WAIVER
This
Waiver (the "Agreement"), is made and entered into as of February 23, 2007
by
and between Spatialight, Inc., a New York corporation (the “Seller”), and
Iroquois Master Fund Ltd. (the “Purchaser”).
WITNESSETH
WHEREAS,
the
Seller and the Purchaser are parties to a Securities Purchase Agreement dated
November 29, 2006 (the “Securities Purchase Agreement”); and
WHEREAS,
Section
4.19 of the Securities Purchase Agreement prohibits the issuance of shares
of
the Seller’s common stock at a purchase price of less than $1.30 per share until
the earlier of (i) 90 days from the effective date of the registration statement
covering the Registrable Securities, as defined in the Securities Purchase
Agreement or (ii) 12 months from the date of the Securities Purchase Agreement;
and
WHEREAS,
Seller
desires to sell an aggregate of 3,333,333 shares of its common stock, at a
purchase price of $1.05 per share (the “February Offering”), and Purchaser
desires to waive the provisions of Section 4.19 of the Securities Purchase
Agreement in connection with the February Offering on the terms provided
herein.
NOW,
THEREFORE,
in
consideration of the mutual covenants and undertakings contained herein the
parties hereto agree as follows:
1.
Waiver
Shares.
Subject
to the terms and conditions of this Agreement, Seller hereby agrees to issue
to
Purchaser and Purchaser hereby agrees to waive the provisions of Section 4.19
of
the Securities Purchase Agreement in connection with the February Offering
in
consideration of the issuance to Purchaser of 200,000 shares of the Seller’s
common stock (the “Waiver Shares”). On the date hereof the Seller shall transfer
the Waiver Shares to the Purchaser by crediting the account of the Purchaser’s
broker (the “Prime Broker”) with the Depository Trust Company through its
Deposit Withdrawal Agent Commission system in accordance with instructions
annexed hereto. The issuance of the Waiver Shares to the Purchaser is solely
in
connection with the waiver by the Purchase of its rights under Section 4.19
in
connection with the February Offering and such waiver does not constitute a
waiver of (i) the Purchaser’s rights under Section 4.19 in connection with any
other issuance of the Seller’s securities or (ii) any other rights of Purchaser
pursuant to the Securities Purchase Agreement. Except as otherwise provided
herein, the Securities Purchase Agreement is unmodified and in full force and
effect.
2. Conditions.
This
Agreement shall not be effective and Seller shall have no obligation to issue
the Waiver Shares unless Seller shall have received a waiver on the same terms
as set forth in this Agreement from the holders of at least 1,200,001 shares
of
common stock issued pursuant to the Securities Purchase Agreement.
3.
Representations
of Seller.
Seller
represents and warrants to Purchaser that:
(a)
The
Waiver Shares shall be freely transferable by the Purchaser without restriction.
The Waiver Shares shall not bear a restricted legend under applicable Federal
and state securities laws.
(b)
This
Agreement has been duly authorized, executed and delivered by Seller and
constitutes a legal, valid and binding obligation of Seller, enforceable in
accordance with its terms (subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization or other similar laws and to general
principles of equity).
(c)
Seller's execution, delivery and performance of this Agreement does not (i)
violate or conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, result in the creation
of any lien upon any of the properties or assets of Seller, or give to others
any rights of termination, amendment, acceleration, or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility,
debt
or other instrument (evidencing a debt of Seller or otherwise) or other
understanding to which the Seller is a party or by which any property or asset
of Seller is bound or affected, (ii) conflict with the Seller’s certificate of
incorporation or bylaws, (iii) conflict with, or result in a violation of any
law, rule or regulation applicable to Seller, or any order or judgment of any
court or other agency of government applicable to, or affecting
Seller.
(d)
The
Seller has filed all forms, reports and documents (the "SEC Documents") required
to be filed with the Securities and Exchange Commission (the "Commission")
pursuant to the Securities At of 1933, as amended (the "Securities Act") or
the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case
may be, and the rules and regulations of the Commission thereunder during the
12
month period ending on the date of this Agreement. Except as corrected by
subsequent amendment, as of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the Securities Act
or
the Exchange Act, as the case may be, and the rules and regulations of the
Commission thereunder applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to stated therein or necessary in order to make
statements therein, in light of the circumstances under which they were made,
not misleading. Except as corrected by subsequent amendment, as of their
respective filing dates, the financial statements of the Seller included in
the
SEC Documents complied as to form in all material respects with the applicable
accounting requirements and the rules and regulations of the Commission
thereunder and were prepared in accordance with generally accepted accounting
principles and fairly presented, in all material respects, the financial
position of the Seller as at the dates thereof and the results of operations
and
cash flows of the Seller for the periods then ended (subject, in the case of
unaudited statements, to normal, recurring audit adjustments not material in
scope or amount).
