As filed with the Securities and Exchange Commission on August 6, 1999
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
SOFTNET SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-1817252
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
650 Townsend Street, San Francisco, California 94103
(Address of principal executive offices) (Zip Code)
SOFTNET SYSTEMS, INC.
OPTION GRANTS TO CERTAIN EMPLOYEES AND CONSULTANTS PURSUANT
TO WRITTEN COMPENSATION AGREEMENTS
(Full title of the Plans)
Dr. Lawrence B. Brilliant
Chairman of the Board and Chief Executive Officer
SOFTNET SYSTEMS, INC.
650 Townsend Street, San Francisco, California 94103
(Name and address of agent for service)
(415) 365-2500
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================== ==================== ==================== ========================= ================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) per Share Price Fee(2)
<S> <C> <C> <C> <C>
Option Grants to Employees
- --------------------------
Common Stock 54,500 shares $21.63(2) $1,179,000(2) $328
Option Grants to Consultants
- ----------------------------
Common Stock 90,000 shares $8.93(2) $804,375(2) $224
=============================================================================================================================
Aggregate Registration Fee: $552
=============================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the option grants made by the
Registrant to certain employees and Consultants by reason of any stock
dividend, stock split, recapitalization or other similar transaction
effected without the Registrant's receipt of consideration which
results in an increase in the number of the outstanding shares of
Registrant's Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the weighted
average exercise price of the outstanding options.
================================================================================
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
SoftNet Systems, Inc. (the "Registrant") hereby incorporates
by reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Annual Report on Form 10-K for the
fiscal year ended September 30, 1998, filed with the
Commission on January 13, 1999 as amended on Form
10-K/A on February 2, 1999 and March 4, 1999;
(b) The Registrant's Quarterly Reports on Form 10-Q for
the fiscal quarters ended December 31, 1999 and March
31, 1999, filed with the Commission on February 16,
1999 and May 17, 1999, respectively;
(c) The Registrant's Current Reports on Forms 8-K filed
with the Commission on January 26, 1999, February 24,
1999, February 26, 1999, March 5, 1999, April 14,
1999, April 27, 1999, July 7, 1999 and July 20, 1999
and the Registrant's Current Reports on Forms 8-K/A
filed with the Commission on February 26, 1999 and
March 12, 1999; and
(d) The Registrant's Registration Statement on Form
8-A/A, filed with the Commission on April 22, 1999,
pursuant to Section 12 of the Securities and Exchange
Act of 1934, as amended (the "1934 Act"), in which
there is described the terms, rights and provisions
applicable to the Registrant's outstanding Common
Stock.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the
date of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained in any subsequently filed document
which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
The Registrant's Certificate of Incorporation limits the
liability of directors to the maximum extent permitted by Delaware law.
Delaware law provides that a director of a corporation will not be personally
liable for monetary damages for breach of such individual's fiduciary duties
as a director except for liability for (i) any breach of such director's duty
of loyalty to the corporation, (ii) any acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) any
unlawful payments of dividends or unlawful stock repurchases or redemptions as
provided in Section 174 of the Delaware General Corporation Law, or (iv) any
transaction from which a director derives an improper personal benefit.
<PAGE>
The Registrant's Bylaws provide that the Registrant will indemnify its
directors and may indemnify its officers, employees and other agents to the full
extent permitted by law. The Registrant believes that indemnification under its
Bylaws covers at least negligence and gross negligence on the part of an
indemnified party and permits the Registrant to advance expenses incurred by an
indemnified party in connection with the defense of any action or proceeding
arising out of such party's status or service as a director, officer, employee
or other agent of the Registrant upon an undertaking by such party to repay such
advances if it is ultimately determined that such party is not entitled to
indemnification.
The Registrant has entered into separate indemnification agreements
with each of its directors and officers. These agreements require the
Registrant, among other things, to indemnify such director or officer against
expenses (including attorney fees), judgments, fines and settlements
(collectively, "Liabilities") paid by such individual in connection with any
action, suit or proceeding arising out of such individual's status or service as
a director or officer of the Registrant (other than Liabilities arising from
willful misconduct or conduct that is knowingly fraudulent or deliberately
dishonest) and to advance expenses incurred by such individual in connection
with any proceeding against such individual with respect to which such
individual may be entitled to indemnification by the Registrant. The Registrant
believes that its Certificate of Incorporation and Bylaw provisions and
indemnification agreements are necessary to attract and retain qualified persons
as directors and officers.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
Exhibit Number Exhibit
-------------- ----------------------------------------------------------
4 Instruments Defining Rights of Shareholders. Reference is
made to Registrant's Registration Statement on Form 8-A/A
which is incorporated herein by reference pursuant to Item
3(c).
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent
Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Form of Stock Option Agreement
99.2 Form of Notice of Grant of Stock Option
99.3 List of Employees Receiving Stock Options
99.4 Notice of Grant of Stock Option- Lalchandani*
99.5 Notice of Grant of Stock Option- Rheingold*
99.6 Notice of Grant of Stock Option- Kleeman*
* Denotes an option grant to a consultant.
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement (i) to include any prospectus required
by Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts
or events arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement; provided, however, that clauses (1)(i) and (1)(ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
<PAGE>
Section 13 or Section 15(d) of the 1934 Act that are incorporated by reference
into the Registration Statement; (2) that for the purpose of determining any
liability under the 1933 Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and (3) to remove from registration by means
of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the option grants to certain employees and
Consultants pursuant to written compensation agreements.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference into the Registration Statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under
the 1933 Act may be permitted to directors, officers or controlling persons of
the Registrant pursuant to the indemnification provisions summarized in Item 6
above or otherwise, the Registrant has been informed that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
1933 Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Francisco, State of California, on this 6th
day of August, 1999.
SOFTNET SYSTEMS, INC.
By: ------------------------
Douglas S. Sinclair
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of SoftNet
Systems, Inc., a Delaware corporation, do hereby constitute and appoint Douglas
S. Sinclair and Lawrence B. Brilliant and each of them, the lawful attorneys and
agents, with full power and authority to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, and any one of
them, determine may be necessary or advisable or required to enable said
corporation to comply with the Securities Act of 1933, as amended, and any rules
or regulations or requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments, both pre-effective and post-effective, and supplements to this
Registration Statement, and to any and all instruments or documents filed as
part of or in conjunction with this Registration Statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, or any of them, shall do or cause to be done
by virtue hereof. This Power of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signatures Title Date
- ----------------------------- --------------------------- -------------
/s/ Lawrence B. Brilliant
- -----------------------------
Lawrence B. Brilliant Chairman of the Board and August 6, 1999
Chief Executive Officer
/s/ Ian B. Aaron
- -----------------------------
Ian B. Aaron Director and President August 6, 1999
/s/ Douglas S. Sinclair
- -----------------------------
Douglas S. Sinclair Chief Financial Officer August 6, 1999
/s/ Ronald I. Simon
- -----------------------------
Ronald I. Simon Vice Chairman of the Board August 6, 1999
/s/ Edward A. Bennett
- -----------------------------
Edward A. Bennett Director August 6, 1999
/s/ Sean P. Doherty
- -----------------------------
Sean P. Doherty Director August 6, 1999
/s/ Robert C. Harris, Jr.
- -----------------------------
Robert C. Harris, Jr. Director August 6, 1999
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
SOFTNET SYSTEMS, INC.
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit
-------------- ----------------------------------------------------------
4 Instruments Defining Rights of Shareholders. Reference is
made to Registrant's Registration Statement on Form 8-A/A
which is incorporated herein by reference pursuant to Item
3(c).
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent
Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 Form of Stock Option Agreement
99.2 Form of Notice of Grant of Stock Option
99.3 List of Employees Receiving Stock Options
99.4 Notice of Grant of Stock Option- Lalchandani*
99.5 Notice of Grant of Stock Option- Rheingold*
99.6 Notice of Grant of Stock Option- Kleeman*
* Denotes an option grant to a consultant.
<PAGE>
EXHIBIT 5
Opinion and Consent of Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER, & HARRISON LLP
Attorneys at Law
Two Embarcadero Place
220 Geng Road
Palo Alto, CA 94303-0913
650-424-0160 telephone
650-496-2777 facsimile
August 5, 1999
SOFTNET SYSTEMS, INC
650 Townsend Street
San Francisco, CA 94103
Re: SoftNet Systems, Inc.
