REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made
as of November 4, 1999, by and among SoftNet Systems, Inc., a Delaware
corporation (the "Company"), with headquarters located at 000 Xxxxxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxxxxxx, XX 00000 and Mediacom LLC, a New York limited
liability company (the "Initial Purchaser"), with headquarters located at 000
Xxxxxxx Xxx Xxxx, Xxxxxxxxxx, Xxx Xxxx 00000.
WHEREAS, in connection with the Stock Purchase Agreement dated of even
date herewith by and between 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 to the Initial Purchaser 3,500,000 shares
of common stock of the Company, par value $0.01 per share (the "Common Stock"),
and to issue additional shares of Common Stock under certain circumstances set
forth in the Stock Purchase Agreement (collectively, the "Shares").
WHEREAS, the Shares are being issued in order to induce the Initial
Purchaser to enter into an affiliate agreement pursuant to which, subject to the
terms and provisions contained therein, the Initial Purchaser agrees to use the
Company's subsidiary, ISP Channel, Inc., as the exclusive provider of Internet
access and other Internet services to customers passed by the Initial
Purchaser's cable infrastructure; and
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.
WHEREAS, the Shares are subject to a Stockholder Agreement by and
between the Company and the Initial Purchaser, of even date herewith (the
"Stockholder Agreement"), that governs certain rights and obligations with
respect to the parties.
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.
(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 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 Unrestricted Shares (as defined in the
Stockholder 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 Unrestricted Shares or any other Registrable Securities. The
Unrestricted Shares shall cease to be Registrable Securities to the extent that
they (in the reasonable opinion of counsel to the Purchaser) have been sold to
the public without registration and without restriction, whether pursuant to
Rule 144 or otherwise.
(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.
ARTICLE II
REGISTRATION
2.1 Demand Registration. At any time after December 31, 1999 and subject to
Section 2.5 of the Stockholder Agreement, if the Purchaser holds at least
500,000 shares of Registrable Securities, 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 or any portion of the then issued
Registrable Securities (a "Demand Registration"). The Registration Statement
shall have a minimum aggregate offering price (as set forth on the facing page
of the Registration Statement) to the public of $10,000,000. The Purchaser may
demand that any Registration Statement be a shelf-registration in accordance
with Rule 415 under the Securities Act or any successor rule providing for
offering securities on a continuous basis ("Rule 415"). The Company shall send
to all other Purchasers, if any, written notice of such request 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 Purchaser 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 one
Registration Statement under this Section 2.1 in any twelve (12) month period;
provided, however, that if the Purchaser requests the filing of more than one
Registration Statement in a twelve month period then the Purchaser shall pay for
all expenses of such Registration.
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 the investment banker or
bankers and manager or managers to administer the offering, which investment
banker or bankers or manager or managers shall be reasonably satisfactory to the
Company. If the underwriter of an underwritten offering advises the Company that
in its opinion the number of Registrable Securities requested to be included in
such offering exceeds the number of Registrable Securities which can be sold in
an orderly manner in such offering within a price range acceptable to the
Purchaser initially requesting such registration, then the Company shall include
in such registration prior to the inclusion of any securities which are not
Registrable Securities the number of Registrable Securities requested to be
included which, in the opinion of such underwriters, can be sold in an orderly
manner within the price range of such offering without adversely affecting the
marketability of the offering, pro rata among the holders of such Registrable
Securities. The Company shall agree to such reasonable lock-up provisions as may
be requested by such underwriter.
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
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 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 seventy-five (75) days upon the good faith
determination by the Company's Board of Directors that such Registration
Statement would have a material adverse effect on any proposed 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, provided, however, that no more than
two (2) such Permitted Delays 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; and provided further, that in the event of a
Permitted Delay, the holders of Registrable Securities initially requesting
registration shall be entitled to withdraw such request and, if such request is
withdrawn, such Demand Registration shall not count as one of the permitted
Demand Registrations hereunder and the Company shall pay all expenses in
connection with such registration in accordance with Article V.
2.4 "Piggyback" Registration. If, after the date hereof, the Company shall
decide to file with the SEC a Registration Statement relating to an offering for
its own account or the account of others (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), 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 Securities Act of any of its equity securities
(any such Registration Statement, 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 securities not subject to a similar cut-back provision.
(b) If an offering in connection with which a Purchaser is
entitled to registration under this Section 2.4 is an underwritten offering,
then each Purchaser 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 500,000 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, if shelf-registration under Rule 415 is requested by Purchaser,
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
all of the Registrable Securities covered by such Registration Statement have
been sold (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
with the Registration Statement as may be necessary to keep the Registration
Statement effective and, subject to Section 3.7, 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. Upon written request, the Company shall furnish to the
Purchaser 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.
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 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 with 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 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 Material Non-Public Information. If at any time during the Registration
Period, counsel to the Company should determine in good faith that the
compliance by the Company with its disclosure obligations in connection with the
Registration Statement may require the disclosure of information which the Board
of Directors of the Company has identified as material and which the Board of
Directors has determined that the Company has a bona fide business purpose for
preserving as confidential, the Company shall promptly, (i) notify the
Purchasers in writing of the existence of material non-public information (but
in no event, without the prior written consent of a Purchaser, shall the Company
disclose to such Purchasers any of the facts or circumstances regarding such
information) and (ii) advise the Purchasers in writing to cease all sales under
the Registration Statement until such information is disclosed to the public or
ceases to be material.
3.8 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.
3.9 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 is 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).
3.10 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
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.
3.11 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.
3.12 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.
3.13 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.
3.14 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
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.
3.15 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).
3.16 Other Registration Rights. The Company has not and shall not hereafter
enter into any other registration agreement with respect to its securities which
is inconsistent with or violates or adversely affects the rights granted to the
holders of Registrable Securities in this Agreement.
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 required 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 Sections 3.6 and 3.7, 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 Sections 3.6 or
3.7 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 time of receipt of such notice.
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
Subject to Section 2.1, all reasonable expenses, other than
underwriting discounts and commissions, incurred by Purchaser 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 (such fees and
expenses not to exceed $5,000), and all registration, listing and qualification
fees, printers and accounting fees, and the fees and disbursements of counsel
for the Company and other expenses of 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
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
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.
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 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.
(d) Take such further action as the Purchaser may reasonably request to enable
the Purchaser to sell Registrable Securities without registration under Rule
144, including any opinion of counsel to the Company required by the Company's
transfer agent.
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 1,000,000 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
(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, Secretary
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; 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.
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,
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.
* * *
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: ---------------------------
Xxxxxxxx X. Brilliant
Chief Executive Officer
MEDIACOM LLC
By: -------------------------------
Name: -------------------------------
Title -------------------------------
Address: 000 Xxxxxxx Xxx Xxxx
Xxxxxxxxxx, XX 00000
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.
Facsimile: (000) 000-0000
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 Delaware 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 November 4, 1999, by and among the Company
and the signatories thereto (the "Agreement"). Pursuant to a Registration Rights
Agreement, dated as of November 4, 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]
