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Exhibit 7. Form of Note Holders' Representative Agreement
NOTE HOLDERS' REPRESENTATIVE AGREEMENT
This NOTE HOLDERS' REPRESENTATIVE AGREEMENT (this "Agreement")
is entered into as of the _____ day of November, 1998, by and among Xxxxxx X.
Xxxxx ("SFT"), on the one hand, and the holders of certain convertible secured
notes issued by Spatialight, Inc. (such holders are hereinafter referred to as
the "Holders"), on the other.
R E C I T A L S
WHEREAS, Spatialight, Inc., a New York corporation
("Spatialight"), and the Holders have entered into certain Convertible Secured
Loan Agreements (the "Loan Agreements"), which provide, inter alia, that Holders
shall, under certain conditions, release funds to Spatialight in an amount not
to exceed $2,000,000 in the aggregate;
WHEREAS, Section 6.4 of the Loan Agreements provides that the
Holders, acting as a group, shall have the right to nominate one candidate at
the next election of the board of directors of Spatialight, which nominee shall
be included in Spatialight's slate of directors in all proxy materials sent to
the shareholders of Spatialight;
WHEREAS, the Holders desire to appoint a representative (the
"Holders' Representative") as agent to act on their behalf with respect to the
matters described in this Agreement;
WHEREAS, the Holders also desire to appoint a collateral agent
(the "Collateral Agent") to act as collateral agent on their behalf with respect
to the security interests granted in favor of the Holders by Spatialight and by
Spatialight of California, Inc.; and
WHEREAS, the Holders recognize that there will be expenses
incidental to the transactions contemplated by the Loan Agreements that cannot
be specifically determined as of the date of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Holders agree among themselves
and with SFT as follows:
1. Definitions. Capitalized terms in this Agreement, unless
otherwise defined herein, shall have the same meaning ascribed to those terms in
the Loan Agreements.
2. Representative. Each of the Holders hereby irrevocably
makes, constitutes and appoints SFT as the Holders' Representative to act on
such Holder's behalf, with such authority and powers as are necessary,
appropriate or helpful to properly represent the Holders as provided in this
Agreement. In the event SFT, or any successor Holders' Representative, shall
cease to serve as the Holders' Representative under this Agreement for any
reason whatsoever, including the resignation of the Holders' Representative, the
Holders, with each such Holder voting its, his or her respective amount of the
total debt owed by Spatialight to the Holders (the "Debt"), promptly shall elect
a successor Holders' Representative to serve under this Agreement. The
preference of the
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Holders holding a majority of the Debt, as indicated by a vote of the Holders,
shall elect the successor Holders' Representative. The election of a Holders'
Representative in the manner provided in this Paragraph 2 shall be final and
binding upon all of the Holders. The decisions and actions of any successor
Holders' Representative shall be, for all purposes, those of a Holders'
Representative as if originally named herein.
3. Escrow Agreement . The Holders shall designate an account
at AmSouth Bank (together with any replacement bank named subsequently by the
Holders' Representative, the "Bank"), for the receipt of all cash received from
the Holders (the "Loan Funds"). The Loan Funds shall be held by the Bank
pursuant to an escrow agreement, in form as approved by the Holders'
Representative (the "Escrow Agreement").
4. Collateral Agent.
(a) Each Holder hereby designates and appoints SFT
(the "Collateral Agent") as the collateral agent for such holder under the
Security Agreement dated of even date herewith made by Spatialight and by
Spatialight of California, Inc., and authorizes the Collateral Agent, in such
capacity, to be the secured party under said Security Agreement and to take such
action on behalf of the Holders and to exercise such powers and perform such
duties as are expressly given to the Collateral Agent by the terms of this
Agreement and such Security Agreement, together with such other powers as are
reasonably incidental thereto, including, without limitation, the authority to
sign such financing statements, continuation statements, and make such filings
with the U.S. Patent and Trademark Office as are necessary to perfect and
protect the security interests and liens of the Holders under the Security
Agreement. Notwithstanding any provision to the contrary, elsewhere in this
Agreement, the Collateral Agent shall not have any duties or responsibilities
except those expressly set forth herein or any fiduciary relationship with any
Holder, and no implied covenants, functions, responsibilities, duties,
obligations, or liabilities shall be read into this Agreement or the Security
Agreement or any document executed in connection herewith or shall otherwise
exist against the Collateral Agent.
