STOCK PURCHASE AGREEMENT
BY AND BETWEEN
SOFTNET SYSTEMS, INC.,
AND
MEDIACOM LLC
dated
November 4, 1999
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of November 4, 1999,
by and between SOFTNET SYSTEMS, INC., a Delaware corporation (the "Company"),
and MEDIACOM LLC, a New York limited liability company ("Mediacom").
W I T N E S S E T H:
WHEREAS, the Company wishes to issue to Mediacom, and Mediacom
wishes to purchase from the Company, the Common Shares on the terms and subject
to the conditions set forth herein; and
WHEREAS, the Common Shares are being issued in order to induce
Mediacom to enter into an affiliate agreement pursuant to which, subject to the
terms and provisions contained therein, Mediacom will agree to use the Company's
subsidiary, ISP Channel, Inc., as the exclusive provider of Internet access to
customers passed by Mediacom's cable infrastructure (the "Affiliate Agreement");
and
WHEREAS, the Company has made a good faith determination that
the Common Shares to be issued hereunder represent the fair market value of
securing Mediacom's obligations under the Affiliate Agreement; and
WHEREAS, concurrently with this Agreement, the parties shall
execute that certain Registration Rights Agreement dated as of the same date as
this Agreement, by and among the Company and Mediacom, the form of which is
attached hereto as Exhibit A (the "Registration Rights Agreement").
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions.
1.1 "Additional Shares" means shares of Common Stock issued pursuant to Section
2.2.
1.2 "Alternate Cash Consideration" means the difference between "*Filed
separately with the Commission*" and
the product of (a) the sum of (i) the First Shares plus (ii) the Second Shares,
multiplied by (b) the average closing price of the Common Stock for the twenty
trading days prior to the trading day immediately preceding the Third Closing
Date, as reported by the principal exchange or automated quotation system upon
which the Common Stock is then traded.
1.3 "Ancillary Agreements" means the Affiliate Agreement, the Stockholder
Agreement and the Registration Rights Agreement.
1.4 "Committed Home Passed" has the same meaning as set forth in the Affiliate
Agreement.
1.5 "Common Shares" means the Initial Shares and the Additional Shares.
1.6 "Common Stock" means the common stock, par value $0.01 per share, of the
Company.
1.7 "Default Shares" means "*Filed separately with the Commission*" shares of
Common Stock.
1.8 "First Closing" has the meaning set forth in Section 7.1
1.9 "First Closing Date" has the meaning set forth in Section 7.1.
1.10 "First Shares" means that number of shares of Common Stock derived by
dividing $15,000,000 by the closing price of the Common Stock on the trading day
prior to the date hereof, as reported by the principal exchange or automated
quotation system upon which the Common Stock is then traded, rounding down, and
subtracting one (1).
1.11 "Fully Diluted Common Stock" means, at any given time, the sum of (a) the
number of shares of Common Stock that are outstanding, and (b) the number of
shares of Common Stock that are issuable upon exercise, conversion or exchange
of all outstanding options, warrants and other securities and obligations of the
Company.
1.12 "HSR Approval" means the earlier of (a) the termination or expiration of
the waiting period for filings made under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvement Xxx 0000, as amended (the "HSR Act"), or (b) approval by the Federal
Trade Commission and the Department of Justice pursuant to the HSR Act of the
transactions contemplated hereby.
1.13 "Initial Shares" means the First Shares, the Second Shares and, subject to
Section 6.6, the Third Shares, which shall equal (a) 3.5 million shares of
Common Stock in the aggregate or (b) in the event the Company does not obtain
Stockholder Approval as required by Section 6.5, the sum of the First Shares and
the Second Shares, all as subject to adjustment for Default Shares.
1.14 "ISP Channel Services" has the same meaning as the term "Services" in the
Affiliate Agreement.
1.15 "Material Adverse Effect" means a material adverse effect on the business,
operations, properties, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole.
1.16 "Preferred Share" has the meaning set forth in the Stockholder Agreement.
1.17 "Second Closing" has the meaning set forth in Section 7.2.
1.18 "Second Closing Date" has the meaning set forth in Section 7.2.
1.19 "Second Shares" means that number of shares of Common Stock which on the
Second Closing Date will be equal to the maximum number of shares of Common
Stock which the Company is permitted to issue to Mediacom without seeking
Stockholder Approval under the then current rules of the NASDAQ Stock Market.
1.20 "Stockholder Agreement" means that certain Stockholder Agreement by and
between the Company and Mediacom dated the same date as this Agreement, a copy
of which is attached hereto as Exhibit B.
1.21 "Stockholder Approval" has the meaning set forth in Section 6.5.
1.22 "Subsidiary" means any corporation, limited liability company or other
entity of which the Company or Mediacom, as applicable, directly or indirectly,
controls or which the Company or Mediacom, as applicable, owns, directly or
indirectly, more than 50% of the capital stock or other voting and/or equity
interests.
1.23 "Third Closing" has the meaning set forth in Section 7.3.
1.24 "Third Closing Date" has the meaning set forth in Section 7.3.
1.25 "Third Shares" means that number of shares of Common Stock equal to the
difference between 3.5 million and the sum of (a) the First Shares, (b) the
Second Shares and (c) any Default Shares payable to the Company as of the Third
Closing Date.
