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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported) September 16, 1998
IMARK TECHNOLOGIES, INC.
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(Exact name of Registrant as Specified in Charter)
Delaware 0-21147 87-0378128
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification
incorporation) Number)
580 Herndon Parkway, Herndon, Virginia 20170
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (703) 925-3400
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Item 5: Other Events
The Company has previously provided press releases concerning its
financing activities with International Advance, Inc. As described in the
attached press release, the Company has stopped receiving funding from
International Advance, Inc.
In addition, Phil Gross, an inside director and Chief Financial Officer of
the Company, resigned effective August 17, 1998 to take a part time teaching
position at the University of Maryland and to pursue other business consulting
opportunities. Weldon Rackley, an outside director, resigned effective August
31, 1998 due to increased responsibilities and travel time for his employer,
the American Management Association. Steve Schnipper, an outside director,
resigned effective September 15, 1998 to spend more time with his family and to
pursue other business opportunities.
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Item 7: Financial Statements and Exhibits
(c) The following exhibits are filed as part of this Report and
incorporated herein by reference.
99.1 Press release of Imark Technologies, Inc. dated September 15,
1998.
99.2 Subscription Agreement dated June 15, 1998 by and between
Imark Technologies, Inc. and International Advance, Inc.
99.3 Loan and Security Agreement Dated August 6, 1998, between Imark
Technologies, Inc, and International Advance, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IMARK TECHNOLOGIES, INC.
Dated: September 16, 1998 /s/ Robert A. Wiedemer
-------------------------------------
Robert A. Wiedemer
President and Chief Executive Officer
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EXHIBIT 99.1
Press Contact: Diane Keweshan - 703-925-3435
IMARK ANNOUNCES CAPITAL SHORTAGE
Herndon, Virginia --September 15, 1998 - Imark Technologies, Inc.
("Imark" or the "Company") (NASDAQ: MAXX), "The Information Commerce
Company(TM)," announced today that it is no longer receiving funding from
International Advance for its current operations. Discussions are underway to
resolve the situation, but Imark cannot meet its current financial commitments,
including payroll. Although Imark is continuing to work to resolve the capital
shortage, there can be no assurance that it will do so.
This press release, especially any statements about receiving additional
funding from International Advance, includes forward-looking statements related
to Imark that involve risks and uncertainties, including, but not limited to,
quarterly fluctuations in results, the management of growth, market acceptance
of certain products and other risks. These forward-looking statements are made
in reliance on the "safe-harbor" provisions of the Private Securities
Litigation Reform Act of 1995. For further information about these factors that
could affect Imark's future results, please see the Company's filings with the
Security and Exchange Commission (the "Commission"). Prospective investors are
cautioned that forward-looking statements are not guarantees of future
performance. Actual results may differ materially from management expectations.
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EXHIBIT 99.2
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (the "Agreement") is made and
entered into effective as of June 15, 1998, by and among IMARK Technologies,
Inc., a Delaware corporation ("IMARK") and International Advance, Inc., a
Delaware corporation ("Advance").
RECITALS
The purposes of this Agreement are, inter alia, to provide IMARK
with financing and an interest in a related company. Pursuant to this
Agreement, IMARK will issue common and preferred shares to Advance, with
Advance being free to distribute such shares to its shareholders (the "Advance
Stockholders"). After the closing, the Advance Stockholders in the aggregate
will own a majority of the capital and voting stock of IMARK.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Agreement" means this Subscription Agreement as it may be amended,
supplemented or modified.
"Closing" means the closing of the transactions contemplated by
this Agreement, in particular the issuance to Advance of 10,741,621 shares of
IMARK common stock and 1,000,000 shares of IMARK preferred stock.
"Closing Date" means the date on which the Closing occurs.
"Commission" means the United States Securities and Exchange
Commission.
"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision of any thereof and any entity
(corporate or otherwise) exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"IMARK Common Stock" means 10,741,621 shares of authorized but
unissued common stock of IMARK.
"IMARK Preferred Stock" means 1,000,000 shares of authorized but
unissued Series A preferred stock of IMARK, having the characteristics and
attributes set forth in the form of Certificate of Designation attached hereto
as EXHIBIT A.
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"Liabilities" shall mean any direct or indirect liability,
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost,
expense, fine, penalty, obligation or responsibility, either accrued, absolute,
contingent, or otherwise, and whether known or unknown, fixed or unfixed,
choate or inchoate, liquidated or unliquidated, secured or unsecured.
"Lien" means any mortgage, deed of trust, pledge, assignment,
encumbrance, lien (statutory or other) or preference, priority, security
interest or preferential arrangement of any kind (excluding preferred stock
and equity related preferences) including, without limitation, those created
by, arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease obligation, or any
financing lease having substantially the same economic effect as any of the
foregoing.
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means any natural person, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, Governmental Authority or other entity of any kind, and shall include
any successor (by merger or otherwise) of any such entity.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.
"VossNet Stock" means 842,793 shares of the issued and outstanding
capital of VossNet PLC ("VossNet"), a company registered in the United Kingdom
whose shares are publicly held and traded on the Alternate Investment Market,
which shares represent approximately 29.9% of the capital stock of VossNet.
2. SUBSCRIPTION; ISSUANCE OF IMARK COMMON AND PREFERRED STOCK
2.1 SUBSCRIPTION. Advance hereby subscribes for: (a) 10,741,621 shares
of IMARK's Common Stock in exchange for the VossNet Stock; and
(b) 1,000,000 shares of the IMARK Preferred Stock at a price of
$1.00 per share, or $1,000,000 in the aggregate.
2.2 ISSUANCE OF STOCK. On the Closing Date, IMARK shall issue to
Advance, the IMARK Common Stock and the IMARK Preferred Stock. Advance will
distribute the IMARK Common Stock to the Advance Stockholders by way of
dividend on about the Closing Date. If Advance so elects, IMARK, instead of
delivering certificates for the IMARK Common Stock to Advance, shall issue to
each Advance Stockholder the number of shares of IMARK Common Stock to which
they would be entitled pursuant to such dividend, as certified to IMARK by
Advance on or about the Closing Date..
