SC 13D 1 kl08012_sc13d.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) SoftNet Systems, Inc. --------------------- (Name of Issuer) Common Stock, $0.01 par value ----------------------------- (Title of Class of Securities) 833964109 --------- (CUSIP Number) Mr. David T. Kettig 96 Cummings Point Road Stamford, Connecticut 06902 (203) 358-8000 -------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) July 30, 2002 ------------- (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f), or 13d-1(g), check the following box: |_|. Page 1 of 17 pages Exhibit Index appears on page 7 SCHEDULE 13D CUSIP No. 833964109 -------------------------------------------------------------------------------- 1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Madison Investors Corporation ------------------------------------------------------------------------------- 2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| -------------------------------------------------------------------------------- 3) SEC USE ONLY -------------------------------------------------------------------------------- 4) SOURCE OF FUNDS WC -------------------------------------------------------------------------------- 5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_| -------------------------------------------------------------------------------- 6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware -------------------------------------------------------------------------------- NUMBER OF 7) SOLE VOTING POWER SHARES BENEFICIALLY 5,000,000 OWNED BY ------------------------------------------------------- EACH 8) SHARED VOTING POWER REPORTING PERSON None WITH ------------------------------------------------------- 9) SOLE DISPOSITIVE POWER 5,000,000 ------------------------------------------------------ 10) Shared Dispositive Power None -------------------------------------------------------------------------------- 11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,000,000 -------------------------------------------------------------------------------- 12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| -------------------------------------------------------------------------------- 13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 19.9% -------------------------------------------------------------------------------- 14) TYPE OF REPORTING PERSON CO -------------------------------------------------------------------------------- -2- Item 1. Security and Issuer. -------------------- This Statement on Schedule 13D (the "Schedule 13D") relates to the common stock, $0.01 par value (the "Common Stock"), of SoftNet Systems, Inc., a Delaware corporation (the "Company"). The principal executive offices of the Company are located at 650 Townsend Street, Suite 225, San Francisco, CA 94103. Item 2. Identity and Background. ------------------------ (a) - (c) This Schedule 13D is being filed by Madison Investors Corporation, a Delaware corporation ("Madison Investors"). Madison Investors is a holding company. The address of the principal business and principal offices of Madison Investors is c/o Independence Holding Company, 96 Cummings Point Road, Stamford, Connecticut 06902. The officers and directors of Madison Investors and their principal occupations and business addresses are set forth on Schedule I and incorporated by reference into this Item 2. Madison Investors is a wholly-owned subsidiary of Madison National Life Insurance Company, Inc., a Wisconsin company engaged in life and health insurance. The address of the principal business and principal office of Madison National Life Insurance Company, Inc. is 6120 University Avenue, Middleton, Wisconsin 53562. The officers and directors of Madison National Life Insurance Company, Inc. and their principal occupations and business addresses are set forth on Schedule II and incorporated by reference into this Item 2. Madison National Life Insurance Company, Inc. is a wholly-owned subsidiary of Independence Financial Services Corp., a Delaware corporation and insurance holding company. The address of the principal business and principal office of Independence Financial Services Corp. is c/o Independence Holding Company, 96 Cummings Point Road, Stamford, Connecticut 06902. The officers and directors of Independence Financial Services Corp. and their principal occupations and business addresses are set forth on Schedule III and incorporated