Registration Statement for Registration
of 144,500 Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to SoftNet Systems, Inc., a Delaware
corporation (the "Company"), in connection with the registration on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended, of
144,500 shares of common stock for issuance (the "Shares") to certain employees
and Consultants pursuant to written compensation agreements (the "Options") with
such individuals.
This opinion is being furnished in accordance with the
requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the
corporate proceedings taken by the Company in connection with the grant of the
Options. Based on such review, we are of the opinion that if, as and when the
Shares are issued and sold (and the consideration therefor received) pursuant to
the provisions of the option agreements, and in accordance with the Registration
Statement such Shares will be duly authorized, legally issued, fully paid and
non-assessable.
We consent to the filing of this opinion letter as Exhibit 5
to the Registration Statement.
This opinion letter is rendered as of the date first written
above and we disclaim any obligation to advise you of facts, circumstances,
events or developments which hereafter may be brought to our attention and which
may alter, affect or modify the opinion expressed herein. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company, the Options or the Shares.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
/s/ BROBECK, PHLEGER & HARRISON
EXHIBIT 23.1
Consent of PricewaterhouseCoopers LLP, Independent Auditors
We consent to the incorporation by reference in the Registration
Statement on Form S-8, pertaining to certain option grants made by SoftNet
Systems. Inc. to employees and consultants of the Company, of our report dated
December 1, 1998, except for Note 18 which is dated January 13, 1999, with
respect to the consolidated financial statements of SoftNet Systems, Inc.
incorporated by reference in its Annual Report on Form 10-K for the year ended
September 30, 1998 and the related financial statement schedule included
therein, filed with the Securities and Exchange Commission. We hereby further
consent to the incorporation by reference of our report on Intelligent
Communications, Inc. Financial Statements dated February 9, 1999 which is
incorporated by reference in SoftNet Reports on Form 8-K/A filed with the
Commission on February 26, 1999 and March 12, 1999.
PRICEWATERHOUSECOOPERS LLP
/s/ PRICEWATERHOUSECOOPERS LLP
August 5, 1999
San Jose, California
EXHIBIT 99.1
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
SOFTNET SYSTEMS, INC.
STOCK OPTION AGREEMENT
RECITALS
A. The Corporation wishes to attract and retain high quality
individuals to positions with the Corporation and to provide incentive to such
employees and consultants of the Corporation by granting stock options and stock
purchase rights for Common Stock of the Corporation.
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary).
C. The Board of Directors has authorized the Secondary Stock Committee
of the Corporation to act on behalf of the Corporation with respect to this
option.
D. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of the Grant
Date, an option to purchase up to the number of Option Shares specified in the
Grant Notice. The Option Shares shall be purchasable from time to time during
the option term specified in Paragraph 2 at the Exercise Price.
2. Option Term. This option shall have a maximum term of ten (10) years measured
from the Grant Date and shall accordingly expire at the close of business on the
Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6.
3. Limited Transferability.
(a) This option shall be neither transferable nor assignable by Optionee other
than by will or by the laws of descent and distribution following Optionee's
death and may be exercised, during Optionee's lifetime, only by Optionee.
However, Optionee may designate one or more persons as the beneficiary or
beneficiaries of this option, and this option shall, in accordance with such
designation, automatically be transferred to such beneficiary or beneficiaries
upon the Optionee's death while holding such option. Such beneficiary or
beneficiaries shall take the transferred option subject to all the terms and
conditions of this Agreement, including (without limitation) the limited time
period during which this option may, pursuant to Paragraph 5, be exercised
following Optionee's death.
<PAGE>
(b) Optionee may, in connection with the Optionee's estate plan, assign this
option in whole or in part during Optionee's lifetime to one or more members of
Optionee's immediate family or to a trust established for the exclusive benefit
of one or more such family members. The assigned portion shall be exercisable
only by the person or persons who acquire a proprietary interest in the option
pursuant to such assignment. The terms applicable to the assigned portion shall
be the same as those in effect for this option immediately prior to such
assignment.
4. Dates of Exercise. This option shall become exercisable for the Option Shares
in one or more installments as specified in the Grant Notice. As the option
becomes exercisable for such installments, those installments shall accumulate
and the option shall remain exercisable for the accumulated installments until
the Expiration Date or sooner termination of the option term under Paragraph 5
or 6.
5. Cessation of Service. The option term specified in Paragraph 2 shall
terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(a) Should Optionee cease to remain in Service for any reason (other than death,
Permanent Disability or Misconduct) while holding this option, then Optionee
shall have a period of three (3) months (commencing with the date of such
cessation of Service) during which to exercise this option, but in no event
shall this option be exercisable at any time after the Expiration Date.
(b) Should Optionee die while holding this option, then the personal
representative of Optionee's estate or the person or persons to whom the option
is transferred pursuant to Optionee's will or in accordance with the laws of
inheritance shall have the right to exercise this option. However, if Optionee
has designated one or more beneficiaries of this option, then those persons
shall have the exclusive right to exercise this option following Optionee's
death. Such right shall lapse, and this option shall cease to be outstanding,
upon the earlier of (i) the expiration of the twelve (12)-month period measured
from the date of Optionee's death or (ii) the Expiration Date.
(c) Should Optionee cease Service by reason of Permanent Disability while
holding this option, then Optionee shall have a period of twelve (12) months
(commencing with the date of such cessation of Service) during which to exercise
this option. In no event shall this option be exercisable at any time after the
Expiration Date.
(d) During the limited period of post-Service exercisability, this option may
not be exercised in the aggregate for more than the number of Option Shares for
which the option is exercisable at the time of Optionee's cessation of Service.
Upon the expiration of such limited exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding for any
exercisable Option Shares for which the option has not been exercised. However,
this option shall, immediately upon Optionee's cessation of Service for any
reason, terminate and cease to be outstanding with respect to any Option Shares
for which this option is not otherwise at that time exercisable.
<PAGE>
(e) Should Optionee's Service be terminated for Misconduct, then this option
shall terminate immediately and cease to remain outstanding.
6. Special Acceleration of Option.
(a) This option, to the extent outstanding at the time of a Corporate
Transaction, but not otherwise fully exercisable, shall automatically accelerate
so that this option shall, immediately prior to the effective date of such
Corporate Transaction, become exercisable for all of the Option Shares at the
time subject to this option and may be exercised for any or all of those Option
Shares as fully vested shares of Common Stock. No such acceleration of this
option shall occur, however, if and to the extent: (i) this option is, in
connection with the Corporate Transaction, to be assumed by the successor
corporation (or parent thereof) or (ii) this option is to be replaced with a
cash incentive program of the successor corporation which preserves the spread
existing at the time of the Corporate Transaction on the Option Shares for which
this option is not otherwise at that time exercisable (the excess of the Fair
Market Value of those Option Shares over the aggregate Exercise Price payable
for such shares) and provides for subsequent payout in accordance with the same
option exercise/vesting schedule set forth in the Grant Notice.
(b) Immediately following the Corporate Transaction, this option shall terminate
and cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof) in connection with the Corporate Transaction.
(c) If this option is assumed in connection with a Corporate Transaction, then
this option shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to Optionee in consummation of such Corporate Transaction had the
option been exercised immediately prior to such Corporate Transaction, and
appropriate adjustments shall also be made to the Exercise Price, provided the
aggregate Exercise Price shall remain the same.
(d) This Agreement shall not in any way affect the right of the Corporation to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
<PAGE>
7. Adjustment in Option Shares. Should any change be made to the Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the total number and/or class of securities
subject to this option and (ii) the Exercise Price in order to reflect such
change and thereby preclude a dilution or enlargement of benefits hereunder.
8. Stockholder Rights. The holder of this option shall not have any stockholder
rights with respect to the Option Shares until such person shall have exercised
the option, paid the Exercise Price and become a holder of record of the
purchased shares.
9. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or any part of the
Option Shares for which this option is at the time exercisable, Optionee (or any
other person or persons exercising the option) must take the following actions:
(i) Execute and deliver to the Corporation a Notice of Exercise for the Option
Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased shares in one or more of
the following forms:
(A) cash or check made payable to the Corporation;
(B) a promissory note payable to the Corporation, but only to the extent
authorized by the Secondary Stock Committee in accordance with
Paragraph 13;
(C) shares of Common Stock held by Optionee (or any other person or
persons exercising the option) for the requisite period necessary to
avoid a charge to the Corporation's earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise Date; or
(D) through a special sale and remittance procedure pursuant to which
Optionee (or any other person or persons exercising the option) shall
concurrently provide irrevocable instructions (I) to a
Corporation-designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate Exercise Price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such exercise
and (II) to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete
the sale.
