Exhibit 10.6
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of September 15, 1995, among
SoftNet Systems, Inc., a New York corporation (the "Company") and R.W.C. ▇▇▇▇▇▇
and A.J.R. Oosthuizen (the "Investors").
The parties to this Agreement are parties to an Agreement dated as of
March 24, 1995, as amended (the "Stockholders Agreement") which sets forth
certain obligations of the Investors and the entering into of which was a
condition to the Company entering into an Agreement and Plan of Reorganization
dated as of March 24, 1995, as amended (the "Merger Agreement") with
Micrographic Technology Corporation, a California corporation, of which the
Investors collectively own 89.1% of the outstanding common stock.
In connection with the Stockholders Agreement and the Merger Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement.
The parties hereto agree as follows:
1. PIGGYBACK REGISTRATIONS.
(a) Right to Piggyback. At any time beginning ninety (90) days from
the date hereof, whenever the Company proposes to register any of its shares of
Common Stock ("Common Stock") or other securities convertible or exchangeable
into or exercisable for Common Stock under the Securities Act and the
registration form to be used may be used for the registration of Registrable
Securities (a "Piggyback Registration"), the Company will give prompt written
notice (which will include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable blue sky or
other state securities laws, the proposed offering price, and the plan of
distribution) to all holders of Registrable Securities of its intention to
effect such a registration and will include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within fifteen (15) days after receipt of the Company's notice
by the Investors.
(b) Priority on Primary Registrations. If a Piggyback Registration
is an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such offering within a price
range acceptable to the Company, the Company will include in such registration
(i) first, the securities the Company proposes to sell and (ii) second, Common
Stock requested to be included in such registration by the holders of any
registration rights including holders of Registrable Securities, pro rata among
such holders.
(c) Priority on Secondary Registrations. If a Piggyback Registration
includes an underwritten secondary registration on behalf of holders of the
Company's securities, and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in an orderly manner
in such offering within a price range acceptable to the Company, the Company
will include in such registration (i) first, the securities requested to be
included therein by the persons requesting such registration and (ii) second,
Common Stock requested to be included in such registration by the holders of any
registration rights including holders of Registrable Securities, pro rata among
such holders.
(d) Other Registrations. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to this
Agreement, and if the Company is using its best efforts to cause such
registration statement to become effective, the Company will not file or cause
to be effected any other registration of any of its equity securities or
securities convertible or exchangeable into or exercisable for its equity
securities under the Securities Act (except on Form S-1 in connection with a
transaction of the type referred to in Rule 145 of the Securities Act or on Form
S-4 or Form S-8 or any successor forms), whether on its own behalf or at the
request of any holder or holders of such securities, until a period of at least
90 days has elapsed from the effective date of such previous registration,
unless the underwriters managing the registered public offering otherwise agree.
2. DEMAND REGISTRATION.
(a) On or prior to the second anniversary of the consummation of the
merger (the "Merger") contemplated under the Merger Agreement, the Company shall
cause a registration statement to be filed and become effective under the
Securities Act, or an existing registration statement to be amended, for the
purpose of registering all of the Registrable Securities which the holders of
Registrable Securities request to be registered ("Demand Registration"). If any
of the holders of Registrable Securities to be included in the Demand
Registration intends to distribute such shares by means of an underwriting, the
Company agrees to cooperate with such holder and the underwriter selected by
such holder, and if requested, enter into an underwriting agreement in customary
form.
3. HOLDBACK AGREEMENTS.
(a) Each holder of Registrable Securities agrees not to effect any
public sale or distribution of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for such securities,
during the seven days prior to and the 90-day period beginning on the effective
date of any underwritten Piggyback Registration in which Registrable Securities
are included (except as part of such underwritten registration), unless the
underwriters managing the registered public offering otherwise agree.
(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 90-day period beginning on the effective date of any underwritten
Piggyback Registration or Demand Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-1 in connection
with a transaction of the type referred to in Rule 145 of the Securities Act or
on Form S-4 or Form S-8 or any successor form), unless (x) the underwriters
managing the registered public offering otherwise agree and (y) the holders of
Registrable Securities are released from the restrictions under Section C(1)
above, and (ii) to cause each of its Affiliates to agree not to effect any
public sale or distribution of any such securities during such period (except as
part of such underwritten registration, if otherwise permitted), unless (x) the
underwriters managing the registered public offering otherwise agree and (y) the
holders of Registrable Securities are released from the restrictions under
Section C(1) above.
4. REGISTRATION PROCEDURES. Whenever the holders of Registrable
Securities have properly requested that any Registrable Securities be registered
pursuant to the Piggyback Registration or Demand Registration rights granted by
this Agreement, the Company will use its reasonable best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(A) prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its reasonable best efforts
to cause such registration statement to become effective;
(B) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of not less than (i) six months with respect to a Piggyback
Registration and (ii) three years from the effective date of the Merger with
respect to the Demand Registration, or until such time as all of the securities
covered by such registration statement have been sold and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(C) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(D) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction, or (iii) consent to general service of
process in any such jurisdiction, unless the Company is already subject to
service in such jurisdiction);
(E) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company will prepare
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 fact necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading;
(F) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed or, if not so listed, on any automated quotation system in which similar
securities issued by the Company are then quoted;
(G) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(H) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant, or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents, and properties of the Company, and cause the Company's
officers, directors, employees, and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant, or agent in connection with such registration statement;
(I) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder; and
(J) on the date the Registrable Securities are delivered to the
underwriters, if such securities are being sold through underwriters, or, if
such securities are not being sold through underwriters, on the date that the
registration statement becomes effective, furnish a cold comfort letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by comfort letters as the holders of a
majority of the Registrable Securities being sold reasonably request (provided
that such Registrable Securities constitute at least 10% of the securities
covered by such registration statement).