by reference into this Item 2. Independence Financial Services Corp. is a wholly-owned subsidiary of Independence Capital Corp., a Delaware corporation and insurance holding company. The address of the principal business and principal office of Independence Capital Corp. is c/o Independence Holding Company, 96 Cummings Point Road, Stamford, Connecticut 06902. The officers and directors of Independence Capital Corp. and their principal occupations and business addresses are set forth on Schedule IV and incorporated by reference into this Item 2. Independence Capital Corp. is a wholly-owned subsidiary of Independence Holding Company (Nasdaq: INHO), a Delaware corporation and holding company engaged in the life and health insurance business. The address of the principal business and principal office of Independence Holding Company is 96 Cummings Point Road, Stamford, Connecticut 06902. The officers and directors of Independence Holding Company and their principal occupations and business addresses are set forth on Schedule V and incorporated by reference in this Item 2. 3 Geneve Holdings, Inc. owns 58% of the stock of Independence Holding Company, and is a financial services holding company. Pursuant to Amendment No. 35 to Schedule 13D filed by Geneve Holdings, Inc. ("GHI") and two of its subsidiaries, SIC Securities Corp. ("SIC") and SMH Associates Corp. ("SMH" and collectively with SIC and GHI, "The Geneve Companies") with respect to the Common Stock of Independence Holding Company, the Geneve Companies own in the aggregate 58% of the stock of Independence Holding Company. The address and principal offices of each of The Geneve Companies is 96 Cummings Point Road, Stamford, Connecticut 06902. The officers and directors of GHI, SIC and SMH and their principal occupations and business addresses are set forth on Schedules VI, VII and VIII, respectively, and are incorporated by reference in this Item 2. Mr. Edward Netter, Chairman and President of GHI may be deemed to be a controlling person of GHI and therefore a controlling person of any other entity identified in response to this Item 2. (d) - (e) During the last five years, neither Madison Investors nor any other person identified in response to this Item 2, including those individuals listed on Schedules I through VI, has been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) and have not, respectively, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction nor as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding any violation with respect to such laws. (f) Each natural person identified in Item 2, including those individuals listed on Schedules I through VIII, is a citizen of the United States. Item 3. Source and Amount of Funds or Other Consideration. ------------------------------------------------- All Common Stock owned by Madison Investors was purchased pursuant to a Stock Purchase Agreement dated as of July 30, 2002 between Cyber Net Technologies Limited and Madison Investors ("Stock Purchase Agreement") whereby Madison Investors acquired record and beneficial ownership of 5,000,000 shares of Common Stock for a purchase price of $3.00 per share. The total amount of funds expended by Madison Investors for the purchase was $15,000,000 and was funded by working capital. A copy of the Stock Purchase Agreement is attached hereto as Exhibit 10.1 and is incorporated by reference into this Item 3. Item 4. Purpose of Transaction. ----------------------- Madison Investors acquired beneficial ownership of the shares of Common Stock to which this Schedule 13D relates for investment purposes and to obtain a significant equity interest in the Company. The acquisition of the 5,000,000 shares of Common Stock was approved by the Company's Board of Directors. Contemporaneously with its acquisition of the Common Stock, Madison Investors, Independence Holding Company and the Company entered into a Stock Agreement dated as of July 30, 2002 (the "Stock Agreement"). A copy of the Stock Agreement is attached hereto as Exhibit 10.2 and is incorporated by reference into this Item 4. In addition, the Company and Madison Investors entered into a Registration Rights Agreement dated as of July 30, 2002 (the 4 "Registration Rights Agreement"). A copy of the Registration Rights Agreement is attached hereto as Exhibit 10.3 and is incorporated by reference into this Item 4. In a related transaction, the Company and Independence Holding