<PAGE>
Except to the extent the sale and remittance procedure is utilized in
connection with the option exercise, payment of the Exercise Price
must accompany the Notice of Exercise delivered to the Corporation in
connection with the option exercise.
(iii) Furnish to the Corporation appropriate documentation that the person or
persons exercising the option (if other than Optionee) have the right
to exercise this option.
(iv) Make appropriate arrangements with the Corporation (or Parent or
Subsidiary employing or retaining Optionee) for the satisfaction of all
Federal, state and local income and employment tax withholding
requirements applicable to the option exercise.
(b) As soon as practical after the Exercise Date, the Corporation shall issue to
or on behalf of Optionee (or any other person or persons exercising this option)
a certificate for the purchased Option Shares, with the appropriate legends
affixed thereto.
(c) In no event may this option be exercised for any fractional shares.
10. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of the Option Shares upon such
exercise shall be subject to compliance by the Corporation and Optionee with all
applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange (or the Nasdaq National Market, if applicable)
on which the Common Stock may be listed for trading at the time of such exercise
and issuance.
(b) The inability of the Corporation to obtain approval from any regulatory body
having authority deemed by the Corporation to be necessary to the lawful
issuance and sale of any Common Stock pursuant to this option shall relieve the
Corporation of any liability with respect to the non-issuance or sale of the
Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
11. Successors and Assigns. Except to the extent otherwise provided in
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns, the legal representatives, heirs and legatees of
Optionee's estate and any beneficiaries of this option designated by Optionee.
12. Notices. Any notice required to be given or delivered to the Corporation
under the terms of this Agreement shall be in writing and addressed to the
Corporation at its principal corporate offices. Any notice required to be given
or delivered to Optionee shall be in writing and addressed to Optionee at the
address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
<PAGE>
13. Financing. The Secondary Stock Committee may, in its absolute discretion and
without any obligation to do so, permit Optionee to pay the Exercise Price for
the purchased Option Shares by delivering a full-recourse promissory note
payable to the Corporation. The terms of any such promissory note (including the
interest rate, the requirements for collateral and the terms of repayment) shall
be established by the Secondary Stock Committee in its sole discretion.
14. Construction. All decisions of the Secondary Stock Committee with respect to
any question or issue arising under this Agreement shall be conclusive and
binding on all persons having an interest in this option.
15. Governing Law. The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify SoftNet Systems, Inc. (the "Corporation") that
I elect to purchase shares of the Corporation's Common Stock (the "Purchased
Shares") at the option exercise price of $ per share (the "Exercise Price")
pursuant to that certain option (the "Option") granted to me on , _______.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
_____________, ________
Date
____________________________________________
Optionee
Address: ___________________________________
____________________________________________
Print name in exact
manner it is to appear ____________________________________________
on the stock certificate:
____________________________________________
Address to which certificate
is to be sent, if different ____________________________________________
from address above:
Social Security Number: ____________________________________________
<PAGE>
APPENDIX
The following definitions shall be in effect under the
Agreement:
A. Agreement shall mean this Stock Option Agreement.
B. Board shall mean the Corporation's Board of Directors.
C. Common Stock shall mean shares of the Corporation's common stock.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
E. Corporate Transaction shall mean either of the following stockholder-approved
transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities are transferred to a
person or persons different from the persons holding those
securities immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
F. Corporation shall mean SoftNet Systems, Inc., a Delaware corporation, and any
successor corporation to all or substantially all of the assets or voting stock
of SoftNet Systems, Inc. which shall by appropriate action adopt the option.
G. Employee shall mean an individual who is in the employ of the Corporation (or
any Parent or Subsidiary), subject to the control and direction of the employer
entity as to both the work to be performed and the manner and method of
performance.
H. Exercise Date shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.
I. Exercise Price shall mean the exercise price per Option Share as specified in
the Grant Notice.
J. Expiration Date shall mean the date on which the option expires as specified
in the Grant Notice.
K. Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be deemed equal to the
closing selling price per share of Common Stock on the date in
question, as the price is reported by the National Association of
Securities Dealers on the Nasdaq National Market. If there is no
closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists,
or
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be deemed equal to the closing
selling price per share of Common Stock on the date in question
on the Stock Exchange determined by the Secondary Stock Committee
to be the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which
such quotation exists.
L. Grant Date shall mean the date of grant of the option as specified in the
Grant Notice.
M. Grant Notice shall mean the Notice of Grant of Stock Option accompanying the
Agreement, pursuant to which Optionee has been informed of the basic terms of
the option evidenced hereby.
N. Misconduct shall mean the commission of any act of fraud, embezzlement or
dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee adversely affecting
the business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be deemed to be inclusive of
all the acts or omissions which the Corporation (or any Parent or Subsidiary)
may consider as grounds for the dismissal or discharge of Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary).
O. Notice of Exercise shall mean the notice of exercise in the form attached
hereto as Exhibit I.
P. Option Shares shall mean the number of shares of Common Stock subject to the
option as specified in the Grant Notice.
Q. Optionee shall mean the person to whom the option is granted as specified in
the Grant Notice.
R. Parent shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation, provided each corporation in
the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
S. Permanent Disability shall mean the inability of Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which is expected to result in death or has lasted or can be
expected to last for a continuous period of twelve (12) months or more.
T. Secondary Stock Committee shall mean the Secondary Stock Committee of the
Board of Directors.
U. Service shall mean the Optionee's performance of services for the Corporation
(or any Parent or Subsidiary) in the capacity of an Employee, a non-employee
member of the board of directors or a consultant or independent advisor.
V. Stock Exchange shall mean the American Stock Exchange or the New York Stock
Exchange.
W. Subsidiary shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
EXHIBIT 99.2
THE SECURITIES GRANTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
SOFTNET SYSTEMS, INC.
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following option grant (the
"Option") to purchase shares of the Common Stock of SoftNet Systems, Inc. (the
"Corporation"):
Optionee:
Grant Date:
Vesting Commencement Date:
Exercise Price: $ per share
Number of Option Shares: shares
Expiration Date:
Type of Option: Non-Statutory Stock Option
Exercise Schedule: The Option shall become exercisable for
twenty-five percent (25%) of the Option Shares upon Optionee's
completion of one (1) year of Service measured from the
Vesting Commencement Date and shall become exercisable for the
balance of the Option Shares in thirty-six (36) successive
equal monthly installments upon Optionee's completion of each
additional month of Service over the thirty-six (36) month
period measured from the first anniversary of the Vesting
Commencement Date. In no event shall the Option become
exercisable for any additional Option Shares after Optionee's
cessation of Service.
Optionee understands and agrees that the Option is granted
outside of the Corporation's stock option and stock incentive plans. Optionee
further agrees to be bound by the terms of the Option as set forth in the Stock
Option Agreement attached hereto as Exhibit A.
Employment at Will. Nothing in this Notice or in the attached
Stock Option Agreement shall confer upon Optionee any right to continue in
Service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Parent or Subsidiary
employing or retaining Optionee) or of Optionee, which rights are hereby
expressly reserved by each, to terminate Optionee's Service at any time for any
reason, with or without cause.
Definitions. All capitalized terms in this Notice shall
have the meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
DATED: ,1999
SOFTNET SYSTEMS, INC.
By:
Title:
OPTIONEE
Address:
ATTACHMENTS
Exhibit A - Stock Option Agreement
<PAGE>
EXHIBIT A
STOCK OPTION AGREEMENT
EXHIBIT 99.3
SoftNet Systems, Inc.
