EXHIBIT 5
COMMUNICATION INTELLIGENCE CORPORATION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of June
13, 1996, is made by and between Communication Intelligence Corporation, a
Delaware corporation (the "Company") and Libra Investments, Inc. (the
"Advisor").
R E C I T A L S
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WHEREAS, the Advisor is acting as placement agent for a $2,700,000
private placement of shares (the "Shares") of common stock, par value $0.01 per
share, of the Company (the "Common Stock") (the "Private Placement"); and
WHEREAS, in partial consideration for the Advisor acting as placement
agent for the Shares, the Company is issuing Warrants to purchase Common Stock
of the Company to the Advisor; and
WHEREAS, as further inducement for the Advisor to act as placement
agent for the Shares, the Company desires to undertake to register the Warrant
Shares (as hereinafter defined) under the Securities Act of 1933, as amended,
and the rules and regulations thereunder (the "Securities Act"), in accordance
with, and subject to, the terms hereof.
NOW, THEREFORE, the Advisor and the Company covenant and agree, upon
the terms and subject to the conditions set forth herein, as follows:
1. Definitions. For the purposes of this Agreement, the following
capitalized terms shall have the following meanings:
(a) "Holder" means, initially, the Advisor, and thereafter, any
person or entity (a "person") who at a given time is the holder of record of any
Registrable Securities or Warrants, so long as such transfers or assignments
were made in compliance with Section 8 hereof or, with respect to the Warrants,
in compliance with the terms thereof.
(b) "Register," "registered" and "registration" refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the Securities Act.
(c) "Registration Statement" means any registration statement or
comparable document of the Company under the Securities Act through which a
public sale or disposition of the Company's securities may be registered (except
a form used exclusively for the sale or distribution of securities in connection
with an employee stock option plan or
in connection with a business combination), the prospectus contained therein and
all amendments and supplements to such Registration Statement, including post-
effective amendments, and all material incorporated by reference in such
Registration Statement.
(d) "Registrable Securities" means (i) the Warrant Shares (as
defined below); and (ii) any other security of the Company issued as a dividend
or other distribution with respect to, or in exchange for or in replacement of
the Warrant Shares, excluding in all cases, however, any Registrable Securities
disposed of by a Holder in a transaction in which its registration rights under
this Agreement are not assigned pursuant to Section 8 of this Agreement.
(e) "SEC" means the United States Securities and Exchange
Commission or any similar agency then having the authority to enforce the
Securities Act.
(f) "Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Warrants pursuant to the terms of the Warrants.
(g) "Warrants" means the 30,000 Warrants of the Company being
issued by the Company to the Advisor on the date hereof.
2. Advisor's Registration.
(a) PiggyBack Registration. If at any time during the five year
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period from the date hereof the Company proposes to register any of its
securities under the Securities Act, either for its own account or for the
account of others, in connection with the public offering of such securities
solely for cash, pursuant to a Registration Statement that would also permit the
registration of the Registrable Securities, the Company shall, in each such
time, promptly give the Holder written notice of such proposal and the Holder
may, within fifteen days after the Company provides such notice, request the
inclusion of Registrable Securities in such Registration Statement; provided,
however, that it shall be a condition precedent to the Company's obligations
under this Section 2(a) that the underwriter(s) of such offering, if any,
consent to the inclusion of the Holder's Registrable Securities in any such
offering. In such event the Company shall include the Registrable Securities in
such registration; provided that the Holder (i) agrees to sell the Registrable
Securities on the basis provided in any underwriting agreements relating to such
offering, and otherwise complies with the provisions of Section 4 hereof, (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up agreements and other documents required under
the terms of such underwriting arrangements, and (iii) agrees to pay the
Holder's pro rata portion of all underwriting discounts and commissions.
(b) Demand Registration. Subject to Section 2(c) hereof, at any
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one time during the period commencing ninety (90) days from the closing date of
the Private Placement (the "Closing Date") and terminating five years from the
Closing Date, the Holder
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may deliver to the Company a written request that the Company register the
Registrable Securities (but no less than all of the Registrable Securities)
under the Securities Act and, upon receipt of such request, the Company shall
prepare and file a Registration Statement with the SEC covering the Registrable
Securities provided that if at the time of such written request, (i) the Company
has filed an application to list its Common Stock on the NASDAQ SmallCap Market,
(ii) the Company has met all of the NASDAQ SmallCap Market listing requirements,
and (iii) the Company has no reason to believe that the Common Stock will not be
so listed, the Company may extend the filing date of the Registration Statement
for not more than 90 days after the date of the Holder's written request. The
Company shall use its best efforts to keep such Registration Statement
continually effective for the earlier to occur of the following: (i) all of the
Registrable Securities covered by such Registration Statement have been sold,
and (ii) nine months from the effective date of any such Registration Statement.
