Exhibit 10.1
STOCK PURCHASE AGREEMENT
AGREEMENT dated as of October 12, 1999 between SoftNet Systems, Inc., a
Delaware corporation (the "Corporation"), and Pacific Century Cyberworks
Limited, a company incorporated in Hong Kong with limited liability ("Buyer").
WHEREAS, the Corporation and the Buyer are entering into a joint
venture on the terms described in Exhibit A (the "Joint Venture"); and
WHEREAS, in connection with the Joint Venture, the Corporation desires
to sell the Shares (as defined herein) to Buyer, and Buyer desires to purchase
the Shares from the Corporation, upon the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and undertakings contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms, as used herein,
have the following meanings:
"Affiliate" means, with respect to any specified person, any other
person which, directly or indirectly, controls, is controlled by or is under
direct or indirect common control with, such specified person. For the purposes
of this definition, "control" when used with respect to any person means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms "affiliated," "controlling," and "controlled" have
meanings correlative to the foregoing.
"Board of Directors" means the Board of Directors of the Corporation.
"Closing Date" means the date of the Closing.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the shares of common stock, par value $0.01 per
share, of the Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind.
"Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise), business, assets or results of operations of
the Corporation and its Subsidiaries, taken as whole.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Shares" means 5,000,000 shares of Common Stock issued to the Buyer on
the Closing Date.
"Subsidiary" means any corporation or other entity (and any predecessor
thereof) of which the securities or other ownership interests having ordinary
voting power to elect a majority of the Board of Directors or other persons
performing similar functions are directly or indirectly owned by the
Corporation.
ARTICLE 2
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, the Corporation agrees to sell to Buyer, and Buyer
agrees to purchase from the Corporation, the Shares at the Closing. The purchase
price (the "Purchase Price") for the Shares is $25.75 per share in cash (which
is the closing price of the Common Stock on the NASDAQ System on the day prior
to the execution of this Agreement, this Agreement being executed prior to the
opening of trading on the NASDAQ System on the date hereof). The Purchase
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Price shall be paid as provided in Section 2.02. The Buyer may designate (upon
three business days prior notice to the Corporation) any Person that is
wholly-owned, directly or indirectly, by the Buyer or its parent, Pacific
Century Group, as the Person in whose name the Shares will be initially issued
and registered.
SECTION 2.02. Closing. The closing (the "Closing") of the purchase and
sale of the Shares hereunder shall take place at the offices of Xxxxxx &
Xxxxxxx, 000 Xxxxxxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, as soon as
possible, and in no event later than five business days after satisfaction of
the conditions set forth in Article 8.01, or at such other time or place as
Buyer and the Corporation may agree. At the Closing:
(a) Buyer shall deliver to the Corporation the Purchase Price in
immediately available funds by wire transfer to an account of the Corporation
with a bank designated by the Corporation, by notice to Buyer, not later than
two business days prior to the Closing Date.
(b) the Corporation shall deliver to Buyer certificates for the
Shares.
SECTION 2.03. Certificates for Shares. (a) Each certificate for Shares
shall bear the following legend for so long as such securities constitute
restricted securities (as such term is defined in the regulations under the
Securities Act):
"The securities represented hereby have not been registered
under the Securities Act of 1933, as amended, and may not be
offered, sold, transferred or otherwise disposed of except in
compliance with such laws."
(b) The Corporation agrees that, at the request of Buyer or any
Permitted Transferee, it will remove the legend contemplated by this Section
from the certificates representing any Shares in the event that outside counsel
for Buyer or such Permitted Transferee determines that the transfer of such
Shares is no longer restricted by the Securities Act and outside counsel for the
Corporation reasonably concurs in such determination.
(c) The Shares shall also bear a legend stating that their transfer or
sale is restricted by the terms of this Agreement (which shall be removed when
such restrictions no longer apply).
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation represents and warrants to Buyer as of the date hereof
that:
SECTION 3.01. Corporate Existence and Power. The Corporation is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers required to carry on
its business as now conducted.
SECTION 3.02. Corporate Authorization. The execution, delivery and
performance of this Agreement by the Corporation is within the Corporation's
corporate powers and has been duly authorized by all necessary corporate action
on the part of the Corporation. This Agreement constitutes a legal and binding
agreement of the Corporation, enforceable against the Corporation in accordance
with its terms, except (a) as such enforcement is limited by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally and (b) for limitations imposed by general principles of equity.
SECTION 3.03. Authorization. Except as set forth in Schedule 3.03
hereto, the execution, delivery and performance of this Agreement by the
Corporation requires no action by or in respect of, or filing with, any
governmental or non-governmental body, agency, official or authority other than
(i) compliance with any applicable requirements of the Exchange Act; (ii) with
respect to the Corporation's obligations under Section 7.04, compliance with any
applicable requirements of the Securities Act; (iii) compliance with the
pre-notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act
of 1976 and (iv) other filings or notifications that are immaterial to the
consummation of the transactions contemplated hereby.
SECTION 3.04. Noncontravention. The execution, delivery and performance
of this Agreement by the Corporation do not and will not (i) violate the
certificate of incorporation or bylaws of the Corporation, (ii) assuming
compliance with the matters referred to in Section 3.03, violate any applicable
law, rule, regulation, judgment, injunction, order or decree binding upon the
Corporation, other than violations that would not have a Material Adverse
Effect, or (iii) except as to matters which would not have a Material Adverse
Effect, constitute a default under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of the Corporation or to
a loss of any benefit to which the Corporation is entitled under any provision
of any agreement or other instrument binding upon the Corporation or (iv) result
in the creation or
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imposition of any Lien on any asset of the Corporation except where such Lien
would not have a Material Adverse Effect.
SECTION 3.05. Capitalization. (a) As of the date hereof, the authorized
capital stock of the Corporation consists of: 100,000,000 shares of common
stock, par value $0.01 per share ("Common Stock"); and 4,000,000 shares of
preferred stock, par value $0.10 per share. As of September 30, 1999, there were
17,217,476 shares of Common Stock issued and outstanding and no shares of
preferred stock outstanding. In addition, the Corporation is contractually
obligated to issue 3,500,000 shares of common stock to Mediacom and 1,217,062
shares of Common Stock upon the conversion of outstanding debt, and has
approximately 3,750,000 shares of Common Stock issuable under stock options and
warrants.
(b) All outstanding shares of Common Stock are duly authorized,
validly issued and fully paid and nonassessable. There are no preemptive or
other similar rights available to the existing holders of the capital stock of
the Corporation. As of the date hereof and other than (i) as set forth in the
financial statements contained in the forms, reports and documents filed with
the Commission (the "SEC Reports") (ii) as described in the last sentence of
Section 3.05(a) above, and (iii) in connection with the transactions
contemplated by this Agreement, there are no outstanding options, warrants,
rights, puts, calls, commitments, or other contracts, arrangements, or
understandings issued by or binding upon the Corporation requiring, and there
are no outstanding debt or equity securities of the Corporation which upon the
conversion, exchange or exercise thereof would require, the issuance, sale or
transfer by the Corporation of any new or additional equity interests in the
Corporation (or any other securities of the Corporation or any of its
Subsidiaries which, whether after notice, lapse of time or payment of monies,
are or would be convertible into or exercisable or exchangeable for equity
interests in the Corporation). Except as set forth in the SEC Reports, there are
no voting trusts or other agreements or understandings to which the Corporation
or any of its Subsidiaries is a party with respect to the voting of capital
stock of the Corporation.