2.3 LEGEND. The certificates representing the IMARK Common Stock and
the IMARK Preferred Stock shall bear a restrictive legend substantially as
follows:
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THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES
LAW OF ANY STATE OR COUNTRY AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
2.4 CLOSING. The Closing shall take place at the offices of Ginsburg,
Feldman and Bress, Chartered in Washington, D.C. at 10:00 a.m. (DST) on the
later of (a) 10 days after notice of this transaction has been given to the
shareholders of IMARK pursuant to NASD Rule 4310(c)(25)(H)(ii) or (b) June 30,
1998, or at such other time, date and place as may be agreed amongst the
parties. At the Closing, IMARK shall deliver to Advance or (if Advance so
elects with respect to the IMARK Common Stock, each Advance Stockholder)
certificates representing the number of shares of IMARK Common Stock and IMARK
Preferred Stock to which Advance or such Advance Stockholder is entitled. Upon
completion of the Closing, Ginsburg, Feldman and Bress shall deliver to each
Advance Stockholder who did not attend by overnight courier any certificates
representing IMARK Common Stock to which he is entitled, as certified to
Ginsburg, Feldman and Bress by Advance. At Closing, Advance shall deliver to
IMARK (a) its check or a wire transfer for $1,000,000 and (b) stock powers in
favor of IMARK with respect to the VossNet Stock as well as stock certificates
representing the VossNet Stock. Also at the Closing, Advance shall deliver to
IMARK a certificate stating that all of their representations and warranties
are true and correct as of the Closing, and IMARK shall deliver to Advance a
certificate of like tenor with respect to the representations and warranties
made by IMARK.
3. REPRESENTATIONS AND WARRANTIES OF IMARK
IMARK represents and warrants to Advance and the Advance Stockholders as
follows:
3.1 EXECUTION. This Agreement has been duly and validly executed and
delivered by IMARK and constitutes the valid and binding agreement of IMARK
enforceable against IMARK in accordance with its terms.
3.2 CORPORATE EXISTENCE, POWER AND GOOD STANDING. IMARK is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware. IMARK has the power and authority to own and lease its
properties and to carry on its business as and where such business is now being
conducted. IMARK is qualified to do business as a foreign corporation in
Virginia, and is not required to be qualified in any other jurisdiction where
failure to so qualify would have a material adverse effect on the business or
financial condition of IMARK or its assets.
3.3 SUBSIDIARIES. IMARK does not now have, and never has had, an
equity interest in any corporation or other business enterprise.
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3.4 CAPITALIZATION. (a) IMARK's authorized capital stock consists of
20,000,000 shares of authorized common stock, $0.01 par value, of which
4,719,479 shares are issued and outstanding, and an additional 4,417,588 shares
are subject to issuance upon the exercise of options or warrants, and 1,000,000
shares of Preferred Stock, issuable in series, none of which has been issued or
is outstanding. All of the outstanding shares of common stock have been duly
authorized, are duly and validly issued, and are fully paid and nonassessable.
No shares of common stock are held in the treasury of IMARK. Other than as
listed on SCHEDULE 3.4, there is no security, option, warrant, right, call,
subscription, agreement, commitment or understanding of any nature whatsoever,
fixed or contingent, that directly or indirectly (i) calls for the issuance,
sale, pledge or other disposition of the capital stock of IMARK or any
securities convertible into, or other rights to acquire, any capital stock of
IMARK, (ii) obligates IMARK to grant, offer or enter into any of the foregoing,
or (iii) relates to the voting or control of such capital stock. The terms of
the IMARK Preferred Stock are set forth in the Certificate of Designation
delivered to Advance, which has been duly approved and adopted by all requisite
corporate action and will be duly filed by June 22, 1998 with the Delaware
Secretary of State. The IMARK Common Stock and IMARK Preferred Stock have
been duly authorized, and upon issuance pursuant to this Agreement will be duly
and validly issued and outstanding, fully paid and nonassesable, and free of
Liens.
(b) The IMARK Preferred Stock is convertible into 35,150,000
shares of Common Stock of IMARK. IMARK will not (after issuance of the IMARK
Common Stock to Advance) have sufficient authorized Common Stock to effect such
conversion. IMARK covenants to take the actions set forth in Section 4.5 such
that it will have sufficient Common Stock to effect the conversions. No other
actions or filings are necessary such that, upon conversion of the IMARK
Preferred Stock, Advance will own an additional 35,150,000 shares of the Common
Stock of IMARK which are duly authorized duly and validly issued and
outstanding, fully paid, and non-assessable and free of Liens.
3.5 AUTHORIZATION. IMARK has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of this Agreement have been
duly and validly authorized by all necessary corporate action of IMARK.
Stockholder approval of this transaction by IMARK is not required by the laws
of Delaware or by the Articles of Incorporation or Bylaws of IMARK. IMARK has,
or prior to Closing will, obtain a waiver of the general requirement of
shareholder approval pursuant to NASD Rule 4310(c)(25)(H)(ii).
3.6 NO CONFLICT; NO CONSENTS. The execution, delivery and performance
of this Agreement by IMARK does not and will not:
(a) conflict with or result in a breach of the Articles of
Incorporation or Bylaws of IMARK;
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(b) conflict with or result in a breach of any contract or
commitment to which IMARK is a party or by which it is bound, or result in the
right of acceleration or any similar right of any other party under any such
contract or commitment;
(c) violate or conflict with any laws, ordinances, codes, rules,
regulations, judgments, orders or decrees of governmental, administrative or
judicial authorities applicable to IMARK or any of its businesses or
properties, except that IMARK does not plan to seek shareholder approval, as
generally required by the rules of the NASD;
(d) require any authorization, consent, order, permit, license
or approval of, or notice to, or filing, registration or qualification with,
any governmental, administrative or judicial authority, other than notice to
its shareholders and notice filings with the NASD and the Commission; or
(e) require any notice to, filing with or authorization,
registration, consent or approval of any Person (other than a governmental
agency) pursuant to any contracts, agreement, indentures, credit agreements,
leases or otherwise.