(K) on the date the Registrable Securities are delivered to the
underwriters, if such securities are being sold through underwriters, or, if
such securities are not being sold through underwriters, on the date that the
registration statement becomes effective, furnish an opinion of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering addressed to the underwriters, if any, and to the sellers of
Registrable Securities; and
(L) in the event of any underwritten public offering, enter into and
perform its obligations under and underwriting agreement, in usual and customary
form, with the managing underwriter of such offering.
5. REGISTRATION EXPENSES.
(a) All Registration Expenses will be borne by the Company.
(b) In connection with each Piggyback Registration and the Demand
Registration, underwriting discounts and commissions shall be borne by such
holders.
(c) To the extent any expenses are not required to be paid by the
Company, each holder of securities included in any registration hereunder will
pay those expenses allocable to the registration of such holder's securities so
included, and any Registration Expenses not so allocable will be borne by all
sellers of securities included in such registration in proportion to the
aggregate selling price of the securities to be so registered.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities, its officers, directors and agents, and
each person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities, and expenses caused by (i) any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus, or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, except
insofar as the same are caused by or contained in any information furnished in
writing to the Company by such holder and stated to be specifically for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with the reasonably requested number of copies
of the same or (ii) any violation or alleged violation by the Company under the
Securities Act, the Securities Exchange Act of 1934, as amended, or any state
securities law; and the Company will pay as incurred to each holder of
Registrable Securities or controlling person, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action. In connection with an
underwritten offering, the Company will indemnify such underwriters, their
officers and directors, and each person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder will promptly
furnish to the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such registration statement
or prospectus and, to the extent permitted by law, will indemnify the Company,
its directors and officers, and each person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus, or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which they were
made, not misleading, but only to the extent that such untrue statement or
omission is contained in any information or affidavit furnished in writing by
such holder and stated to be specifically for use therein; provided that the
obligation to indemnify will be several, not joint and several, among such
holders of Registrable Securities and the liability of each such holder of
Registrable Securities will be in proportion to and limited to the net amount
received by such holder from the sale of Registrable Securities pursuant to such
registration statement.
(c) Any person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of such counsel a conflict of interest may exist between such indemnified party
and any other of such indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director, or controlling person of such
indemnified party and will survive the transfer of securities.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No person may
participate in any registration hereunder which is underwritten unless such
person (a) agrees to sell such person's securities on the basis provided in any
underwriting arrangements approved by the person or persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
8. DEFINITIONS.
(a) "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
(b) The terms "register" and "registration" refer to a registration
effected by preparing and filing with the Commission a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(c) "Registrable Securities" shall mean the shares of Common Stock of
the Company held by the Investors as a result of the Merger (the "Merger")
contemplated under the Merger Agreement, other securities held by the Investors
as a result of the Merger which are convertible or exchangeable into Common
Stock (provided that such securities are converted or exchanged into Common
Stock prior to the exercise of such Investor's registration rights hereunder)
and any shares of Common Stock issuable as a dividend or other distribution with
respect to, in exchange for, or in replacement of the foregoing, provided that
any shares of Common Stock sold to the public pursuant to a registered public
offering under the Securities Act, or pursuant to Rule 144 (or a similar rule)
under the Securities Act shall cease to be Registrable Securities from and after
the time of such sale.
(d) "Registration Expenses" shall mean all expenses incident to the
registration of Registrable Securities pursuant to this Agreement including,
without limitation, all registration and filing fees, printers and accounting
fees and fees and disbursements of counsel for the Company, reasonable fees and
disbursements of counsel for the sellers of Registrable Securities, all fees and
expenses in connection with complying with securities or blue sky laws,
including the expenses required by or incident to such performance or
compliance, but excluding any underwriting discounts and commissions and
applicable transfer taxes on the Registrable Securities and the fees and
disbursements of counsel for the sellers of Registrable Securities in excess of
a reasonable amount, which shall be borne pro rata by the sellers of Registrable
Securities.
(e) "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder,
all as from time to time in effect.
9. MISCELLANEOUS
(a) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(b) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
(c) Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(d) Governing Law. The corporate law of New York will govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity and interpretation of this
Agreement and the exhibits and schedules hereto will be governed by the internal
law, and not the law of conflicts, of Illinois.
(e) Notices. All notices, demands, or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight express courier
service (charges prepaid) or mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid. Such notices, demands and
other communications will be sent to each Investor at the address indicated
below his respective signature and to the Company at the address indicated
below:
SoftNet Systems, Inc.
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or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
(f) Assignment. The rights to cause the Company to register the
Registrable Securities may be assigned by the Investors to permitted transferees
or assignees of the Registrable Securities; provided, however, that such
transferee or assignee agrees in writing to be bound by and subject to the terms
and conditions of this Agreement.
(g) Subsequent Registration Rights. Without the prior written
consent of each of the Investors, the Company may not grant registration rights
with priority in any respects to the registration rights provided under this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
SoftNet Systems, Inc.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
President
/s/ R.C.W. ▇▇▇▇▇▇
R.C.W. ▇▇▇▇▇▇
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/s/ ▇▇▇▇▇▇ ▇.▇. Oosthuizen
A.J.R. Oosthuizen
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