1.26 "Unrestricted Shares" has the meaning set forth in the Stockholder
Agreement.
1.27 "Year 2000 Issue" means the failure of computer software, hardware and
firmware systems and equipment containing embedded computer ships to properly
receive, transmit, process, manipulate, store, retrieve, re-transmit or in any
other way utilize data and information due to the occurrence of the year 2000 or
the inclusion of dates on or after January 1, 2000.
2. Issuance of Common Shares. Subject to the terms and conditions set forth in
this Agreement, the Company agrees to issue to Mediacom the Common Shares as
follows:
2.1 Initial Shares.
(a) First Shares. The Company shall issue to Mediacom the First Shares on
the First Closing Date.
(b) Second Shares. The Company shall issue to Mediacom the Second Shares on
the Second Closing Date.
(c) Third Shares. In the event Stockholder Approval is required under
Section 6.5, the Company shall issue to Mediacom the Third Shares, or subject to
Section 6.6, the Alternate Cash Consideration, on the Third Closing Date.
2.2 Additional Shares. For each Committed Home Passed in excess of 900,000 that
Mediacom makes available for ISP Channel Services, the Company shall issue to
Mediacom additional shares of Common Stock equal to the greater of (i) "*Filed
separately with the Commission*" divided by the per share closing price of the
Common Stock on the trading day prior to the date such shares are issued, as
reported by the principal exchange or automated quotation system upon which the
Common Stock is then traded and (ii) the lesser of (x) the quotient derived from
dividing (A) "*Filed separately with the Commission*" multiplied by the per
share closing price of the Common Stock on the trading day prior to the date
such shares are issued, as reported by the principal exchange or automated
quotation system upon which the Common Stock is then traded by (B) 900,000 and
(y) "*Filed separately with the Commission*" shares; provided, that the Company
shall not be obligated to accept more than 3,000,000 Committed Homes Passed for
ISP Channel Services without prior approval by the Board of Directors of the
Company; provided, further, that in no event shall Mediacom acquire more than
35% of the Fully Diluted Common Stock without prior approval by the Board of
Directors of the Company.
(a) Procedure. For each delivery of such excess Committed Homes Passed, Mediacom
shall deliver to the Company a certificate signed by an authorized officer of
Mediacom certifying that (i) Mediacom has delivered such excess Committed Homes
Passed, and (ii) the Affiliate Agreement has been amended to reflect the
delivery of such excess Committed Homes Passed. The Company shall issue to
Mediacom such Additional Shares within 30 days of receipt of such certificate.
(b) Adjustment for Subdivisions and Combinations. In the event at any time the
Company shall, by subdivision, stock split, reverse stock split, dividend,
combination or reclassification of any shares of its capital stock or otherwise
change any of the shares of Common Stock into the same or different number of
securities of any class or classes. The specific share numbers set forth herein
and in the Ancillary Agreements shall be proportionately adjusted to reflect
such change. An adjustment made pursuant to this Section 2.2(b) shall become
effective immediately after the effective date of such subdivision or
combination.
2.3 Shares to be Subject to Transfer Restrictions. The Common Shares shall be
subject to transfer restrictions and other conditions as set forth in the
Stockholder Agreement.
3. Execution of Ancillary Agreements. In consideration for the issuance of the
Common Shares, Mediacom shall enter into the Ancillary Agreements and use ISP
Channel, Inc. as the exclusive provider of Internet access passed by Mediacom's
cable infrastructure according to the terms of the Affiliate Agreement.
4. Representations and Warranties of the Company. The Company hereby represents
and warrants to Mediacom as follows, except as set forth on a Schedule of
Exceptions (the "Schedule of Exceptions") furnished to Mediacom attached hereto
as Schedule A, which exceptions shall be deemed to be representations and
warranties as if made hereunder:
4.1 Organization and Qualification. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Company has all requisite corporate power to carry on its business as it is
now being conducted and is duly qualified to do business as a foreign
corporation and is in good standing in each of the jurisdictions in which the
properties owned, leased or operated by the Company or the nature of the
business conducted by the Company makes such qualification necessary and where
the failure to so qualify (individually or in the aggregate) would have a
Material Adverse Effect.
4.2 Subsidiaries. The Schedule of Exceptions sets forth each Subsidiary of the
Company. Except as set forth in the Schedule of Exceptions, the Company does not
own any capital stock in any other corporation or similar business entity nor is
the Company a partner in any partnership or joint venture. The Schedule of
Exceptions describes the state or other jurisdiction of incorporation or
organization and the percentage ownership interest owned by the Company of each
Subsidiary. Each Subsidiary is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of its state or
other jurisdiction of incorporation or organization. Each Subsidiary has all
requisite power (corporate or otherwise) to carry on its business as it is now
being conducted and is duly qualified to do business as a foreign corporation or
limited liability company and is in good standing in the jurisdictions in which
the properties owned, leased or operated by such Subsidiary or the nature of the
business conducted by such Subsidiary makes such qualification necessary and
where the failure to so qualify (individually or in the aggregate) would have a
Material Adverse Effect.
4.3 Authorization, Validity and Enforceability. The Company has full power,
authority and legal capacity to execute and deliver this Agreement and each of
the Ancillary Agreements, and subject to the HSR Approval, to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby, including without limitation the issuance of
the Common Shares hereunder and the issuance of the Preferred Share pursuant to
the Stockholder Agreement. This Agreement and each of the Ancillary Agreements
have been duly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, and (b) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies.