List of Employees and Consultants receiving options outside of incentive plans
<TABLE>
<CAPTION>
Number
EMPLOYEES of Options Vest
- ---------- Issued Grant Start Date Exercise Expiration Vesting
Optionee (NSOs) Date (Hire date) Price Date Schedule
- -------- ------ ---- ----------- ----- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Heyer, Mark 2,500 07/16/99 09/01/98 $ 7.3750 07/16/09 25% the first year, followed by 36 months of monthly vesting
Alarcon-Carillo,
Victoria 1,000 04/14/99 03/22/99 $ 29.8750 04/14/09 25% the first year, followed by 36 months of monthly vesting
Andre, Eric 2,000 04/14/99 03/08/99 $ 21.5000 04/14/09 25% the first year, followed by 36 months of monthly vesting
Castillo, Rebecca 1,000 04/14/99 03/01/99 $ 21.5625 04/14/09 25% the first year, followed by 36 months of monthly vesting
Centeno, Sonja 1,000 04/14/99 03/15/99 $ 21.0000 04/14/09 25% the first year, followed by 36 months of monthly vesting
Clark, Bill 5,000 04/14/99 03/15/99 $ 21.0000 04/14/09 25% the first year, followed by 36 months of monthly vesting
Garcia, Ivan 2,000 04/14/99 04/05/99 $ 40.8125 04/14/09 25% the first year, followed by 36 months of monthly vesting
Henkelman, Michael 2,000 04/14/99 03/23/99 $ 28.3750 04/14/09 25% the first year, followed by 36 months of monthly vesting
Kendall, Jim 5,000 04/14/99 04/05/99 $ 40.8125 04/14/09 25% the first year, followed by 36 months of monthly vesting
Kirkley, Michael 1,000 04/14/99 03/29/99 $ 39.0000 04/14/09 25% the first year, followed by 36 months of monthly vesting
Lazarowich, Kam 3,000 04/14/99 04/06/99 $ 39.8750 04/14/09 25% the first year, followed by 36 months of monthly vesting
Le Mond, Michael 3,000 04/14/99 03/29/99 $ 39.0000 04/14/09 25% the first year, followed by 36 months of monthly vesting
Lund, Timothy 1,000 04/14/99 04/05/99 $ 40.8125 04/14/09 25% the first year, followed by 36 months of monthly vesting
McDonald, Larry 5,000 04/14/99 04/06/99 $ 39.8750 04/14/09 25% the first year, followed by 36 months of monthly vesting
Moreno, Monique 1,000 04/14/99 04/05/99 $ 40.8125 04/14/09 25% the first year, followed by 36 months of monthly vesting
Nguyen, Chu 5,000 04/14/99 04/07/99 $ 40.8125 04/14/09 25% the first year, followed by 36 months of monthly vesting
Olivares, Jose 2,000 04/14/99 03/10/99 $ 20.5000 04/14/09 25% the first year, followed by 36 months of monthly vesting
Sayer, Alexander 1,000 04/14/99 03/01/99 $ 21.5625 04/14/09 25% the first year, followed by 36 months of monthly vesting
Smith, Guy 5,000 04/14/99 03/22/99 $ 29.8750 04/14/09 25% the first year, followed by 36 months of monthly vesting
Wolters, Juan 3,000 04/14/99 04/05/99 $ 40.8125 04/14/09 25% the first year, followed by 36 months of monthly vesting
Woods, Douglas 1,000 04/14/99 03/15/99 $ 21.0000 04/14/09 25% the first year, followed by 36 months of monthly vesting
Zhang, Jacob 2,000 04/14/99 04/05/99 $ 40.8125 04/14/09 25% the first year, followed by 36 months of monthly vesting
---------
54,500
Number
CONSULTANTS of Options
- -------------- Issued Vest Exercise Expiration Vesting
Optionee (NSOs) Grant Date Start Date Price Date Schedule
- -------- ------ ---------- ---------- ----- ---- --------
Lalchandani, Atam 50,000 05/14/98 05/14/98 $ 10.1875 05/14/08 36 months of equal monthly vesting measured from the
Grant Date. Recently accelerated to 100% vested.
Rheingold, Howard 25,000 10/08/98 07/01/98 $ 7.3750 07/01/08 One-third the first year, followed by 24 months of equal
monthly vesting measured from the Vest Start Date.
Kleeman, Michael 15,000 10/08/98 09/30/98 $ 7.3750 09/30/08 One-third the first year, followed by 24 months of equal
monthly vesting measured from the Vest Start Date.
---------
90,000
=========
Total Shares 144,500
=========
</TABLE>
EXHIBIT 99.4
SOFTNET SYSTEMS, INC.
CONSULTANT STOCK OPTION AGREEMENT
THIS CONSULTANT STOCK OPTION AGREEMENT (the "Agreement"), dated as of
this 14th day of May, 1998, is made by and between SoftNet Systems, Inc., a New
York corporation (the "Company") and Atam Lalchandani (the "Option Holder").
1. Grant of Option. The Company hereby grants to the Option Holder as of May 14,
1998 (the "Option Date") an option (the "Option") to purchase from the Company a
total of 50,000 shares (the "Shares") of the Common Stock, par value $.01, of
the Company at $10.1875 per share, said purchase price being 100% of the fair
market value of a share of Common Stock on the Option Date, during the periods
and upon the terms and conditions set forth in this Agreement. This Option is a
Non-Qualified Stock Option and not an Incentive Stock Option.
2. Time of Exercise.
(a) Except as provided elsewhere in this Agreement, this
Option is exercisable and shall vest, with respect to 1/36 of the total option
Shares, after each monthly anniversary of the Option Date for the 36 months
following the date hereof.
(b) Notwithstanding the provisions of Section 2(a) hereof, in
the event that the Consulting Agreement between the Company and the Option
Holder dated the date hereof (the "Consulting Agreement") is terminated by
either party for any reason after the first anniversary of the Option Date, the
Option shall be exercisable with respect to 100% of the total option Shares.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Company may in its sole discretion, adjust or amend any
outstanding Option if the Company determines such adjustment is necessary in
order to prevent dilution or undue enlargement of the intended benefits under
the Option:
(i) in the event of a stock dividend or other distribution of
stock, recapitalization, stock split, reverse stock split,
reorganization, repurchase or exchange; or
(ii) in recognition of unusual or nonrecurring events affecting the
Company or its affiliates, or the financial statements of the
Company or its affiliates or due to changes in accounting
principles or laws or regulations or the interpretation
thereof.
(a) In the event that the Company is merged in or
consolidated with another corporation such that the Company is not the surviving
corporation, or upon a sale of substantially all of the assets of the Company
and subsequent liquidation, the Company may determine in its discretion that
each outstanding Option at the time of such merger or consolidation shall be
exchangeable into such other class of securities received by other holders of
shares at the time of the transaction. The Company, however, (i) may waive any
limitations imposed herein so that all Options from and after the date prior to
the effective date of such merger, consolidation, or sale and liquidation, as
the case may be, as specified by the Company, shall be exercisable in full; and
(ii) all outstanding Options may be canceled by the Company as of the effective
date of any such merger, consolidation or sale and liquidation provided that (x)
notice of such cancellation shall be given to the Option Holder and (y) the
Option Holder shall have the right to exercise such Option in full during a
30-day period preceding the effective date of such merger, consolidation or sale
and liquidation.
(b) In the event the Company or any of its affiliates shall
assume this Option, or the right or obligation to make future such options in
connection with the acquisition of another business or another corporation or
business entity, the Company may make such adjustments, in the terms of options
as it shall deem appropriate in order to achieve reasonable comparability or
other equitable relationship between the assumed options and the Options granted
under the Plan so adjusted.
3. Term.
(a) This Option will terminate at 5:00 p.m. Pacific time on
the tenth anniversary of the Option Date.
(b) Nothing in this Section shall be construed as enlarging or
amending the time of exercise as described in Section 2 hereof.
4. Who May Exercise. This Option may be exercised only by the Option Holder
during his or her lifetime, or, if permissible under applicable law, the Option
Holder's legally appointed guardian or legal representative, or the Option
Holder's estate upon the death of the Option Holder.
