Exhibit 10.10
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STOCK PURCHASE AGREEMENT
BY AND BETWEEN
SOFTNET SYSTEMS, INC.,
AND
MEDIACOM LLC
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dated
November 4, 1999
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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"),
a copy of which is attached hereto as Exhibit A; and
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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 B (the "Registration Rights Agreement").
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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.
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1.1 "Additional Shares" means shares of Common Stock issued pursuant
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to Section 2.2.
1.2 "Alternate Cash Consideration" means the difference between
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_______________* 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.
* Denotes the information has been filed separately with the Securities and
Exchange Commission for Confidential Treatment.
1.3 "Ancillary Agreements" means the Affiliate Agreement, the Stockholder
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Agreement and the Registration Rights Agreement.
1.4 "Committed Home Passed" has the same meaning as set forth in the
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Affiliate Agreement .
1.5 "Common Shares" means the Initial Shares and the Additional Shares.
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1.6 "Common Stock" means the common stock, par value $0.01 per share, of
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the Company.
1.7 "Default Shares" means _____________* shares of Common Stock.
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1.8 "First Closing" has the meaning set forth in Section 7.1
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1.9 "First Closing Date" has the meaning set forth in Section 7.1.
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1.10 "First Shares" means that number of shares of Common Stock derived by
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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)
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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
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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,
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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
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the Affiliate Agreement.
* Denotes the information has been filed separately with the Securities and
Exchange Commision for Confidential Treatment.
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1.15 "Material Adverse Effect" means a material adverse effect on the
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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
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Agreement.
1.17 "Second Closing" has the meaning set forth in Section 7.2.
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1.18 "Second Closing Date" has the meaning set forth in Section 7.2.
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1.19 "Second Shares" means that number of shares of Common Stock which
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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
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by and between the Company and Mediacom dated the same date as this Agreement, a
copy of which is attached hereto as Exhibit C.
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1.21 "Stockholder Approval" has the meaning set forth in Section 6.5.
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1.22 "Subsidiary" means any corporation, limited liability company or
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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.
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1.24 "Third Closing Date" has the meaning set forth in Section 7.3.
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1.25 "Third Shares" means that number of shares of Common Stock equal
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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
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Stockholder Agreement.
1.27 "Year 2000 Issue" means the failure of computer software,
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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.
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2. Issuance of Common Shares. Subject to the terms and conditions set forth
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in this Agreement, the Company agrees to issue to Mediacom the Common Shares as
follows:
2.1 Initial Shares.
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(a) First Shares. The Company shall issue to Mediacom the First
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Shares on the First Closing Date.
(b) Second Shares. The Company shall issue to Mediacom the Second
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Shares on the Second Closing Date.
(c) Third Shares. In the event Stockholder Approval is required
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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) ____________* 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)
____________* 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) ___________* shares; provided, that the
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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
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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
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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
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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
* Denotes the information has been filed separately with the Securities and
Exchange Commission for Confidential Treatment.
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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
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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
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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
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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
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representations and warranties as if made hereunder:
4.1 Organization and Qualification. The Company is a corporation duly
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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
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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
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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
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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
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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
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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
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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.
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(a) The authorized capital of the Company consists of:
(i) Preferred Stock. 4,000,000 shares of Preferred Stock, par
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value $.10 per share (the "Preferred Stock"), of which no shares were
issued and outstanding as of October 31, 1999.
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(ii) Common Stock. 100,000,000 shares of Common Stock, of
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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,
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employed any investment banker, broker, finder, consultant or intermediary in
connection with
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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
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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
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and warrants to the Company that:
5.1 Authorization. Mediacom has full power and authority to enter into
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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
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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
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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
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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
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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
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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
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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
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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;
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Covenants and Alternate Consideration
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6.1 Conditions to the Company's Obligations. The obligations of the
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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
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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
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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.
12
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
13
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
14
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
15
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
16
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 (1) 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
17
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.
18
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.
19
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.
/s/ Xxxxxxxx X. Brilliant
-------------------------
By: Xxxxxxxx X. Brilliant
Title: Chief Executive Officer
MEDIACOM LLC
/s/Xxxxx X. Xxxxxxxx
-------------------------
By: Xxxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
20
Exhibit A
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
--------
2
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
3
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.
4
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.
5
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.
6
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
7
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
8
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
--------
9
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
10
(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
11
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
12
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
13
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.
14
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
17
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]