4.4 No Conflicts. Subject to the HSR Approval, the execution and delivery by the
Company of this Agreement and each of the Ancillary Agreements and the
performance by the Company of its obligations hereunder and thereunder, and the
consummation of the transactions contemplated hereby and thereby (including,
without limitation, the offer and sale of the Common Shares hereunder and the
issuance of the Preferred Share pursuant to the Stockholder Agreement), do not
and will not conflict with or violate the Certificate of Incorporation or
By-laws of the Company and do not and will not conflict with, result in any
breach or violation of, constitute a default under (or an event which with the
giving of notice or the lapse of time or both would constitute a default under),
give rise to any right of termination or acceleration of any right or obligation
of the Company under, or result in the creation of any lien or encumbrance upon
any assets or properties of the Company by reason of the terms of, (a) any
material contract to which the Company or by or to which the Company or its
assets or properties may be bound or subject, or (b) any order, writ, judgment,
injunction, award, decree, law, statute, ordinance, rule or regulation
applicable to the Company.
4.5 Third-Party Consents and Approvals. Except for the Stockholder Approval and
the HSR Approval, no consent, approval, authorization, license or order of,
registration, qualification, designation, declaration or filing with, or notice
to, any governmental entity or any other person is necessary to be obtained,
made or given by the Company in connection with the execution and delivery of
this Agreement, the performance by the Company of its obligations hereunder, and
the consummation of the transactions contemplated hereby.
4.6 Title to Securities. The Common Shares, when issued and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, and the Preferred Share, when issued and delivered in accordance with
the terms of the Stockholder Agreement, will be duly and validly issued, fully
paid and nonassessable. The issuance, sale and delivery of the Common Shares is
not subject to any preemptive rights of stockholders of the Company or to any
right of first refusal or other similar right in favor of any person.
4.7 Capitalization and Voting Rights.
(a) The authorized capital of the Company consists of:
(i) Preferred Stock. 4,000,000 shares of Preferred Stock, par value
$.10 per share (the "Preferred Stock"), of which no shares were issued and
outstanding as of October 31, 1999.
(ii) Common Stock. 100,000,000 shares of Common Stock, of which
__________ shares were issued and outstanding as of October 31,
1999.
(b) All outstanding shares of Common Stock are duly and validly authorized and
issued, fully paid and nonassessable, and were issued in compliance with all
applicable state and federal laws concerning the issuance of securities and not
in violation of any preemptive rights of stockholders of the Company or to any
right of first refusal or other similar right in favor of any person. All shares
of Common Stock issuable upon exercise of all options, warrants or other rights
or agreements for the purchase or acquisition of Common Stock (including
Additional Shares) have been duly reserved for issuance and, upon issuance
thereof in accordance with the respective terms of their governing documents,
will be duly and validly issued, fully paid and non-assessable.
(c) Except as disclosed in the Schedule of Exceptions there are no (i)
outstanding options, warrants, rights (including conversion or preemptive
rights) or agreements or obligations (contingent or otherwise) for the purchase,
repurchase or acquisition or retirement of any shares of its capital stock or
other interests therein, (ii) securities of the Company convertible into or
exchangeable for any capital stock of the Company, (iii) commitments of the
Company to issue any shares, warrants, options or other such rights or to
distribute to holders of any class of its capital stock in respect thereof, any
evidences of indebtedness or assets, or (D) agreements to pay any dividend or
make any other distribution in respect thereof. Between October 31, 1999 and the
Closing Date, the Company has not issued any shares of capital stock or other
securities other than upon conversion or exercise or otherwise as a result of
conversion rights, options, warrants and other rights or agreements for the
purchase of shares of capital stock that were outstanding as of October 31,
1999. The Company is not a party or subject to any agreement and, to the
Company's knowledge, there is no agreement between any persons and/or entities,
which affects or relates to the voting or giving of written consents with
respect to any security or by a director of the Company.
4.8 Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company or any
of its Subsidiaries is required in connection with (a) the execution, delivery
and performance of this Agreement or any of the Ancillary Agreements, (b) the
issuance, sale and delivery of the Common Shares and the Preferred Share, and
(c) the consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, except for (i) such filings required pursuant to
applicable federal and state securities laws and blue sky laws, which filings
will be effected within the required statutory period, and (ii) the HSR
Approval.
4.9 Litigation. There is no action, suit, proceeding or investigation pending,
or to the Company's knowledge, currently threatened against the Company that
questions the validity of this Agreement or the right of the Company to enter
into such Agreement or to consummate the transactions contemplated hereby, or
that might result, either individually or in the aggregate, in a Material
Adverse Effect or any change in the current equity ownership of the Company.
4.10 Certificate of Incorporation, By-laws and Minutes. The Company has
heretofore made available to Mediacom true and complete copies of its
Certificate of Incorporation and By-laws as in effect on the date hereof. The
minute books of the Company and the Subsidiaries, which have been made available
to Mediacom for inspection, contain true and complete records of all meetings
and consents of the Board of Directors and stockholders of the Company and the
Subsidiaries.