Company entered into an agreement whereby the Company agreed to purchase First Standard Holdings Corp. from Independence Holding Company for $31.92 million cash, subject to certain conditions. The terms of this agreement are set forth in the Stock Purchase Agreement, dated as of July 30, 2002, among the Company, SSH Corp., a Delaware corporation, and Independence Holding Company (the "First Standard Stock Purchase Agreement"). A copy of the First Standard Stock Purchase Agreement is attached hereto as Exhibit 10.4 and is incorporated by reference into this Item 4). The obligation of the Company to consummate the transactions set forth in the First Standard Stock Purchase Agreement is, among other things, contingent upon the holders (other than Independence Holding Company and its affiliates) of a majority of the shares of Common Stock present in person or by proxy at the Company's Special Meeting (as defined below) approving the transaction. (a) Pursuant to the terms and conditions set forth in the Stock Agreement, the Company has agreed to allow Independence Holding Company to purchase up to 40% of the outstanding Common Stock of the Company without prior approval of the Company's Board of Directors. In addition, pursuant to the terms of the Stock Agreement, Independence Holding Company and/or one of its Affiliates will make a cash tender offer at $3.00 per share for at least 3,000,000 shares of the Company, subject to certain limitations. (b) Not applicable. (c) Not applicable. (d) Pursuant to the terms and conditions set forth in the Stock Agreement, the Company's Board of Directors has appointed Edward Netter and Roy Thung (Chairman and Chief Executive Officer, respectively, of Independence Holding Company) to serve on the Board of Directors of the Company. In addition, upon the closing of the transactions set forth in the First Standard Stock Purchase Agreement, the Company's operations will be directed by the management of Independence Holding Company. (e) Not applicable. (f) Not applicable. (g) Pursuant to the terms and conditions set forth in the First Standard Stock Purchase Agreement, the Board of Directors of the Company will hold a special meeting of the stockholders of the Company (the "Special Meeting") to, among other things, recommend that the stockholders approve amendments to the Company's Certificate of Incorporation which will (1) limit acquisitions of the Company's Common Stock in excess of certain percentage amounts and (2) change the Company's name to better reflect its new business. (h) Not applicable. (i) Not applicable. 5 (j) Not applicable. Except as set forth in this Item 4, or as set forth in the Stock Agreement, Registration Rights Agreement and First Standard Stock Purchase Agreement (copies of which are attached hereto as Exhibits 10.2, 10.3 and 10.4, respectively, and are incorporated by reference into this Item 4), Madison Investors does not have any present plans or proposals that relate to or would result in any of the actions specified in clauses (a) through (j) of the instructions to Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer. ------------------------------------ (a) As of the date hereof, Madison Investors owns an aggregate of 5,000,000 shares of Common Stock, representing approximately 19.9% of the outstanding shares of Common Stock based upon the 25,183,487 shares of Common Stock reported by the Company to be issued and outstanding as of March 31, 2002 as reported in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002. (b) Madison Investors has sole voting power and sole dispositive power over the shares of Common Stock it beneficially owns. (c) Except as set forth above, no person identified in Item 2 hereof has effected any transaction in shares of such Common Stock during the 60 days preceding the date hereof. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. -------------------------------------------------------------- (a) Pursuant to the terms and conditions set forth in the Stock Agreement, Madison Investors has agreed to the following: (i) In connection with any transaction involving the merger of the Corporation with or into any other entity or any acquisition of 50% or more of the outstanding Common Stock, Madison Investors has agreed to vote its shares of Common Stock in the same proportion as shareholders who individually hold less than 5% of the outstanding Common Stock; (ii) Until the fifth anniversary of the closing of the transactions set forth in the First Standard Stock Purchase Agreement, Madison Investors has agreed not to solicit, encourage or recommend to other stockholders of the Company that they vote their shares of Common Stock in favor of any nominee or nominees for director other than those duly proposed and nominated in accordance with the terms of the Stock Agreement; and (iii) The Company has granted Madison Investors certain rights enabling Madison Investors to purchase additional Common Stock and maintain its ownership percentage in the Company in the event the Company issues additional Common Stock. 6 For a complete description of the terms and conditions set forth in the Stock Agreement, please see Exhibit 10.2 which is incorporated by reference into this item 6. (b) Pursuant to the terms and conditions set forth in the Registration Rights Agreement, the Company has granted certain registration rights to Madison Investors. For a complete description of the terms and conditions set forth in the Registration Rights Agreement, please see Exhibit 10.3 which is incorporated by reference into this Item 6. (c) For a complete description of the terms and conditions set forth in the Stock Purchase Agreement, please see Exhibit 10.1 which is incorporated by reference into this Item 6. (d) For a complete description of the terms and conditions set forth in the First Standard Stock Purchase Agreement, please see Exhibit 10.4 which is incorporated by reference into this Item 6. Item 7. Material to be Filed as Exhibits. --------------------------------- Exhibit No. Description ------- ------------ 10.1 Stock Purchase Agreement among Cyber Net Technologies Limited, a British Virgin Islands Corporation and a wholly owned subsidiary of Pacific Century CyberWorks Limited, a company incorporated in Hong Kong with limited liability, and Madison Investors Corporation, a Delaware corporation, and/or one of its Affiliates dated July 30, 2002. 10.2 Stock Agreement between SoftNet Systems, Inc., a Delaware Corporation, Independence Holding Company, a Delaware corporation, and Madison Investors Corporation, a Delaware corporation dated July 30, 2002. 10.3 Registration Rights Agreement which constitutes Exhibit B to the Stock Agreement dated as of July 30, 2002 between SoftNet Systems, Inc., a Delaware corporation, and Madison Investors Corporation, a Delaware corporation dated July 30, 2002. 10.4 Stock Purchase Agreement Stock Purchase Agreement, dated as of July 30, 2002, between SoftNet Systems, Inc., a Delaware corporation, SSH Corp., a Delaware corporation and Independence Holding Company, a Delaware corporation. 99.1 Press Release dated July 30, 2002. 7 SIGNATURES After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certify that the information set forth in this Schedule 13D is true, complete and correct. Dated: August 8, 2002 MADISON INVESTORS CORPORATION By /s/ David T. Kettig -------------------------- Name: David T. Kettig Title: Secretary 8
SCHEDULE I Directors and Officers of Madison Investors Corporation Name and Position Principal Occupation Principal Business Address ----------------- -------------------- -------------------------- Roy T. K. Thung Chief Executive Officer and President of 96 Cummings Point Road President, Chief Operating Officer Independence Holding Company Stamford, CT 06902 and Director Teresa A. Herbert Vice President and 96 Cummings Point Road Vice President and Chief Financial Officer of Stamford, CT 06902 Chief Financial Officer Independence Holding Company Brian R. Schlier Vice President - Taxation 96 Cummings Point Road Vice President - Taxation of Independence Holding Company Stamford, CT 06902 David T. Kettig Vice President - Legal and Secretary of 485 Madison Avenue Secretary and Director Independence Holding Company New York, NY 10022 Edward Netter Chairman of Independence Holding Company 96 Cummings Point Road Director Stamford, CT 06902 9 SCHEDULE II Directors and Officers of Madison National Life Insurance Company, Inc. Name and Position Principal Occupation Principal Business Address ----------------- -------------------- -------------------------- Larry R. Graber President of Madison National Life 3508 Far West Blvd. President Insurance Company, Inc. Suite 140 Austin, TX 78731 James R. Balgord Senior Vice President - Group 6120 University Avenue Senior Vice President - Claims and Administration of Middleton, WI 