SECTION 3.06. Authorization of Shares. The issuance, sale and delivery
of the Shares has been duly authorized by all requisite corporate action of the
Corporation and the Shares when issued and delivered in accordance with the
terms of this Agreement will be validly issued and outstanding, fully paid and
nonassessable free and clear of any Liens and not subject to preemptive or other
similar rights of the stockholders of the Corporation.
SECTION 3.07. Finders' Fees. Except for Credit Suisse First Boston and
Bear Xxxxxxx & Co., Inc., whose fees will be paid by the Corporation, there is
no
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investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of the Corporation who is entitled to any
fee or commission in connection with the transactions contemplated by this
Agreement.
SECTION 3.08. SEC Reports. The Corporation has since January 1, 1998
filed all required SEC Reports when due in accordance with the Exchange Act. As
of their respective dates, the SEC Reports complied in all material respects
with all applicable requirements of the Exchange Act or the Securities Act, as
the case may be. As of their respective dates, none of the SEC Reports contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
SECTION 3.09. Financial Statements. The consolidated financial
statements of the Corporation contained in the SEC Reports complied as to form
in all material respects with the published rules and regulations of the
Commission with respect thereto, were prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present, in conformity with GAAP (except as may be
indicated in the notes thereto), the consolidated financial position of the
Corporation and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements).
SECTION 3.10. Absence of Certain Changes. Since June 30, 1999, there
has not been any event, occurrence or development of a state of circumstances or
facts that has had or could reasonably be expected to have a Material Adverse
Effect or an adverse effect on the ability of the Corporation to perform its
obligations under this Agreement.
SECTION 3.11. Litigation. Except as disclosed in the SEC Reports, there
is no action, suit, investigation or proceeding pending against, or to the
knowledge of the Corporation threatened against or affecting, the Corporation or
any Subsidiary before any court or arbitrator or any governmental body, agency
or official which (i) in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the transactions contemplated by this Agreement or
(ii) if resolved adversely to the Corporation or a Subsidiary would reasonably
be likely to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.12. Offering of Shares. Neither the Corporation nor any
Person acting on its behalf has taken or will take any action (including,
without
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limitation, any offering of any securities of the Corporation under
circumstances which would require, under the Securities Act, the integration of
such offering with the offering and sale of the Shares) which might subject the
offering, issuance or sale of the Shares to the registration requirements of
Section 5 of the Securities Act.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Corporation as of the date hereof
that:
SECTION 4.01. Existence and Power. Buyer is a corporation duly formed,
validly existing and in good standing under the laws of its jurisdiction of
formation.
SECTION 4.02. Authorization. The execution, delivery and performance of
this Agreement by Buyer are within the Buyer's corporate powers and have been
duly authorized by all necessary corporate action on the part of Buyer. This
Agreement constitutes a legal, valid and binding agreement of Buyer, enforceable
against Buyer in accordance with its terms, except (a) as such enforcement is
limited by bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally and (b) for limitations imposed by
general principles of equity.
SECTION 4.03. Authorization. The execution, delivery and performance of
this Agreement by Buyer requires no action by or in respect of, or filing with,
any governmental or non-governmental body, agency or official or any other
Person other than (i) compliance with the pre-notification requirements of the
Xxxx-Xxxxx- Xxxxxx Antitrust Improvement Act of 1976, and (ii) other filings or
notifications that are immaterial to the consummation of the transactions
contemplated hereby.
SECTION 4.04. Noncontravention. The execution, delivery and performance
of this Agreement by Buyer does not and will not (i) violate the charter
documents of Buyer, or, (ii) assuming compliance with the matters referred to in
Section 4.03, violate any applicable law, rule, regulation, judgment,
injunction, order or decree, except for any such violations which would not have
a material adverse effect on the ability of Buyer to consummate the transactions
contemplated hereby.
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SECTION 4.05. Purchase for Investment. Buyer is purchasing the Shares
for investment for its own account and not with a view to, or for sale in
connection with, any distribution thereof. Buyer (either alone or together with
its advisors) has sufficient knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of its investment
in the Shares and is capable of bearing the economic risks of such investment.
Buyer is an "accredited investor," as such term is defined in Rule 501 under the
Securities Act. Buyer has been afforded access to all information deemed by it
to by necessary, and has been given an opportunity to ask all necessary
questions of the Corporation's management, in connection with its decision to
acquire the Shares.
SECTION 4.06. Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer threatened against or
affecting, Buyer before any court or arbitrator or any governmental body, agency
or official which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement.
SECTION 4.07. Finders' Fees. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of Buyer who might be entitled to any fee or commission from the
Corporation or any of its Affiliates upon consummation of the transactions
contemplated by this Agreement.
ARTICLE 5
COVENANTS OF THE CORPORATION
The Corporation agrees that:
SECTION 5.01. Access to Information. From the date hereof until the
Closing Date, the Corporation will (i) furnish to Buyer and its authorized
representatives such financial and operating data and other information relating
to the Corporation and its Subsidiaries as such Persons may reasonably request
and (ii) instruct its counsel, independent accountants and financial advisors to
cooperate with Buyer and its authorized representatives in its investigation of
the Corporation. Any investigation pursuant to this Section shall be conducted
in such manner as not to interfere unreasonably with the conduct of the business
of the Corporation.
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SECTION 5.02. Restrictions Pending the Closing. After the date hereof
and prior to the Closing Date, except as expressly provided for in this
Agreement or as consented to in writing by Buyer, the Corporation will not:
(i) amend its Certificate of Incorporation or By-laws or similar
organizational documents;
(ii) split, combine or reclassify any shares of the Corporation's
capital stock;
(iii) declare or pay any dividend or distribution (whether in cash,
stock or property) in respect of its capital stock;
(iv) knowingly take any action, or knowingly omit to take any action,
that would, or that would reasonably be expected to, result in (A) any
of the representations and warranties of the Corporation set forth in
Article 3 becoming untrue or (B) any of the conditions to the
obligations of Buyer set forth in Section 8.02 not being satisfied; or
(v) enter into any agreement or commitment to do any of the foregoing.
SECTION 5.03. Buyer Director. Buyer shall be entitled to designate for
election to the Board of Directors two persons (the "Buyer Directors") for so
long as Buyer owns the Shares issued pursuant to this Agreement. In the event
the Buyer sells or otherwise disposes of such Shares, then it shall be entitled
to a number of Directors that is pro rata to its ownership of the outstanding
shares of Common Stock (rounded down to the nearest whole number of Directors).
In the event Buyer elects to have the Board of Directors appoint a Buyer
Director, it shall so notify the Corporation in writing and the Corporation
shall (a) increase the size of the Board of Directors by one and fill the
vacancy created thereby by electing the Buyer Director and (b) in connection
with the meeting of shareholders of the Corporation next following such
election, nominate such Buyer Director for election as director by the
shareholders and use its best efforts to cause the Buyer Director to be so
elected. If a vacancy shall exist in the office of a Buyer Director, Buyer shall
be entitled to designate a successor and the Board of Directors shall elect such
successor and, in connection with the meeting of shareholders of the Corporation
next following such election, nominate such successor for election as director
by the shareholders and recommend to shareholders that the successor be elected.