The Holder shall notify the Company in writing within five (5) days after the
sale of all of the Registrable Securities to enable the Company to determine
when its obligation to continue effectiveness of such Registration Statement
terminates.
(c) Notwithstanding anything contained in Section 2(b) to the
contrary, the Holder shall have no rights under Section 2(b), and Section 2(b)
shall be deemed null and void, if the Holder elects to exercise the Warrants
pursuant to and in accordance with Section 2.6 of the Warrant Certificate
evidencing the Warrants.
(d) Suspension of Sales by Holders. If at any time when a
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Registration Statement is effective with respect to Registrable Securities
pursuant to Section 2(b) hereof, the Company intends to file a registration
statement for an underwritten public offering of securities to be issued by the
Company (a "Company Registration Statement"), the Company shall promptly give
written notice thereof to the Holder, which notice shall include the anticipated
filing date of the Company Registration Statement, and the Holder shall suspend
offers and sales of its Registrable Securities covered by such Registration
Statement for a period commencing fourteen days prior to the anticipated filing
date of the Company Registration Statement and terminating not later than
150 days from the effective date of the Company Registration Statement (a
"Suspension Period"); provided, however, that the Holder shall only be required
to suspend such offers and sales of its Registrable Securities (i) if so
requested by the underwriter of any such offering, and (ii) if and to the extent
that any other securityholders of the Company whose securities have been
registered by the Company pursuant to registration rights also agree to
suspension of their sales. The Holder agrees that, during any such Suspension
Period, the Holder shall not sell, make any short sale of, pledge, grant any
option for the purchase of or otherwise dispose of any Registrable Securities
without the prior written consent of such underwriter(s), and shall enter into
such agreements with such underwriter(s) with respect to the foregoing as is
reasonably requested by such underwriter(s).
3. Obligations of the Company. In connection with the registration
of the Registrable Securities pursuant to Section 2 of this Agreement, the
Company shall, as expeditiously as reasonably possible:
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(a) Prepare and file with the SEC a Registration Statement with
respect to all Registrable Securities included therein, and use its best efforts
to cause the Registration Statement to become effective as soon as reasonably
possible after such filing, and to keep the Registration Statement effective for
the period specified in Section 2 hereof, which Registration Statement shall not
contain during such period any untrue statement of a material fact or omit to
state during such period a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective for the period specified
in Section 2 hereof and as may be required by the Securities Act, and during
such periods to comply with the provisions of the Securities Act with respect to
the Registration Statement.
(c) Furnish promptly to each Holder whose Registrable Securities
are included in the Registration Statement such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as such Holder may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by such Holder.
(d) Use its best efforts to register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders and prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements and to take such other actions as may
be necessary to maintain such registration and qualification in effect at all
times during which it has agreed to use its best efforts to keep a Registration
Statement effective under the Securities Act pursuant to the terms of this
Agreement, and to take all other actions necessary or advisable to enable the
disposition of such securities in such jurisdictions, provided that the Company
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shall not be required in connection therewith or as a condition thereto to
qualify to do business, to file a general consent to service of process, to
subject itself to general taxation in any such states or jurisdictions or to
make any change in its charter or bylaws which the Board of Directors determines
to be contrary to the best interest of the Company and its shareholders.
(e) Notify the Holders who hold Registrable Securities being
sold of the happening of any event as a result of which the prospectus included
in the Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The Company
shall promptly amend or supplement the Registration Statement to correct any
such untrue statement or omission.
(f) Notify the Holders who hold Registrable Securities being
sold of the issuance by the SEC or any state securities commission or agency of
any stop order
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suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose. The Company will use its best efforts to
prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible time.
(g) Permit a single firm of counsel to review the Registration
Statement and all amendments and supplements thereto within a reasonable period
of time prior to each filing, and shall not file any document in a form to which
such counsel reasonably objects.
(h) Furnish to the Holders on the effective date of the
Registration Statement, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given in such an offering, addressed to the Company;
and (ii) a "cold comfort" letter, dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to securityholders
in such an offering, so addressed.
(i) Make available for inspection by representatives of the
Holders and any counsel, accountants or other agents retained by any thereof,
all pertinent financial and other records, corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to supply
all information reasonably requested by any such party in connection with the
Registration Statement.
(j) Use its best efforts to cause the Registrable Securities
being sold to be listed on the NASDAQ SmallCap Market.
(k) Take all actions reasonably necessary to facilitate the
timely preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be sold pursuant to the
Registration Statement and to enable such certificates to be in such
denominations and registered in such names as the Holders of the Registrable
Securities being sold.
(l) Take all other actions reasonably necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities being sold
pursuant to the Registration Statement.
