Exhibit 10.30
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made
as of April 12, 1999, by and among SoftNet Systems, Inc., a New York corporation
(the "Company"), with headquarters located at 000 Xxxxxxxx Xxxxxx, Xxxxx 000,
Xxx Xxxxxxxxx, XX 00000 and Xxxxxx X. Xxxxxxxx (the "Initial Purchaser").
WHEREAS, in connection with the Common Stock Purchase Agreement dated
of even date herewith by and among the Company and the Initial Purchaser (the
"Stock Purchase Agreement"), the Company has agreed, upon the terms and subject
to the conditions contained therein, to issue and sell to the Initial Purchaser
660,000 shares of common stock of the Company (the "Shares"), par value $0.01
per share (the "Common Stock").
WHEREAS, to induce the Initial Purchaser to execute and deliver the
Stock Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company, and the
Initial Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Purchaser" means, collectively, the Initial Purchaser and any
transferees or assignees who agree to become bound by the provisions of this
Agreement in accordance with Article IX hereof or who otherwise take rights
under this Agreement in accordance with the terms hereof.
(b) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(c) "Registrable Securities" means the Common Stock issued pursuant to
the Stock Purchase Agreement, and any shares of capital stock issued or
issuable, from time to time (with any adjustments) on or in exchange for or
otherwise with respect to the Common Stock or any other Registrable Securities.
(d) "Registration Statement" means any registration statement of the
Company under the Securities Act subject to or pursuant to Article II or another
provision of this Agreement, as applicable.
1.2 Capitalized Terms. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Stock
Purchase Agreement.
ARTICLE II
REGISTRATION
2.1 Demand Registration. Beginning on July 1, 1999, if the Purchaser
holds at least 200,000 shares of Common Stock, the Purchaser shall have the
right to request that the Company prepare, and file with the SEC a Registration
Statement on Form S-3 covering the resale of all of the Registrable Securities
(a "Demand Registration"). The Registration Statement shall have a minimum
aggregate offering price to the public of $2,000,000. The Company shall send to
all other Purchasers, if any, written notice of such demand and if any such
Purchasers respond within fifteen (15) days after the effective date of such
notice (in accordance with Section 2.6 below), the Company shall include all
Registrable Securities requested by any such Purchase to be registered in the
Demand Registration in accordance with this Section 2.1. The Registration
Statement (and each amendment or material supplement thereto, and each request
for acceleration of effectiveness thereof) shall be provided to (and subject to
the approval of (which approval shall not be unreasonably withheld or denied))
the Purchaser and its counsel prior to its filing. After receiving the
Registration Statement, the Purchaser shall provide the Company with either its
approval of the Registration Statement or its comments or corrections to the
Registration Statement within five (5) business days of receipt of the draft
Registration Statement. If the Purchaser does not respond with approval or
comments within five business days, it shall be deemed to approve the
Registration Statement. Without limiting the Company's obligations under this
Section, if Form S-3 is not available to the Company in connection with
re-sales, the Company shall file a Registration Statement on such form as is
then available to effect a registration, subject to the consent of the Purchaser
(as determined pursuant to Section 11.10 hereof) as to the form used for such
filing. The Purchaser shall have the right to request the filing of a maximum of
two (2) Registration Statements under this Section 2.1.
2.2 Underwritten Offering. If any offering pursuant to a Registration
Statement pursuant to Section 2.1 hereof involves an underwritten offering, the
Purchaser who holds a majority in interest of the Registrable Securities subject
to such underwritten offering shall have the right to select one legal counsel
to represent the Purchaser and an investment banker or bankers and manager or
managers to administer the offering, which counsel and investment banker or
bankers or manager or managers shall be reasonably satisfactory to the Company.
2.3 Registration and Permitted Delays. The Company shall file the
Registration Statement within thirty (30) days of a demand pursuant to Section
2.1 above, and shall use its best efforts to cause the Registration Statement to
become effective as soon as practicable, but in no event later than the sixtieth
(60th) day following the date of the filing of the Registration Statement,
except in instances representing Permitted Delay (as defined below); provided,
however, that if, notwithstanding such best efforts, the Registration Statement
is not declared effective on or prior to the 60th day following the date of the
filing of the Registration Statement as a result of the SEC review process, the
Company shall, so long as it continues to use such best efforts, have an
additional
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sixty (60) days to cause the registration statement to become effective. The
Company shall respond to each item of correspondence from the SEC or the staff
of the SEC relating to such registration statement as promptly as practicable.