The Buyer Director shall be subject to the prior approval of the Board of
Directors, such approval not to be unreasonably withheld.
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SECTION 5.04. Other Transfers of Restricted Securities. The Corporation
shall take all actions reasonably necessary to enable holders of the Restricted
Securities to sell such securities without registration under the Securities Act
pursuant to Rule 144 under the Securities Act or any successor rule or
regulation, subject in each case to the provisions of this Agreement and,
specifically, the filing on a timely basis of all reports required to be filed
under the Exchange Act.
SECTION 5.05. Preemptive Rights. In connection with any issuance by the
Corporation of shares of Common Stock, the Corporation shall offer the Buyer an
opportunity to acquire (on the terms and subject to the conditions generally
applicable to such issuance) a sufficient number of shares to maintain the
Buyer's then-existing percentage of ownership of the Corporation's issued and
outstanding shares of Common Stock; provided that the Buyer shall have no such
right in connection with the issuance of shares of Common Stock to service
providers, in connection with an acquisition of a business entity or property or
to a strategic buyer in connection with a transaction approved by the Board of
Directors, and provided further that in connection with any public offering for
cash, the Buyer shall be entitled to acquire shares at a price equal to the
public offering price less the underwriter's commission or discount.
ARTICLE 6
COVENANTS OF BUYER
Buyer agrees that:
SECTION 6.01. Confidentiality. Buyer will comply with the terms and
restrictions set forth in a letter agreement executed in October 1999 relating
to information provided by the Corporation.
SECTION 6.02. Sale or Transfer of Shares. Except pursuant to a Change
of Control (as defined below), Buyer will not sell, pledge, encumber or
otherwise transfer, or agree to sell, pledge, encumber or otherwise transfer,
directly or indirectly, any shares of Common Stock for a period of six months
from and after the Closing Date; provided, that prior to the expiration of such
period with the prior written consent of the Corporation, and thereafter in its
sole discretion, Buyer may sell, pledge, encumber or otherwise transfer Common
Stock (a) (i) in any transaction (other than a transaction described in (iii)
below) in compliance with Rule 144 under the Securities Act or any successor
rule or regulation, (ii) in a public offering, registered under the Securities
Act or (iii) in a private transaction exempt from the registration requirements
of the Securities Act (but only if the Buyer reasonably believes after due
inquiry that the acquiror, following such
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transaction, will not be the beneficial owner of more than 5% of the outstanding
shares of Common Stock), and (b) to Permitted Transferees. A "Permitted
Transferee" means a Person that (A) has agreed in writing to be bound by the
terms (including Exhibit B) of this Agreement and (B) is a Person that is an
Affiliate of Buyer.
SECTION 6.03. Purchase of Additional Shares of Common Stock. Buyer
agrees not to purchase any additional shares of Common Stock without the prior
written consent of the Corporation (which shall not be unreasonably withheld
until the Buyer is the beneficial owner of up to 30% of the outstanding shares
of Common Stock and which may be withheld in the sole discretion of the
Corporation if the Buyer owns 30% or more of the outstanding shares of Common
Stock). Buyer agrees not to make a formal proposal to acquire control of the
Corporation unless it is invited to do so by the Board of Directors.
SECTION 6.04. Change of Control. In connection with any transaction
involving the merger of the Corporation with or into any other Person or any
acquisition of 50% or more of the outstanding Common Stock by any other Person
or any other transaction that effects a change in control of the Corporation, in
each case at a per share price higher than $25.75 (a "Change of Control"), the
Buyer will cause its shares of Common Stock to be voted in the same proportion
as shareholders (other than the Buyer or any Affiliate of the Corporation) who
individually hold less than 5% of the outstanding Common Stock, provided that
the Person involved in such Change of Control is not a material competitor of
the Buyer in Asia (and if the Person is a material competitor of the Buyer in
Asia, then the Buyer shall be free to vote its shares as it wishes).
SECTION 6.05. Buyer Voting. Until the fifth anniversary of the Closing
Date, Buyer agrees that it will not solicit, encourage or recommend to other
shareholders of the Corporation that they vote their shares of Common Stock in
favor of any nominee or nominees for Director other than those duly proposed and
nominated in accordance with Section 5.03 hereof.
ARTICLE 7
COVENANTS OF BUYER AND THE CORPORATION
SECTION 7.01. Reasonable Best Efforts; Further Assurances. Subject to
the terms and conditions of this Agreement, Buyer and the Corporation will use
their reasonable best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary or desirable under applicable laws
and regulations to consummate the transactions contemplated by this Agreement.
The
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Corporation and Buyer agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be necessary or desirable in order to consummate or implement expeditiously
the transactions contemplated by this Agreement.
SECTION 7.02. Certain Filings. The Corporation and Buyer shall
cooperate with one another (i) in determining whether any action by or in
respect of, or filing with, any governmental body, agency, official or authority
is required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (ii) in
taking such actions or making any such filings, furnishing information required
in connection therewith and seeking timely to obtain any such actions, consents,
approvals or waivers.
SECTION 7.03. Public Announcements. Prior to the Closing, the parties
agree to consult with each other before issuing any press release or making any
public statement with respect to this Agreement or the transactions contemplated
hereby and, except as may be required by applicable law or any listing agreement
with any securities exchange or inter-dealer quotation system, will not issue
any such press release or make any such public statement prior to such
consultation. Following the Closing, the parties agree to consult with each
other before issuing any press release or making any public filing that
describes any terms of this Agreement.
SECTION 7.04. Registration Rights Agreement. The terms set forth in
Exhibit B hereto are hereby incorporated by reference.
ARTICLE 8
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of Buyer and the Corporation.
The obligations of Buyer and the Corporation to consummate the Closing are
subject to the satisfaction of the conditions that (i) the prescribed period
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976 shall have expired
and (ii) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Closing.
SECTION 8.02. Conditions to Obligation of Buyer. The obligation of
Buyer to consummate the Closing is subject to the satisfaction of the following
further conditions:
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(a) The Corporation shall have performed in all material respects all
of its obligations hereunder required to be performed by it on or prior to the
Closing.
(b) The representations and warranties of the Corporation contained in
this Agreement shall in each case, if specifically qualified by materiality, be
true and correct and, if not so qualified, be true and correct in all material
respects at and as of the Closing, as if made at and as of such date (except to
the extent such representations and warranties expressly relate to an earlier
date, in which case such representations and warranties shall be true and
correct on and as of such earlier date).
(c) The Corporation shall have delivered to Buyer (i) a copy of the
resolutions adopted by the Board of Directors, certified by the Secretary of the
Corporation, authorizing this Agreement (which shall contain the appropriate
acknowledgment pursuant to Section 203 of the Delaware General Corporation Law)
and (ii) a certificate dated the Closing Date, signed by the chief executive
officer of the Corporation, certifying to his knowledge after due inquiry as to
the fulfillment of the conditions set forth in Sections 8.02(a) and (b).