4. Obligations of the Holders. In connection with the registration
of the Registrable Securities, the Holders shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to each
Holder that such Holder shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended methods of
disposition of such securities as shall be
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reasonably required to effect the registration of the Registrable Securities and
shall execute such documents in connection with such registration as the Company
may reasonably request. At least ten days prior to the first anticipated filing
date of the Registration Statement, the Company shall notify each Holder of the
information the Company requires from each such Holder if it elects to have any
of his Registrable Securities included in the Registration Statement.
(b) Each Holder agrees to cooperate with the Company in
connection with the preparation and filing of any Registration Statement
hereunder.
(c) No Holder may participate in any underwritten registration
hereunder unless such Holder (i) agrees to enter into and perform its
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations; (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements; (iii) agrees to pay such
Holder's pro rata portion of all underwriting discounts and commissions; and
(iv) agrees to take such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registrable Securities being sold.
(d) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 2(c) or
Section 3(e), such Holder will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Holder's receipt of (i) confirmation from the
Company that such sales may resume under the terms of Section 2(c) or (ii) the
copies of the supplemented or amended prospectus contemplated by Section 3(e)
and, if so requested in writing by the Company, such Holder shall deliver to the
Company (at the expense of the Company) or destroy (and deliver to the Company a
certificate of such destruction) all copies, other than the permanent file
copies then in such Holder's possession, of the prospectus covering such
Registrable Securities at the time of receipt of such notice.
5. Expenses of Registration. All expenses incurred in connection
with registration, filings or qualifications pursuant to Section 2, including,
without limitation, all registration, listing, filing and qualification fees,
printers and accounting fees, the fees and disbursements of counsel for the
Company and the reasonable fees and disbursements of one firm of counsel for the
Holders, shall be borne by the Company.
6. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the fullest extent permitted by law, the Company will
indemnify and hold each Holder, it partners and their respective directors,
officers, employees and representatives, and each person who controls any such
Holder within the
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meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934 (the "1934 Act") (each such person being referred to as an
"Indemnified Person") harmless from and against any and all losses, claims,
damages, liabilities and expenses arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement, or in any amendment or supplement thereto, or arising
out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or allegation thereof
based upon information furnished in writing to the Company by such Indemnified
Person expressly for use therein. Notwithstanding the foregoing, the Company
shall not be obligated to so indemnify any such Holder, officer, director or
controlling person with respect to any loss, claim, damage, liability or expense
arising out of the failure by such person to comply with the prospectus delivery
requirements under the Securities Act and the rules and regulations thereunder.
(b) If any action or proceeding (including any governmental
investigation) shall be brought, threatened or asserted against any Indemnified
Person in respect of which indemnity may be sought from the Company, such
Indemnified Person shall promptly notify the Company in writing, and the Company
shall assume the defense thereof, including employment of counsel and the
payment of all expenses related thereto. Any such Indemnified Person shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) the Company has agreed to pay
such fees and expenses; or (ii) the Company shall have failed to assume the
defense of such action or proceeding and employ counsel in such action or
proceeding; or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both such Indemnified Person and the
Company, and such Indemnified Person shall have been advised by counsel that
there may be one or more legal defenses available to such Indemnified Person
which are different from or additional to those available to the Company (in
which case, if such Indemnified Person notifies the Company in writing that it
elects to employ separate counsel at the expense of the Company, the Company
will not have the right to assume the defense of such action or proceeding on
behalf of such Indemnified Person); provided, however, that the Company will
not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys at any time for
all such Indemnified Persons, which firm shall be designated in writing by a
majority in interest of such Indemnified Persons. The Company shall not be
liable for any default judgment caused by any Indemnified Person or settlement
of any such action or proceeding or confession of judgment without its prior
written consent, but if settled with its written consent (which consent shall
not be unreasonably withheld), or if there be a final judgment (other than such
default judgment) for the plaintiff in any such action or proceeding, the
Company agrees to indemnify and hold harmless such Indemnified Person from and
against any loss or liability by reason of such settlement or
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judgment. Subject to the following sentence, if the Company agrees to a
settlement of an action or proceeding against an Indemnified Person which does
not involve any finding or admission of liability or wrongdoing on the part of
the Indemnified Person and stands ready, willing and able to pay such settlement
and the Indemnified Person refuses to settle, then the Indemnified Person shall
continue the defense at its own expense and the Company shall be responsible to
indemnify only the lesser of the amount of the settlement accepted by the
Company or the cost of the final disposition of the claim. The Company will
not, without the prior written consent of any Indemnified Person, settle or
compromise or consent to the entry of any judgment in or otherwise seek to
terminate any pending or threatened action, claim, suit or proceeding in respect
to which indemnification or contribution may be sought hereunder unless such
settlement, compromise, consent or termination includes an express unconditional
release of all Indemnified Persons from all liability arising out of such
action, claim, suit or proceeding.