3.7 FINANCIAL STATEMENTS. IMARK has provided Advance and the Advance
Stockholders with copies of the audited balance sheets of IMARK as of June 30,
1996, and 1997, and the related audited statements of income, retained earnings
and changes in financial position for the years then ended; and the unaudited
balance sheet of IMARK as of March 31, 1998, and the related unaudited
statements of income, retained earnings and changes in financial position for
the quarter then ended. The audited financial statements have been audited by
Ernst & Young LLP and have been prepared in accordance with GAAP. The audited
financial statements are true and correct and present fairly the financial
condition of IMARK as of June 30, 1996 and 1997, and the results of operations
and changes in financial position of IMARK for the years then ended. The
unaudited financial statements have been prepared by IMARK in accordance with
GAAP (except for the omission of footnotes and accruals customarily made at
year-end) and in a manner consistent with the audited financial statements.
The unaudited financial statements present fairly the financial position of
IMARK as of March 31, 1998, and the results of operations and changes in
financial position of IMARK for the quarter and nine months then ended. Except
for contingent liabilities disclosed in the notes to IMARK's financial
statements, there are no facts or circumstances that could reasonably be
expected to result in any liability of IMARK other than liabilities appearing
on its March 31, 1998 balance sheet or incurred in the ordinary course of
business thereafter.
3.8 TAX RETURNS AND LIABILITIES.
(a) Returns. IMARK has delivered to the Stockholders true and
complete copies of all federal, state, local and foreign income tax returns
filed by IMARK for the fiscal years 1996 and 1997.
(b) All Returns Filed. All federal, state, local and foreign
tax returns that were due to have been filed in accordance with Applicable Law
(foreign and domestic), subject to any
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extensions of time obtained by IMARK, have been duly filed, and are accurate
and complete in all material respects, and all taxes due have been paid in
accordance with such returns have been paid in full. There are no outstanding
agreements by IMARK for the extension of time for the assessment of any tax.
IMARK is not currently being audited by the Internal Revenue Service and no
such audit has been threatened. There are no tax liens on any of the assets of
IMARK.
3.9 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as disclosed in
SCHEDULE 3.9, since March 31, 1998, there has not been:
(a) any material adverse change in the financial condition,
business or results of operations of IMARK;
(b) any material damage, destruction or loss (whether or not
covered by insurance) adversely affecting the properties, business prospects or
results of operation of IMARK;
(c) any increase in any compensation payable by IMARK to any
director, officer, employee or agent of IMARK, or any amendment to any
consulting or service agreement between IMARK and any officer, director,
employee or agent of IMARK or between IMARK and any third party;
(d) any loan to or any change in or addition to, any insurance,
pension or other benefit plan for or with any director, officer, employee or
agent of IMARK;
(e) any commission or bonus paid to any director, officer,
employee or agent of IMARK; or
(f) any change in the operation of the business of IMARK or any
transaction entered into by IMARK, except such changes and transactions
occurring in the ordinary course of business.
3.10 SEVERANCE BENEFITS; EMPLOYMENT CONTRACTS. Except as set forth on
SCHEDULE 3.10, IMARK provides no severance benefits to, and has no severance or
golden parachute agreement with, any director, officer, employee or agent,
other than as required by law, and is not a party to any employment contract,
employment manual or employee benefit plan or program that cannot be terminated
on 30 days notice without liability to IMARK, or which in any way promises or
guarantees continued employment to any person.
3.11 MATERIAL CONTRACTS; LIENS. Except as listed on SCHEDULE 3.11,
IMARK is not a party to or bound by any:
(a) contract or agreement that by its terms:
(i) requires IMARK to make payments thereunder in any
twelve month period in excess of an aggregate of $50,000,
and
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(ii) requires more than sixty (60) days' notice in order
for such commitments to be terminated without liability to
IMARK;
(b) management, consultant or employment contract or
collective bargaining or other labor union agreement;
(c) pension, profit sharing, retirement or other employee
benefit plan or arrangement;
(d) contract, agreement or arrangement of any nature
whatsoever with any director, officer, employee or agent of IMARK, or any
person related to any director, officer, employee or agent of IMARK, or any
IMARK or other organization in which any such director, officer, employee or
agent of IMARK has a direct or indirect financial interest;
(e) loan, factoring, credit line or subordination agreement;
(f) contract preventing IMARK from carrying on its business
anywhere in the world;
(g) joint venture or other agreement involving sharing of
profits;
(h) outstanding power of attorney empowering any person, or
another organization to act on behalf of IMARK or any officer or director
thereof;
(i) lease agreement or sublease agreement with respect to
real, personal or mixed property, other than lease agreements or sublease
agreements with respect to personal property that may be cancelled on no more
than thirty (30) days' notice without any penalty;
(j) outstanding guaranty, subordination or other similar type
of agreement, whether or not entered into in the ordinary course of business;
or
True and complete copies of all such contracts and other documents (including
any amendments thereto) listed on SCHEDULE 3.11 have been furnished to Advance.
(b) There are no Liens of any kind or nature whatsoever on
any of the assets or properties of IMARK.
3.12 LITIGATION. Except as set forth on SCHEDULE 3.12, no claim, suit,
action, governmental investigation or litigation, or legal, administrative,
arbitration or other proceeding of any kind (domestic or foreign) is pending or
threatened against, relating to or involving IMARK (whether as plaintiff or
defendant), or its property or business, nor does IMARK know of any ground for
any such claim, suit, IMARK, investigation, litigation or proceeding. Except
as set forth on SCHEDULE 3.12, IMARK is not subject to any outstanding order,
writ or decree of any court or other governmental authority (domestic or
foreign).