(d) The Corporation shall have delivered to Buyer an opinion
reasonably acceptable to Buyer from the General Counsel of the Corporation, with
respect to the due incorporation, due authorization, non-contravention (which
may be based on a review of the Corporation's filings under the Exchange Act and
an officer's certificate), capitalization of the Corporation (which may be based
on a certificate of the transfer agent and an officers' certificate) and the
validity of the Shares.
(e) There shall not have occurred any event, circumstance, condition,
fact, effect, or other matter which has had or could reasonably be expected to
have a Material Adverse Effect or which prevents the Corporation from performing
in a timely basis any material obligation under this Agreement or consummating
the transactions contemplated hereby.
SECTION 8.03. Conditions to Obligation of the Corporation. The
obligation of the Corporation to consummate the Closing is subject to the
satisfaction of the following further conditions:
(a) Buyer shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the Closing
Date.
(b) The representations and warranties of Buyer contained in this
Agreement shall be true in all material respects at and as of the Closing Date,
as if made at and as of such date.
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(c) The Corporation shall have received a certificate signed by an
appropriate officer of Buyer to the foregoing effect.
(d) Buyer shall have delivered to the Corporation an opinion
reasonably acceptable to Buyer from the Buyer's chief legal officer, with
respect to the valid, binding and enforceable nature of this Agreement.
ARTICLE 9
TERMINATION
SECTION 9.01. Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual written agreement of the Corporation and Buyer; or
(b) by either the Corporation or Buyer if consummation of the
transactions contemplated hereby would violate any nonappealable final order,
decree or judgment of any court or governmental body having competent
jurisdiction; or
(c) if the Closing shall not have occurred on or prior to February 15,
2000.
The party desiring to terminate this Agreement pursuant to clause 9.01(b) or (c)
shall promptly give notice of such termination to the other party.
SECTION 9.02. Effect of Termination. If this Agreement is terminated as
permitted by Section 9.01, such termination shall be without liability of either
party (or any stockholder, director, officer, partner, employee, agent,
consultant or representative of such party) to the other party to this
Agreement; provided that if such termination shall result from the (a) failure
of either party to fulfill a condition to the performance of the obligations of
the other party, (b) failure to perform a covenant of this Agreement or (c)
breach by either party hereto of any representation or warranty or agreement
contained herein, such party shall be fully liable for any and all losses
incurred or suffered by the other party as a result of such failure or breach.
The provisions of Sections 6.01, 11.01, 11.03, 11.05, 11.06, 11.07, 11.08,
11.09, and 11.11 shall survive any termination hereof pursuant to Section 9.01.
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ARTICLE 10
SURVIVAL; INDEMNIFICATION
SECTION 10.01. Survival of Representation and Warranties. All
representations and warranties contained in this Agreement and all claims with
respect thereto shall terminate upon the expiration of 18 months after the
Closing Date, except that the representations and warranties contained in
Sections 3.01, 3.02, 3.03, 3.06, 4.01, 4.02, and 4.03 shall survive
indefinitely. Notwithstanding the preceding sentence, any covenant, agreement,
representation or warranty in respect of which indemnity may be sought under
this Agreement shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if notice of the inaccuracy or breach
thereof giving rise to such right of indemnity shall have been given to the
party against whom such indemnity may be sought prior to such time.
SECTION 10.02. Indemnification. (a) The Corporation hereby indemnifies
Buyer against and agrees to hold Buyer harmless from any and all damage, loss,
liability and expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding) ("Damages") incurred or suffered by Buyer arising
out of any misrepresentation or breach of warranty, covenant or agreement made
or to be performed by the Corporation pursuant to this Agreement.
(b) Buyer hereby indemnifies the Corporation against and agrees to
hold the Corporation harmless from any and all Damages incurred or suffered by
the Corporation arising out of any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by Buyer pursuant to this
Agreement.
SECTION 10.03. Procedures. The party seeking indemnification under
Section 10.02 (the "Indemnified Party") agrees to give prompt notice to the
party against whom indemnity is sought (the "Indemnifying Party") of the
assertion of any claim, or the commencement of any suit, action or proceeding in
respect of which indemnity may be sought under such Section. The Indemnifying
Party may at the request of the Indemnified Party participate in and control the
defense of any such suit, action or proceeding at its own expense. The
Indemnifying Party shall not be liable under Section 10.02 for any settlement
effected without its consent of any claim, litigation or proceeding in respect
of which indemnity may be sought hereunder.
SECTION 10.04. Inspections; No Other Representations . Buyer is an
informed and sophisticated purchaser, and has undertaken such investigation and
has been provided with and has evaluated such documents and information as it
has deemed necessary to enable it to make an informed and intelligent decision
15
with respect to the execution, delivery and performance of this Agreement. Buyer
will undertake prior to the Closing such further investigation and request such
additional documents and information as it deems necessary. Buyer agrees to
accept the Shares based upon its own inspection, examination and determination
with respect thereto as to all matters, and without reliance upon any express or
implied representations or warranties of any nature made by or on behalf of or
imputed to the Corporation, except as expressly set forth in this Agreement.
Without limiting the generality of the foregoing, Buyer acknowledges that the
Corporation makes no representation or warranty with respect to (i) any
projections, estimates or budgets delivered to or made available to Buyer of
future revenues, future results of operations (or any component thereof), future
cash flows or future financial condition (or any component thereof) of the
Corporation and the Subsidiaries or the future business and operations of the
Corporation and the Subsidiaries or (ii) any other information or documents made
available to Buyer or its counsel, accountants or advisors with respect to the
Company or the Subsidiaries or their respective businesses or operations, except
as expressly set forth in this Agreement.
SECTION 10.05. Exclusivity. Except as specifically set forth in this
Agreement and except in the case of fraud, effective as of the Closing Buyer
waives any rights and claims Buyer may have against the Corporation, whether in
law or in equity, relating to the Corporation or the Shares or the transactions
contemplated hereby. The rights and claims waived by Buyer include, without
limitation, claims for breach of contract, breach of representation or warranty,
negligent misrepresentation and all other claims for breach of duty. After the
Closing, Section 10.02 will provide the exclusive remedy for any
misrepresentation, breach of warranty, covenant or other agreement or other
claim arising out of this Agreement or the transactions contemplated hereby,
except in the case of fraud.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing and shall be deemed duly given,
effective (i) three Business Days later, if sent by registered or certified
mail, return receipt requested, postage prepaid, (ii) when sent if sent by
telecopier or fax, provided that the telecopy or fax is promptly confirmed by
telephone confirmation thereof, (iii) when served, if delivered personally to
the intended recipient, and (iv) one Business Day later, if sent by overnight
delivery via a national courier service, and in each case, addressed,
16
if to Buyer, to:
Pacific Century Cyberworks, Inc.
00xx Xxxxx, Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxx
0 Xxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx
Xxxxxxxxx: Company Secretary
Fax: (000) 0000-0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
Fax: (000) 000-0000
if to the Corporation, to:
SoftNet Systems Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxxxx X. Brilliant
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
Any party may change the address to which notices or other communications
hereunder are to be delivered by giving the other party notice in the manner
herein set forth.
SECTION 11.02. Amendments and Waivers. Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed, in the case of an amendment, by each party to this Agreement, or
in the case of a waiver, by the party against whom the waiver is to be
effective. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of
17
any other right, power or privilege. The rights and remedies herein provided
shall be cumulative.