4.11 No Violation of Law. To the Company's knowledge, the Company and each
Subsidiary is not in violation of and has not been given notice or been charged
with any violation of any law, statute, order, rule, regulation, ordinance or
judgment (including, without limitation, any applicable environmental law,
ordinance or regulation) of any governmental or regulatory body or authority,
except for violations which, in the aggregate, do not have, and would not
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any Subsidiary has received any written notice that any investigation or
review with respect to it by any governmental or regulatory body or authority is
pending or threatened, other than, in each case, those the outcome of which, as
far as reasonably can be foreseen, would not reasonably be expected to have a
Material Adverse Effect. The Company and each Subsidiary have all permits,
licenses, franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct their businesses as
presently conducted, except for those, the absence of which, alone or in the
aggregate, would not have a Material Adverse Effect (collectively, the
"Permits"). The Company and each Subsidiary (a) have duly and timely filed all
reports and other information required to be filed with any governmental or
regulatory authority in connection with its Permits, and (b) are not in material
violation of the terms of any of its Permits, except for such omissions or
delays in filings, reports or violations which, alone or in the aggregate, would
not have a Material Adverse Effect.
4.12 Registration Rights. Except as set forth in the Schedule of Exceptions, the
Company has not granted or agreed to grant any registration rights under any
applicable securities laws to any person.
4.13 Intellectual Property. The Company and each Subsidiary owns or has the
right to use the patents, unpatented inventions, trademarks, tradenames, service
marks, service names, copyrights, trade secrets, know-how, design, process and
other intangible assets (collectively, "Proprietary Assets") used in the
business of the Company and the Subsidiaries free and clear of liens, claims,
and encumbrances created outside of the ordinary course of business or
identified in agreements referred to in the SEC Reports. Neither the Company nor
any Subsidiary is knowingly violating or infringing the rights of others in any
patent, unpatented invention, trademark, trade name, servicemark, copyright,
trade secret, know-how, design, process or other intangible asset. The Company
has not received any communications alleging that the Company (or any of its
employees or consultants) has violated or infringed or, by conducting its
business as proposed, would violate or infringe, any Proprietary Asset of any
other person or entity. To the Company's knowledge, no third party has any
ownership, right, title, interest, claim or lien on any of the Company's
Proprietary Assets and the Company has taken, and in the future the Company will
use its best efforts to take all steps reasonably necessary to preserve its
legal rights in, and the secrecy of, all its Proprietary Assets, except those
for which disclosure is required for legitimate business or legal reasons.
Except as set forth in the Schedule of Exceptions, the Company has not granted,
and, to the Company's knowledge there are not outstanding, any options, licenses
or agreements of any kind relating to any Proprietary Asset of the Company, nor
is the Company bound by or a party to any option, license or agreement of any
kind with respect to any of its Proprietary Assets. Except as set forth on the
Schedule of Exceptions, the Company is not obligated to pay any royalties or
other payments to third parties with respect to the marketing, sale,
distribution, manufacture, license or use of any of Proprietary Asset or any
other property or rights.
4.14 Company SEC Reports. Since January 1, 1998, the Company has timely filed
with the Securities and Exchange Commission (the "SEC") all reports,
registrations and other documents, together with any amendments thereto,
required to be filed under the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act")(all such reports, registrations and documents filed with the SEC
since January 1, 1998 are collectively referred to as the "Company SEC
Reports"). As of their respective dates or such later date as the Company filed
an amendment with the SEC, the Company SEC Reports complied in all material
respects with all rules and regulations promulgated by the SEC and did not
contain any untrue statement of a material fact or omit to state a material face
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading. The
consolidated financial statements of the Company (the "Company Financial
Statements") included in the Company SEC Reports present fairly, in all material
respects, the consolidated financial position of the Company and the
Subsidiaries as of their respective dates and the results of their operations
and cash flows for the fiscal years and periods covered in accordance with GAAP
consistently applied and in accordance with Regulation S-X of the SEC (subject,
in the case of unaudited interim period financial statements to normal recurring
year-end adjustments which, individully or collectively, are not material).
Without limiting the generality of the foregoing, (a) as of the date of the most
recent balance sheet included in the Company Fiancial Statements, there was no
material debt, liability or obligation of any nature not fully reflected or
reserved in accordance with GAAP; and (b) there are no assets of the Company or
any Subsidiary, the value of which (in the reasonable judgment of the Company)
is materially overstated in the Company Financial Statements. Except as set
forth in the Company SEC Reports, neither the Company nor any Subsidiary, to
their knowledge, has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) other than liabilities and obligations which
would not, individually or in the aggregate, have a Material Adverse Effect.
4.15 Brokers and Finders. The Company has not, directly or indirectly, employed
any investment banker, broker, finder, consultant or intermediary in connection
with the transactions contemplated by this Agreement which would be entitled to
any investment banking, brokerage, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby.
4.16 Year 2000 Issue. The Company has reviewed the effect of the Year 2000 Issue
on the computer software used by the Company and the Subsidiaries in the
business of the Company and the Subsidiaries, as well as those hardware and
firmware systems and equipment containing embedded microchips owned or operated
by the Company and the Subsidiaries or used or relied upon in the conduct of
their business (including systems and equipment supplied by others or with which
such computer systems of the Company and the Subsidiaries interface). The costs
to the Company of any reprogramming required as a result of the Year 2000 Issue
to permit the proper functioning of such systems and equipment and the proper
processing of data, and the testing of such reprogramming, are not reasonably
expected to have a Material Adverse Effect on the Company.
