ESCROW AGREEMENT
The undersigned parties hereby establish Chase Manhattan Bank and Trust
Company, N.A. Escrow No. C27110A (the "Escrow") and agree to be bound by this
Escrow Agreement, dated as of May 28, 1998, as follows:
1. Parties and Transaction. The following entities are parties to this Escrow
Agreement:
(a) Seller: SoftNet Systems, Inc. IRS EIN# 00-0000000
000 Xxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx, Treasurer
Telephone: (000) 000-0000
Fax: (000) 000-0000 ("Seller").
(b) Buyers:
(i) RGC International Investors, LDC
c/o Xxxx Xxxx Capital Management, L.P.
0 Xxxx Xxxxx Xxxx, Xxxxx 000
000 Xx. Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Attn: Xx. Xxxxx Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000; and
(ii) Shoreline Associates I, LLC
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attn: Xx. Xxxx X. Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
(each a"Buyer", and collectively "Buyers").
(c) Shoreline: Shoreline Pacific Institutional Finance, the
Institutional Division of Financial West Group, Xxxxx Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxx, 00000, Attn: General
Counsel, telephone number (000) 000-0000, facsimile number
(000) 000-0000 ("Shoreline"). Shoreline is acting as agent for
Buyers and Seller in this transaction and will be paid a
commission of five percent 5% by Seller. No commission is
being charged to Buyers. Shoreline will not receive any
payment for order flow relating to any of the securities
offered by Seller in connection with this transaction,
including any shares of Seller's common stock.
(d) Escrow Holder: Chase Manhattan Bank and Trust Company, N.A., a
subsidiary of Chase Manhattan Corporation, 000 Xxxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000,
telephone number: (000) 000-0000, facsimile number: (415)
693-8850 ("Escrow Holder").
This Escrow Agreement contains the closing information for the transaction
effected between and on behalf of Buyers and Seller involving the sale by Seller
and the purchase by Buyers of Ten Thousand (10,000) shares of Seller's Series B
Convertible Preferred Stock ("Preferred Shares"), at a purchase price of One
Thousand Dollars ($1,000) per share, for an aggregate purchase price of Ten
Million Dollars ($10,000,000) U.S., pursuant to the Securities Purchase
Agreement dated as of May 28, 1998 ("Purchase Agreement"), by and among Seller
and Buyers. Seller represents that said Preferred Shares are issued by Seller
pursuant to Section 4(2) of the Securities Act of 1933, as amended and/or
Regulation D thereunder. Upon request of any party hereto, Escrow Holder will
furnish the date and time this transaction took place.
In the event funds transfer instructions are given by any party to this
Agreement (other than in writing at the time of execution of the Agreement),
whether in writing, by telecopier or otherwise, the Escrow Agent is authorized
to seek confirmation of such instructions by telephone call-back to the person
or persons designated above, and the Escrow Agent may rely upon the
confirmations of anyone purporting to be the person or persons so designated.
The persons and telephone numbers for call-backs may be changed only in a
writing actually received and acknowledged by the Escrow Agent. The parties to
this Agreement acknowledge that such security procedure is commercially
reasonable.
2. Deliveries.
(a) Deliveries By Seller. Seller shall deliver the following documents
to Escrow Holder or to Shoreline, as provided herein, no later 12:00 P.M.
Pacific Standard Time on the "Closing Date," as such term is defined below:
(1) Seller shall deliver to Escrow Holder, with a copy to
Shoreline, a copy of this Escrow Agreement, duly executed by Seller (which
delivery may be made by facsimile so long as a manually executed original of the
Escrow Agreement is delivered to Escrow Holder by Seller by overnight courier
within one (1) business day following the Closing Date).
(2) Seller shall deliver to Escrow Holder Ten Thousand
(10,000) Preferred Shares in the name of each Buyer and in face amounts and
denominations more particularly set forth in the Closing Schedule annexed hereto
as Exhibit C (the "Preferred Share Certificates"). The Preferred Share
Certificates shall each bear substantially the following legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of
any state of the United States. The securities have been acquired for
investment and may not be sold, transferred or assigned in the absence
of an effective registration statement for the securities under
applicable securities laws, or unless offered, sold or transferred
pursuant to an available exemption from the registration requirements
of those laws.
A copy of the form of Seller's Preferred Share Certificate is attached hereto as
Exhibit A and is incorporated herein by this reference.
(b) Deliveries By Buyer. Each Buyer shall deliver the following to
Escrow Holder or to Shoreline, as provided herein, not later than 12:00 P.M.