SECTION 11.03. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 11.04. Assignment. The rights and obligations of the parties
hereunder cannot be assigned or delegated except (i) that Buyer may assign any
or all of its rights and obligations under this Agreement in accordance with the
provisions of Section 2.01 and (ii) that Buyer may assign its rights and
obligations under Sections 2.03, 6.02, 7.04 and Exhibit B of this Agreement to
any one or more Permitted Transferees.
SECTION 11.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of California, without regard
to the conflicts of law rules of such state.
SECTION 11.06. Counterparts; Third Party Beneficiaries. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto. No
provision of this Agreement is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder, except for rights provided to
Permitted Transferees under Section 7.04.
SECTION 11.07. Entire Agreement. This Agreement (including the Exhibits
hereto) constitutes the entire agreement between the parties with respect to the
subject matter of this Agreement and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement.
SECTION 11.08. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 11.09. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision
18
and (b) the remainder of this Agreement and the application of such provision to
other persons, entities or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
SECTION 11.10. Specific Performance. The parties hereto agree that the
remedy at law for any breach of this Agreement will be inadequate and that any
party by whom this Agreement is enforceable shall be entitled to specific
performance in addition to any other appropriate relief or remedy. Such party
may, in its sole discretion, apply to a court of competition jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief.
SECTION 11.11. No Recourse. Notwithstanding any of the terms or
provisions of this Agreement, (i) the Corporation agrees that neither it nor any
person acting on its behalf may assert any claims or cause of action against any
officer, director, partner, member or stockholder of the Buyer or any of its
Affiliates in connection with or arising out of this Agreement or the
transactions contemplated hereby and (ii) the Buyer agrees that neither it nor
any person acting on its behalf may assert any claims or cause of action against
any officer, director, partner, member or stockholder of the Corporation or any
of its Affiliates in connection with or arising out of this Agreement or the
transactions contemplated hereby.
19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
SOFTNET SYSTEMS, INC.
By: _______________________________
Name: Xxxxxxxx X. Brilliant
Title: Chairman and CEO
PACIFIC CENTURY CYBERWORKS,
LTD.
By: _______________________________
Name: Xxxx Xxxxx
Title: Executive Director
EXHIBIT A
News Release
SoftNet Systems Contact:
Xxxx X. Xxxxx Xxxx Xxxxxxxxxx
Director, Public Relations Xxxxx & Company
SoftNet Systems, Inc. 000-000-0000
000-000-0000 xxxxxxxx@xxxxxxx.xxx
000-000-0000 --------------------
xxxxxx@xxxxxxx.xxx
------------------
Pacific Century Group Contact:
Xxxxxxx Xxxxx
PCG Public Relations
(000) 0000-0000
xx@xxx-xxxxx.xxx
----------------
SoftNet Systems, Inc. and Pacific Century Cyberworks announce $129
million investment and International Joint Venture
Pacific Century SoftNet joint venture formed to collaborate on
satellite delivered broadband Internet Services to 110 million Asian cable
households
SAN FRANCISCO, Calif., and Hong Kong, China, October 12, 1999 -- SoftNet
Systems, Inc (NASDAQ: SOFN) and Pacific Century Cyberworks ("PCCW"; Reuters:
1186; Bloomberg: 1186) announced today a strategic investment and a joint
venture to collaborate on broadband Internet, cable modem and satellite projects
using technologies, products and services of both companies. Under the agreement
announced today, PCCW, a Hong Kong based international broadband convergence
company majority owned by Pacific Century Group will invest $129 million to
purchase 5 million shares of SoftNet stock. The two companies have agreed to
form a Joint Venture, "Pacific Century SoftNet", that will market products and
services to cable operators throughout 63 countries serving 110 million Asian
cable households.
The Joint Venture will leverage SoftNet's experience in the U.S. to accelerate
the build out of PCCW's targeted cable operators. In addition, the joint venture
will explore the delivery of PCCW's converged Internet and Video service to
SoftNet's existing 2.4 million homes passed under contract, including the
pending 1.0 million homes passed under the recently announced Mediacom
agreement, and other MSO's throughout the U.S. The Joint Venture will also
market SoftNet's Intellicom VSAT capability to MSO's, ISP's and businesses in
the 63 countries of PCCW's service area.
Mr. Xxxxxxx Xx, Chairman of Pacific Century Group and Chairman of Pacific
Century Cyberworks Ltd., said, "SoftNet has demonstrated its capabilities in the
U.S. We believe SoftNet has significant expertise that will enable the rapid
upgrade and deployment of 2-way cable broadband systems throughout the Asian
service area. We see our investment in SoftNet as a vehicle to form a strong
relationship with a leading U.S. cable modem and satellite services company and
to secure a "beach head" for launch of our converged Internet and Video Service
in the U.S. market."
Xx. Xxxxxxxx X. Brilliant, SoftNet's chairman and chief executive officer, said,
"The investment by PCCW and our Joint Venture represents a vehicle to rapidly
enter a very large Asian market. Xxxxxxx Xx and his management team have a
proven track record including the creation of Star TV. Their reputation with
Asian cable operators will allow us to rapidly deploy PCCW's converged Internet
and Video service. The Joint Venture also increases our market to deliver
Intellicom high_speed satellite Internet service to ISPs, MDUs, hotels, and
businesses in 63 Asian countries. In addition, we look forward to teaming with
PCCW to expedite their launch and take PCCW's converged Internet and Video
service to the U.S."
Xx. Xxx Xxxxx, SoftNet's president, said, "This Joint Venture represents a
tremendous global opportunity as well as enables SoftNet to increase the breadth
and quality of service to its existing U.S. cable partners and their respective
cable customers."
About SoftNet Systems, Inc. and ISP Channel
SoftNet Systems, Inc. is one of the three largest broadband Internet providers
over cable in the U.S. Through its ISP Channel, the company provides a complete
turnkey Internet service to partnering cable affiliates, similar to @Home
(Nasdaq:ATHM).
ISP Channel's services to partnering cable affiliates include cable head_end
equipment and integration, Internet backbone connectivity, and technical support
and customer care twenty_four hours a day, seven days a week. ISP Channel offers
its customers high speed Internet access at speeds up to 500 KB per second when
downloading files, graphics, audio and video. Additional ISP Channel services
include e_mail, personal web pages, news groups, and full multi_media
capabilities. ISP. Channel also provides access to Microsoft(R) Internet
Explorer and Netscape(R) Navigator browsers.
Through SoftNet's Intellicom subsidiary, the company markets a satellite_based
VSAT commercial Internet link. SoftNet's unique cost_saving technology
infrastructure includes Intellicom VSAT satellite links to the company's network
operations center (NOC), which replace more expensive terrestrial
telecommunications data lines.
SoftNet's NOC is located in Silicon Valley, while its corporate headquarters is
located in San Francisco. For further information about SoftNet and its
services, please visit xxx.xxxxxxx.xxx, xxx.xxxxxxxxxx.xxx or call 415_365_2500.
