right to realize upon the first ranking
pledge on all of the outstanding stock of Dorotech, S.A. held by Network Imaging
as such pledge is herein granted to CDRE. As soon as such right arises and CDRE
is entitled to realize upon the pledge, CDRE shall be at liberty to require that
Network Imaging effect a sale of Dorotech, S.A. and to immediately upon the
consummation of such sale remit all amounts due and payable to CDRE. In the
event that Network Imaging has not effected a sale of Dorotech, S.A. by January
31, 1998, and Network Imaging is in default of payments under this Agreement,
CDRE shall be at liberty to sell the Pledged Securities and withhold all amounts
due and payable under the Agreement before paying back the excess money, if any,
to Network Imaging; provided however that CDRE shall be at liberty to sell the
Pledged Securities, and that all payment obligations of Network Imaging
hereunder shall become
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due and payable immediately, in the event that Network Imaging files for
protection against its creditors or is declared bankrupt.
a. Representations and Warranties. Network Imaging represents and warrants
as follows:
(i) Title to Pledged Securities. Network Imaging beneficially owns all
of the Shares of Dorotech, S.A., a societe anonyme organized under the
laws of France (hereinafter the "Pledged Securities"), free and clear
of any liens. All of the Pledged Securities have been duly authorized
and validly issued, and are fully paid and non-assessable, and are not
subject to any options to purchase or similar rights of any Person.
Network Imaging is not and will not become a party to or otherwise
bound by any agreement, other than this Agreement, which restricts in
any manner the rights of any present or future holder of any of the
Pledged Securities with respect thereto.
(ii) Validity, Perfection and Priority of Security Interests. Network
Imaging shall, upon execution of this Agreement, obtain from Dorotech
and promptly forward to CDRE a certificate from the Company's Register
evidencing the pledge on the Pledged Securities in favor of CDRE. Upon
the delivery of this Agreement to CDRE and the delivery by Network
Imaging of the said certificate, CDRE will have valid and perfected
security interests in the Pledged Securities subject to no prior lien.
No registration, recordation or filing with any governmental body,
agency or official is required in connection with the execution or
delivery of this Agreement or necessary for the validity or
enforceability hereof or for the perfection or enforcement of the
Pledged Securities. Neither Network Imaging nor any of its
subsidiaries has performed or will perform any acts which might
prevent CDRE from enforcing any of the terms and conditions of this
Agreement or which would limit CDRE in any such enforcement.
b. Security Interests. In order to secure the full and punctual payment of
the payment obligations of Network Imaging in accordance with the terms
thereof, and to secure the performance of all of the obligations of Network
Imaging hereunder:
(i) Network Imaging hereby assigns and pledges to and with CDRE and
grants to CDRE security interests in the Pledged Securities, and all
of its rights and privileges with respect to the Pledged Securities,
and all income and profit thereon, and all interest, dividends and
other payments and distributions with respect thereto, and all of the
proceeds of the foregoing (the "Collateral").
(ii) In the event that Dorotech at any time issues any additional or
substitute shares of capital stock of any class, Network Imaging will
immediately pledge and deposit with CDRE all such shares as additional
security for the payment obligations and shall cause the Company's
Registrar to deliver to CDRE a
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certificate evidencing such pledge. All such shares constitute Pledged
Securities and are subject to all provisions of this Agreement.
(iii) The security interests are granted as security only and shall
not subject CDRE to, or transfer or in any way affect or modify, any
obligation or liability of Network Imaging with respect to any of the
Collateral or any transaction in connection therewith.
c. Sale of Dorotech, S.A. CDRE agrees that in the event of the sale by
Network Imaging of the Pledged Securities, it shall, at the closing of such
transaction release the Pledged Securities against receipt from Network
Imaging or from the buyer of Dorotech of: (i) the Second Cash Payment, or
the Alternate Second Cash Payment, as the case may be, (ii) all Interest
Payments remaining due pursuant to Article 4 above, and (iii) in the event
that the sale of Dorotech occurs prior to June 30, 1997, the First Cash
Payment or part thereof, and the Second Cash Payment, or the Alternate
Second Cash Payment, as the case may be, if not previously made.
Conversely, CDRE shall then transfer to Network Imaging title to all the
shares of Preferred Stock not previously transferred.
d. Sale of Dorotech, S.A. by Merger. In the event that Network Imaging
operates a sale of Dorotech, as it is contemplated in this Agreement, by
other means than a straightforward sale of the shares of that company, such
as a merger or partial merger into another company, CDRE shall release the
Pledged Securities only against receipt of the payments specified at
subsection (c) above.
e. Further Assurances. Network Imaging agrees that it will, at its expense
and in such manner and form as CDRE may reasonably require, execute,
deliver, file, and record any financing statement, specific assignment or
other paper and take any other action that may be necessary or desirable,
or that CDRE may reasonably request, in order to create, preserve, perfect
or validate any security interest or to enable CDRE to exercise and enforce
its rights hereunder with respect to any of the Collateral.
f. Covenants. Network Imaging shall, until the sale or merger of Dorotech,
S.A., as the case may be, refrain from authorizing or causing Dorotech to
take any of the following actions without the prior written approval of
CDRE, which consent shall not be unreasonably withheld:
(1) Borrow except in the normal course of business.
(2) Sell or contribute or merger any of its assets to third parties
or to affiliates of Network Imaging.
(3) Acquire or agree to acquire any assets not planned in the 1997
budget, from third parties or affiliates of Network Imaging.
(4) Assume any liabilities except in the normal course of business.
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Notwithstanding the foregoing, no prior written approval shall be necessary
for transactions not exceeding one hundred thousand dollars ($100,000) or
those entered into in the normal course of business.
6. Covenants of the Parties.
6.1 Covenants of CDRE. CDRE hereby covenants to Network Imaging that it
shall use its best efforts to obtain from COFRACOMI a full and
unconditional release for Dorotech, S.A., on terms reasonably satisfactory
to its counsel, from any and all obligations under the lease guarantee
(cautionnement) dated March 31, 1992 for the ATG Cygnet office space in
Toulouse, France; provided however, that the above shall not be construed
as an absolute obligation of CDRE to procure such release, but solely to
exert its best means to try and obtain the same (obligation de moyens).
CDRE hereby covenants that in the event that such release has not been
obtained by February 28, 1997, it shall indemnify Network Imaging against
half of the sums actually paid out by Dorotech or Network Imaging to
COFRACOMI as a result of said lease guarantee being called by COFRACOMI, up
to a maximum of four million U.S. dollars ($4,000,000.00).
CDRE may choose to fulfill this indemnity by deducting from the First Cash
Payment, Second Cash Payment, or the Alternate Second Cash Payment, as the
case may be, the sums which become due under this indemnity, and Network
Imaging hereby agrees that such setoff shall be satisfactory performance to
Network Imaging of the indemnity obligations of CDRE hereunder.
Network Imaging shall cause Dorotech to assign to CDRE half of its rights
and claims against ATG Cygnet up to the amount for which it shall have been
indemnified by CDRE hereunder.
This indemnity shall become null and void in the event that Network Imaging
defaults on any one of its payment obligations hereunder, and such default
has not been cured by Network Imaging within five (5) business days after
the payment due date.
6.2 Covenants of Network Imaging. Network Imaging covenants to CDRE that it
shall abstain from any contacts or approaches with the Commercial Court in
Toulouse or the bankruptcy judge appointed to supervise the ATG Cygnet
receivership without the prior written approval of CDRE, and that CDRE
shall take full charge and control of such contacts, petitions and actions
with the said Court and judge in order to try and gain the above-mentioned
release.
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7. Representations and Warranties of the Parties.
a. CDRE
(i) CDRE represents and warrants to Network Imaging that it has full
power and authority to enter into and consummate all transactions
contemplated by this Agreement and that all necessary corporate action
has been taken to authorize such transactions.
(ii) At each delivery as provided in Section 1 above, CDRE represents
and warrants that it will transfer to Network Imaging title to the
Preferred Stock free and clear of any liens and encumbrances of any
kind.
b. Network Imaging
(i) Network Imaging represents and warrants to CDRE that it has full
power and authority to enter into and consummate all transactions
contemplated by this Agreement and that all necessary corporate action
has been taken to authorize such transactions.
8. Severability. Every provision of this Agreement shall be construed, to the
extent possible, so as to be valid and enforceable. If any provision of this
Agreement so construed is held by a court of competent jurisdiction to be
invalid, illegal or otherwise unenforceable, such provision shall be deemed
severed from this Agreement, and all other provisions shall remain in full force
and effect.
9. Choice of Law and Venue. This Agreement shall in all respects be governed by
and interpreted, construed and enforced in accordance with the laws of the
France. Any action between Network Imaging and CDRE will be venued in a state or
federal court situated within the Commonwealth of Virginia, and CDRE irrevocably
submits itself to the personal jurisdiction of such courts for such purpose.
10. Entire Agreement. This Agreement sets forth the entire agreement and
understanding between Network Imaging and CDRE regarding the subject matter
hereof and supersedes any prior representations, advertisements, statements,
proposals, negotiations, discussions, understandings, or agreements regarding
the same subject matter. Both parties acknowledge that they have not been
induced to enter into this Agreement by any representations or statements, oral
or written, not expressly contained in this Agreement. The terms and conditions
of this Agreement shall prevail, notwithstanding any variance or inconsistency
with the terms and conditions of any purchase order or other document heretofore
or hereafter submitted by either party. This Agreement may not be modified or
amended except by a written document signed by the party against whom the same
is sought to be enforced.
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11. Counterparts. This Agreement may be executed simultaneously in two
counterparts, each of which shall be deemed to be an original, and all of which
shall constitute one and the same instrument.
This Agreement is executed on this 31st day of December, 1996 between the
parties.
CDR ENTERPRISES NETWORK IMAGING CORPORATION
Signature ______________________ Signature ______________________
Name ___________________________ Name ___________________________
Title __________________________ Title __________________________
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