If to the actual knowledge of a senior officer of the Company or the Company's
outside counsel the SEC and the staff of the SEC have no comments (or no further
comments) concerning such Registration Statement, the Company shall as soon as
practicable, but in any case within three (3) business days request acceleration
of effectiveness of the Registration Statement from the SEC. For purposes of
this Agreement, "Permitted Delay" shall mean the suspension of, or delay in
filing of in response to a demand, of the Registration Statement for up to one
hundred and twenty (120) days upon the good faith determination by the Company's
Board of Directors that the Company has pending or recently completed (a) a
material financing, acquisition or other extraordinary corporate transaction as
a result of which such suspension or delay is in the best interest of the
Company and the holders of its outstanding Common Stock, or (b) a registration
statement on Form S-3 relating to a primary offering representing value of
equity securities of the Company in excess of $5 million in the aggregate (a
"Primary Offering"), provided, however, that no more than one (1) such Permitted
Delay may be imposed during any period of twelve (12) consecutive months; and
provided, however that no Permitted Delay shall be imposed with respect to a
demand by the Purchaser where such Permitted Delay is not imposed on all other
stockholders, and only to the same extent it is imposed on all other
stockholders holding registration rights with respect to shares of capital stock
of the Company.
2.4 "Piggyback" Registration. Except for the registration statement on
Form S-3 for a Primary Offering, pending as of the date of the Agreement: (a)
If, after the date hereof, the Company shall file with the SEC a Registration
Statement relating to an offering for its own account or the account of others,
including a Demand Registration pursuant to Section 2.1 (unless inclusion
therein would require the consent of such other party, and the Company is
unable, despite exercise of good faith efforts, to obtain such consent) under
the 1933 Act of any of its equity securities (any such Registration Statement
other than a registration statement on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option, stock purchase or other employee benefit plans, a
"Company Registration Statement"), the Company shall send to the Purchaser
written notice of such determination and, if within fifteen (15) days after the
effective date of such notice (in accordance with Section 2.6 below), the
Purchaser shall so request in writing, the Company shall include in such Company
Registration Statement all or any part of the Registrable Securities the
Purchaser requests to be registered, except that if, in connection with any
underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in a Company Registration Statement because,
in such underwriter(s)' judgment, marketing or other factors dictate such
limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such Company Registration Statement only such
limited portion of the Registrable Securities with respect to which the
Purchaser has requested inclusion hereunder as the underwriter shall permit;
provided, however, that the Company shall not exclude any Registrable Securities
unless the Company has first excluded all outstanding securities, the holders of
which are not entitled to inclusion of such securities in such Company
Registration Statement; and provided further, however, that, after giving effect
to the immediately preceding proviso, any exclusion of Registrable Securities
shall be made pro rata with holders of other securities having the right to
include such securities in a Company Registration Statement and holders of
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securities not subject to a similar cut-back provision; and provided further,
that after giving effect to such cut back the number of Registrable Securities
of the Purchaser which may be included in such Registration Statement shall not
be less than 20% of the offered shares.
(b) If an offering in connection with which an Investor is entitled to
registration under this Section 2.4 is an underwritten offering, then each
Investor whose Registrable Securities are included in such Company Registration
Statement shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering.
2.5 Eligibility for Form S-3. The Company represents and warrants that
it currently meets the requirements for the use of Form S-3 for registration of
the re-sale by the Purchaser and that the Company shall use its best efforts to
continue to meet such requirements, and that such re-sales may currently be
effected pursuant to Form S-3; the Company shall file all reports required to be
filed by the Company with the SEC in a timely manner so as to maintain such
eligibility for the use of Form S-3 and shall use its best efforts in all other
respects to maintain such eligibility.
2.6 Notices. Upon receipt of a request for a Demand Registration, the
Company shall give all other Purchasers, if any, prompt written notice of such
Demand Registration, which other Purchasers shall otherwise have the right to
participate in such Demand Registration either pursuant to (i) Section 2.1, in
the case of the Initial Purchaser, any affiliates of the Initial Purchaser, or
Purchasers holding at least 200,000 shares of Common Stock, or (ii) Section 2.4,
hereof, in the case of Purchasers not otherwise described in (i).