(b) Neither the Collateral Agent nor any company with
which he is affiliated, nor any of the directors, officers, agents or employees
of such company shall be liable for any action taken or omitted to be taken by
him or them under or in connection with this Agreement or the Security Agreement
in the absence of his or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Collateral Agent (1)
may treat the payee of any Note as the holder thereof until the Collateral Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to the Collateral Agent; (2) may consult with
legal counsel (including counsel for the Spatialight), independent public
accountants and other experts selected by him and shall not be liable for any
action taken or omitted to be taken in good faith by him in accordance with the
advice of such counsel, accountants, or experts; (3) makes no warranty or
representations to any Holder and shall not be responsible to any Holder for any
statements, warranties, or representations made in or in connection with this
Agreement other than those statements, warranties or representations made by
himself as the holder of a Note; (4) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants, or
conditions of the Security Agreement on the part of Spatialight, or to inspect
the property (including the books and records) of Spatialight; (5) shall not be
responsible to any Holder for the due execution, legality, validity,
enforceability, genuineness, perfection, sufficiency, or value of the Security
Agreement or any other instrument or document furnished pursuant thereto;
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and (6) shall incur no liability under or in respect of this Agreement or the
Security Agreement by acting upon any notice, consent, certificate, or other
instrument or writing (which may be sent by telegram, telex, or facsimile
transmission) believed by him to be genuine and signed or sent by the proper
party or parties.
(c) The Holders agree to indemnify the Collateral
Agent (to the extent not reimbursed by Spatialight) ratably according to the
respective amounts of the Debt from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Collateral Agent in any way relating to
or arising out of this Agreement or the Security Agreement or any action taken
or omitted by the Collateral Agent under this Agreement or the Security
Agreement, provided that no Holder shall be liable for any portion of any of the
foregoing resulting from the Collateral Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Holder agrees to reimburse
the Collateral Agent (to the extent not reimbursed by Spatialight) promptly upon
demand for its ratable share of any out-of-pocket expenses (including counsel
fees) incurred by the Collateral Agent in connection with the preparation,
administration, or enforcement of, or legal advice in respect of rights or
responsibilities under, this Agreement or the Security Agreement.
(d) The Collateral Agent may resign at any time by
giving at least sixty (60) days' prior written notice thereof to the Holders and
may be removed at any time with or without cause by a vote of the Holders
holding a majority of the amount of the Notes held by the Holders. Upon any such
resignation or removal, the Holders shall have the right to appoint a successor
Collateral Agent. If no successor Collateral Agent shall have been so appointed
by the Holders, and shall have accepted such appointment, within thirty (30)
days after the retiring Collateral Agent's giving of notice of resignation or
the Holders' removal of the retiring Collateral Agent, then the retiring
Collateral Agent may, on behalf of the Holders, appoint a successor Collateral
Agent. Upon the acceptance of any appointment as Collateral Agent hereunder by a
successor Collateral Agent, such successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent, and the retiring Collateral Agent shall be
discharged from his duties and obligations under this Agreement. After any
retiring Collateral Agent's resignation or removal hereunder as Collateral
Agent, the provisions of this document shall inure to the benefit as to any
actions taken or omitted to be taken by it while it was Collateral Agent under
this Agreement.
5. Incidental Expenses. The Holders shall collectively
contribute, on a pro rata basis according to their respective percentage
interest in the Debt, the aggregate amount of any costs, expenses and
disbursements required to be paid by the Holders' Representative in connection
with the consummation of the transactions contemplated by the Loan Agreement and
the performance of the Holders' Representative's duties hereunder. These
expenses may include, but are not limited to, accountant's and attorney's fees
and fees paid to the Bank.
6. Authority of Holders' Representative. Each of the Holders
does hereby irrevocably make, constitute, and appoint the Holders'
Representative as such Holder's true and lawful attorney in fact and agent, to
act for and on behalf of such Holder and in such Holder's name, (a) to execute
the Escrow Agreement and to take any action (or to determine to take no action)
with respect thereto as the Holders' Representative may deem appropriate as
effectively
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as such Holder could act for itself, himself or herself, and (b) to execute and
deliver all instruments and documents of every kind incident to the foregoing to
all intents and purposes and with the same effect as such Holder could do
personally, and each Holder hereby ratifies and confirms as its, his or her own
act, all that the Holders' Representative shall do or cause to be done pursuant
to the provisions of this Agreement.