5. Representations and Warranties of Mediacom. Mediacom hereby represents and
warrants to the Company that:
5.1 Authorization. Mediacom has full power and authority to enter into this
Agreement, and such Agreement constitutes its valid and legally binding
obligation, enforceable in accordance with its terms.
5.2 Purchase Entirely for Own Account. This Agreement is made with Mediacom in
reliance upon Mediacom's representation to the Company, which by Mediacom's
execution of this Agreement Mediacom hereby confirms, that the Common Shares to
be received by Mediacom will be acquired for investment for Mediacom's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Mediacom has no present intention of
selling, granting any participation in, or otherwise distributing the same. By
executing this Agreement, Mediacom further represents that Mediacom does not
presently have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to any of the Common Shares.
5.3 Disclosure of Information. Mediacom believes it has received all the
information it considers necessary or appropriate for deciding whether to
acquire the Common Shares. Mediacom further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Securities and the business,
properties, prospects and financial condition of the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 4 of this Agreement or the right of Mediacom to rely thereon.
5.4 Investment Experience. Mediacom acknowledges that it can bear the economic
risk of its investment, and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the
investment in the Common Shares. Mediacom has the capacity to protect its own
interests in connection with the transactions contemplated by this Agreement.
Mediacom has not been organized for the purpose of acquiring the Common Shares.
5.5 No Solicitation. Neither the offer nor the sale of the Common Shares to
Mediacom has been accomplished by the publication of any form of advertisement
or general solicitation.
5.6 Restricted Securities. Mediacom understands that the Common Shares are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such Securities may be resold without registration under the Securities Act,
only in certain limited circumstances. In this connection, Mediacom represents
that it is familiar with SEC Rule 144, as presently in effect, and understands
the resale limitations imposed thereby and by the Act.
5.7 Legends. Mediacom acknowledges that the Common Shares, and any securities
issued in respect thereof or exchange therefor, may bear one or all of the
following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(b) "THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFER, REPURCHASE RIGHTS
AND OTHER CONDITIONS CONTAINED IN THAT CERTAIN STOCKHOLDER AGREEMENT BETWEEN
MEDIACOM LLC AND THE COMPANY, DATED NOVEMBER 4, 1999."
(c) Any legend required by the laws of the jurisdiction where Mediacom is
domiciled or incorporated.
(d) Any legend required by the Blue Sky laws of any other state to the extent
such laws are applicable to the shares represented by the certificate so
legended.
6. Conditions to the First Closing, Second Closing and Third Closing; Covenants
and Alternate Consideration
6.1 Conditions to the Company's Obligations. The obligations of the Company to
issue the Common Shares shall be subject to the satisfaction of the following
conditions as of the First Closing, the Second Closing and the Third Closing:
(a) Representations and Warranties. The representations and warranties of
Mediacom contained in this Agreement shall be true and correct as of the First
Closing Date, the Second Closing Date and the Third Closing Date with the same
force and effect as though made as of each such respective Closing Date.
(b) Covenants. Mediacom shall have complied with all covenants and agreements
required to be complied with by Mediacom hereunder and in the Affiliate
Agreement.
(c) Compliance Certificate. The Company shall have received from an officer of
Mediacom a certificate, dated as of the First Closing Date, the Second Closing
Date, or the Third Closing Date, as the case may be, that the conditions
specified in Sections 6.1(a) and 6.1(b) have been fulfilled.
(d) Consents and Approvals. Mediacom shall have obtained, made or given all
consents, approvals, authorizations, licenses or orders of, registrations,
qualifications, designations, declarations or filings with, or notice to any
governmental entity or any other person to the extent necessary to be obtained,
made or given by Mediacom in connection with the transactions contemplated
hereby.
(e) No Injunction or Illegality. No injunction, order, decree or judgment shall
have been issued by any court or other governmental entity and be in effect, and
no statute, rule or regulation shall have been enacted or promulgated by any
governmental entity and be in effect, which in each case restrains or prohibits
any of the transactions contemplated hereby.
(f) Ancillary Agreements. Mediacom shall have executed and delivered to the
Company the Ancillary Agreements and the Ancillary Agreements shall be in full
force and effect.
(g) Delivery of Documents. The Company shall have received from Mediacom:
incumbency certificates and such other evidence of corporate authority for the
transactions contemplated hereby as the Company and its counsel shall reasonably
request. The Company may conclusively rely on such documents.
(h) Celebratory Dinner. Solely as a condition to the First Closing, Xxxxx
Xxxxxxxx, the Chairman and Chief Executive Officer of Mediacom, shall have come
to California for a celebratory dinner in his honor.
6.2 Conditions to Mediacom's Obligations. The obligations of Mediacom to
consummate the First Closing, the Second Closing and the Third Closing shall be
subject to the satisfaction of the following conditions:
(a) Representations and Warranties. The representations and warranties of the
Company contained in this Agreement shall be true and correct as of the First
Closing Date, the Second Closing or the Third Closing Date, as the case may be,
(other than representations and warranties made as of a specific date, which
shall be true and correct as of the date specified), with the same force and
effect as though such representations and warranties had been made as of each
such respective Closing Date.