ARTICLE III
OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
3.1 Availability of Registration Statement. The Company shall prepare
promptly and file with the SEC the Registration Statement required by Section
2.1, and use its best efforts to cause such Registration Statement relating to
Registrable Securities to become effective as soon as practicable after such
filing, and keep the Registration Statement continuously effective pursuant to
Rule 415 and available for use at all times, except as set forth herein, until
such date as is the earlier of (i) the date on which all of the Registrable
Securities have been sold (and no further Registrable Securities may be issued
in the future) and (ii) the date on which all of the Registrable Securities (in
the reasonable opinion of counsel to the Purchaser) may be immediately sold to
the public without registration and without restriction as to the number of
Registrable Securities to be sold, whether pursuant to Rule 144 or otherwise
(the "Registration Period").
3.2 Amendments to Registration Statement. The Company shall prepare and
file with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used in connection
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with the Registration Statement as may be necessary to keep the Registration
Statement effective and available for use at all times during the Registration
Period, (including, without limitation, amendments and supplements necessary in
connection with a change in the "Plan of Distribution" section in any
Registration Statement or prospectus) and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until the termination of the Registration Period or, if earlier, such time as
all of such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
the Registration Statement. The Company shall cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the
filing thereof.
3.3 Information. The Company shall furnish to the Purchaser upon its
written request whose Registrable Securities are included in the Registration
Statement and its legal counsel promptly after the same is prepared and publicly
distributed, filed with the SEC, or received by the Company, one copy of the
Registration Statement and any amendment thereto, each preliminary prospectus
and prospectus and each amendment or supplement thereto and, such number of
copies of a prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as the Purchaser may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned (or to be owned) by the Purchaser. The Company shall promptly notify the
Purchaser of the effectiveness of any Registration Statement or post-effective
amendments thereto.
3.4 Blue Sky. The Company shall (a) register and qualify the
Registrable Securities covered by the Registration Statement under securities
laws of such jurisdictions in the United States (including Puerto Rico) as each
Purchaser who holds (or has the right to hold) Registrable Securities being
offered reasonably requests, (b) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof and availability for use during the Registration Period,
(c) take such other actions as may be reasonably necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (d) take all other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (i) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3.4, (ii)
subject itself to general taxation in any such jurisdiction, (iii) file a
general consent to service of process in any such jurisdiction, (iv) provide any
undertakings that cause the Company material expense or burden, or (v) make any
change in its charter or by-laws, which in each case the board of directors of
the Company determines to be contrary to the best interests of the Company and
its stockholders.
3.5 Underwriters. In the event the Purchaser, holding a majority in
interest of the Registrable Securities being offered in an offering pursuant to
a Registration Statement or any amendment or supplement thereto under Section
2.1 or 2.4 hereof, selects underwriters for the offering, the Company shall
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, including, without limitation, customary indemnification and
contribution obligations, with the underwriters of such offering.
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3.6 Correction of Statements or Omissions. As soon as practicable after
becoming aware of such event, the Company shall publicly announce or notify by
facsimile the Purchaser (at the facsimile number for such Purchaser set forth on
the signature page hereto) of the happening of any event, of which the Company
has actual knowledge, 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 omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and use its best
efforts as soon as possible to (but in any event it shall within five (5)
business days) prepare a supplement or amendment to the Registration Statement
(and make all required filings with the SEC) to correct such untrue statement or
omission if not otherwise satisfied through the filing of a report to the SEC or
otherwise pursuant to applicable securities laws (but such a supplement or
amendment or other filing shall not be required if, notwithstanding the
Company's best efforts to so prepare and file such supplement, amendment or
other filing, such a supplement, amendment or other filing is no longer required
by applicable law to correct such untrue statement or omission because such
untrue statement or omission no longer exists) and the Company shall
simultaneously (and thereafter as requested) deliver such number of copies of
such supplement or amendment to each Purchaser (or other applicable document) as
such Purchaser may request in writing. Unless such an event is publicly
announced, the Company shall not, without the consent of a Purchaser, give such
Purchaser any material non-public information, but shall inform the Purchaser
that the such prospectus includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
3.7 Stop Orders. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest practicable time, and the Company shall
immediately notify by facsimile the Purchaser (at the facsimile number set forth
on the signature page hereto) or, in the event of an underwritten offering, the
managing underwriters, of the issuance of such order and the resolution thereof.