7. Death or Incapacity of a Holder. The death or incapacity of
any Holder shall not terminate the authority and agency of the Holders'
Representative as to such deceased or incapacitated Holder.
8. Indemnification of Holders' Representative. The Holders
hereby agree to indemnify the Holders' Representative and to hold him harmless
against any loss, liability or expense incurred without bad faith on the part of
the Holders' Representative and arising out of or in connection with his duties
as Holders' Representative, including, without limitation, the costs and
expenses incurred by such Holders' Representative in defending against any claim
of liability in connection with this Agreement. The obligation of Holders to
indemnify Holders' Representative shall be apportioned among all of the Holders
on a pro rata basis in accordance with the amount of Debt held by each Holder.
9. Spatialight Board. Section 6.4 of the Loan Agreements
provides that the Holders may nominate one candidate at the next election of the
board of directors of Spatialight to be included in the slate of directors
proposed by management of Spatialight and to select a representative (the
"Representative") in the event the Holders do not have a representative for the
board of directors of Spatialight. The Holders hereby nominate Xxxxxx X. Xxxxx
to be included in the slate of directors proposed by management of Spatialight
at the next election of directors and agree that any future decisions regarding
nominees of the Holders, whether for a position as member of the board of
directors or for the position of Representative, shall be determined by the
preference of those Holders holding a majority of the Debt.
10. No Fiduciary Relationship. The Holders recognize and
covenant that nothing in this Agreement shall be construed as constituting the
appointment of Holders' Representative as trustee for any Holder. The Holders
further recognize and acknowledge that (a) Holders' Representative shall take
the action and exercise the powers granted in this Agreement in an
administrative and ministerial capacity only, (b) Holders' Representative shall
not have a fiduciary relationship with any Holder by reason of this Agreement
and (c) it is the intention of SFT to serve as a director of Spatialight
following the Closing, and he will, therefore, in all likelihood serve as a
director of Spatialight during the same period he also serves as Holders'
Representative pursuant to this Agreement.
11. Headings. All headings in this Agreement are inserted for
the convenience of the reader and shall not be construed to alter the meaning of
the textual portions of the Agreement.
12. Severability. In the event any provision or portion of
this Agreement is held to be illegal, invalid, or unenforceable, in whole or in
part, for any reason, under present or
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future law, such provision shall be severable and the remainder thereof shall
not be invalidated or rendered unenforceable or otherwise adversely affected.
13. Binding Effect on Successors, Assignees, Etc.
(a) Holders' Representative may not assign, delegate,
or otherwise transfer his rights or obligations under this Agreement without the
express written consent of Holders holding a majority of the Debt.
(b) This Agreement shall be binding upon and shall
inure to the benefit of each of the parties hereto who has executed a
counterpart of this Agreement, regardless of whether each of the other Holders
has executed a counterpart of this Agreement. In addition, this Agreement shall
be binding upon and shall inure to the benefit of the respective executors,
administrators, personal representatives, legal representatives, heirs,
successors and assigns of the undersigned Holders.
14. Term. The term of this Agreement shall terminate with
respect to each Holder on the later to occur of: (i) the Cessation Date with
respect to that Holder's Note or (ii) the conclusion of any claim made against
such Holder for indemnification.
15. Amendment. This Agreement may be amended in whole or in
part by a vote of the Holders, with each Holder voting its, his, or her interest
in the Debt, with the majority of such interests controlling.
16. Notices. All notices given hereunder to Xxxxxx X. Xxxxx in
his capacity as Holders' Representative or Collateral Agent shall be to the
following address:
Xxxxxx X. Xxxxx
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
or to such other address as Xxxxxx X. Xxxxx shall furnish to the Holders in
writing.
16. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument with the same force and
effect as though all parties had executed the same document. Execution and
delivery by facsimile shall constitute good and valid execution and delivery
unless and until replaced or substituted by an original executed instrument.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed, all as of the date first above written.
HOLDERS:
[Signature lines of Filing Persons omitted]
HOLDERS' REPRESENTATIVE:
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Xxxxxx X. Xxxxx
