Exhibit 10.9
SOFTNET SYSTEMS, INC.
9% Convertible Subordinated Debentures due 2000
No. __________ $__________
Softnet Systems, Inc., a New York corporation (herein called the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
________________________________ or registered assigns, the principal sum of
______________________________ Dollars on ________________, 2000, at the office
or agency of the Company referred to below, and to pay interest thereon from
________________, 1995 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for quarterly, on January 15, April 15,
July 15 and October 15 in each year, commencing _____________ 15, 1995, at the
rate of 9% per annum, until the principal hereof is paid or duly provided for.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the January 1, April 1, July 1 or October 1 (whether or
not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities not less than 10
days prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture. Payment of the
principal of (and premium, if any, on) and interest on this Security will be
made at the office or agency of the Company maintained for that purpose in the
City of New York, or at such other office or agency of the Company as may be
maintained for such purpose, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by the manual signature of one of
its authorized officers, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: SOFTNET SYSTEMS, INC.
By
Attest:
Authorized Signature Section 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company designated as its 9% Convertible Subordinated Debentures due 2000
(herein called the "Securities"), limited in aggregate principal amount to
$__________, issued under an indenture (herein called the "Indenture") dated as
of _________________, 1995 between the Company and
_____________________________________, trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties, obligations
and immunities thereunder of the Company, the Trustee and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
The indebtedness evidenced by the Securities is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness of the Company as defined
in the Indenture, and this Security is issued subject to such provisions. Each
Holder of this Security, by accepting the same, (a) agrees to and shall be bound
by such provisions, (b) authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
as provided in the Indenture and (c) appoints the Trustee his attorney-in-fact
for such purpose.
The Securities are subject to redemption upon not less than 30 days'
notice, at any time as a whole or in part, at the election of the Company, at a
Redemption Price initially equal to 102% of the principal amount and beginning
on the second anniversary of the Effective Time equal to 100% of the principal
amount together in the case of any such redemption with accrued interest, if
any, to the Redemption Date, all as provided in the Indenture.
In the case of any redemption of Securities, interest installments whose
Stated Maturity is on or prior to the Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Regular Record Date referred to on the
face hereof. Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear interest
from and after the Redemption Date.
In the event of redemption of this Security in part only, a new Security or
Securities for the unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
Subject to and upon compliance with the provisions of the Indenture, the
Holder of this Security is entitled, at his option, at any time after the first
anniversary of the Effective Time, or in case this Security or a portion hereof
is called for redemption, then in respect of this Security or such portion
hereof then at any time until and including, but (unless the Company defaults in
making the payment due upon redemption) not after, the close of business on the
Business Day preceding the Redemption Date, to convert this Security (or any
portion of the principal amount hereof which is $1,000 or an integral multiple
thereof), at the principal amount hereof (or of such portion), into fully paid
and non-assessable shares (calculated as to each conversion to the nearest 1/100
of a share) of Common Stock of the Company at the rate of 148.15 shares of
Common Stock for each $1,000 principal amount of Securities (or at the current
adjusted conversion rate if an adjustment has been made as provided in the
Indenture) by surrender of this Security, duly endorsed or assigned to the
Company or in blank, to the Company at its office or agency in the City of
Chicago, accompanied by written notice to the Company that the Holder hereof
elects to convert this Security, or if less than the entire principal amount
hereof is to be converted, the portion hereof to be converted, and, in case such
surrender shall be made during the period from the close of business on any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date (unless this Security or the portion
thereof being converted has been called for redemption on a Redemption Date
within such period), also accompanied by payment in New York Clearing House or
other funds acceptable to the Company of an amount equal to the interest payable
on such Interest Payment Date on the principal amount of this Security then
being converted. If this Security is converted after having been called for
redemption, interest accrued and unpaid hereon to the date of conversion shall
be payable on such date. Subject to the aforesaid and, in the case of a
conversion after the Regular Record Date next preceding any Interest Payment
Date and on or before such Interest Payment Date, to the right of the Holder of
this Security (or any Predecessor Security) of record at such Regular Record
Date to receive an installment of interest (with certain exceptions provided in
the Indenture), no payment or adjustment is to be made on conversion for
interest accrued hereon or for dividends on the Common Stock issued on
conversion. No fractions of shares or scrip representing fractions of shares
will be issued on conversion, but instead of any fractional interest the Company
shall pay a cash adjustment as provided in the Indenture. In addition, the
Indenture provides that in case of certain consolidations or mergers to which
the Company is a party or the transfer of substantially all of the assets of the
Company, the Indenture shall be amended without the consent of any Holders of
Securities, so that this Security, if then outstanding, will be convertible
thereafter, during the period this Security shall be convertible as specified
above, only into the kind and amount of securities, cash and other property
receivable upon the consolidation, merger or transfer (assuming such holder of
Common Stock failed to exercise any rights of election and received per share
the kind and amount received per share by a plurality of non-electing shares).
If an Event of Default shall occur and be continuing, the principal of all
the Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.
Except as otherwise provided herein, the Securities are not subject to any
sinking fund and are not subject to redemption at the option of the Company
prior to Maturity.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of 66-
2/3% in aggregate principal amount of the Securities at the time outstanding.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by or on behalf of the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof whether or not notation of such consent or waiver is made upon
this Security.
As set forth in, and subject to, the provisions of the Indenture, no Holder
of any Security will have any right to institute any proceeding with respect to
the Indenture or for any remedy thereunder, unless such Holder shall have
previously given to the Trustee written notice of a continuing Event of Default,
the Holders of not less than 66-2/3% in principal amount of the Outstanding
Securities shall have made a written request, and offered reasonable indemnity,
to the Trustee to institute such proceeding as trustee, the Trustee for 60 days
after its receipt of such notice, request and offer of indemnity has failed to
institute any such proceeding and the Trustee shall not have received from the
Holders of 66-2/3% in principal amount of the Outstanding Securities during such
60-day period a direction inconsistent with such request; provided, however,
that such limitations do not apply to a suit instituted by the Holder hereof for
the enforcement of payment of the principal of (and premium, if any) or interest
on this Security on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, of any on) and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
This security may not be transferred, sold, assigned, pledged, mortgaged or
hypothecated without the express written consent of the Board of Directors.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registerable on the Security Register of
the Company, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in New York, New
York or Chicago, Illinois, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or his attorney in duly authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to the time of due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