Pacific Standard Time on the Closing Date:
(1) Each Buyer shall deliver to Escrow Holder, with a copy to
Shoreline, a copy of this Escrow Agreement, duly executed by such Buyer (which
delivery may be made by facsimile so long as a manually executed original of the
Escrow Agreement is delivered to Escrow Holder by Buyer by overnight courier
within one (1) business day following the Closing Date).
(2) Each Buyer shall wire funds in the amount specified for
such Buyer on Exhibit C hereof to Escrow Holder at the account set forth below:
The Chase Manhattan Bank
New York, New York
ABA #000000000
Credit: CTCC Operating Account #507874439
Ref: Shoreline Pacific/SoftNet Systems, Inc./Escrow No. C27110A/[Investor Name]
(3) Each Buyer shall deliver to Escrow Holder, with copy to
Shoreline, a written confirmation in the form attached hereto as Exhibit B (the
"Closing Confirmation", delivery of which may be made by facsimile so long as a
manually executed original thereof is delivered to the Escrow Agent by Buyer by
overnight courier within one (1) business day of the Closing Date), stating
that, subject to Escrow Holder's receipt of the items to be delivered by Seller
specified in Section 2(a) hereof, all of the conditions to the Closing in
Section 7 of the Purchase Agreement have been satisfied in full or waived as of
the date of delivery of such confirmation with respect to Buyer.
3. Closing. The closing of the purchase by Buyers (the "Closing") is scheduled
to occur on May 28, 1998 or on such other date as Seller, Buyers, and Shoreline
shall agree (the "Closing Date"). At the Closing, Escrow Holder shall undertake
the following:
(a) Original Deliveries to Buyer. Escrow Holder shall deliver to each
Buyer at the addresses noted in Exhibit C hereto, by overnight courier, the
original Preferred Share Certificates.
(b) Deliveries to Shoreline. Escrow Holder shall deliver to Shoreline,
by wire transfer, its commission in the amount of Five Hundred Thousand Dollars
($500,000) U.S. The wiring instructions for Shoreline are as follows:
Bank of New York
ABA #000000000
BNF-Correspondent Services Corp.
AC #8900186968
Financial West Group/UA99100
(c) Deliveries to Seller. Escrow Holder shall deliver to Seller, by
wire transfer, the funds delivered to it by Buyer less (i) the commission
payable to Shoreline specified in Section 3(b), and (ii) Escrow Holder's fees
and charges as specified in Section 5. The wiring instructions for Seller are as
follow:
Union Bank of California
00 Xxxxxxx Xxxx., Xxxxx 000
Xxx Xxxx, XX 00000
For the benefit of SoftNet Systems Account No. 6450150965
ABA# 000000000
Attn: Xx. Xxxx Xxxx, (000) 000-0000
4. Authorization to Escrow Holder to Close. By their signatures appearing below,
and subject to the provisions of Section 6(k) hereof, each Buyer, Seller and
Shoreline each authorize Escrow Holder to close the Escrow upon occurrence of
the following:
(a) Escrow Holder's receipt from Seller of all documents as set forth
in Section 2(a) hereof;
(b) Escrow Holder's receipt from each Buyer of wire transfers in the
amounts set forth in the Closing Schedule annexed hereto as Exhibit C and all
documents as set forth in Section 2(b) hereof;
(c) Escrow Holder's receipt of a Closing Confirmation from each Buyer;
and
(d) Escrow Holder's notification from Shoreline that copies of the
documents required to be received from Seller and Buyers pursuant to the
Purchase Agreement have been received by Shoreline and receipt from Shoreline of
written notice to close the Escrow (the "Shoreline Closing Notice"), which
notice may be delivered by facsimile transmission, provided that a manually
executed original thereof shall be delivered to Escrow Holder within one (1)
business day following the Closing.
Each party understands and agrees that its signature appearing below confirms
its approval of the documents and instruments delivered to Escrow Holder and
that, except for delivery of the Closing Confirmation, no further approval of
any of the documents and instruments is required by any party. Each Buyer and
Seller each agree that Escrow Holder is authorized to close the Escrow upon
receipt of the items specified in this Section 4.
5. Costs and Charges Due to Escrow Holder. Seller, each Buyer and Shoreline each
hereby authorize Escrow Holder to make the following charges:
(a) Escrow Holder's charges shall be borne by and billed to Seller, and
Escrow Holder shall debit Seller and credit itself with its customary fees, not
to exceed in the aggregate $1,000. Neither Buyer nor Shoreline shall have any
liability to pay Escrow Holder's charges; provided however, that if the Closing
does not occur and fees are due to Escrow Holder as a result thereof, Shoreline
will bear all of Escrow Holder's reasonable charges incurred in connection
herewith, up to a maximum of $500.00, plus any reasonable out of pocket
expenses.