3.8 Opinions of Counsel. If reasonably requested by the Purchaser in
writing (taking into account any applicable legal precedent and any SEC staff
positions), the Company shall use its reasonable efforts to furnish, on the date
of effectiveness of the Registration Statement and thereafter from time to time
on such dates as the Purchaser may reasonably request (a) an opinion, dated as
of such applicable date, from counsel representing the Company addressed to the
Purchaser and in form, scope and substances as is customarily given in an
underwritten public offering and reasonably satisfactory to such counsel and (b)
a letter, dated as of such applicable date, from the Company's independent
certified public accountants addressed to the Purchaser and in form, scope and
substance as customarily given to underwriters in an underwritten public
offering; provided, however, that the Purchaser shall only be entitled to the
foregoing to the extent it is reasonably requested by the Purchaser and
consented to by the Company after consultation with its counsel (which consent
will not be unreasonably withheld based upon all relevant facts and
circumstances and taking into account the advice of such counsel) and in any
event no more than one time in any three-month period (unless a shorter period
would otherwise be reasonable under the applicable circumstances).
3.9 Inspection of Records. The Company shall provide the Purchaser, and
any underwriter who may participate in the distribution of Registrable
Securities, registered pursuant to the Registration Statement and their
respective
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representatives, the opportunity, each at its own expense, to conduct a
reasonable inquiry of the Company's financial and other records during normal
business hours and make available its officers, directors and employees for
questions regarding information which the Purchaser may reasonably request in
connection with the Registration Statement; provided, however, the Purchaser
shall hold in confidence and shall not make any disclosure of any record or
other information which the Company determines in good faith to be confidential,
and of which determination the inspectors are so notified in writing, unless (a)
the disclosure of such records is necessary to avoid or correct a misstatement
or omission in any Registration Statement, (b) the release of such records is
ordered pursuant to a subpoena or other order from a court or government body of
competent jurisdiction, or is otherwise required by applicable law or legal
process or (c) the information in such records has been made generally available
to the public other than by disclosure in violation of this or any other
agreement (to the knowledge of the relevant inspector); provided further, that
the Company is not required to waive the attorney-client privilege and the
Company shall not provide the Purchaser with material non-public information in
connection with such inquiry.
3.10 Purchaser Information. The Company shall hold in confidence and
not make any disclosure of non-public information concerning the Purchaser
provided to the Company by the Purchaser unless (a) disclosure of such
information is necessary to comply with federal or state securities laws, rules,
statutes or regulations, (b) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement or
other public filing by the Company, (c) the release of such information is
ordered pursuant to a subpoena or other order from a court or governmental body
of competent jurisdiction or is otherwise required by applicable law or legal
process, (d) such information has been made generally available to the public
other than by disclosure in violation, to the knowledge of the Company, of this
or any other agreement, or (e) the Purchaser consents to the form and content of
any such disclosure. The Company agrees that it shall, upon learning that
disclosure of such information concerning the Purchaser is sought in or by a
court or governmental body of competent jurisdiction in or through other means,
give prompt notice to the Purchaser prior to making such disclosure, and allow
the Purchaser, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
3.11 Listing. The Company shall use its best efforts to cause the
listing and the continuation of listing of all the Registrable Securities
covered by the Registration Statement on the American Stock Exchange, The Nasdaq
National Market System, The Nasdaq SmallCap Market or the New York Stock
Exchange, and cause the Registrable Securities to be quoted or listed on each
additional national securities exchange or quotation system upon which the other
Common Stock of the Company is then listed or quoted.
3.12 Transfer Agent. The Company shall provide a transfer agent and
registrar, which may be a single entity, for the Registrable Securities not
later than the effective date of the Registration Statement.
3.13 Delivery of Certificates. The Company shall cooperate with the
Purchaser who holds Registrable Securities being offered and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to the Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the
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managing underwriter or underwriters, if any, or the Purchaser may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Purchaser may request, and, within two (2) business
days after a Registration Statement which includes Registrable Securities is
ordered effective by the SEC, the Company shall cause legal counsel selected by
the Company to deliver, to the transfer agent for the Registrable Securities
(with copies to the Purchaser whose Registrable Securities are included in such
Registration Statement) an opinion of such counsel substantially in the form
attached hereto as Exhibit 1.