(b) Covenants. The Company shall have performed and complied with all covenants
and agreements required to be performed or complied with by the Company
hereunder and under the Ancillary Agreements.
(c) Compliance Certificate. Mediacom shall have received from an officer of the
Company a certificate, dated as of the First Closing or Second Closing, as the
case may be (and as to each issuance of Additional Shares, the date of issuance
of such shares), that the conditions specified in Sections 6.2(a) and 6.2(b)
have been fulfilled.
(d) Consents and Approvals. All consents, approvals, authorizations, licenses or
orders of, registrations, qualifications, designations, declarations or filings
with, or notice to any governmental entity or any other person necessary to be
obtained, made or given in connection with the transactions contemplated hereby
shall have been duly obtained, made or given and shall be in full force and
effect.
(e) No Injunction or Illegality. No injunction, order, decree or judgment shall
have been issued by any court or other governmental entity and be in effect, and
no statute, rule or regulation shall have been enacted or promulgated by any
governmental entity and be in effect, which in each case restrains or prohibits
any of the transactions contemplated hereby.
(f) Ancillary Agreements. The Company shall have entered into each of the
Ancillary Agreements and the Ancillary Agreements shall be in full force and
effect.
(g) Share Certificates; Alternate Cash Consideration. Mediacom shall have
received stock certificates of the Company representing the First Shares for the
First Closing, the Second Shares for the Second Closing, or the Third Shares, or
subject to Section 6.6, the Alternate Cash Consideration, for the Third Closing,
in such denominations as may be requested by Mediacom.
(h) Delivery of Documents. Mediacom shall have received from the Company: (i) a
copy of the Amended and Restated Certificate of Incorporation of the Company in
effect at the time of the Closing, certified as having been filed with the
Delaware Secretary of State, (ii) a copy of the By-laws of the Company in effect
at the time of the Closing, certified as being true and correct by the Secretary
of the Company, and (iii) incumbency certificates, board resolutions and such
other evidence of corporate authority for the transactions contemplated hereby
as Mediacom and its counsel shall reasonably request. Mediacom may conclusively
rely on such documents.
(i) Opinion of Counsel. Mediacom shall have received an opinion from Xxxxxx &
Xxxxxxx, corporate counsel to the Company, dated as of the First Closing Date,
the Second Closing Date or the Third Closing Date, as the case may be, in form
reasonably satisfactory to Mediacom.
6.3 Additional Conditions to the Second Closing. The obligations of the Company
and Mediacom to consummate the Second Closing shall be subject to HSR Approval.
The obligation of Mediacom to consummate the Second Closing shall also be
subject to the Company's amending its Bylaws as set forth in Section 5.3 of the
Stockholder Agreement.
6.4 HSR Filings. Each of the parties hereto covenants and agrees to use its
reasonable commercial efforts to comply promptly with any applicable
requirements under the HSR Act, and rules and regulations promulgated
thereunder, relating to filing and furnishing of information to the Federal
Trade Commission ("FTC") and the Antitrust Division of the Department of Justice
("DOJ"), the parties' actions to include, without limitation, (a) filing or
causing to be filed the Notification and Report (the "HSR Report") required to
be filed by them, or by any other person that is part of the same "person" (as
defined in the HSR Act) or any of them, and taking all other action required by
the HSR Act; (b) coordinating the filing of such HSR Reports (and exchanging
drafts thereof) so as to present both HSR Reports to the FTC and the DOJ within
10 business days after the date of execution of this Agreement, or as soon
thereafter as reasonably practicable, and to avoid substantial errors or
inconsistencies between the two in the description of the transaction; and (c)
using their reasonable commercial efforts to comply with any additional request
for documents or information made by the FTC or the DOJ or by a court and
assisting the other party to so comply. Notwithstanding anything herein to the
contrary, in the event that the consummation of the transactions contemplated
under this Agreement is challenged by the FTC, the DOJ or any agency or
instrumentality of the federal government by an action to stay or enjoin such
consummation, then the parties shall cooperate with each other, as reasonably
requested, until either party does not reasonably believe that there are
reasonable grounds to contest such action, at which time such party shall have
the right to terminate this Agreement and the Ancillary Agreements, unless the
other party, at its sole cost and expense, elects to contest such action, in
which case the noncontesting party shall cooperate with the contesting party and
assist the contesting party, as reasonably requested, to contest such action
until such time as any party terminates this Agreement under this Section. In
the event that a stay or injunction is granted (preliminary or otherwise), then
either party may terminate this Agreement by prompt written notice to the other.
If any other form of equitable relief affecting any party is granted to the FTC,
the DOJ or other such agency or instrumentality, then the noncontesting party
may terminate this Agreement by prompt written notice to the other party. Upon
any termination pursuant to this Section 6.4 other than as a result of a breach
of this Agreement, no party shall have any further obligation or liability to
the other party under this Agreement or the Ancillary Agreements. To effectuate
the intent of the foregoing provisions of this Section 6.4, the parties agree to
exchange requested or required information in making the filings and in
complying as above provided, and the parties agree to take all reasonable steps
to preserve the confidentiality of the information set forth in any filings.