6. Additional Provisions.
(a) Indemnification. Seller, each Buyer and Shoreline acknowledge and
agree that Escrow Holder is acting as an escrow agent in this transaction and in
no other capacity. Except for the negligence or willful misconduct of Escrow
Holder, Seller, each Buyer and Shoreline each hereby agree to indemnify and to
hold Escrow Holder harmless from any claim, liability, cost, expense or damage,
including reasonable attorneys' fees and costs, incurred by Escrow Holder in
connection with any action taken or not taken by Escrow Holder pursuant to this
Escrow Agreement. Seller, each Buyer and Shoreline, jointly and severally, shall
reimburse Escrow Holder for all of its reasonable expenses covered by the
foregoing indemnification as and when such expenses are incurred.
(b) Facsimile Signatures. Facsimile signatures on this Escrow Agreement
and the documents referred to herein are binding upon any party submitting same.
(c) Notices. Any notice, request, demand, instruction or other
communication given hereunder by any party must be in writing and will be
validly and timely given or made to another party if (i) delivered personally,
(ii) deposited in the United States mail, certified or registered, with postage
prepaid and return receipt requested, (iii) delivered by overnight courier, or
(iv) sent by telecopier, to each of the parties at the addresses and facsimile
numbers contained in Section 1 hereof. If such notice is served personally, such
notice will be deemed to be given at the time of such personal delivery. If
notice is served by mail, such notice will be deemed to be given two days after
the deposit of same in any United States mail post office box. If such notice is
served by overnight courier, such notice will be deemed to be given on the next
business day following the acceptance of such notice for delivery by such
overnight courier. If such notice is served by telecopier, such notice will be
deemed to be given upon confirmation of transmission. Any person entitled to
receive notice under this agreement may change the address or telecopier number
to which such notice may be sent, by giving notice thereof pursuant to this
Section 6(c).
(d) Attorneys' Fees. Should any legal action be brought for the
enforcement of this Escrow Agreement or any term hereof, or due to any alleged
dispute, breach, default or misrepresentation in connection with any provisions
herein contained, the prevailing party shall be entitled to its reasonable
attorneys' fees and costs and other costs incurred in any such action or
proceeding and including any such action which results in an arbitration of the
matters herein, in addition to such other relief as may be granted by the courts
or arbitration proceedings.
(e) Applicable Law. The existence, validity, and construction of this
Escrow Agreement and all matters pertaining hereto shall be determined in
accordance with the laws of the State of New York.
(f) Further Assurances. Each of the parties agrees that it will,
without further consideration, execute, acknowledge and deliver such other
documents and take such other actions as may be reasonably requested by the
other party in order to consummate the purposes and subject matter hereof.
(g) Assignment. No party hereto shall have any right whatsoever to
voluntarily assign its rights or delegate its duties hereunder to any third
party, without the prior written consent of the other parties.
(h) Validity. If any provision of this Escrow Agreement may be
prohibited by law or otherwise held invalid, such prohibition or invalidity
shall be effective only to the extent of such prohibition or invalidity and
shall not invalidate or otherwise render ineffective the remaining provisions of
this Escrow Agreement.
(i) Counterparts. This Escrow Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
(j) Survival. The representations, warranties and covenants contained
in this Escrow Agreement shall survive the Closing, if any.
(k) Timing. If at any time any party hereto has made written demand
upon Escrow Holder for the return of documents and/or funds deposited by such
party, Escrow Holder may withhold and stop all further proceedings in this
Escrow upon notice to the parties, and may then return all documents and/or
funds to the party from which received within two business days of receipt of
said notice, without liability for interest on funds held or for damages.
Additionally, should the Closing not occur by 5 PM Central Time on June 4, 1998,
then Escrow Holder shall, on the next business day, return to each Buyer by wire
transfer any and all funds received by Escrow Holder from such Buyer(s) and
return to Seller by overnight mail service all Preferred Share Certificates
received from Seller.
(l) Reliance Upon Provided Information. It is understood that the
Escrow Agent and the beneficiary's banks in any funds transfer may rely solely
upon any account numbers or similar identifying number provided by any of the
parties hereto to identify (i) the beneficiary, (ii) the beneficiary's bank, or
(iii) an order it executes using any such identifying number, even where its use
may result in a person other than the beneficiary being paid, or the transfer of
funds to a bank other than the beneficiary's bank, or an intermediary bank
designated.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
Escrow Agreement
SoftNet Systems, Inc.