5. Restrictions on Exercise.
(a) This Option may be exercised only with respect to fully
vested Shares and no fractional Shares shall be issued;
(b) This Option may be exercised only on or after thirty (30)
days after the Option Date;
(c) This Option may not be exercised in whole or in part
after the expiration of the Option period specified in Section 3(a), subject to
the right of the Company to extend the term of this Option;
(d) Upon the death of the Option Holder (i) while the
Consulting Agreement is in effect, or (ii) within one (1) year of the
termination of the Consulting Agreement, then, in any such event, the Option may
be exercised by the person(s) to whom such Option Holder's rights with respect
to this Option are transferred by will or the laws of descent and distribution
prior to the expiration of the earlier of: (1) the date specified in Section
3(a) hereof, or (2) one year after the Option Holder's death; such person(s)
shall be entitled to purchase all of the vested Shares with respect to which the
Option Holder was entitled to exercise this Option pursuant to Section 2 hereof
immediately prior to the Option Holder's death, and any part of this Option not
so exercisable will lapse on the Option Holder's death; and
(e) Upon the termination of the Consulting Agreement, this
Option may be exercised by the Option Holder prior to the expiration of the
earlier of: (1) the date specified in Section 3(a) hereof, or (2) one (1) year
after the date of such termination, unless at the time of such termination the
Option Holder is serving the Company in another capacity, such as an officer,
director or pursuant to a different services agreement, in which event the time
period specified in this clause (2) shall extend until one (1) year after the
termination of such other service capacity. The Option Holder shall be entitled
to purchase those Shares in which he/she was vested pursuant to Section 2 hereof
immediately prior to, or by reason of, such termination of the Consulting
Agreement, and any part of this Option not yet vested as of the date of such
termination will automatically lapse.
6. Manner of Exercise. Subject to such rules and regulations as the Company may
from time to time adopt, the Option Holder shall, in order to exercise this
Option, give written notice to the Company which states the number of Shares
being purchased and the purchase price to be paid therefor, accompanied by the
following:
(a) Payment, in full, of the amount required to be paid
pursuant to this Agreement, which may be made by such method(s) as the Company
shall determine, including, without limitation, cash, Shares, other securities,
other property, or any combination thereof; provided that the combined value, as
determined by the Company, of all cash and cash equivalents and the fair market
value of any such Shares or other property so tendered to the Company, as of the
date of such tender, is at least equal to the full amount required to be paid
pursuant to this Agreement; and
(b) Such documents as the Company in its discretion deems
necessary (i) to evidence the exercise, in whole or in part, of the Option
evidenced by this Agreement, (ii) to determine whether registration is then
required under the Securities Act of 1933, as amended (the "Act"), or by any
other law, as then in effect, and (iii) to comply with or satisfy the
requirements of the Act or any other law, as then in effect.
7. Cashless Exercise. Notwithstanding the foregoing Section 6 regarding payment
of the exercise price of the Option, the Option Holder may elect to receive a
reduced number of Shares in lieu of tendering the exercise price in cash
("Cashless Exercise"). In such case, the number of Shares to be issued to the
Option Holder shall be computed using the following formula:
X=Y(A-B)
-------
A
where: X = the number of Shares to be issued to the Option Holder;
Y = the number of Shares to be exercised under this Option;
A = the Market Value (defined below) of one share of Common
Stock on the trading day immediately prior to
the date that the Option Holder notifies the
Company of his full or partial exercise hereof;
and
B = the exercise price per share then in effect under
this Option.
The term "Market Value" means, for any security as of any date, the last
reported sale price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
Financial Markets or a comparable reporting service of national reputation
selected by the Company and reasonably acceptable to the Option Holder if
Bloomberg Financial Markets is not then reporting last reported sale prices of
such security (collectively, "Bloomberg"), or if the foregoing does not apply,
the last reported sale price of such security in the over-the-counter market or
the electronic bulletin board of such security as reported by Bloomberg, or, if
no sale price is reported for such security by Bloomberg, the average of the bid
prices of any market makers for such security that are listed in the "pink
sheets" by the National Quotation Bureau, Inc. If the Market Value cannot be
calculated for such security on such date on any of the foregoing bases, the
Market Value of such security on such date shall be the fair market value as
reasonably determined by the Board of Directors of the Company.
8. Compliance With Law and Regulations. This Option and the obligation of the
Company to sell and deliver Shares hereunder shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required. The Company shall not be
required to issue or deliver any certificates for Shares prior to (i) the
listing of such Shares on any stock exchange on which the Shares may then be
listed, and (ii) the completion of any registration or qualification of such
Shares under any federal or state law, or any rule or regulation of any
government body which the Company shall, in its sole discretion, determine to be
necessary or advisable. Moreover, this Option may not be exercised if its
exercise, or the receipt of Shares pursuant thereto, would be contrary to
applicable law.
9. Withholding. The Company or any of its affiliates shall be authorized, to the
extent, in the Company's judgment, required by applicable law, to withhold from
any Option exercised, from any payment due or transfer made under this Option,
or under the Plan, or from any compensation or other amount owing to an Option
Holder, the amount (in cash, Shares, other securities, or other property) of
withholding taxes due in respect of this Option, its exercise, or any payment or
transfer under this Option or under the Plan, and to take such action as may be
necessary in the opinion of the Company or its affiliates to satisfy all
obligations for the payment of such taxes.
10. No Right To Continued Consulting. The grant of this Option shall not be
construed as giving the Option Holder the right to be retained as a consultant
of the Company. Further, the Company may at any time dismiss an Option Holder
from a consultancy, free from any liability, or any claim under the Plan or this
Option Agreement, unless otherwise expressly provided in the Plan or in this
Option Agreement.
11. Non-Assignability. This Option is not assignable or transferable by the
Option Holder, except by the Option Holder's guardian or legal representative
upon his death, in accordance with his will or by the laws of descent and
distribution.
12. Rights as Shareholder. The Option Holder will have no rights as a
shareholder of the Company with respect to any Shares covered by this Option
until the issuance of a stock certificate or stock certificates to the Option
Holder for the Shares. No adjustment shall be made for distributions or other
rights for which the record date is prior to the issuance of such stock
certificate or stock certificates.
13. Amendments. Any amendment, alteration, suspension, discontinuation,
cancellation or termination of the provisions of this Agreement that would
impair the rights of any Option Holder or the beneficiary of any such Option
Holder shall not, to that extent, be effective without the consent of the Option
Holder or the beneficiary of such Option Holder, as the case may be.
14. Entire Agreement. This Agreement, together with the Plan which is
incorporated herein by reference, embody the complete agreement and
understanding of the Option Holder and the Company and supersede and preempt any
prior understandings, agreements or representations by either of them, written
or oral, with respect to the subject matter hereof in any way.
15. Law Governing. This Agreement is intended to be performed in the State of
California and shall be construed and enforced in accordance with and governed
by the laws of such state and the federal laws of the United States of America.
IN WITNESS WHEREOF, the Company and the Option Holder have duly
executed this Agreement as of the date specified in Section 1 hereof.
COMPANY:
SOFTNET SYSTEMS, INC.
By: /s/ Lawrence B. Brilliant
--------------------------
Its President
EXHIBIT 99.5
SOFTNET SYSTEMS, INC.
CONSULTANT STOCK OPTION AGREEMENT
THIS CONSULTANT STOCK OPTION AGREEMENT (the "Agreement"), dated as of
this 8th day of October, 1998, is made by and between SoftNet Systems, Inc., a
New York corporation (the "Company") and Howard Rheingold (the "Option Holder").
1. Grant of Option. The Company hereby grants to the Option Holder as of October
8, 1998 (the "Option Date") an option (the "Option") to purchase from the
Company a total of 25,000 shares (the "Shares") of the Common Stock, par value
$.01, of the Company at $7.375 per share, said purchase price being 100% of the
fair market value of a share of Common Stock on the Option Date, during the
periods and upon the terms and conditions set forth in this Agreement. This
Option is a Non-Qualified Stock Option and not an Incentive Stock Option.
2. Time of Exercise.
(a) Except as provided elsewhere in this Agreement, this
Option is exercisable and shall vest, with respect to one-third of the total
shares as of the first anniversary of the Vesting Date, which is July 1, 1998,
and thereafter 1/36 of the total option Shares, after each monthly anniversary
of the Vesting Date for the 24 months following the first anniversary of the
Vesting Date.
(b) Notwithstanding the provisions of Section 2(a) hereof, in
the event that the Consulting Agreement between the Company and the Option
Holder dated the date hereof (the "Consulting Agreement") is terminated by the
Company for any reason:
(i) after the first anniversary of the Vesting Date,
other than for cause, the Option shall be exercisable
with respect to 100% of the total option Shares, or
(ii) up to the first anniversary of the Vesting Date,
the Option shall be exercisable with respect to
one-third of the total option Stares.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Company may in its sole discretion, adjust or amend any
outstanding Option if the Company determines such adjustment is necessary in
order to prevent dilution or undue enlargement of the intended benefits under
the Option:
(i) in the event of a stock dividend or other
distribution of stock, recapitalization, stock
split, reverse stock split, reorganization,
repurchase or exchange; or
(ii) in recognition of unusual or nonrecurring events
affecting the Company or its affiliates, or the
financial statements of the Company or its
affiliates or due to changes in accounting
principles or laws or regulations or the
interpretation thereof.