6.5 Stockholder Approval. The Company covenants and agrees to submit to its
stockholders for approval at the 2000 Annual Meeting of Stockholders, duly
called and held as promptly as reasonably possible, but not later than March 31,
2000 (the "Stockholders Meeting"), and the Company will recommend to, and will
use its best efforts to solicit and obtain from such stockholders, the approval
of (a) the issuance of the Common Shares, as contemplated by this Agreement, but
only in the event stockholder approval is necessary to issue the Third Shares in
order to comply with the rules of the NASDAQ Stock Market ("Shareholder
Approval") and (b) the election of Mediacom's designee to the Company's Board of
Directors consistent with Mediacom's percentage ownership of the Common Stock,
as set forth in Section 5 of the Stockholder Agreement. The Company shall timely
prepare and file with the SEC a preliminary proxy statement in connection with
the Stockholders Meeting, and shall endeavor to obtain prompt review of such
proxy statement by the SEC, to respond to comments receive and to mail the
definitive version thereof (together with any supplements thereto, the "Proxy
Statement") promptly to its stockholders. The Proxy Statement will comply as to
form in all material respects with all applicable rules and regulations under
the Exchange Act . Copies of all preliminary proxy material to be submitted to
the SEC, and all SEC responses, comments or inquiries related thereto shall be
sent or communicated to Mediacom and its counsel sufficiently in advance of
filing or other formal action with respect thereto to provide them with a
reasonable opportunity to review and comment thereon.
6.6 Alternate Cash Consideration. In the event that, despite its best efforts,
the Company shall not obtain Stockholder Approval, at the Third Closing the
Company shall deliver to Mediacom the Alternate Cash Consideration, at
Mediacom's option, by the delivery of a certified or cashier's check or by
federal wire transfer to an account designated by Mediacom.
6.7 Additional Shares. Solely as a condition to issuing Additional Shares, the
Company shall be reasonably satisfied that Mediacom has made available for ISP
Channel Services the number of Committed Homes Passed that requires the issuance
of Additional Shares.
7. Closing Dates.
7.1 First Closing. Subject to the satisfaction (or waiver) of the conditions
thereto set forth in Section 6.1 and 6.2, the date and the time of the issuance
and sale of the First Shares pursuant to this Agreement (the "First Closing")
shall be 10:00 a.m., on November 3, 1999 at 000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, XX, or at such other date, time and place as the Company and Mediacom
mutually agree upon orally or in writing (the "First Closing Date").
7.2 Second Closing. Subject to the satisfaction (or waiver) of the conditions
thereto set forth in Section 6.1, 6.2, 6.3 and 6.4, the date and the time of the
issuance and sale of the Second Shares pursuant to this Agreement (the "Second
Closing") shall be no later than the fifth business day following HSR Approval
at 000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, XX, or at such other date,
time and place as the Company and Mediacom mutually agree upon orally or in
writing (the "Second Closing Date").
7.3 Third Closing. Subject to the satisfaction (or waiver) of the conditions
thereto set forth in Section 6, the date and the time of the issuance and sale
of the Third Shares, or delivery of the Alternate Cash Consideration, pursuant
to this Agreement (the "Third Closing") shall be within five business days after
the earlier of (a) Stockholder Approval or (b) March 31, 2000, at 000 Xxxxxxxx
Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, XX, or at such later date, time and place as
the Company and Mediacom mutually agree upon orally or in writing (the "Third
Closing Date"); provided, that the Third Closing shall be unnecessary in the
event Stockholder Approval is not required by Section 6.5.
8. Protective Provision. In the event ISP Channel, Inc. or the Company enter
into agreements with any other cable operator that have, in the aggregate,
terms, rates and conditions more favorable than set forth in this Agreement and
the Ancillary Agreements, taken as a whole, then such party shall offer to
Mediacom such set of terms, rates and conditions offered to the other cable
operator; provided, however, that this provision shall not apply to agreements
for test or demonstration purposes.
9. Miscellaneous.
9.1 Survival of Representations and Warranties; Indemnity.
(a) The representations and warranties contained in this Agreement shall survive
the execution and delivery of this Agreement regardless of any investigation
made by or on behalf of either party hereto, until the fifth anniversary of the
date hereof.