53562 Group Claims and Madison National Life Insurance Administration Company, Inc. Murray A. Klein Senior Vice President - Credit Insurance 6120 University Avenue Senior Vice President - Credit of Madison National Life Insurance Middleton, WI 53562 Insurance Company, Inc. Mark A. Musser Chief Financial Officer, 6120 University Avenue Chief Financial Officer, Senior Senior Vice President - Finance and Middleton, WI 53562 Vice President - Finance and Administration of Madison National Life Administration Insurance Company, Inc. Joel E. Myrold Senior Vice President - 6120 University Avenue Senior Vice President - Acquisitions and Reinsurance and Middleton, WI 53562 Acquisitions and Assistant Secretary of Madison Reinsurance and Assistant National Life Insurance Secretary Company, Inc. Alex Giordano Vice President and Chief Marketing 485 Madison Avenue Senior Vice President and Chief Officer of Independence Holding Company New York, NY 10022 Marketing Officer C. Winfield Swarr Senior Vice President and Chief 485 Madison Avenue Senior Vice President and Chief Underwriting Officer of Independence New York, NY 10022 Underwriting Officer Holding Company Gene L. McKinney Vice President - Director of Agencies of 600 University Park Place Vice President - Director Madison National Life Insurance Company, Suite 300 of Agencies Inc. Homewood, AL 35209 10 SCHEDULE III Directors and Officers of Independence Financial Services Corp. Name and Position Principal Occupation Principal Business Address ----------------- -------------------- -------------------------- Roy T. K. Thung Chief Executive Officer and President of 96 Cummings Point Road President, Chief Operating Independence Holding Company Stamford, CT 06902 Officer and Director Teresa A. Herbert Vice President and Chief Financial 96 Cummings Point Road Vice President and Chief Financial Officer of Independence Holding Company Stamford, CT 06902 Officer Brian R. Schlier Vice President - Taxation of 96 Cummings Point Road Vice President - Taxation Independence Holding Company Stamford, CT 06902 David T. Kettig Vice President - Legal and Secretary of 485 Madison Avenue Vice President - Legal, Independence Holding Company New York, NY 10022 Secretary and Director Edward Netter Chairman of Independence 96 Cummings Point Road Director Holding Company Stamford, CT 06902 11 SCHEDULE IV Directors and Officers of Independence Capital Corp. Name and Position Principal Occupation Principal Business Address ----------------- -------------------- -------------------------- Roy T. K. Thung Chief Executive Officer and President 96 Cummings Point Road President, Chief Operating of Independence Holding Company Stamford, CT 06902 Officer and Director Teresa A. Herbert Vice President and Chief Financial 96 Cummings Point Road Vice President and Chief Financial Officer of Independence Holding Company Stamford, CT 06902 Officer Brian R. Schlier Vice President - Taxation of 96 Cummings Point Road Vice President - Taxation Independence Holding Company Stamford, CT 06902 David T. Kettig Vice President - Legal and Secretary of 485 Madison Avenue Vice President - Legal, Independence Holding Company New York, NY 10022 Secretary and Director Edward Netter Chairman of Independence 96 Cummings Point Road Director Holding Company Stamford, CT 06902 12 SCHEDULE V Directors and Officers of Independence Holding Company Name and Position Principal Occupation Principal Business Address ----------------- -------------------- -------------------------- Edward Netter Chairman of Independence Holding Company 96 Cummings Point Road Chairman and Director Stamford, CT 06902 Steven B. Lapin Vice Chairman of Independence Holding 96 Cummings Point Road Vice Chairman and Director Company Stamford, CT 06902 Roy T. K. Thung Chief Executive Officer and President of 96 Cummings Point Road Chief Executive Officer, President Independence Holding Company Stamford, CT 06902 and Director Teresa A. Herbert Vice President and Chief Financial 96 Cummings Point Road Vice President and Chief Financial Officer of Independence Holding Company Stamford, CT 06902 Officer Roy L. Standfest Vice President - Investments and Chief 96 Cummings Point Road Vice President - Investments and Investment Officer of Independence Stamford, CT 06902 Chief Investment Officer Holding Company Alex Giordano Vice President and Chief Marketing 485 Madison Avenue Vice President and Chief Marketing Officer of Independence