About The Pacific Century Group
The Pacific Century Group (xxx.xxx_xxxxx.xxx) was established in October 1993
with proceeds from the sale of STAR TV, the first pan_Asian satellite television
network, operating in more than 50 countries, to News Corp. At the sale, which
was completed in 1995, the valuation of the enterprise was US$950.5 million. The
total original investment in STAR TV, which Mr. Xxxxxxx Xx founded in 1990, was
US$125 million. Pacific Century Cyberworks, the Group's technology flagship, has
Intel (12%) and CMGI (4.9%) as its strategic investors. One of its subsidiaries,
Pacific Convergence Corporation, is to be the preeminent provider of broadband
Internet services in Asia via its satellite network serving 110 million
connected cable households.
The Pacific Century Group is the sole partner with the Government of Hong
Kong in the approximately US$1.6 billion Cyber_Port project (xxx.xxxxx_xxxx.xxx)
announced by the Financial Secretary Xxxxxx Xxxxx in his 1999 Budget. The
Cyber_Port is a comprehensive facility designed to xxxxxx the development of
Hong Kong's information services sector through the formation of a strategic
cluster of both information technology and services companies at the one
location.
The Group's aim is to build on its expertise and knowledge of digital technology
and new media to become a preeminent leader in Internet content and services
such as e_Commerce. The Group believes there are tremendous synergies between
its existing activities in this field and future business opportunities. The
Group's parallel involvements in the Cyber_Port and PCCW's fast_growing
information technology and Internet sectors, and its acquisition of Pacific
Convergence Corporation, will help secure Hong Kong's position as a hub of
Asia_focused e_Commerce and Internet content development, and create new
opportunities for the best talent in the region.
Safe Harbor statement under the Private Securities Litigation Reform Act of
1995: Except for historical information, the matters discussed in this news
release that may be considered forward_looking statements may be subject to
certain risks and uncertainties that could cause the actual results to differ
materially from those projected, including uncertainties and other risks
detailed from time to time in the Company's Securities and Exchange Commission
filings.
EXHIBIT B
REGISTRATION RIGHTS
This constitutes Exhibit B to the Stock Purchase Agreement (as it may
be amended from time to time, the "Stock Purchase Agreement") dated as of
October 12, 1999 between SoftNet Systems, Inc., a Delaware corporation (the
"Corporation") and Pacific Century Cyberworks Limited, a Hong Kong corporation
("Buyer").
ARTICLE 1
DEFINITIONS
1.01 SECTION . Definitions. Terms defined in the Stock Purchase
Agreement are used herein as therein defined. In addition, the following terms,
as used herein, have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Demand Registration Statement" means the Demand Registration Statement
as defined in Section .
"Holder" means a person who owns Registrable Securities and
is either (a) the Buyer or (b) a direct or an indirect transferee of the Buyer
permitted under the Stock Purchase Agreement who has agreed in writing to be
bound by the terms of Sections 2.03(b), 6.02 and 7.04 of the Stock Purchase
Agreement and this Exhibit B.
"Piggyback Registration" means a Piggyback Registration as defined in
Section .
"Registrable Common Stock" means the shares of Common Stock issued to
the Buyer under the Stock Purchase Agreement and any additional shares of Common
Stock issued the respect thereof in connection with a stock split, stock
dividend or similar event with respect to the Common Stock, and any other shares
of Common Stock acquired by the Buyer as permitted by the Stock Purchase
Agreement.
"Registrable Securities" means the Registrable Common Stock. As to any
particular Registrable Securities, such Registrable Securities shall cease to be
Registrable Securities as soon as they (i) have been sold or otherwise disposed
of pursuant to a registration statement that was filed with the Commission and
declared effective under the Securities Act, (ii) are eligible for sale pursuant
to Rule 144 without being subject to applicable volume limitations thereunder,
(iii) have been otherwise sold, transferred or disposed of by a Holder to any
Person that is not a Holder, or (iv) have ceased to be outstanding.
"Rule 144" means Rule 144 (or any successor rule of similar effect)
promulgated under the Securities Act. "Selling Holder" means any Holder who is
selling Registrable Securities pursuant to a public offering registered
hereunder.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal and not as part of such dealer's market_making
activities.
Section 1.02. Internal References . Unless the context indicates
otherwise, references to Articles, Sections and paragraphs shall refer to the
corresponding articles, sections and paragraphs in this Exhibit B, and
references to the parties shall mean the parties to the Stock Purchase
Agreement.
ARTICLE 2
REGISTRATION RIGHTS
(a) Section 201. Demand Registration . The Buyer, on its own behalf and
on behalf of the other Holders, may make up to three written requests for
registration under the Securities Act of all or any part of the Registrable
Securities held by the Holders (each, a "Demand Registration"); provided that
(i) no Demand Registration may be requested within 180 days after the preceding
request for a Demand Registration, and (ii) each Demand Registration must be (x)
in respect of Registrable Securities with a fair market value of at least
$20,000,000 or (y) in respect of all remaining Registrable Securities and have a
fair market value of at least $5,000,000 and, provided further, at the request
of the Corporation, the Buyer and Holders shall accept in lieu of one of the
Demand Registrations, an agreement by the Corporation to permit sales of
Registrable Securities under a "shelf registration" under Rule 415 if such
registration remains continuously effective for a period of not less than 180
days. Such request will specify the aggregate number of shares of Registrable
Securities proposed to be sold and will also specify the intended method of
disposition thereof.
2
A registration will not count as a Demand Registration until it has become
effective; provided should a Demand Registration not become effective due to the
failure of a Holder to perform its obligations under this Exhibit B or the
inability of the requesting Holders to reach agreement with the underwriters for
the proposed sale (the "Underwriters") on price or other customary terms for
such transaction, or in the event the requesting Holders withdraw or do not
pursue the request for the Demand Registration (in each of the foregoing cases,
provided that at such time the Corporation is in compliance in all material
respects with its obligations under this Exhibit B), then such Demand
Registration shall be deemed to have been effected (provided that if the Demand
Registration does not become effective because of a Material Adverse Effect that
occurs subsequent to the date of the written request made by the requesting
Holders, then the Demand Registration shall not be deemed to have been
effected).
(b) In the event that Buyer withdraws or does not pursue a request for
a Demand Registration and, pursuant to Section hereof, such Demand Registration
is deemed to have been effected, the Holders may reacquire such Demand
Registration (such that the withdrawal or failure to pursue a request will not
count as a Demand Registration hereunder) if the Selling Holders reimburse the
Corporation for any and all Registration Expenses incurred by the Corporation in
connection with such request for a Demand Registration; provided that the right
to reacquire a Demand Registration may be exercised only once.
(c) If the Selling Holders so elect, the offering of such Registrable
Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. A majority in interest of the Selling Holders shall have
the right to select the managing Underwriters and any additional investment
bankers and managers to be used in connection with any offering under this
Section 2.01, subject to the Corporation's approval, which approval shall not be
unreasonably withheld.
(d) The Selling Holders will inform the Corporation of the time and
manner of any disposition of Registrable Common Stock, and agree to reasonably
cooperate with the Corporation in effecting the disposition of the Registrable
Common Stock in a manner that does not unreasonably disrupt the public trading
market for the Common Stock.