(m) Representation or Warranties of Escrow Holder. Escrow Holder shall
make no representation or warranty with respect to the genuineness or any other
matter concerning any document or instrument deposited herein and shall have no
liability to any other party hereto with respect to such items; provided,
however, that Escrow Holder shall inspect the Preferred Share Certificates to
(i) confirm that required number of Preferred Share Certificates have been
delivered by Seller, in the denominations and face amounts set forth on the
Closing Schedule annexed hereto as Exhibit C, and (ii) that the legend appearing
on the Preferred Share Certificates conforms to the legend language set forth in
Section 2(a)(2) above.
THE COMPANY:
SOFTNET SYSTEMS, INC.
By: -------------------------------
Name:
Title:
DATE:--------------------------
[SIGNATURES CONTINUED ONTO NEXT PAGE]
BUYERS:
RGC INTERNATIONAL INVESTORS, LDC
By: Xxxx Xxxx Capital Management, L.P.
Investment Manager
By: RGC General Partner Corp.
By: -------------------------------
Name:
Title:
DATE:--------------------------
SHORELINE ASSOCIATES I, LLC
By: -------------------------------
Name:
Title:
DATE:--------------------------
[SIGNATURES CONTINUED ONTO NEXT PAGE]
SHORELINE:
SHORELINE PACIFIC INSTITUTIONAL FINANCE,
THE INSTITUTIONAL DIVISION
OF FINANCIAL WEST GROUP
By: -------------------------------
Name:
Title:
DATE:--------------------------
ESCROW HOLDER:
CHASE MANHATTAN BANK AND TRUST COMPANY,N.A.,
a subsidiary of Chase Manhattan Corporation
By: ------------------------------
Chii Xxxx Xxx
Assistant Vice President
DATE:-----------------------
EXHIBIT A
Form of Preferred Share Certificate
EXHIBIT B
[INVESTOR'S LETTERHEAD]
[DATE]
Facsimile No. (000) 000-0000
Xx. Xxxx Xxxx Lei
Assistant Vice President
Chase Manhattan Bank and Trust Company, N.A.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Re: SoftNet Systems, Inc. Financing; Closing Confirmation
Dear Xx. Xxx:
Please accept this letter as confirmation from [INVESTOR] that, subject to your
receipt of the items specified in Section 2(a) of the Escrow Agreement dated
[DATE], the conditions to the Closing in [Articles VI and VII] of the Securities
Purchase Agreement have been satisfied in full or waived as of the date hereof.
Accordingly, this shall serve as our Closing Confirmation as required pursuant
to Section 4(c) of said Escrow Agreement.
Please call me if you have any questions or require further information.
Sincerely,
Name:
Title:
cc: Shoreline Pacific
CLOSING SCHEDULE - EXHIBIT C
------------------------------------------- -------------------------------------- -------------------------------------------------
INVESTOR/CERTIFICATE DELIVERY ADDRESS: AGGREGATE NO. OF PREFERRED SHARES PREFERRED SHARE CERTIFICATE DENOMINATIONS:
PURCHASED/AGGREGATE PURCHASE PRICE:
------------------------------------------- -------------------------------------- -------------------------------------------------
------------------------------------------- -------------------------------------- -------------------------------------------------
RGC International Investors, LDC
c/o Xxxx Xxxx Capital Management, L.P. 9,000 Preferred Shares 9 Preferred Share certificates each representing
Attn: Xxxx X. Xxxxxxxx ----- --
0 Xxxx Xxxxx Xxxx, Xxxxx 000 1,000 Preferred Shares/$1,000,000
000 Xx. Xxxxxx Xxxx -----
Xxxx Xxxxxx, XX 00000 $9,000,000
Telephone: (000) 000-0000 ----------
Fax: (000) 000-0000
------------------------------------------- -------------------------------------- -------------------------------------------------
------------------------------------------- -------------------------------------- -------------------------------------------------
Shoreline Associates I, LLC
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000 1,000 Preferred Shares 1 Preferred Share certificate representing
Xxxx Xxxx, XX 00000 ----- --
Attn: Xx. Xxxx X. Xxxxxxx 1,000 Preferred Shares
Telephone: (000) 000-0000 -----
Fax: (000) 000-0000 $1,000,000
------------------------------------------- -------------------------------------- -------------------------------------------------
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