(b) The Company hereby agrees to indemnify, defend and hold harmless Mediacom,
any affiliate of Mediacom, and any director, officer, employee, representative
or agent of any of them (an "Indemnified Party") from and against, and agrees to
pay or cause to be paid to such Indemnified Party the amounts ("Losses") equal
to the sum of any and all claims, demands, costs, expenses or other liabilities
of any kind that any Indemnified Party may incur or suffer, directly or
indirectly, including without limitation the cost of investigation (including
without limitation attorneys' fees) which arise out of, result from or relate to
(i) any misrepresentation or breach by the Company of any of its representations
or warranties or covenants contained in this Agreement, or in any schedule,
certificate, exhibit, or other instrument furnished by, or on behalf of, the
Company under this Agreement or (ii) any claim by any stockholders of the
Company arising under or in connection with this Agreement. Each Indemnified
Party shall give prompt notice to the Company of the commencement of any suit,
action or proceeding against such Indemnified Party in respect of which
indemnity may be sought hereunder. The Company may, at its own expense,
participate in and upon notice to the Indemnified Party, assume the defense any
such suit, action or proceeding; provided that (A) the Company's counsel is
reasonable satisfactory to such Indemnified Party and (B) the Company shall
thereafter consult with such Indemnified Party upon such Indemnified Party's
reasonable request for such consultation from time to time with respect to such
suit, action or proceeding. If the Company assumes such defense, such
Indemnified Party shall have the right (but not the duty) to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Company. The Company shall be liable for the fees and
expenses of counsel employed by such Indemnified Party for any period during
which the Company has not assumed the defense thereof. Whether or not the
Company chooses to defend or prosecute any claim, all of the parties hereto
shall cooperate in the defense or prosecution thereof. The Company shall not be
liable hereunder for any settlement effected without its consent or resulting
from a proceeding against an Indemnified Party in which the Company was not
permitted an opportunity to participate unless "*Filed separately with the
Commission*" such settlement includes an unconditional release of the Company
from all liability on claims that are the subject matter of such claim,
litigation or proceeding, and (2) such settlement shall not require that the
Company incur any obligation (monetary or otherwise) or forego any rights. The
Company shall not effect any settlement relating to a proceeding against any
Indemnified Party without the consent of such Indemnified Party (which consent
shall not be unreasonably withheld) unless such settlement includes (as to such
Indemnified Party) money damages only and an unconditional release of such
Indemnified Party from all Losses related to such proceeding.
9.2 Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid), mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid, or transmitted by facsimile (with request
for immediate confirmation of receipt in a manner customary for communications
of such type and with physical delivery of the communication being made by one
of the other means specified in this Section as promptly as practicable
thereafter). Such notices, demands and other communications shall be addressed
as follows:
If to the Company:
SOFTNET SYSTEMS, INC.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxx, Secretary
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Mediacom
MEDIACOM LLC
000 Xxxxxxx Xxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party
(provided that notice of a change of address shall be effective only upon
receipt thereof).
9.3 Expenses. The Company shall pay, and hold Mediacom harmless from and against
liability for the payment of, stamp and other taxes which may be payable in
respect of the execution and delivery of this Agreement or the delivery or
acquisition of any Common Shares.
9.4 Remedies. The parties shall have all rights and remedies set forth in this
Agreement and all rights which such holders have under any law. Any person
having any rights under any provision of this agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights granted by law. The losing party shall pay the
reasonable fees and expenses incurred by the prevailing party for the
enforcement of the rights granted under this Agreement.
9.5 Entire Agreement; Waivers and Amendments. This Agreement (including the
exhibits and schedules hereto and the documents and instruments referred to
herein) contains the entire agreement and understanding of the parties with
respect to the subject matter hereof and supersedes all prior written or oral
agreements and understandings with respect thereto. This Agreement may only be
amended or modified, and the terms hereof may only be waived, by a writing
signed by both parties hereto or, in the case of a waiver, by the party entitled
to the benefit of the terms being waived.
9.6 Assignment; Binding Effect. This Agreement may not be assigned or delegated,
in whole or in part, by either party hereto without the prior written consent of
the other party hereto, except by operation of law in connection with a merger,
consolidation or other reorganization or sale of all or substantially all of the
assets of Mediacom; provided, that Mediacom may assign, in its sole discretion,
all of its rights, interests and obligations under this Agreement to any buyer
who assumes all of Mediacom's obligations under this Agreement and the Ancillary
Agreements. Mediacom may assign any or all of its rights and obligations
hereunder to its direct or indirect wholly-owned Subsidiaries if such
Subsidiaries agrees in writing in form satisfactory to the Company to be bound
by this agreement and make the representations and warranties hereunder to the
same extent as Mediacom. In the event Mediacom assigns such rights to any such
Subsidiary, such Subsidiary shall be deemed to be "Mediacom" for all purposes of
this Agreement, and the Company shall re-issue the applicable Common Shares in
the name of any such Subsidiary at the direction in writing by Mediacom. The
assignment by Mediacom of any rights, interest or obligations under the
Registration Rights Agreement to a transferee of the Unrestricted Shares
acquired hereunder shall not affect or diminish the rights or obligations of
Mediacom under this Agreement. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
9.7 Severability. In the event that any provision of this Agreement shall be
declared invalid or unenforceable by a court of competent jurisdiction in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to
the extent declared invalid or unenforceable without affecting the validity or
enforceability of the other provisions of this Agreement, and the remainder of
this Agreement shall remain binding on the parties hereto.
9.8 Governing Law; Jurisdiction and Venue. This Agreement shall be governed by,
construed and enforced in accordance with the internal laws of the State of
Delaware, excluding the conflict of laws provisions thereof that would otherwise
require the application of the law of any other jurisdiction. The parties hereto
acknowledge and agree that the state and federal courts sitting in the State of
Delaware shall have jurisdiction in any matter arising out of this Agreement,
and the parties hereby consent to such jurisdiction and agree that the venue of
any such matter shall also be proper in such state and federal courts sitting in
the State of Delaware.
9.9 Captions. The Section and subsection headings in this Agreement are inserted
for convenience of reference only, and shall not affect the interpretation of
this Agreement.
9.10 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original and both of which together shall be considered one
and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf as of the date first written above.
SOFTNET SYSTEMS, INC.
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By: Xxxxxxxx X. Brilliant
Title: Chief Executive Officer
MEDIACOM LLC
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By:
Title:
