REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE.
THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
REGULATION S ("REGULATION S") PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S) UNLESS THE
SECURITIES ARE REGISTERED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
UNLESS EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS ARE AVAILABLE
AND THE COMPANY IS PROVIDED WITH AN OPINION OF COUNSEL OR OTHER SUCH INFORMATION
AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE.
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY BY OR TO
ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND THE RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED OR DETERMINED THE ACCURACY OR ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Regulation S Securities Subscription Agreement (the "Agreement")
is executed by the undersigned (the "Subscriber") in connection with the offer
by the undersigned to purchase shares of Common Stock, par value .0001 per share
(the "Common Stock"), of Network Imaging Corporation, a Delaware corporation
(the "Company"). The Company is offering Common Stock at a purchase price per
share equal to 85% of the average closing sale price for the Common Stock as
reported by the Nasdaq National Market System for the five trading days
preceding the date on which the Company executes this Agreement (the "Closing
Price"). The Company is offering that number of shares of Common Stock which
when multiplied by the Closing Price equals $5 million. The Company in its
discretion may increase the aggregate dollar amount of the offering and the
number of shares being sold. There is no minimum number of shares that must be
sold in the offering. The solicitation of this Subscription and, if accepted by
the Company, the offer and sale of Common Stock are being made in reliance upon
the provisions of Regulation S ("Regulation S") promulgated under the United
States Securities Act of 1933, as amended (the "Act").
1. Offer to Purchase; Purchase Price
Subject to the terms and conditions of this Agreement, the Subscriber
hereby offers to purchase the number of shares of Common Stock (the "Shares")
having the aggregate purchase price set out in Section 14 of this Agreement (the
"Purchase Price"). Payment shall be made by the Subscriber, by wire transfer, as
provided in the Escrow Agreement attached hereto as Exhibit A. This Agreement
shall not be binding on the Company until executed by it. The Closing shall be
deemed to occur when this Agreement is executed by the Company, or if later,
when the Purchase Price is received by the Company, or at such other time as may
be agreed upon by the Subscriber and the Company (the "Closing").
2. Representations; Access to Information; Independent Information; In-
dependent Investigation
The Subscriber represents and warrants to the Company and agrees as
follows:
2.1 Offshore Transaction. (i) The Subscriber is not a "U.S.
person" (as defined in Rule 902 (o) of Regulation S under the
Act, which definition is set forth in Exhibit B hereto and is
hereby incorporated by reference); (ii) the Common Stock was
not offered to the Subscriber in the United States; (iii) the
Subscriber was physically outside the United States when the
Subscriber executed this Agreement; (iv) the Subscriber is
purchasing the Shares for the Subscriber's own account and not
on behalf of or for the benefit of any U. S. person, has not
prearranged the sale of the Shares to any buyer in the United
States and has no present plan or intention to engage in a
distribution of the Shares in the United States at any time;
(v) the Subscriber agrees, and to the best knowledge of the
Subscriber each distributor, if any, participating in the
offering of the Shares has agreed, that prior to the
expiration of a period commencing on the Closing of all Common
Stock offered and ending forty days thereafter (the
"Restricted Period"), no offers and sales of the Common Stock
shall be made to U.S. persons or for the account or benefit of
U.S. persons. The Subscriber is not a distributor or dealer
with respect to this transaction.
2.2 Investment Intent; Risks. The Subscriber is acquiring the
Shares for the Subscriber's own account for investment and not
as a nominee and not with a view to the distribution thereof.
The Subscriber understands that the Shares must be held
indefinitely unless they are registered under the Act or
unless an exemption from such registration is available, and
that the Company has no obligation to register the Shares. The
Subscriber understands the very substantial risks associated
with an investment in the Company, is able to bear
indefinitely the economic risk of acquiring the Shares and has
no present need for liquidity with respect to such investment.
2.3 No Directed Selling Efforts in Regard to This Transaction. The
Subscriber has not engaged in and is not aware of any other
person having engaged in any "directed selling efforts," as
that term is defined in Rule 902 of Regulation S, in
connection with the offering of the Shares.
2.4 Short Positions. The Subscriber and its affiliates do not have
any put option, short position or other similar instrument or
position with respect to any securities of the Company and
will not enter into any such instrument or position while any
of them holds any of the Shares.
2.5 No Government Recommendation or Approval. The Subscriber
understands that no United States federal or state agency or
similar agency of any other country has passed upon or made
any recommendation or endorsement of the Company or the
transactions contemplated by this Agreement.
2.6 Independent Investigation. The Subscriber, in offering to
purchase the Shares hereunder, has relied upon an independent
investigation made by it and its representatives, if any, and
has, prior to the date hereof, been given access to and the
opportunity to examine all books and records, and all material
contracts and documents of the Company. In making a decision
to purchase the Shares, the Subscriber is not relying on any
oral or written representations or assurances from the Company
or any representation of the Company other than as set forth
in this Agreement, public filings of the Company or in a
document executed by a duly authorized representative of the
Company making reference to this Agreement. The Subscriber has
such knowledge and experience in business and financial
matters that the Subscriber is capable of evaluating the
merits and risks of an investment in the Shares and
determining the suitability of the investment. The Subscriber
is an accredited investor as defined in Rule 501 of Regulation
D, a copy of which definition is attached hereto as Exhibit C.
2.7 Authority. The Subscriber has the full power and authority to
execute, deliver and perform this Agreement. This Agreement,
when executed and delivered by the Subscriber, will constitute
a valid and legally binding obligation of the Subscriber,
enforceable against the Subscriber in accordance with its
terms
2.8 No Legal or Tax Advice From Company. The Subscriber has had
the opportunity to review this Agreement and the transactions
contemplated by this Agreement with the Subscriber's own legal
counsel and with its own tax advisors, if any. The Subscriber
is relying solely on such counsel and tax advisors and not on
any statements or representations of the Company or any of its
agents for legal and tax advice with respect to this
investment and the transactions contemplated by this
Agreement. The Subscriber understands that the Subscriber (and
not the Company) shall be responsible for any tax liability of
the Subscriber that may arise as a result of this investment
or the transactions contemplated by this Agreement.
2.9 No Sale in Violation of Securities Laws. The Subscriber will
not make any sale, transfer or other disposition of the Shares
in violation of the Act, the Securities and Exchange Act of
1934, as amended (the "Exchange Act") or the rules and
regulations of the Securities and Exchange Commission (the
"Commission") promulgated thereunder.
3. Resales
3.1 During the Restricted Period. Any proposed offer, sale or
transfer of any of the Shares during the Restricted Period
shall be subject to the condition that the Subscriber must
deliver to the Company (i) a written certification that
neither the Shares nor any interest therein has been offered
or sold in the United States or to, or for the account or
benefit of, any "U.S. Person"; (ii) a written certification of
the proposed transferee that such transferee is not a U.S.
Person, is acquiring the Shares for such transferee's own
account and will comply with the terms of this Agreement,
including this resale restriction, as they apply to the
Subscriber; and (iii) if requested by the Company, a written
opinion of counsel satisfactory to the Company to the effect
that the offer, sale and transfer of such Shares are exempt
from registration under the Act and any applicable state
securities law in the United States. The Subscriber consents
to the issuance of appropriate stop transfer instructions to
the Company's transfer agent with respect to the Shares.
3.2 After the Restricted Period. The Subscriber acknowledges and
agrees that the Shares may only be resold (a) in compliance
with Regulation S; (b) pursuant to a Registration Statement
under the Act; or (c) pursuant to an exemption from
registration under the Act. The Subscriber acknowledges that
if the Subscriber publicly re-offers all or any part of the
Shares in the United States, the Subscriber may be deemed to
be an underwriter, as defined in Section 2(11) of the Act,
under certain circumstances, for example, if the Subscriber
purchases shares in this offering with a view to their
distribution in the United States. Subscriber agrees to
consult with the Subscriber's counsel prior to any such
re-offer. Upon request of the Company, the Subscriber will
furnish the Company with evidence of the availability of an
exemption from registration for any resales. The Company may
refuse to register any transfer of the Shares which it
believes is not made in accordance with the Act and the rules
and regulations promulgated thereunder.
4. Legends
4.1 During the Restricted Period. The certificates representing
the Shares shall bear a legend substantially in the form of
the first legend set forth on the first page of this Agreement
(the "First Legend") and any other legend which the Company
reasonably believes is required to comply with state, federal
or foreign law.
4.2 After the Restricted Period. The First Legend will be removed
from certificates representing the Shares at the request of
the Subscriber following the Restricted Period; provided that
nothing has come to the attention of the Company that would
cause it to believe that the representations and warranties of
the Subscriber in this Agreement were inaccurate in any
material respect or that the Subscriber has failed to comply
in any material respect with any of the Subscriber's
agreements set forth herein.
5. Representations and Warranties of the Company
The Company represents and warrants to the Subscriber and agrees as
follows:
5.1 Organization, Good Standing, and Qualification. The Company is
a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all
requisite corporate power and authority to carry on its
business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so
qualify would have a material adverse effect on the business
or properties of the Company and its subsidiaries taken as a
whole. The Company to its knowledge is not the subject of any
material pending or threatened investigation or administrative
or legal proceeding by the Internal Revenue Service, the
taxing authorities of any state or local jurisdiction, or the
Securities and Exchange Commission which have not been
disclosed in the reports and prospectus referred to in Section
5.5 below.
5.2 Corporate Condition. The Company's condition is as described
in the Company's reports filed pursuant to the Exchange Act.
There have been no material adverse changes in the Company's
financial condition or business since the date of those
reports which have not been disclosed to Subscriber.
5.3 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary
for the authorization, execution and delivery of this
Agreement, the performance of all obligations of the Company
hereunder and the authorization, issuance (or reservation for
issuance) and delivery of the Common Stock being sold
hereunder has been taken.
5.4 Valid Issuance of Preferred Stock and Common Stock. This
Agreement, when executed and delivered by the Company, shall
constitute a valid and binding obligation of the Company,
enforceable in accordance with its terms. The Common Stock,
when issued, sold and delivered in accordance with the terms
hereof for the consideration expressed herein, will be validly
issued, fully paid and nonassessable and, based in part upon
the representations of the Subscriber in this Agreement, will
be issued in compliance with all applicable federal, state,
and other applicable securities laws.
5.5 Current Public Information. The Company represents and
warrants to the Subscriber that the Company is a "reporting
issuer" as defined in Rule 902 (1) of Regulation S and it has
a class of securities registered under Section l2(b) or 12(g)
of the Exchange Act or is required to file reports pursuant to
Section l5(d) of the Exchange Act, and has filed all the
material required to be filed as reports pursuant to the
Exchange Act for a period of at least twelve months preceding
the date hereof (or for such shorter period as the Company was
required by law to file such material). The Company has
furnished the Subscriber with copies of the Company's Form
10-KSB Annual Report for the year ended December 31, 1994,
Form 10-Q quarterly report for the period ended September 30,
1995 and Prospectus dated February 14, 1996 and undertakes to
furnish the Subscriber with copies of such other information
as may be reasonably requested by the Subscriber.
5.6 No U.S. Offering. The Company represents that it has not
offered the Shares to the Subscriber in the U.S. or, to the
best knowledge of the Company, to any person in the United
States or any U.S. person. The Company has not engaged in any
"directed selling efforts" as that term is defined in Rule 902
of Regulation S in connection with the offering of the Common
Stock.
6. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the Commonwealth of Virginia except for matters arising under the Act or the
Exchange Act which matters shall be construed and interpreted in accordance with
such laws.
7. Entire Agreement; Amendment
This Agreement and the other documents delivered pursuant hereto constitute the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as specifically set forth herein or therein. Except as expressly provided
herein, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.
8. Notices, Etc.
Any notice, demand or request required or permitted to be given by either the
Company or the Subscriber pursuant to the terms of this Agreement shall be in
writing and shall be deemed given when delivered personally or by facsimile,
with a hard copy to follow by overnight or two-day courier addressed to the
parties at the addresses of the parties set forth at the end of this Agreement
or such other address as a party may request by notifying the other in writing.
9. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be enforceable against the parties actually executing such counterparts,
and all of which together shall constitute one instrument.
10. Severability
In the event that any provision of this Agreement becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision;
provided that no such severability shall be effective if it materially changes
the economic benefit of this Agreement to any party.
11. Titles and Subtitles
The titles and subtitles used in this Agreement are used for convenience only
and are not to be considered in construing or interpreting this Agreement.
13. No Recourse
Except as provided by applicable law, no recourse shall be had on account of
this Agreement or the Shares, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, stockholder, officer or director, as
such, past, present, or future, of the Company or of any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
14. Amount
The undersigned hereby offers to purchase the number of shares of Common Stock
having an aggregate purchase price of $ .
The undersigned acknowledges that this subscription shall not be effective
unless accepted by the Company as indicated below.
Dated this day of February, 1996.
Registration instructions: [Name of Subscriber]
____________________________ By ____________________________
Place:
Title:
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE DAY OF FEBRUARY 1996.
NETWORK IMAGING CORPORATION
By __________________________
Xxxxxx X. Xxxxxxxx
Chief Executive Officer