(c) Each Holder, severally and not jointly, agrees to indemnify
and hold harmless the Company, its directors and officers, and each person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the 1934 Act, to the same extent as the
indemnity from the Company to each Indemnified Person set forth in Section 6(a),
but only (i) with respect to untrue statements, alleged untrue statements,
omissions or alleged omissions relating to such Holder or an Indemnified Person
who is such by reason of such person's relationship to such Holder, furnished in
writing by such Holder or such person to the Company expressly for use in the
Registration Statement or the Prospectus, or any amendment or supplement
thereto; and (ii) with respect to any failure by such Holder to comply with the
prospectus delivery requirements under the Securities Act and the rules and
regulations thereunder. In case any action or proceeding shall be brought
against the Company or its officers or directors or any such controlling person
in respect of which indemnity may be sought against a Holder under the
provisions of this Section 6(c), such Holder shall have the rights and duties
given to the Company and each of the Company or its directors or its officers or
its controlling persons shall have the rights and duties given to each Holder
and other Indemnified Persons, under the terms of Section 6(b) above.
Notwithstanding anything contained herein, no Holder shall be liable for an
amount which is greater than the proceeds received by such Holder from the sale
of Registrable Securities.
(d) If the indemnification provided for under Section 6(a) or
Section 6(c) hereof is unavailable to an indemnified party thereunder in respect
of any losses, claims, damages, liabilities or expenses referred to therein,
then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and of the applicable Holders on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand and
of the applicable Holders on the other shall be determined by reference to,
among
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other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
Company or information supplied by the applicable Holder in writing for use in
the Registration Statement and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Subsection 11(f) of the Securities Act) or of gross negligence, willful
misconduct or bad faith shall be entitled to contribution from any person who is
not guilty of such fraudulent misrepresentation, gross negligence, willful,
misconduct or bad faith. Notwithstanding anything contained herein, no Holder
shall be liable for an amount which is greater than the proceeds received by
such Holder from the sale of Registrable Securities.
7. Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of SEC Rule 144 promulgated under
the Securities Act and any other rule or regulation of the SEC that may at any
time permit the Holders to sell securities of the Company to the public without
registration, the Company agrees to file with the SEC all reports and documents
required to be filed by it under the Securities Act and the 1934 Act and the
rules and regulations promulgated thereunder, and to furnish to each Holder, so
long as such Holder owns any Registrable Securities, a copy of the most recent
annual or quarterly report of the Company, such other reports and documents
filed by the Company with the SEC, and such other information as may be
reasonably requested in availing the Holders of any rule or regulation of the
SEC which permits the selling of any such securities without registration.
8. Assignments of Registration Rights. The rights of a Holder under
this Agreement may be assigned by a Holder to permitted transferees or assignees
of Registrable Securities or Warrants provided that (i) the Company is furnished
with written notice of the name and address of such transferee or assignee and
the securities with respect to which such registration rights are being
assigned; (ii) the transfer or assignment of such Registrable Securities or
Warrants has been made in compliance with the Securities Act and applicable
state securities law and, immediately following such transfer or assignment the
further disposition of such Registrable Securities or Warrants is restricted
under the Securities Act; and (iii) the notice provided in this Section 8
contains a written agreement by the transferee or assignee to be bound by the
terms and provisions of this Agreement.
9. Miscellaneous.
(a) Notices required or permitted to be given hereunder shall be
in writing and shall be deemed to be sufficiently given when personally
delivered or sent by registered mail, return receipt requested, addressed (i) if
to the Company, at 275 Shoreline Drive, Redwood Shores, California 94065, with a
copy to Donald J. Bezahler, Esq., Baer Marks & Upham LLP, 805 Third Avenue, New
York, New York 10022; (ii) if to the Advisor, at 11766 Wilshire Boulevard,
Suite 870, Los Angeles, CA 90025; or at such other address as any such party
furnishes by notice given in accordance with this Section 9.
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(b) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, will not operate as a waiver thereof.
(c) This Agreement shall be enforced, governed and construed in
all respects in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of law applied in such State. In the
event that any provision of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof
which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.
(d) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by a writing executed by the Company and each of the
Holders. Any amendment or waiver effected in accordance with this Section 9
shall be binding upon the Holders and the Company.
(e) Any person or entity is deemed to be a Holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall be entitled to act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(f) This Agreement may be executed in counterparts, each of
which shall be an original, but all of which shall constitute one instrument.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed on its behalf as of the date first set forth above.
COMMUNICATION INTELLIGENCE
CORPORATION
By:
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Philip S. Sassower
Chairman of the Finance
Committee
LIBRA INVESTMENTS, INC.
By:
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Name:
Title:
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