(e) The Corporation will have the right to preempt any Demand
Registration with a primary registration by delivering written notice (within
five business days after the Corporation has received a request for such Demand
Registration) of such intention to the Buyer indicating that the Corporation has
identified a specific business need and use for the proceeds of the sale of such
securities and the Corporation shall use commercially reasonable efforts to
effect a primary registration within 60 days of such notice. In the ensuing
3
primary registration, the Holders will have such piggyback registration rights
as are set forth in Section 2.02 hereof. Upon the Corporation's preemption of a
requested Demand Registration, such requested registration will not count as the
Holders' Demand Registration; provided that a Demand Registration will not be
deemed preempted if the Holders are permitted to sell all requested securities
in connection with the ensuing primary offering by exercising their piggyback
registration rights as set forth in Section . The Corporation may exercise the
right to preempt only twice in any 360-day period; provided, that during any 360
day period there shall be a period of at least 120 consecutive days during which
the Selling Holders may effect a Demand Registration.
SECTION 2.02 . Piggyback Registration. If the Corporation proposes to
file a registration statement under the Securities Act with respect to an
offering of Common Stock for its own account or for the account of another
Person (other than a registration statement on Form S_4 or S_8 or pursuant to
Rule 415 (or any substitute form or rule, respectively, that may be adopted by
the Commission)), the Corporation shall give written notice of such proposed
filing to the Holders at the address set forth in the share register of the
Corporation as soon as reasonably practicable (but in no event less than 10 days
before the anticipated filing date), undertaking to provide each Holder the
opportunity to register on the same terms and conditions such number of shares
of Registrable Common Stock as such Holder may request (a "Piggyback
Registration"). Each Holder will have five business days after receipt of any
such notice to notify the Corporation as to whether any it wishes to participate
in a Piggyback Registration; provided that should a Holder fail to provide
timely notice to the Corporation, such Holder will forfeit any rights to
participate in the Piggyback Registration with respect to such proposed
offering. In the event that the registration statement is filed on behalf of a
Person other than the Corporation, the Corporation will use commercially
reasonable efforts to have the shares of Registrable Common Stock that the
Holders wish to sell included in the registration statement. If the Corporation
shall determine in its sole discretion not to register or to delay the proposed
offering, the Corporation may, at its election, provide written notice of such
determination to the Holders and (i) in the case of a determination not to
effect the proposed offering, shall thereupon be relieved of the obligation to
register such Registrable Common Stock in connection therewith, and (ii) in the
case of a determination to delay a proposed offering, shall thereupon be
permitted to delay registering such Registrable Common Stock for the same period
as the delay in respect of the proposed offering. As between the Corporation and
the Selling Holders, the Corporation shall be entitled to select the
Underwriters in connection with any Piggyback Registration.
SECTION 2.03. Reduction of Offering. Notwithstanding anything contained
herein, if the managing Underwriter of an offering described in Section 2.01 or
2.02 states in writing that the size of the offering that Holders, the
4
Corporation and any other Persons intend to make is such that the inclusion of
the Registrable Securities would be likely to materially and adversely affect
the price, timing or distribution of the offering, then the amount of
Registrable Securities to be offered for the account of Holders shall be reduced
to the extent necessary to reduce the total amount of securities to be included
in such offering to the amount recommended by such managing Underwriter;
provided that in the case of a Piggyback Registration, if securities are being
offered for the account of Persons other than the Corporation, then the
proportion by which the amount of Registrable Securities intended to be offered
for the account of Holders is reduced shall not exceed the proportion by which
the amount of securities intended to be offered for the account of such other
Persons (other than any Person exercising a demand registration right) is
reduced; provided further that in the case of a Demand Registration, the amount
of Registrable Securities to be offered for the account of the Holders making
the Demand Registration shall be reduced only after the amount of securities to
be offered for the account of the Corporation and any other Persons has been
reduced to zero.
SECTION 204. Preservation of Rights. The Corporation will not grant any
registration rights to third parties which contravene the rights granted
hereunder.
ARTICLE 3
REGISTRATION PROCEDURES
SECTION 3.01. Filings; Information. In connection with the registration
of Registrable Securities pursuant to Section hereof, the Corporation will use
commercially reasonable efforts to effect the registration of such Registrable
Securities as promptly as is reasonably practicable, and in connection with any
such request:
(a) The Corporation will expeditiously prepare and file with the
Commission a registration statement on any form for which the
Corporation then qualifies and which counsel for the Corporation shall
deem appropriate and available for the sale of the Registrable
Securities to be registered thereunder in accordance with the intended
method of distribution thereof, and use commercially reasonable
efforts to cause such filed registration statement to become and
remain effective for such period, not to exceed 60 days, as may be
reasonably necessary to effect the sale of such securities; provided
that if the Corporation shall furnish to the Buyer a certificate
signed by the Corporation's Chairman, President or any Vice_President
stating that in his or her good faith judgment it would be detrimental
or otherwise disadvantageous to the Corporation or its shareholders
5
for such a registration statement to be filed as expeditiously as
possible (because the sale of Registrable Securities covered by such
Registration Statement or the disclosure of information in any related
prospectus or prospectus supplement would materially interfere with
any acquisition, financing or other material event or transaction
which is then intended or the public disclosure of which at the time
would be materially prejudicial to the Corporation), the Corporation
may postpone the filing or effectiveness of a registration statement
for a period of not more than 120 days; provided, that during any 360
day period there shall be a period of at least 120 consecutive days
during which the Corporation will make a registration statement
available under this Exhibit B; and provided further, that if (i) the
effective date of any registration statement filed pursuant to a
Demand Registration would otherwise be at least 45 calendar days, but
fewer than 90 calendar days, after the end of the Corp(a) oration's
fiscal year, and (ii) the Securities Act requires the Corporation to
include audited financials as of the end of such fiscal year, the
Corporation may delay the effectiveness of such registration statement
for such period as is reasonably necessary to include therein its
audited financial statements for such fiscal year.
(b) The Corporation will, if requested, prior to filing such
registration statement or any amendment or supplement thereto, furnish
to the Selling Holders, and each applicable managing Underwriter, if
any, copies thereof, and thereafter furnish to the Selling Holders and
each such Underwriter, if any, such number of copies of such
registration statement, amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference
therein) and the prospectus included in such registration statement
(including each preliminary prospectus) as the Selling Holders or each
such Underwriter may reasonably request in order to facilitate the
sale of the Registrable Securities by the Selling Holders.
(c) After the filing of the registration statement, the
Corporation will promptly notify the Selling Holders of any stop order
issued or, to the Corporation's knowledge, threatened to be issued by
the Commission and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.
(d) The Corporation will use commercially reasonable efforts to
qualify the Registrable Securities for offer and sale under such other
securities or blue sky laws of such jurisdictions in the United States
as the Selling Holders reasonably request; provided that the
Corporation will not be required to qualify generally to do business
in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph , subject itself to taxation in any
such jurisdiction or consent to general service of process in any such
jurisdiction.