(e)
The
Waiver Shares are included in the Seller's registration statement filed with
the
Commission Registration No. 333-137100 (the "Registration Statement."). The
Registration Statement covering the issuance of the Waiver Shares was declared
effective on February 14, 2007 by the Commission and neither the Commission
nor
any state regulatory authority has issued, or threatened to issue, any order
preventing or suspending the use of the Registration Statement or the prospectus
contained therein or has instituted or, to the Seller’s knowledge, threatened to
institute any proceedings with respect to such an order.
(f)
No
consent, approval, authorization or order of, or filing or registration with,
any court, regulatory authority or other governmental agency or body or third
party is required in connection with the transactions contemplated herein.
(g)
The
Seller hereby confirms that neither it nor, to its knowledge, any other person
acting on its behalf has provided the Purchaser or its agents or counsel with
any information that it believes constitutes or might constitute material,
non-public information.
4. Representations
of Purchaser.
Purchaser represents and warrants to Seller that:
(a)
Purchaser is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and it has full right, power and
authority to enter into this Agreement and to perform its obligations hereunder
in accordance with the terms of this Agreement and has taken all necessary
action to authorize the execution, delivery and performance of this
Agreement.
(b)
This
Agreement has been duly authorized, executed and delivered by it and constitutes
a legal, valid and binding obligation of it, enforceable in accordance with
its
terms (subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization or other similar laws and to general principles of
equity).
(c)
Purchaser's execution, delivery and performance of this Agreement does not
violate or conflict with the Purchaser’s governing documents or any law, rule or
regulation applicable to Purchaser, or any order or judgment of any court or
other agency of government applicable to or affecting Purchaser.
5.
Indemnification.
(a)
Seller shall indemnify and hold harmless Purchaser, the officers, directors,
agents, investment advisors and employees of Purchaser, each person who controls
any such person (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling person, to the fullest extent permitted
by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable costs of
preparation and reasonable attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or relating to (i) any untrue or alleged
untrue statement of a material fact contained in the Registration Statement,
any
prospectus contained therein or in any amendment or supplement thereto or
arising out of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
(in the case of any prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading or (ii) the inaccuracy
in any representation or breach of any warranty of Seller contained
herein.
(b)
Purchaser shall indemnify and hold harmless the Seller, its directors, officers,
agents and employees, each person who controls the Seller (within the meaning
of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling person, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or based solely upon: (i) any untrue
or
alleged untrue statement of a material fact contained in the Registration
Statement, any prospectus or in any amendment or supplement thereto or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any prospectus or supplement thereto, in light of the circumstances
under which they were made) not misleading to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
so furnished in writing by Purchaser to the Seller specifically for inclusion
in
the Registration Statement or such prospectus, amendment or supplement, or
(ii)
the inaccuracy in any representation or breach of any warranty of Purchaser
contained herein.
(c)
If
any proceeding shall be brought or asserted against any person entitled to
indemnity hereunder (an "Indemnified Party"), such Indemnified Party shall
promptly notify the Seller (for purposes of this Section 5, the Seller shall
be
referred to as the "Indemnifying Party") in writing, and the Indemnifying Party
shall have the right to assume the defense thereof, including the employment
of
counsel reasonably satisfactory to the Indemnified Party and the payment of
all
reasonable fees and expenses incurred in connection with the defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant
to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party unless: (1)
the Indemnifying Party has agreed in writing to pay such fees and expenses;
(2)
the Indemnifying Party shall have failed promptly to assume the defense of
such
proceeding and to employ counsel reasonably satisfactory to such Indemnified
Party in any such proceeding; or (3) the named parties to any such proceeding
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and such Indemnified Party shall have been advised by
counsel that a conflict of interest is likely to exist if the same counsel
were
to represent such Indemnified Party and the Indemnifying Party (in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party,
the
Indemnifying Party shall not have the right to assume the defense thereof and
the reasonable fees and expenses of one separate counsel, (but no more than
one
separate counsel on behalf of all of the Indemnified Parties) shall be at the
expense of the Indemnifying Party). The Indemnifying Party shall not be liable
for any settlement of any such proceeding effected without its written consent,
which consent shall not be unreasonably withheld or delayed. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending proceeding in respect of which any Indemnified
Party is a party, unless such settlement includes an unconditional release
of
such Indemnified Party from all liability on claims that are the subject matter
of such proceeding.
All
reasonable fees and expenses of the Indemnified Party (including reasonable
fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled
to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses
to
the extent it is finally judicially determined that such Indemnified Party
is
not entitled to indemnification hereunder).
(d)
If a
claim for indemnification hereunder is unavailable to an Indemnified Party
(by
reason of public policy or otherwise), then each 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, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates
to
information supplied by, such Indemnifying Party or Indemnified Party, and
the
parties' relative intent, knowledge, access to information and opportunity
to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or
other
reasonable fees or expenses incurred by such party in connection with any
proceeding to the extent such party would have been indemnified for such fees
or
expenses if the indemnification provided for in this Section was available
to
such party in accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), the Purchaser and the
other
Indemnified Parties shall not be required to contribute, in the aggregate,
any
amount in excess of the amount by which the proceeds actually received by such
person from the sale of the Waiver Shares subject to such dispute exceeds the
amount of any damages that such person has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission, except in the case of fraud by such person.