3.14 Compliance with Laws. The Company shall comply with all applicable
laws related to a Registration Statement and offering and sale of securities
covered by the Registration Statement and all applicable rules and regulations
of governmental authorities in connection therewith (including, without
limitation, the Securities Act and the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC).
ARTICLE IV
OBLIGATIONS OF THE PURCHASER
In connection with the registration of the Registrable Securities, the
Purchaser shall have the following obligations:
4.1 Information Concerning Purchasers. Purchaser shall furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it
as shall be required to effect the registration of such Registrable Securities.
At least five (5) business days prior to the first anticipated filing date of
the Registration Statement, the Company shall notify each Purchaser of the
information the Company so requires from each such Purchaser.
4.2 Cooperation. Purchaser, by such Purchaser's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statements hereunder, unless such Purchaser has notified the
Company in writing of such Purchaser's election to exclude all of such
Purchaser's Registrable Securities from the Registration Statement.
4.3 Prospectus Delivery Requirements. The Purchaser understands that
the Securities Act may require delivery of a prospectus relating thereto in
connection with any sale thereof pursuant to such Registration Statement, and
each such Purchaser shall comply with any applicable prospectus delivery
requirements of the Securities Act in connection with any such sale.
4.4 Discontinuance of Distribution. The Purchaser agrees that, upon
receipt of written notice from the Company of the happening of any event of the
kind described in Section 3.6, the Purchaser will immediately discontinue
disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until such Purchaser's receipt of the
copies of the supplemented or amended prospectus contemplated by Section 3.6 or
advice that a supplement or amendment is not required and, if so directed by the
Company, the Purchaser shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Purchaser's possession (other than a limited number of
permanent file copies), of the prospectus covering such Registrable Securities
current at the
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time of receipt of such notice. Purchaser's obligations under this paragraph
shall in no way limit the Company's obligations under this Agreement or
Purchaser's rights or remedies against the Company with respect to any breach or
threatened breach by the Company of any such obligations.
4.5 Underwriting Agreements. Without limiting Purchaser's rights under
Section 2.1 or 2.4 hereof, no Purchaser may participate in any underwritten
distribution hereunder unless such Purchaser (a) agrees to sell the Purchaser's
Registrable Securities on the basis provided in any underwriting agreements in
usual and customary form entered into by the Company pursuant to Section 3.5
hereof, (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, and (c) agrees to pay its pro
rata share of all underwriting discounts and commissions and any expenses in
excess of those payable by the Company pursuant to Article V.
4.6 SEC. The Purchaser agrees to use reasonable efforts to cooperate
with the Company (at the Company's expense) in responding to comments of the
staff of the SEC, provided nothing in this Section 4.6 shall affect any
obligations of the Company under this Agreement or otherwise create any
liability on the part of the Purchaser or require any change to the terms and
conditions of this Agreement or the Stock Purchase Agreement.
ARTICLE V
EXPENSES OF REGISTRATION
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Articles II and III, including, without limitation,
the reasonable fees and disbursements of one counsel to the Purchaser, including
any of its transferees (fees and expenses not to exceed $5,000), all
registration, listing and qualification fees, printers and accounting fees, and
the fees and disbursements of counsel for the Company, shall be borne by the
Company.
ARTICLE VI
INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
6.1 Indemnification. To the extent permitted by law, the Company will
indemnify, hold harmless and defend (a) the Purchaser, (b) each underwriter of
Registrable Securities and (c) the directors, officers, partners, members,
employees, agents and persons who control the Purchaser and any such underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), if any (each,
an "Indemnified Person"), against any losses, claims, damages, liabilities or
expenses (collectively, together with actions, proceedings or inquiries whether
or not in any court, before any administrative body or by any regulatory or
self-regulatory organization, whether commenced or threatened, in respect
thereof, "Claims") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the omission
or alleged omission to state therein a material fact required to be stated or
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necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). The Company shall reimburse each such Indemnified
Person, promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6.1: (x) shall not apply to an Indemnified Person with
respect to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person expressly for use in the Registration
Statement or any such amendment thereof or supplement thereto; (y) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld; and (z) with respect to any preliminary prospectus, shall
not inure to the benefit of any Indemnified Person if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented, if such
corrected prospectus was timely made available by the Company pursuant to
Section 3.3 hereof, and the Indemnified Person was promptly advised in writing
not to use the incorrect prospectus prior to the use giving rise to a Violation
and such Indemnified Person, notwithstanding such advice, used it. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by a Purchaser pursuant to Article IX.