6
(e) The Corporation will as promptly as is practicable notify the
Selling Holders, at any time when a prospectus relating to the sale of
the Registrable Securities is required by law to be delivered in
connection with sales by an Underwriter or dealer, of the occurrence
of any event requiring the preparation of a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading and promptly make available to the Selling Holders, and
to the Underwriters any such supplement or amendment. Upon receipt of
any notice of the occurrence of any event of the kind described in the
preceding sentence, Selling Holders will forthwith discontinue the
offer and sale of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until receipt by the
Selling Holders and the Underwriters of the copies of such
supplemented or amended prospectus and, if so directed by the
Corporation, the Selling Holders will deliver to the Corporation all
copies, other than permanent file copies then in the possession of
Selling Holders, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. In the
event the Corporation shall give such notice, the Corporation shall
extend the period during which such registration statement shall be
maintained effective as provided in Section hereof by the number of
days during the period from and including the date of the giving of
such notice to the date when the Corporation shall make available to
the Selling Holders such supplemented or amended prospectus.
(f) The Corporation will enter into customary agreements
(including an underwriting agreement in customary form) and take such
other actions as are required in order to expedite or facilitate the
sale of such Registrable Securities.
(g) At the request of any Underwriter in connection with an
underwritten offering the Corporation will use commercially reasonable
efforts to cause to be furnished an opinion of counsel, addressed to
the Underwriters, covering such customary matters as the managing
Underwriter may reasonably request and a comfort letter or comfort
letters from the Corporation's independent public accountants covering
such customary matters as the managing Underwriter may reasonably
request.
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(h) The Corporation will make generally available to its security
holders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after
the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations of the Commission
thereunder.
(i) The Corporation will use its commercially reasonable efforts
to cause all such Registrable Common Stock to be listed on each
securities exchange or quoted on each inter-dealer quotation system on
which the Common Stock is then listed or quoted.
The Corporation may require Selling Holders promptly to furnish in
writing to the Corporation such information regarding such Selling Holders, the
plan of distribution of the Registrable Securities and other information as the
Corporation may from time to time reasonably request or as may be legally
required in connection with such registration.
SECTION 3.02 . Registration Expenses. In connection with any Demand
Registration, the Corporation shall pay 50% of the following expenses incurred
in connection with such registration (the "Registration Expenses"): (i)
registration and filing fees with the Commission and the National Association of
Securities Dealers, Inc., (ii) fees and expenses of compliance with securities
or blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities), (iii)
printing expenses, (iv) fees and expenses incurred in connection with the
listing or quotation of the Registrable Securities, (v) fees and expenses of
counsel to the Corporation and the reasonable fees and expenses of independent
certified public accountants for the Corporation (including fees and expenses
associated with the special audits or the delivery of comfort letters) and (vi)
the reasonable fees and expenses of any additional experts retained by the
Corporation in connection with such registration. In connection with any
Piggyback Registration, the Corporation shall pay the Registration Expenses set
forth in clauses (ii) through (vi) of the preceding sentence. In connection with
any Demand Registration, the Selling Holders shall pay 50% of the expenses set
forth in the first sentence of this Section 3.02 and (i) any underwriting fees,
discounts or commissions attributable to the sale of Registrable Securities,
(ii) fees and expenses of counsel for the Selling Holders and (iii) any
out_of_pocket expenses of the Selling Holders. In connection with any Piggyback
Registration, the Selling Holders shall pay, in addition to items (i) through
(iii) of the preceding sentence, registration and filing fees with the
Commission and National Association of Securities Dealers Inc., in proportion to
the ratio that the number of shares of Registrable Common Stock being registered
for the account of the Selling Holders bears to the aggregate number of shares
of Common Stock being included in the applicable registration statement.
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ARTICLE 4
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.01. Indemnification by the Corporation. The Corporation
agrees to indemnify and hold harmless each Selling Holder and its Affiliates and
their respective officers, directors, partners, stockholders, members,
employees, agents and representatives and each Person (if any) which controls a
Selling Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities, costs and expenses (including reasonable attorneys' fees)
caused by, arising out of resulting from or related to any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as amended or
supplemented if the Corporation shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by or contained in or based upon any
information furnished in writing to the Corporation by or on behalf of such
Selling Holder or any Underwriter expressly for use therein or by the Selling
Holder or Underwriter's failure to deliver a copy of the registration statement
or prospectus or any amendments or supplements thereto after the Corporation has
furnished the Buyer or Underwriter with copies of the same.
SECTION 4.02. Indemnification by the Buyer. Each Selling Holder agrees
to indemnify and hold harmless the Corporation, its officers and directors, and
each Person, if any, which controls the Corporation within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Corporation to each Selling Holder,
but only with reference to information furnished in writing by or on behalf of
such Selling Holder expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus.
SECTION 4.03. Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
Section 4.01 or Section 4.02, such Person (the "Indemnified Party") shall
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promptly notify the Person against whom such indemnity may be sought (the
"Indemnifying Party") in writing and the Indemnifying Party, upon the request of
the Indemnified Party, shall retain counsel reasonably satisfactory to such
Indemnified Party to represent such Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and, in the written
opinion of counsel for the Indemnified Party, representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Indemnified
Parties, such firm shall be designated in writing by the Indemnified Parties
with the approval of the Indemnifying Party (which approval shall not be
unreasonably withheld). The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent (not to be unreasonably withheld), or if there be a
final judgment for the plaintiff, the Indemnifying Party shall indemnify and
hold harmless such Indemnified Parties from and against any loss or liability
(to the extent stated above) by reason of such settlement or judgment.
SECTION 4.04. Contribution. If the indemnification provided for in this
Article 4 is unavailable to an Indemnified Party in respect of any losses,
claims, damages or liabilities in respect of which indemnity is to be provided
hereunder, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall to the fullest extent permitted by law contribute to
the amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of such party in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of the Corporation,
a Selling Holder and the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
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The Corporation and each Selling Holder agrees that it would not be
just and equitable if contribution pursuant to this Section 4.04 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Article , no Selling Holder shall be
required to contribute any amount in excess of the amount by which the net
proceeds of the offering (before deducting expenses) received by such Selling
Holder exceeds the amount of any damages which such Selling Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 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.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Participation in Underwritten Registrations. No Person
may participate in any underwritten registered offering contemplated hereunder
unless such Person agrees to sell its securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements, completes and executes all questionnaires, powers of
attorney, custody arrangements, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting arrangements
and this Exhibit B and (c) furnishes in writing to the Corporation such
information regarding such Person, the plan of distribution of the Registrable
Securities and other information as the Corporation may from time to time
request or as may be legally required in connection with such registration.
SECTION 5.02. Rule 144. The Corporation covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange Act
and that it will take such further action as the Holders may reasonably request
to the extent required from time to time to enable the Holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
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hereafter adopted by the Commission. Upon the request of the Buyer, the
Corporation will deliver to the Buyer a written statement as to whether it has
complied with such reporting requirements.
SECTION 5.03 . Holdback Agreements. Each Holder agrees, in the event of
an underwritten offering for the Corporation (whether for the account of the
Corporation or otherwise) not to offer, sell, contract to sell or otherwise
dispose of any Registrable Securities, or any securities convertible into or
exchangeable or exercisable for such securities, including any sale pursuant to
Rule 144 under the Securities Act (except as part of such underwritten
offering), during the period commencing on the date of the filing of the
registration statement and ending 180 days after the effective date of the
registration statement for such underwritten offering (or, in the case of an
offering pursuant to an effective shelf registration statement pursuant to Rule
415, the pricing date for such underwritten offering).
Sectio 5.04. TerminationTerminationTermination . The registration
rights granted under this Agreement will terminate on December 31, 2006.
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