(a) In the event that the Company is merged in or consolidated with another
corporation such that the Company is not the surviving corporation, or upon a
sale of substantially all of the assets of the Company and subsequent
liquidation, the Company may determine in its discretion that each outstanding
Option at the time of such merger or consolidation shall be exchangeable into
such other class of securities received by other holders of shares at the time
of the transaction. The Company, however, (i) may waive any limitations imposed
herein so that all Options from and after the date prior to the effective date
of such merger, consolidation, or sale and liquidation, as the case may be, as
specified by the Company, shall be exercisable in full; and (ii) all outstanding
Options may be canceled by the Company as of the effective date of any such
merger, consolidation or sale and liquidation provided that (x) notice of such
cancellation shall be given to the Option Holder and (y) the Option Holder shall
have the right to exercise such Option in full during a 30-day period preceding
the effective date of such merger, consolidation or sale and liquidation.
(b) In the event the Company or any of its affiliates shall assume this Option,
or the right or obligation to make future such options in connection with the
acquisition of another business or another corporation or business entity, the
Company may make such adjustments, in the terms of options as it shall deem
appropriate in order to achieve reasonable comparability or other equitable
relationship between the assumed options and the Options granted under the Plan
so adjusted.
3. Term.
(a) This Option will terminate at 5:00 p.m. Pacific time on
the tenth anniversary of the Option Date.
(b) Nothing in this Section shall be construed as enlarging or
amending the time of exercise as described in Section 2 hereof.
4. Who May Exercise. This Option may be exercised only by the Option Holder
during his or her lifetime, or, if permissible under applicable law, the Option
Holder's legally appointed guardian or legal representative, or the Option
Holder's estate upon the death of the Option Holder.
5. Restrictions on Exercise.
(a) This Option may be exercised only with respect to fully
vested Shares and no fractional Shares shall be issued;
(b) This Option may be exercised only on or after the first
anniversary of the Vesting Date;
(c) This Option may not be exercised in whole or in part after
the expiration of the Option period specified in Section 3(a), subject to the
right of the Company to extend the term of this Option;
(d) Upon the death of the Option Holder (i) while the
Consulting Agreement is in effect, or (ii) within one (1) year of the
termination of the Consulting Agreement, then, in any such event, the Option may
be exercised by the person(s) to whom such Option Holder's rights with respect
to this Option are transferred by will or the laws of descent and distribution
prior to the expiration of the earlier of: (1) the date specified in Section
3(a) hereof, or (2) one year after the Option Holder's death; such person(s)
shall be entitled to purchase all of the vested Shares with respect to which the
Option Holder was entitled to exercise this Option pursuant to Section 2 hereof
immediately prior to the Option Holder's death, and any part of this Option not
so exercisable will lapse on the Option Holder's death; and
(e) Upon the termination of the Consulting Agreement, this
Option may be exercised by the Option Holder prior to the expiration of the
earlier of: (1) the date specified in Section 3(a) hereof, or (2) one (1) year
after the date of such termination, unless at the time of such termination the
Option Holder is serving the Company in another capacity, such as an officer,
director or pursuant to a different services agreement, in which event the time
period specified in this clause (2) shall extend until one (1) year after the
termination of such other service capacity. The Option Holder shall be entitled
to purchase those Shares in which he/she was vested pursuant to Section 2 hereof
immediately prior to, or by reason of, such termination of the Consulting
Agreement, and any part of this Option not yet vested as of the date of such
termination will automatically lapse.
6. Manner of Exercise. Subject to such rules and regulations as the Company may
from time to time adopt, the Option Holder shall, in order to exercise this
Option, give written notice to the Company which states the number of Shares
being purchased and the purchase price to be paid therefor, accompanied by the
following:
(a) Payment, in full, of the amount required to be paid
pursuant to this Agreement, which may be made by such method(s) as the Company
shall determine, including, without limitation, cash, Shares, other securities,
other property, or any combination thereof; provided that the combined value, as
determined by the Company, of all cash and cash equivalents and the fair market
value of any such Shares or other property so tendered to the Company, as of the
date of such tender, is at least equal to the full amount required to be paid
pursuant to this Agreement; and
(b) Such documents as the Company in its discretion deems
necessary (i) to evidence the exercise, in whole or in part, of the Option
evidenced by this Agreement, (ii) to determine whether registration is then
required under the Securities Act of 1933, as amended (the "Act"), or by any
other law, as then in effect, and (iii) to comply with or satisfy the
requirements of the Act or any other law, as then in effect.
7. Cashless Exercise. Notwithstanding the foregoing Section 6 regarding payment
of the exercise price of the Option, the Option Holder may elect to receive a
reduced number of Shares in lieu of tendering the exercise price in cash
("Cashless Exercise"). In such case, the number of Shares to be issued to the
Option Holder shall be computed using the following formula:
X=Y(A-B)
------
A
where: X = the number of Shares to be issued to the Option Holder;
Y = the number of Shares to be exercised under this Option;
A = the Market Value (defined below) of one share of Common
Stock on the trading day immediately prior to
the date that the Option Holder notifies the
Company of his full or partial exercise hereof;
and
B = the exercise price per share then in effect under
this Option.
The term "Market Value" means, for any security as of any date, the last
reported sale price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
Financial Markets or a comparable reporting service of national reputation
selected by the Company and reasonably acceptable to the Option Holder if
Bloomberg Financial Markets is not then reporting last reported sale prices of
such security (collectively, "Bloomberg"), or if the foregoing does not apply,
the last reported sale price of such security in the over-the-counter market or
the electronic bulletin board of such security as reported by Bloomberg, or, if
no sale price is reported for such security by Bloomberg, the average of the bid
prices of any market makers for such security that are listed in the "pink
sheets" by the National Quotation Bureau, Inc. If the Market Value cannot be
calculated for such security on such date on any of the foregoing bases, the
Market Value of such security on such date shall be the fair market value as
reasonably determined by the Board of Directors of the Company.
8. Compliance With Law and Regulations. This Option and the obligation of the
Company to sell and deliver Shares hereunder shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required. The Company shall not be
required to issue or deliver any certificates for Shares prior to (i) the
listing of such Shares on any stock exchange on which the Shares may then be
listed, and (ii) the completion of any registration or qualification of such
Shares under any federal or state law, or any rule or regulation of any
government body which the Company shall, in its sole discretion, determine to be
necessary or advisable. Moreover, this Option may not be exercised if its
exercise, or the receipt of Shares pursuant thereto, would be contrary to
applicable law.
9. Withholding. The Company or any of its affiliates shall be authorized, to the
extent, in the Company's judgment, required by applicable law, to withhold from
any Option exercised, from any payment due or transfer made under this Option,
or under the Plan, or from any compensation or other amount owing to an Option
Holder, the amount (in cash, Shares, other securities, or other property) of
withholding taxes due in respect of this Option, its exercise, or any payment or
transfer under this Option or under the Plan, and to take such action as may be
necessary in the opinion of the Company or its affiliates to satisfy all
obligations for the payment of such taxes.
10. No Right To Continued Consulting. The grant of this Option shall not be
construed as giving the Option Holder the right to be retained as a consultant
of the Company. Further, the Company may at any time dismiss an Option Holder
from a consultancy, free from any liability, or any claim under the Plan or this
Option Agreement, unless otherwise expressly provided in the Plan or in this
Option Agreement.
11. Non-Assignability. This Option is not assignable or transferable by the
Option Holder, except by the Option Holder's guardian or legal representative
upon his death, in accordance with his will or by the laws of descent and
distribution.
12. Rights as Shareholder. The Option Holder will have no rights as a
shareholder of the Company with respect to any Shares covered by this Option
until the issuance of a stock certificate or stock certificates to the Option
Holder for the Shares. No adjustment shall be made for distributions or other
rights for which the record date is prior to the issuance of such stock
certificate or stock certificates.