(e)
The
indemnification obligations set forth in (i) Section 5(a)(i) and Section 5(b)(i)
shall survive the transactions contemplated herein and shall remain operative
and in full force until the expiration of the applicable statute of limitations
and (ii) Section 5(a)(ii) and Section 5(b)(ii) shall survive forever. Any claim
pending on the expiration date of any applicable survival period for which
notice has been given to the Indemnifying Party in accordance with this
Agreement may continue to be asserted and indemnified against until finally
resolved.
6.
Miscellaneous.
(a)
Expenses. Each of the Purchaser and Seller agrees to pay its own expenses and
disbursements incident to the performance of its obligations
hereunder.
(b)
Rights Cumulative; Waivers. The rights of each of the parties under this
Agreement are cumulative. The rights of each of the parties hereunder shall
not
be capable of being waived or varied other than by an express waiver or
variation in writing. Any failure to exercise or any delay in exercising any
of
such rights shall not operate as a waiver or variation of that or any other
such
right. Any defective or partial exercise of any of such rights shall not
preclude any other or further exercise of that or any other such right. No
act
or course of conduct or negotiation on the part of any party shall in any way
preclude such party from exercising any such right or constitute a suspension
or
any variation of any such right.
(c)
Benefit; Successors Bound. This Agreement and the terms, covenants, conditions,
provisions, obligations, undertakings, rights, and benefits hereof, shall be
binding upon, and shall inure to the benefit of, the undersigned parties and
their heirs, executors, administrators, representatives, successors, and
permitted assigns.
(d)
Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof. There are no promises,
agreements, conditions, undertakings, understandings, warranties, covenants
or
representations, oral or written, express or implied, between them with respect
to this Agreement or the matters described in this Agreement, except as set
forth in this Agreement and in the other documentation relating to the
transactions contemplated by this Agreement. Any such negotiations, promises,
or
understandings shall not be used to interpret or constitute this
Agreement.
(e)
Amendment. 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.
(f)
Severability. Each part of this Agreement is intended to be severable. In the
event that any provision of this Agreement is found by any court or other
authority of competent jurisdiction to be illegal or unenforceable, such
provision shall be severed or modified to the extent necessary to render it
enforceable and as so severed or modified, this Agreement shall continue in
full
force and effect.
(h)
Notices. All notices, requests, demands or other communications which are
required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed to have been duly given: (i) on the date of delivery
if delivered by hand, (ii) upon the third day after such notice is (a) deposited
in the United States mail, if mailed by registered or certified mail, postage
prepaid, return receipt requested or (b) sent by a nationally recognized
overnight express courier, or (iii) by facsimile upon written confirmation
(other than the automatic confirmation that is received from the recipient's
facsimile machine) of receipt by the recipient of such notice: (i) if to
Purchaser: at the address of the Purchaser on the signature page hereof; and
(ii) if to Seller: Spatialight, Inc., Xxxx Xxxxxxxx Xxxxxxx, Xxxxxx XX 00000,
Facsimilie No. (000) 000-0000
(i)
Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York
without
giving effect to the principles regarding conflicts of laws. The parties
irrevocably consent to the exclusive jurisdiction of any State or Federal Court
located within the County of New York, State of New York, in connection with
any
action or proceeding arising out of or relating to this Agreement.
(j)
Further Assurances. In addition to the instruments and documents to be made,
executed and delivered pursuant to this Agreement, the parties hereto agree
to
make, execute and deliver or cause to be made, executed and delivered, to the
requesting party such other instruments and to take such other actions as the
requesting party may reasonably require to carry out the terms of this Agreement
and the transactions contemplated hereby.
(k)
Section Headings. The Section headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of
this Agreement.
(l)
Construction. Unless the context otherwise requires, when used herein, the
singular shall be deemed to include the plural, the plural shall be deemed
to
include each of the singular, and pronouns of one or no gender shall be deemed
to include the equivalent pronoun of the other or no gender.
(m)
Execution in 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 telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party
so
delivering this Agreement. A facsimile transmission of this signed Agreement
shall be legal and binding on all parties hereto.
IN
WITNESS WHEREOF,
the
parties have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized as of the day and year first above
written.
| SELLER: | ||
| SPATIALIGHT INC. | ||
| |
|
|
| By: | /s/ Xxxxx X. Xxxxxx | |
| Name: | Xxxxx X. Xxxxxx | |
| Title: | Chief Executive Officer | |
| PURCHASER: | ||
| Iroquois Master Fund Ltd. | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxxxx | |
| Name: | Xxxxxx Xxxxxxxxx | |
| Title: | Authorized Signator | |
| Address: | 000 Xxxxxxxxx Xxx. | ||
| 00xx Xxxxx | |||
|
Xxx
Xxxx, XX 00000
|