Holding Company New York, NY 10022 Officer C. Winfield Swarr Vice President and Chief Underwriting 485 Madison Avenue Vice President and Chief Officer of Independence Holding Company New York, NY 10022 Underwriting Officer Brian R. Schlier Vice President - Taxation of 96 Cummings Point Road Vice President - Taxation Independence Holding Company Stamford, CT 06902 David T. Kettig Vice President - Legal of Independence 485 Madison Avenue Vice President - Legal and Secretary Holding Company New York, NY 10022 13 NON OFFICER DIRECTORS OF INDEPENDENCE HOLDING COMPANY Name and Position Principal Occupation Principal Business Address ----------------- -------------------- -------------------------- Larry R. Graber President of Madison National 3508 Far West Boulevard Director Life Insurance Company, Inc. Suite 140 Austin, TX 78731 Harold E. Johnson Retired c/o Independence Holding Company Director 96 Cummings Point Road Stamford, CT 06902 Allan C. Kirkman Executive Vice President of Mellon Bank, N.A. Director Mellon Bank One Mellon Bank Center Suite 5325 Pittsburgh PA 15258 Robert Ross, Jr. Chairman of GRO Corporation The Ross Capital Corp. Director GRO Corporation 300 Weslayan Suite 390 Houston, TX 77027 Edward J. Scheider Retired c/o Independence Holding Company Director 96 Cummings Point Road Stamford, CT 06902 James G. Tatum Registered Investment Advisor 600 University Park Place Director Suite 300 Homewood, AL 35209 14 SCHEDULE VI Directors and Officers of Geneve Holdings, Inc. Name and Position Principal Occupation Principal Business Address ----------------- -------------------- -------------------------- Edward Netter Chairman of Independence Holding Company 96 Cummings Point Road Chairman, President and Director Stamford, CT 06902 Steven B. Lapin Vice Chairman of Independence Holding 96 Cummings Point Road Vice President Company Stamford, CT 06902 Roy T.K. Thung Chief Executive Officer and President 96 Cummings Point Road Vice President and Treasurer of Independence Holding Company Stamford, CT 06902 Brian R. Schlier Vice President - Taxation of 96 Cummings Point Road Vice President - Taxation Independence Holding Company Stamford, CT 06902 H. William Smith Vice President and Secretary of The 96 Cummings Point Road Secretary Aristotle Corporation Stamford, CT 06902 15 SCHEDULE VII Directors and Officers of SIC Securities Corp. Name and Position Principal Occupation Principal Business Address ----------------- -------------------- -------------------------- Edward Netter Chairman of Independence Holding 96 Cummings Point Road President and Director Company Stamford, CT 06902 Steven B. Lapin Vice Chairman of Independence Holding 96 Cummings Point Road Vice President and Director Company Stamford, CT 06902 Roy T.K. Thung Chief Executive Officer and President 96 Cummings Point Road Vice President - Treasurer and of Independence Holding Company Stamford, CT 06902 Director Teresa A. Herbert Vice President and Chief Financial 96 Cummings Point Road Vice President - Finance Officer of Independence Holding Company Stamford, CT 06902 Brian R. Schlier Vice President - Taxation of 96 Cummings Point Road Vice President - Taxation Independence Holding Company Stamford, CT 06902 H. William Smith Vice President and Secretary of The 96 Cummings Point Road Secretary Aristotle Corporation Stamford, CT 06902 16 SCHEDULE VIII Directors and Officers of SMH Associates Corp. Name and Position Principal Occupation Principal Business Address ----------------- -------------------- -------------------------- Edward Netter Chairman of Independence Holding 96 Cummings Point Road President and Director Company Stamford, CT 06902 Steven B. Lapin Vice Chairman of Independence Holding 96 Cummings Point Road Vice President and Director Company. Stamford, CT 06902 Roy T.K. Thung Chief Executive Officer and President 96 Cummings Point Road Vice President - Treasurer and of Independence Holding Company Stamford, CT 06902 Director Teresa A. Herbert Vice President and Chief Financial 96 Cummings Point Road Vice President - Finance Officer of Independence Holding Company Stamford, CT 06902 Brian R. Schlier Vice President - Taxation of 96 Cummings Point Road Vice President - Taxation Independence Holding Company Stamford, CT 06902 H. William Smith Vice President and Secretary of The 96 Cummings Point Road Secretary Aristotle Corporation Stamford, CT 06902
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