13. Amendments. Any amendment, alteration, suspension, discontinuation,
cancellation or termination of the provisions of this Agreement that would
impair the rights of any Option Holder or the beneficiary of any such Option
Holder shall not, to that extent, be effective without the consent of the Option
Holder or the beneficiary of such Option Holder, as the case may be.
14. Entire Agreement. This Agreement, together with the Plan which is
incorporated herein by reference, embody the complete agreement and
understanding of the Option Holder and the Company and supersede and preempt any
prior understandings, agreements or representations by either of them, written
or oral, with respect to the subject matter hereof in any way.
15. Law Governing. This Agreement is intended to be performed in the State of
California and shall be construed and enforced in accordance with and governed
by the laws of such state and the federal laws of the United States of America.
16. Restriction on Issuance of Shares.
16.1 Legality of Issuance. The Company shall not be obligated
to sell or issue any Shares pursuant to this Agreement if such sale or issuance,
in the opinion of the Company and the Company's counsel, might constitute a
violation by the Company of law, including, without limitation, the provisions
of the Securities Act of 1933, as amended (the "Securities Act").
16.2 Registration or Qualification of Securities. The Company
may, but shall not be required to, register or qualify the issuance of this
Option or the issuance or sale of any Shares pursuant hereto under the
Securities Act or any other applicable law. The Company shall not be obligated
to take any affirmative action in order to cause the grant or exercise of this
Option or the issuance or sale of any Shares pursuant hereto to comply with any
law.
17. Restriction on Transfer. Regardless of whether the sale or issuance
of the Shares has been registered under the Securities Act or has been
registered or qualified under the securities laws of any state, the Company may
impose restrictions upon the sale, pledge or other transfer of the Shares
(including the placement of appropriate legends on stock certificates
representing any Shares) if, in the opinion of the Company and the Company's
counsel, such restrictions are necessary or desirable in order to achieve
compliance with the provisions of the Securities Act, the securities laws of any
state, or any other law.
18. Stock Certificate Restrictive Legends. Stock certificates
evidencing the Shares may bear such restrictive legends as the Company and the
Company's counsel deem necessary or advisable under applicable law or pursuant
to this Agreement, including, without limitation, the following legend:
"The offering and sale of the securities represented hereby
have not been registered under the Securities Act of 1933, as amended (the
"Act"). Any transfer of such securities will be invalid unless a registration
statement under the Act is in effect as to such transfer or in the opinion of
counsel for the Company such registration is unnecessary in order for such
transfer to comply with the Act."
19. Representations, Warranties, Covenants, and Acknowledgments Upon
Exercise of Option. The issuance of Shares hereunder may be conditioned upon
receipt by the Company of certain representations, warranties, covenants and
acknowledgments by Optionee or such other person exercising the Option, if in
the opinion of the Company and the Company's counsel, such representations,
warranties, covenants and acknowledgments are necessary or desirable in order to
achieve compliance with the provisions of the Securities Act, the securities
laws of any state, or any other law.
IN WITNESS WHEREOF, the Company and the Option Holder have duly
executed this Agreement as of the date specified in Section 1 hereof.
COMPANY:
SOFTNET SYSTEMS, INC.
/s/Lawrence B. Brilliant
--------------------------
By Lawrence B. Brilliant
/s/ Howard Rheingold
--------------------------
Howard Rheingold
EXHIBIT 99.6
SOFTNET SYSTEMS, INC.
CONSULTANT STOCK OPTION AGREEMENT
THIS CONSULTANT STOCK OPTION AGREEMENT (the "Agreement"), dated as of
this 8th day of October, 1998, is made by and between SoftNet Systems, Inc., a
New York corporation (the "Company") and Michael Kleeman (the "Option Holder").
1. Grant of Option. The Company hereby grants to the Option Holder as of October
8, 1998 (the "Option Date") an option (the "Option") to purchase from the
Company a total of 15,000 shares (the "Shares") of the Common Stock, par value
$.01, of the Company at $7.375 per share, said purchase price being 100% of the
fair market value of a share of Common Stock on the Option Date, during the
periods and upon the terms and conditions set forth in this Agreement. This
Option is a Non-Qualified Stock Option and not an Incentive Stock Option.
2. Time of Exercise.
(a) Except as provided elsewhere in this Agreement, this
Option is exercisable and shall vest, with respect to one-third of the total
shares as of the first anniversary of the Vesting Date, which is September 30,
1998, and thereafter 1/36 of the total option Shares, after each monthly
anniversary of the Vesting Date for the 24 months following the first
anniversary of the Vesting Date.
(b) Notwithstanding the provisions of Section 2(a) hereof, in
the event that the Consulting Agreement between the Company and the Option
Holder dated the date hereof (the "Consulting Agreement") is terminated by the
Company for any reason:
(i) after the first anniversary of the Vesting Date,
other than for cause, the Option shall be exercisable
with respect to 100% of the total option Shares, or
(ii) up to the first anniversary of the Vesting Date,
the Option shall be exercisable with respect to
one-third of the total option Stares.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Company may in its sole discretion, adjust or amend any
outstanding Option if the Company determines such adjustment is necessary in
order to prevent dilution or undue enlargement of the intended benefits under
the Option:
(i) in the event of a stock dividend or other
distribution of stock, recapitalization, stock
split, reverse stock split, reorganization,
repurchase or exchange; or
(ii) in recognition of unusual or nonrecurring events
affecting the Company or its affiliates, or the
financial statements of the Company or its
affiliates or due to changes in accounting
principles or laws or regulations or the
interpretation thereof.
(a) In the event that the Company is merged in or consolidated with another
corporation such that the Company is not the surviving corporation, or upon a
sale of substantially all of the assets of the Company and subsequent
liquidation, the Company may determine in its discretion that each outstanding
Option at the time of such merger or consolidation shall be exchangeable into
such other class of securities received by other holders of shares at the time
of the transaction. The Company, however, (i) may waive any limitations imposed
herein so that all Options from and after the date prior to the effective date
of such merger, consolidation, or sale and liquidation, as the case may be, as
specified by the Company, shall be exercisable in full; and (ii) all outstanding
Options may be canceled by the Company as of the effective date of any such
merger, consolidation or sale and liquidation provided that (x) notice of such
cancellation shall be given to the Option Holder and (y) the Option Holder shall
have the right to exercise such Option in full during a 30-day period preceding
the effective date of such merger, consolidation or sale and liquidation.
(b) In the event the Company or any of its affiliates shall assume this Option,
or the right or obligation to make future such options in connection with the
acquisition of another business or another corporation or business entity, the
Company may make such adjustments, in the terms of options as it shall deem
appropriate in order to achieve reasonable comparability or other equitable
relationship between the assumed options and the Options granted under the Plan
so adjusted.
3. Term.
(a) This Option will terminate at 5:00 p.m. Pacific time on
the tenth anniversary of the Option Date.
(b) Nothing in this Section shall be construed as enlarging or
amending the time of exercise as described in Section 2 hereof.
4. Who May Exercise. This Option may be exercised only by the Option Holder
during his or her lifetime, or, if permissible under applicable law, the Option
Holder's legally appointed guardian or legal representative, or the Option
Holder's estate upon the death of the Option Holder.
5. Restrictions on Exercise.
(a) This Option may be exercised only with respect to fully
vested Shares and no fractional Shares shall be issued;
(b) This Option may be exercised only on or after the first
anniversary of the Vesting Date;
(c) This Option may not be exercised in whole or in part after
the expiration of the Option period specified in Section 3(a), subject to the
right of the Company to extend the term of this Option;
(d) Upon the death of the Option Holder (i) while the
Consulting Agreement is in effect, or (ii) within one (1) year of the
termination of the Consulting Agreement, then, in any such event, the Option may
be exercised by the person(s) to whom such Option Holder's rights with respect
to this Option are transferred by will or the laws of descent and distribution
prior to the expiration of the earlier of: (1) the date specified in Section
3(a) hereof, or (2) one year after the Option Holder's death; such person(s)
shall be entitled to purchase all of the vested Shares with respect to which the
Option Holder was entitled to exercise this Option pursuant to Section 2 hereof
immediately prior to the Option Holder's death, and any part of this Option not
so exercisable will lapse on the Option Holder's death; and
(e) Upon the termination of the Consulting Agreement, this
Option may be exercised by the Option Holder prior to the expiration of the
earlier of: (1) the date specified in Section 3(a) hereof, or (2) one (1) year
after the date of such termination, unless at the time of such termination the
Option Holder is serving the Company in another capacity, such as an officer,
director or pursuant to a different services agreement, in which event the time
period specified in this clause (2) shall extend until one (1) year after the
termination of such other service capacity. The Option Holder shall be entitled
to purchase those Shares in which he/she was vested pursuant to Section 2 hereof
immediately prior to, or by reason of, such termination of the Consulting
Agreement, and any part of this Option not yet vested as of the date of such
termination will automatically lapse.