6.2 Claims. To the extent permitted by law, the Purchaser agrees to
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section 6.1, the Company, each of its directors, each of its
officers who signs the Registration Statement, its employees, agents and
persons, if any, who control the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and any other stockholder
selling securities pursuant to the Registration Statement, together with its
directors, officers and members, and any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act (such
an "Indemnified Party"), against any Claim to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by the Purchaser
expressly for use in connection with such Registration Statement; and the
Purchaser will reimburse any legal or other expenses (promptly as such expenses
are incurred and are due and payable) reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6.2 shall not apply to amounts
paid in settlement of
10
any Claim if such settlement is effected without the prior written consent of
the Purchaser, which consent shall not be unreasonably withheld; provided,
further, however, that the Purchaser shall be liable under this Agreement
(including this Section 6.2 and Article VII) for only that amount as does not
exceed the net proceeds actually received by the Purchaser as a result of the
sale of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the Registrable Securities by the Purchaser pursuant to Article IX.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6.2 with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented, and the Indemnified Party failed to utilize such corrected
prospectus.
6.3 Notices. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Article VI of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Article VI, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right (at its expense) to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume and continue control of the defense thereof with
counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that
such indemnifying party shall diligently pursue such defense and an indemnifying
party shall not be entitled to assume (or continue) such defense if the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
conflicts of interest between such Indemnified Person or Indemnified Party and
any other party represented by such counsel in such proceeding or the actual or
potential defendants in, or targets of, any such action include both the
Indemnified Person or the Indemnified Party and the indemnifying party, and any
such Indemnified Person or Indemnified Party reasonably determines that there
may be legal defenses available to such Indemnified Person or Indemnified Party
which are different from or in addition to those available to such indemnifying
party. Notwithstanding any assumption of such defense and without limiting any
indemnification obligation provided for in Section 6.1 or 6.2, the Indemnified
Party or Indemnified Person, as the case may be, shall be entitled to be
represented by counsel (at its own expense if the indemnifying party is
permitted to assume and continue control of the defense and otherwise at the
expense of the indemnifying party) and such counsel shall be entitled to
participate in such defense. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Article VI, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Article VI shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
11
ARTICLE VII
CONTRIBUTION
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Article VI to the fullest extent permitted by law; provided, however, that
(i) no party shall be liable for contribution if it is not liable for
indemnification pursuant to the provisions of Article VI hereof; (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation; and (iii) contribution
(together with any indemnification or other obligations under this Agreement) by
any Purchaser of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such Purchaser from the sale of its Registrable
Securities.
ARTICLE VIII
REPORTS UNDER THE EXCHANGE ACT
With a view to making available to each Purchaser the benefits of Rule
144, the Company agrees that so long as a Purchaser holds 200,000 shares of
Registrable Securities, the Company shall use its best efforts to:
(a) Not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination;
(b) File with the SEC in a timely manner and make and keep available
all reports and other documents required of the Company under the Securities Act
and the Exchange Act so long as the filing and availability of such reports and
other documents is required for the applicable provisions of Rule 144; and
(c) Furnish to the Purchaser promptly upon written request, (i) a copy
of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested to permit the Purchaser to sell such securities
pursuant to Rule 144 without registration.
ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of the Purchaser hereunder as to Registrable Securities
transferred by the Purchaser, including the right to have the Company register
Registrable Securities pursuant to this Agreement, shall be automatically
assigned by the Purchaser to any transferee of all or any portion of the
Registrable Securities who either (x) is an affiliate or subsidiary of the
Purchaser or (y) acquires at least 200,000 shares of Common Stock of the
Company, whether such transfer occurs before or after the Registration Statement
becomes effective, if: (a) the Purchaser agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (b) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (i) the name and address of such transferee or assignee, and
12
(ii) the securities with respect to which such registration rights are being
transferred or assigned, (c) following such transfer or assignment, the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act or applicable state securities laws, and (d) at or before the
time the Company receives the written notice contemplated by clause (ii) of this
sentence, the transferee or assignee agrees in writing for the benefit of the
Company to be bound by all of the provisions contained herein. The rights of the
Purchaser hereunder with respect to any Registrable Securities not shall not be
assigned by virtue of the transfer of other Registrable Securities or
transferred Registrable Securities.
ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS
Provisions 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 with written consent of the Company and
the Purchaser. Any amendment or waiver effected in accordance with this Article
X shall be binding upon the Purchaser and the Company.
ARTICLE XI
MISCELLANEOUS
11.1 Registered Holders. A person or entity is deemed to be a holder
(or a holder in interest) 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 act
upon the basis of instructions, notice or election received from the registered
owner of such Registrable Securities.
11.2 Notices. Any notices herein required or permitted to be given
shall be in writing and may be personally served or delivered by courier or by
machine generated confirmed telecopy, and shall be deemed delivered at the time
and date of receipt (which shall include telephone line facsimile transmission).
The addresses for such communications shall be:
If to the Company:
SoftNet Systems, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxxx
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
13
If to the Purchaser, as shown on the signature page hereto and if to
any other Purchaser, at such address as such Purchaser shall have provided in
writing to the Company, or at such other address as each such party furnishes by
notice given in accordance with this Section 11.2.
11.3 Waiver. 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, shall not operate as a waiver thereof.
11.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
made and to be performed in the State of California.
11.5 Entire Agreement. This Agreement and the Stock Purchase Agreement
(including all schedules and exhibits thereto and all certificates and opinions
and other documents required thereby) constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement and the Stock Purchase
Agreement supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.
11.6 Successors and Assigns. Subject to the requirements of Article IX
hereof, this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
11.7 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
11.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto, by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.
11.9 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.
11.10 Consents. Unless otherwise provided herein, all consents and
other determinations to be made pursuant to this Agreement shall be made on the
basis of a majority in interest with respect to the Registrable Securities.
11.11 Transferees. The number of Registrable Securities included in any
Registration Statement pursuant to Section 2.4 shall be allocated pro rata among
the Purchasers based on the number of Registrable Securities held by each
Purchaser at the time of establishment of such number. In the event a Purchaser
shall sell or otherwise transfer any of such holder's Registrable Securities,
14
each transferee shall be allocated a pro rata portion of the number of
Registrable Securities included on a Registration Statement for such transferor.
Any shares of Common Stock included on a Registration Statement and which remain
allocated to any person or entity which does not hold any Registrable Securities
shall be allocated to the remaining Purchasers, pro rata based on the number of
shares of Registrable Securities then held by such remaining Purchasers.
11.12 Severability. If any provision of this Agreement shall be invalid
or unenforceable, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement.
* * *
15
IN WITNESS WHEREOF, the parties have caused this Registration
Rights Agreement to be duly executed as of the date first above written.
SOFTNET SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
General Counsel and Secretary
PURCHASER:
XXXXXX X. XXXXXXXX
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Name:
---------------------------------
Title
---------------------------------
Address:
---------------------------------
---------------------------------
Telecopy:
---------------------------------
with a copy to:
Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx., Esquire
Telecopy: 000-000-0000
16
EXHIBIT 1
to Registration
Rights Agreement
[Date]
[Name and address
of transfer agent]
RE: SoftNet Systems, Inc.
Ladies and Gentlemen:
We are counsel to SoftNet Systems, Inc., a New York
corporation (the "Company"), and we understand that [Name of Purchaser] (the
"Holder") has purchased from the Company Common Stock of the Company, par value
$.01 per share (the "Common Stock"). The Common Stock was purchased by the
Holder pursuant to a Stock Purchase Agreement, dated as of April ___, 1999, by
and among the Company and the signatories thereto (the "Agreement"). Pursuant to
a Registration Rights Agreement, dated as of April __, 1999, by and among the
Company and the Holder (the "Registration Rights Agreement"), the Company agreed
with the Holder, among other things, to register the Registrable Securities (as
that term is defined in the Registration Rights Agreement) under the Securities
Act of 1933, as amended (the "Securities Act"), upon the terms provided in the
Registration Rights Agreement. In connection with the Company's obligations
under the Registration Rights Agreement, on __________ __, ____, the Company
filed a Registration Statement on Form S-3 (File No. 333- __________) (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities, which names the Holder as a
selling stockholder thereunder.
[Other customary introductory and scope of examination
language to be inserted, in each case as acceptable to Holders.]
Based on the foregoing, we are of the opinion that the
Registrable Securities have been registered under the Securities Act.
[Other appropriate customary language to be included, in each
case as acceptable to Holders.]
Very truly yours,
cc: [Name of Purchaser]