6. Manner of Exercise. Subject to such rules and regulations as the Company may
from time to time adopt, the Option Holder shall, in order to exercise this
Option, give written notice to the Company which states the number of Shares
being purchased and the purchase price to be paid therefor, accompanied by the
following:
(a) Payment, in full, of the amount required to be paid
pursuant to this Agreement, which may be made by such method(s) as the Company
shall determine, including, without limitation, cash, Shares, other securities,
other property, or any combination thereof; provided that the combined value, as
determined by the Company, of all cash and cash equivalents and the fair market
value of any such Shares or other property so tendered to the Company, as of the
date of such tender, is at least equal to the full amount required to be paid
pursuant to this Agreement; and
(b) Such documents as the Company in its discretion deems
necessary (i) to evidence the exercise, in whole or in part, of the Option
evidenced by this Agreement, (ii) to determine whether registration is then
required under the Securities Act of 1933, as amended (the "Act"), or by any
other law, as then in effect, and (iii) to comply with or satisfy the
requirements of the Act or any other law, as then in effect.
7. Cashless Exercise. Notwithstanding the foregoing Section 6 regarding payment
of the exercise price of the Option, the Option Holder may elect to receive a
reduced number of Shares in lieu of tendering the exercise price in cash
("Cashless Exercise"). In such case, the number of Shares to be issued to the
Option Holder shall be computed using the following formula:
X=Y(A-B)
------
A
where: X = the number of Shares to be issued to the Option Holder;
Y = the number of Shares to be exercised under this Option;
A = the Market Value (defined below) of one share of Common
Stock on the trading day immediately prior to
the date that the Option Holder notifies the
Company of his full or partial exercise hereof;
and
B = the exercise price per share then in effect under
this Option.
The term "Market Value" means, for any security as of any date, the last
reported sale price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
Financial Markets or a comparable reporting service of national reputation
selected by the Company and reasonably acceptable to the Option Holder if
Bloomberg Financial Markets is not then reporting last reported sale prices of
such security (collectively, "Bloomberg"), or if the foregoing does not apply,
the last reported sale price of such security in the over-the-counter market or
the electronic bulletin board of such security as reported by Bloomberg, or, if
no sale price is reported for such security by Bloomberg, the average of the bid
prices of any market makers for such security that are listed in the "pink
sheets" by the National Quotation Bureau, Inc. If the Market Value cannot be
calculated for such security on such date on any of the foregoing bases, the
Market Value of such security on such date shall be the fair market value as
reasonably determined by the Board of Directors of the Company.
8. Compliance With Law and Regulations. This Option and the obligation of the
Company to sell and deliver Shares hereunder shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required. The Company shall not be
required to issue or deliver any certificates for Shares prior to (i) the
listing of such Shares on any stock exchange on which the Shares may then be
listed, and (ii) the completion of any registration or qualification of such
Shares under any federal or state law, or any rule or regulation of any
government body which the Company shall, in its sole discretion, determine to be
necessary or advisable. Moreover, this Option may not be exercised if its
exercise, or the receipt of Shares pursuant thereto, would be contrary to
applicable law.
9. Withholding. The Company or any of its affiliates shall be authorized, to the
extent, in the Company's judgment, required by applicable law, to withhold from
any Option exercised, from any payment due or transfer made under this Option,
or under the Plan, or from any compensation or other amount owing to an Option
Holder, the amount (in cash, Shares, other securities, or other property) of
withholding taxes due in respect of this Option, its exercise, or any payment or
transfer under this Option or under the Plan, and to take such action as may be
necessary in the opinion of the Company or its affiliates to satisfy all
obligations for the payment of such taxes.
10. No Right To Continued Consulting. The grant of this Option shall not be
construed as giving the Option Holder the right to be retained as a consultant
of the Company. Further, the Company may at any time dismiss an Option Holder
from a consultancy, free from any liability, or any claim under the Plan or this
Option Agreement, unless otherwise expressly provided in the Plan or in this
Option Agreement.
11. Non-Assignability. This Option is not assignable or transferable by the
Option Holder, except by the Option Holder's guardian or legal representative
upon his death, in accordance with his will or by the laws of descent and
distribution.
12. Rights as Shareholder. The Option Holder will have no rights as a
shareholder of the Company with respect to any Shares covered by this Option
until the issuance of a stock certificate or stock certificates to the Option
Holder for the Shares. No adjustment shall be made for distributions or other
rights for which the record date is prior to the issuance of such stock
certificate or stock certificates.
13. Amendments. Any amendment, alteration, suspension, discontinuation,
cancellation or termination of the provisions of this Agreement that would
impair the rights of any Option Holder or the beneficiary of any such Option
Holder shall not, to that extent, be effective without the consent of the Option
Holder or the beneficiary of such Option Holder, as the case may be.
14. Entire Agreement. This Agreement, together with the Plan which is
incorporated herein by reference, embody the complete agreement and
understanding of the Option Holder and the Company and supersede and preempt any
prior understandings, agreements or representations by either of them, written
or oral, with respect to the subject matter hereof in any way.
15. Law Governing. This Agreement is intended to be performed in the State of
California and shall be construed and enforced in accordance with and governed
by the laws of such state and the federal laws of the United States of America.
16. Restriction on Issuance of Shares.
16.1 Legality of Issuance. The Company shall not be obligated
to sell or issue any Shares pursuant to this Agreement if such sale or issuance,
in the opinion of the Company and the Company's counsel, might constitute a
violation by the Company of law, including, without limitation, the provisions
of the Securities Act of 1933, as amended (the "Securities Act").
16.2 Registration or Qualification of Securities. The Company
may, but shall not be required to, register or qualify the issuance of this
Option or the issuance or sale of any Shares pursuant hereto under the
Securities Act or any other applicable law. The Company shall not be obligated
to take any affirmative action in order to cause the grant or exercise of this
Option or the issuance or sale of any Shares pursuant hereto to comply with any
law.
17. Restriction on Transfer. Regardless of whether the sale or issuance
of the Shares has been registered under the Securities Act or has been
registered or qualified under the securities laws of any state, the Company may
impose restrictions upon the sale, pledge or other transfer of the Shares
(including the placement of appropriate legends on stock certificates
representing any Shares) if, in the opinion of the Company and the Company's
counsel, such restrictions are necessary or desirable in order to achieve
compliance with the provisions of the Securities Act, the securities laws of any
state, or any other law.
18. Stock Certificate Restrictive Legends. Stock certificates
evidencing the Shares may bear such restrictive legends as the Company and the
Company's counsel deem necessary or advisable under applicable law or pursuant
to this Agreement, including, without limitation, the following legend:
"The offering and sale of the securities represented hereby
have not been registered under the Securities Act of 1933, as amended (the
"Act"). Any transfer of such securities will be invalid unless a registration
statement under the Act is in effect as to such transfer or in the opinion of
counsel for the Company such registration is unnecessary in order for such
transfer to comply with the Act."
19. Representations, Warranties, Covenants, and Acknowledgments Upon
Exercise of Option. The issuance of Shares hereunder may be conditioned upon
receipt by the Company of certain representations, warranties, covenants and
acknowledgments by Optionee or such other person exercising the Option, if in
the opinion of the Company and the Company's counsel, such representations,
warranties, covenants and acknowledgments are necessary or desirable in order to
achieve compliance with the provisions of the Securities Act, the securities
laws of any state, or any other law.
IN WITNESS WHEREOF, the Company and the Option Holder have duly
executed this Agreement as of the date specified in Section 1 hereof.
COMPANY:
SOFTNET SYSTEMS, INC.
By:
/s/ Lawrence B. Brilliant
-------------------------
Lawrence B. Brilliant
/s/ Michael Kleeman
-------------------------
Michael Kleeman