3.13 COMPLIANCE WITH LAWS AND REGULATIONS. IMARK is not and has not
been in violation of any Applicable Laws that would cause IMARK to suffer or
incur any material loss, liability,
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penalty or expense. IMARK has complied with, filed any reports or applications
required by, and obtained any licenses or permits required by Applicable Laws
which are material to the business of IMARK, or to the ownership of its
properties or to its financial condition. IMARK has not been notified that it
has or may have, and no condition exists that would give rise to, Liability
imposed by or based upon any Applicable Laws.
3.14 INTELLECTUAL PROPERTY RIGHTS. IMARK owns the patents and patent
applications listed on SCHEDULE 3.14. IMARK owns all patents, trade secrets,
and other intellectual property rights required for the conduct of its
business, including without limitation the manufacture and sale of its
products, and has generated its own design, development and manufacturing
processes. IMARK has generated its own software (other than off-the-shelf
software generally available to the public) and, except as listed on SCHEDULE
3.14, is not dependent on third party licenses for software. Except as set
forth on SCHEDULE 3.14, IMARK has taken all necessary and customary action to
protect and maintain its trade secrets and other intellectual property rights.
IMARK has received no notice of any action relating to, nor does it have any
knowledge of, any infringement by it of the intellectual property rights of any
third parties.
3.15 TRADEMARK INDEMNIFICATION. IMARK has the right to use all
trademarks, trade names and service marks that it presently uses without the
consent of or payment to any third party. IMARK has no indemnification
obligation or any other Liability to any person for trade name, trademark or
service mark infringement. All trademarks, trade names and service marks
presently used by IMARK are listed in SCHEDULE 3.15.
3.16 EMPLOYEE BENEFIT PLANS. Except as listed on SCHEDULE 3.16, IMARK
has not established or maintained, nor is obligated to make contributions to or
under, or otherwise participate in, for any employee or employees or former
employee or employees, any employee benefit plan, fund or program described in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). IMARK is not, and never has been, obligated to make, and has not
made, contributions to any multi-employer plan within the meaning of Section
4001 (a) (3) of ERISA, and IMARK has not provided or at any time agreed to
provide any post retirement medical benefits to, or on behalf of, former
employees except to the extent required under Section 4980B of the Internal
Revenue Code of 1986 as amended (the "Code"). Each employee benefit plan
maintained by IMARK is listed on SCHEDULE 3.16, and IMARK has given the
Stockholders' Representative a complete copy of all plan documents in
connection with each such plan. Each such plan complies and has at all times
complied with the applicable requirements of the Code and ERISA. Each benefit
plan intended to qualify under Section 401(a) of the Code so qualifies, each
trust which forms a part of any such plan is tax-exempt under Section 501(a) of
the Code, and IMARK has obtained a favorable determination letter regarding the
qualified status of each such plan.
3.17 BROKER'S AND FINDER'S FEES. No person is or will be entitled to a
broker's, finder's, investment banker's, financial adviser's or similar fee
from IMARK, or by reason of any actions taken by IMARK, in connection with this
Agreement or any of the transactions contemplated hereby.
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3.18 PRIVATE OFFERING. No form of general solicitation or general
advertising was used by IMARK in connection with the offer or sale of the IMARK
Common Stock or IMARK Preferred Stock. The terms of this transaction have been
negotiated between the parties. No registration of the IMARK Common Stock or
IMARK Preferred Stock (or the shares of Common Stock of IMARK underlying the
IMARK Preferred Stock) pursuant to the Securities Act or any state securities
or "blue sky" laws will be required by the offer, sale or issuance of such
Common or Preferred Stock pursuant to this Agreement.
3.19 SEC DOCUMENTS. IMARK is a corporation subject to the reporting
requirements of the Securities Exchange Act of 1934 (the "Exchange Act").
IMARK has filed all required reports, schedules, forms, statements, and other
documents with the Commission since July 1, 1994 (the "SEC Documents"). As of
their respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations of the Commission promulgated thereunder
applicable to such SEC Documents, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of IMARK included in the SEC Documents
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, as permitted by SEC Form 10-Q) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the financial position of IMARK as of the
date thereof and its statements of operations, changes in shareholders' equity
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
SEC Documents, to IMARK's knowledge, IMARK does not have any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a balance sheet of IMARK or in the notes
thereto, other than liabilities and obligations incurred in the ordinary course
of business consistent with the past practice and experience since March 31,
1998.
3.20 FULL DISCLOSURE. No representation or warranty made by IMARK in
this Agreement, any Schedule, any Exhibit or any certificate delivered, or to
be delivered, by or on behalf of IMARK pursuant hereto contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements contained herein or therein not misleading. There is no
fact or circumstance that IMARK has not disclosed to Advance or the Advance
Stockholders in writing that IMARK presently believes has resulted, or could
reasonably be expected to result, in a material adverse change in its business
or financial condition or could reasonably be expected to have a material
adverse effect on the ability of IMARK to perform its obligations under this
Agreement.
4. COVENANTS OF THE PARTIES
4.1 ADDITIONAL ACTIONS. Subject to the terms and conditions of this
Agreement, IMARK and Advance agree to use their best efforts to take, or cause
to be taken, all actions and to do, or
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cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement.
4.2 DIRECTORS. Upon the Closing of the transactions contemplated by
this Agreement, IMARK's Board of Directors will be increased from five to six
members, which IMARK represents and warrants is permitted by its Certificate of
Incorporation and By-Laws. Steven P. Schnipper and Weldon P. Rackley will
resign as directors of IMARK and Advance will nominate three directors (at
least two of whom shall be independent directors as defined by NASD Rule
4300(a)(13)) who shall be elected by the remaining directors to serve until the
next annual meeting of stockholders. Thereafter, for so long as Messrs. Robert
A. Wiedemer, John D. Wiedemer, and Philip J. Gross (the "Management
Directors"), or any of them, are employed by IMARK, Advance shall request that
the Advance Stockholders vote the IMARK Common Stock for the election of such
persons or person as a director at each meeting of stockholders at which
directors of IMARK are elected and the Management Directors will vote in favor
of three nominees of Advance, as long as two such nominees continue to be
"independent directors" under NASD Rule 4300(a)(13).
4.3 NASD. Prior to Closing, IMARK will obtain assurances acceptable to
Advance that (a) IMARK will not be delisted from the Nasdaq Small Cap Market
for any action contemplated herein or condition presently existing, including
but not limited to (i) failure to have net tangible assets of at least $2
million, or (ii) failure to satisfy initial listing requirements if NASD Rule
4330(f) were deemed applicable to this transaction, and (b) IMARK is entitled
to the exception from the shareholder voting requirements for this transaction
by virtue of NASD Rule 4310(c)(25)(H)(ii).
4.4 ACCESS TO INFORMATION. Prior to the Closing, Advance shall be
entitled to make or cause to be made such reasonable investigation of IMARK,
and the financial and legal condition thereof, as each reasonably deems
necessary or advisable, and the other party shall cooperate with any such
investigation. In furtherance of the foregoing, but not in limitation thereof,
each shall permit the other and its agents and representatives to have full and
complete access its the premises, books and records upon reasonable notice
during regular business hours and each shall furnish such financial and
operating data, projections, forecasts, business plans, strategic plans and
other data relating to its business, as the other party shall reasonably
request from time to time. Any information obtained pursuant to this Section
4.4 shall be used only for the purpose of evaluating and the consummating the
transactions contemplated by this Agreement and shall otherwise remain
confidential.
4.5 INCREASE IN AUTHORIZED COMMON STOCK. As soon as practical after
the Closing, IMARK will call a meeting of its shareholders to approve an
amendment to its Articles of Incorporation to increase the number of authorized
Common Shares to a number sufficient to permit conversion of the IMARK
Preferred Stock into Common Stock of IMARK in full. If such an amendment is
not adopted within 12 months of the date hereof, Advance shall have, in
addition to my other remedies at law or in equity, the right to rescind its
purchase of the IMARK Preferred Stock.
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5. REPRESENTATIONS AND WARRANTIES OF ADVANCE
Advance hereby represents and warrants to IMARK as follows:
5.1 EXECUTION. This Agreement has been duly and validly executed and
delivered by Advance and constitutes the valid and binding agreement of Advance
enforceable against Advance in accordance with its terms.
5.2 CORPORATE EXISTENCE, POWER AND GOOD STANDING. Advance has had its
charter revoked, but is currently in the process of taking all action necessary
to be reinstated as a corporation duly organized, validly existing and in good
standing under the laws of Delaware. Advance has the power and authority to
own and lease its properties and to carry on its business as and where such
business is now being conducted. Advance is not qualified to do business as a
corporation in any other jurisdiction, and is not required to be qualified in
any other jurisdiction where failure to so qualify would have a material
adverse effect on the business or financial condition of Advance or its assets.
5.3 AUTHORIZATION. Subject to Section 5.2, Advance has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated thereby. The execution and delivery of this
Agreement have been duly and validly authorized by all necessary corporate
action of Advance.
5.4 NO CONFLICT. The execution, delivery and performance of this
Agreement by Advance do not and will not:
(a) conflict with or result in a breach of the Articles of
Incorporation or Bylaws of Advance;
(b) conflict with or result in a breach of any contract or
commitment to which Advance is a party or by which it is bound, or result in
the right of acceleration or any similar right of any other party under any
such contract or commitment;
(c) violate or conflict with any laws, ordinances, codes,
rules, regulations, judgments, orders or decrees of governmental,
administrative or judicial authorities applicable to Advance or its ownership
of an equity interest in VossNet PLC; or
(d) require any authorization, consent, order, permit,
license or approval of, or notice to, or filing, registration or qualification
with, any governmental, administrative or judicial authority.
5.5 BROKER'S AND FINDER'S FEES. No person is or will be entitled to a
broker's, finder's, investment banker's, financial adviser's or similar fee
from Advance, or by reasons of any actions taken by Advance, in connection with
this Agreement or any of the transactions contemplated hereby.
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<PAGE> 12
5.6 PURCHASE FOR OWN ACCOUNT. (a) The IMARK Common Stock and IMARK
Preferred Stock to be acquired by Advance (or, with respect to the IMARK Common
Stock, by each Advance Stockholder), is being acquired for its own account and
with no intention of distributing or reselling such Stock or any part thereof
to any other Person prior to the registration of such Stock under the
Securities Act or in the absence of an opinion of counsel satisfactory to IMARK
that such registration is not required, except for a dividend on or about the
Closing Date by Advance of the IMARK Common Stock to its shareholders (and a
dividend in the future of the Common Stock underlying the IMARK Preferred Stock
after conversion or, possibly, a dividend of the IMARK Preferred Stock). Each
Advance Stockholder is an Accredited Investor as that term is used in
Regulation D promulgated under the Securities Act, and is familiar with and
understands the terms of this transaction and the matters relevant to this
investment. Advance and each Advance Stockholder has such knowledge or
experience in financial and business matters that it is capable of evaluating
the merits and risks of investing in IMARK. Each Advance Stockholder will
acknowledge to IMARK that an investment in IMARK is a high risk.
(b) Advance understands and agrees that:
(i) The IMARK Common Stock and the IMARK Preferred
Stock have not been registered under the Securities Act of 1933 or any state
securities laws and, therefore, the IMARK Common Stock and IMARK Preferred
Stock cannot be resold or transferred unless it is subsequently registered
under the 1933 Act and applicable state securities or "Blue Sky" laws or
exemptions from such registration are available.
(ii) Due to the restrictions on transfer of the IMARK
Common Stock and the IMARK Preferred Stock: (i) Advance may not be able to
liquidate this investment in the event of an unexpected need for cash; (ii)
transferability of the IMARK Common Stock and the IMARK Preferred Stock are
extremely limited; and (iii) in the event of a disposition of the IMARK Common
Stock and the IMARK Preferred Stock, Advance could sustain a loss.
(iii) A legend summarizing the restrictions on the
transfer of the IMARK Common Stock and the IMARK Preferred Stock will be made
on the certificates representing the shares of IMARK Common Stock and the IMARK
Preferred Stock and stop transfer instructions will be given to the transfer
agent for the IMARK Common Stock to prohibit any transfer or attempted transfer
in violation of such restrictions.
5.15 VOSSNET PLC. The ordinary shares of VossNet PLC owned by Advance
constitute approximately 29.9 percent of the outstanding equity of VossNet and
are owned by Advance free of Liens to such shares.
6. CONDITIONS PRECEDENT TO CLOSING
6.1 CONDITIONS TO OBLIGATIONS OF IMARK. Each and every obligation of
IMARK to be performed in connection with the Closing shall be subject to the
satisfaction on or before the Closing of the following conditions (provided,
however, that IMARK may waive any or all of the following conditions prior to
or at the Closing):
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(a) Representations and Warranties of Advance True at Closing.
The representations and warranties of Advance contained herein shall be true
and correct at the Closing with the same effect as though such representations
and warranties had been made or given on and as of the Closing. Advance shall
have performed all obligations and complied with all covenants and agreements
required by this Agreement to be performed or complied with by it prior to or
at the Closing.
(b) Litigation. No suit, investigation, action or other
proceeding shall be threatened or pending against any party before any court or
governmental agency that, in the reasonable opinion of counsel for IMARK, could
result in the restraint, prohibition or the obtaining of damages or other
relief against IMARK in connection with the Agreement or the consummation of
the transactions contemplated hereby.
(c) Incentive Stock Option Plan. Advance and IMARK shall have
agreed on the terms of a new Incentive Stock Option Plan to provide incentives
to the management and employees of IMARK, to be adopted following the Closing.
6.2 CONDITIONS TO OBLIGATIONS OF ADVANCE. Each and every obligation of
Advance to be performed in connection with the consummation of the transactions
contemplated hereby at the Closing shall be subject to following conditions
(provided, however, that Advance may waive, in writing, any or all of the
following conditions prior to or at the Closing):
(a) Directors. The board of directors of IMARK shall have elected
to the board, contingent only on the Closing, three Persons nominated by
Advance to serve as directors, and Messrs. Rackley and Schnipper shall have
delivered their resignations as directors to IMARK, effective upon the Closing.
(b) Representations and Warranties of IMARK True at Closing. The
representations and warranties of IMARK contained herein shall be true and
correct at the Closing with the same effect as though such representations and
warranties had been made or given on and as of the Closing. IMARK shall have
performed all obligations and complied with all covenants and agreements
required by this Agreement to be performed or complied with by IMARK prior to
or at the Closing. There shall have been no material adverse change in the
business, operations, financial condition or prospects of IMARK between March
31, 1998 and the Closing Date.
(c) Litigation. No suit, investigation, action or other
proceeding shall be threatened or pending against any party before any court or
governmental agency that, in the reasonable opinion of counsel for Advance,
could result in the restraint, prohibition or the obtaining of damages or other
relief against Advance in connection with the Agreement or the consummation of
the transactions contemplated hereby.
(d) Consents. All consents required for the consummation of the
transactions contemplated hereby under all material agreements, commitments,
leases, licenses and permits of IMARK shall have been obtained without
materially affecting the rights of IMARK under any
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<PAGE> 14
such agreement, lease, license, permit or commitment and shall be in full force
and effect. IMARK shall have satisfied in full the obligations of Section 4.3
with respect to the NASD.
(e) Preferred Stock. The Certificate of Designation with respect
to the Preferred Stock conforming to Schedule B shall have been filed with the
Secretary of State of Delaware and the IMARK Preferred Stock when issued shall
have the characteristics and attributes set forth in EXHIBIT A.
(f) Resolutions. Certified resolutions of the Board of Directors
of IMARK with respect to the approval of this transaction shall have been
delivered to Advance.
(g) Opinion of Counsel. Advance shall have received an opinion of
IMARK's counsel in form reasonably acceptable to it, and on which the Advance
Stockholders may rely, to the effect that the shares of IMARK Common Stock and
IMARK Preferred Stock have been (and, upon conversion after the shareholder
approval contemplated by Section 4.5, the shares of Common Stock underlying the
IMARK Preferred Stock will be) duly authorized and validly issued to them and
are fully paid and non-assessable.
(h) Due Diligence. Advance shall be satisfied with the results of
its due diligence investigation of IMARK, including the financial and legal
condition thereof.
7. INDEMNIFICATION
7.1 INDEMNIFICATION BY ADVANCE. Advance shall indemnify, defend, protect
and hold harmless IMARK and each of its respective officers, directors,
employees, stockholders, (individually "IMARK Indemnified Party" and
collectively, "IMARK Indemnified Parties") from, against and in respect of all
liabilities, losses, claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, settlement payments, deficiencies, costs and expenses
(including without limitation reasonable attorneys' fees and expenses)
(collectively, "Claims") suffered, sustained, incurred or paid by them or any
of them in connection with, resulting from any breach of any representation or
warranty of Advance set forth in this Agreement. Any Claim arising under this
Section 7.1 shall be reduced by the amount of any insurance proceeds paid to
the IMARK Indemnitees as a result of the event giving rise to such Claim. Any
Claim for indemnification may be satisfied by a return to IMARK of shares with
a "Value" equal to the amount of the Claim. "Value" for this purpose shall
mean (x) for the IMARK Common Stock, the greater of the last sales price of the
IMARK Common Stock (i) on the Closing Date or (ii) on the date of delivery of
shares in payment of any indemnification obligation and (y) for the IMARK
Preferred Stock, the value of the Common Stock (determined pursuant to (i)
above) into which it can be converted.
7.2 INDEMNIFICATION BY IMARK. IMARK covenants and agrees to indemnify,
defend and, protect and hold harmless Advance, each Advance Stockholder, and
each director and officer of Advance immediately prior to the Closing
(individually a "Stockholder Indemnified Party" and collectively "Stockholder
Indemnified Parties") from, against and in respect of all Claims suffered,
sustained, incurred or paid by them or any of them in connection with,
resulting from or
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<PAGE> 15
arising out of any breach of any representation or warranty of IMARK set forth
in this Agreement, including any claims incident to the enforcement of this
Section 7.2. Any Claim arising under this Section 7.2 shall be reduced by the
amount of any insurance proceeds paid to Advance as a result of the event
giving rise to such Claim.
7.3 SURVIVAL. The representations and warranties given or made by the
parties in this Agreement or in any certificate or other writing furnished in
connection herewith shall survive the Closing until the first anniversary of
the Closing Date and shall thereafter terminate and be of no further force or
effect, except that any representation or warranty as to which a claim
(including without limitation a contingent claim) shall have been asserted
during the survival period shall continue in effect with respect to such claim
until such claim shall have been finally resolved or settled. Each party shall
be entitled to rely upon the representations and warranties of the other party
or parties set forth herein regardless of any investigation or audit conducted
before or after the Closing Date or the decision of any party to complete the
Closing.
7.4 INDEMNIFICATION PROCEDURE. All claims for indemnification under
Sections 7.1 or 7.2 shall be asserted and resolved as follows:
(a) If any Claim for which Advance pursuant to Section 7.1 or
IMARK pursuant to Section 7.2 (the "Indemnifying Party") would be liable to any
IMARK Indemnified Party or Stockholder Indemnified Party (collectively or
individually an "Indemnified Party" and the "Indemnified Parties") is asserted
against an Indemnified Party by a third party, the Indemnified Party shall with
reasonable promptness notify the Indemnifying Party of such Claim (the "Claim
Notice"), specifying the nature of such Claim and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such Claim). The Indemnifying Party shall
have thirty (30) days from the receipt of the Claim Notice (the "Notice
Period") to notify the Indemnified Party (i) whether or not the Indemnifying
Party disputes the Indemnifying Party's liability to the Indemnified Party with
respect to such Claim and (ii) if the Indemnifying Party does not dispute such
liability, whether or not the Indemnifying Party desires, at the sole cost and
expense of the Indemnifying Party, to defend against such claim or demand,
provided that the Indemnified Party is hereby authorized (but not obligated)
before and during the Notice Period to file any motion, answer or other
pleading and to take any other action that the Indemnified Party shall deem
necessary or appropriate to protect the Indemnified Party's interests. If the
Indemnifying Party notifies the Indemnified Party within the Notice Period that
the Indemnifying Party does not dispute the Indemnifying Party's obligation to
indemnify hereunder and intends to defend the Indemnified Party against such
Claim, and, except as hereinafter provided, the Indemnifying Party shall have
the right to defend by appropriate proceedings, which proceedings shall be
promptly settled or prosecuted by the Indemnifying Party to a final conclusion;
provided that, unless the Indemnified Party otherwise agrees in writing, the
Indemnifying Party may not settle any matter (in whole or in part) unless such
settlement includes a complete and unconditional release of the Indemnified
Party and/or a dismissal with prejudice from any related suit. If the
Indemnified Party desires to participate in, but not control, any such defense
or settlement the Indemnified Party may do so at its sole cost and expense. If
the Indemnifying Party elects not to defend the Indemnified Party against such
claim or demand, whether by not giving the Indemnified Party timely notice as
provided above or
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<PAGE> 16
otherwise, then the Indemnified Party, without waiving any rights against the
Indemnifying Party, may settle or defend against any such claim in the
Indemnified Party's sole discretion and, if it is ultimately determined that
the Indemnifying Party is responsible therefor under this Section 7, then the
Indemnified Party shall be entitled to recover from the Indemnifying Party the
amount of any settlement or judgment and all indemnifiable costs and expenses
of the Indemnified Party with respect thereto, including interest from the date
such costs and expenses were incurred.
(b) If at any time, in the reasonable opinion of the Indemnified
Party, notice of which shall be given in writing to the Indemnifying Party, any
such Claim seeks material prospective relief which could have a materially
adverse effect on the business, operations, prospects, assets, liabilities or
condition (financial or otherwise) of any Indemnified Party, the Indemnified
Party shall have the right to control or assume (as the case may be) the
defense (at the Indemnified Party's cost with respect to legal fees and other
expenses) of any such claim or demand and the amount of any judgment or
settlement shall be part of the indemnification obligations of the Indemnifying
Party hereunder provided, however that the Indemnifying Party must approve the
amount of any settlement, such approval not to be unreasonably withheld. If
the Indemnified Party should elect to exercise such right, the Indemnifying
Party shall have the right to participate in, but not control, the defense of
such claim or demand at the sole cost and expense of the Indemnifying Party.
(c) If the Indemnified Party has a Claim against an Indemnifying
Party that is not a Claim being asserted or sought to be collected by a third
party, the Indemnified Party shall send a Claim Notice with respect to such
Claim to the Indemnifying Party. If the Indemnifying Party does not notify the
Indemnified Party within the Notice Period that the Indemnifying Party disputes
such claim, the amount of such claim shall be conclusively deemed a liability
of the Indemnifying Party hereunder.
(d) Nothing herein shall be deemed to prevent the Indemnified
Party from making (and an Indemnified Party may make) a claim hereunder for
potential or contingent claims or demands provided the Claim Notice sets forth
the specific basis for any such potential or contingent claim or demand to the
extent then feasible and the Indemnified Party has reasonable grounds to
believe that such a claim or demand may be made. The Indemnified Party's
failure to give reasonably prompt notice to the Indemnifying Party of any
actual, threatened or possible claim or demand which may give rise to a right
of indemnification hereunder shall not relieve the Indemnifying Party of any
liability that the Indemnifying Party may have to the Indemnified Party, unless
the failure to give such notice materially and adversely prejudiced the
Indemnifying Party.
8. PIGGYBACK REGISTRATION RIGHTS
(a) Whenever IMARK proposes to file a registration statement
relating to any of its capital stock under the Securities Act of 1933, as
amended (the "Securities Act"), other than a registration statement required to
be filed in respect of employee benefit plans of IMARK on Form S-8 or any
similar form from time to time in effect or any registration statement on Form
S-4 or similar successor form relating to securities issued in connection with
a reorganization,
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<PAGE> 17
IMARK shall, not less than 14 days prior to such filing, give written notice of
such proposed filing to Advance and all Advance Stockholders who then own IMARK
Common Stock (or shares of Common Stock underlying its IMARK Preferred Stock).
Within seven days after receipt of such notice, Advance or any Advance
Stockholder that wishes to request registration of his/her IMARK Common Stock
shall so notify IMARK in writing. Upon receiving such written request, and
subject to this Section 8, IMARK shall include such Common Stock in such
registration statement or in a separate registration statement concurrently
filed, and shall use all reasonable efforts to cause such registration
statement to become effective with respect to such Common Stock.
(b) IMARK will use all reasonable efforts to cause any
registration statement referred to in this Section 8 to become effective and to
remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the earlier of 90 days from the effective date of the
registration statement and the date on which all Stockholders complete their
distribution of IMARK Common Stock that have been registered pursuant to
Section 8. IMARK will use all reasonable efforts to effect such qualifications
under applicable blue sky or other state securities laws as may be reasonably
requested by the Stockholders to permit or facilitate such sale or other
distribution. IMARK will cause the Common Stock for which registration is
effected under this Section 8 to be listed on the Nasdaq Small Cap Market or
any other national securities exchange or quoted on any stock quotation system
on which the shares of IMARK Common Stock are then listed or quoted.
(c) Upon making a request for registration pursuant to this
Section 8, Advance and/or each requesting Advance Stockholder shall furnish to
IMARK such information as IMARK may reasonably request and as shall be required
in connection with such registration. IMARK agrees that it will furnish to
Advance and each Advance Stockholder the number of prospectuses, offering
circulars or other documents, or any amendments or supplements thereto,
incident to any registration, qualification or compliance referred to in this
Section 8 as such Stockholder from time to time may reasonably request.
(d) IMARK will bear all expenses of registrations pursuant to this
Section 8 (other than underwriting discounts and commissions and brokerage
commissions and fees, if any, payable with respect to shares of IMARK Common
Stock sold by Advance or the Advance Stockholders and other than any
professional fees for lawyers or other advisers separately engaged by Advance
or such Stockholders), including, without limitation, registration fees,
printing expenses, expenses of compliance with blue sky or other state
securities laws, and legal and audit fees incurred by IMARK in connection with
such registration and amendments or supplements in connection therewith.
(e) In connection with any offering by an underwriter of shares of
IMARK's capital stock, IMARK shall not be required under this Section 8 to
include any of Advance's or any Advance Stockholder's IMARK Common Stock in
such underwriting unless the Advance Stockholder accepts the financial terms of
the underwriting as agreed upon between IMARK and the underwriters selected by,
and then only in such quantity as the underwriters determine in their sole
discretion will not adversely affect the success of the offering by IMARK. If
the
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underwriters determine that the total amount of IMARK Common Stock requested by
Advance and the Advance Stockholders to be included in such offering exceeds
the amount that the underwriters determine in their sole discretion can be sold
without adversely affecting the success of the offering, then IMARK shall be
required to include in the offering only that amount of IMARK Common Stock
which the underwriters determine in their sole discretion will not adversely
affect the success of the offering (the securities so included to be
apportioned pro rata among Advance and the Advance Stockholders, prior to any
other individuals or entities including their shares in such an offering).
(f) Advance and the Advance Stockholders shall not have any right
to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 8.
(g) IMARK shall have no obligation to register, under this Section
8, any shares of IMARK Common Stock which are eligible for immediate resale
pursuant to Rule 144.
9. MISCELLANEOUS PROVISIONS
9.1 CHOICE OF LAW. This Agreement shall be deemed to be made in, and in
all respects shall be interpreted, construed, and, governed by and in
accordance with the laws of Delaware. No provision of this Agreement or any
related document shall be construed against or interpreted to the disadvantage
of any party hereto by reason of such party's having or being deemed to have
drafted such provision.
9.2 EXPENSES. Each of IMARK and Advance shall pay its own expenses in
connection with the negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby.
9.3 NOTICES. All notices, demands, or other communications provided for
hereunder shall be in writing, shall be delivered in person, or by overnight
courier, or by fax followed by first class mail, and shall be deemed to be
given when so delivered, and
(a) If to Advance, addressed to:
International Advance, Inc.
11 James Square
London, England SW1Y4LB
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<PAGE> 19
(b) If to IMARK, addressed to:
IMARK Technologies, Inc.
580 Herndon Parkway
Herndon, VA 20170-5225
Tel: 703-925-3400
Fax: 703-925-3430
Attn: Robert A. Wiedemer, President
or at such other place or places or to such other person or persons as shall be
designated in writing by the parties hereto.
9.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the name instrument.
9.5 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement embodies the entire
agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter. This Agreement may be modified only by a
written instrument signed by the parties.
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<PAGE> 20
This Agreement has been duly authorized and executed by the parties
hereto, effective as of the date set forth on the first page.
IMARK TECHNOLOGIES, INC.
By: /s/ Robert A. Wiedemer
----------------------------------
Robert A. Wiedemer
Title: President
INTERNATIONAL ADVANCE, INC.
(on behalf of International Advance, Inc.,
without personal liability and subject to any
required stockholder approvals)
By: /s/ Ed Guinan
----------------------------------
Ed Guinan
Title: President
Page 20 6/15/98
<PAGE> 1
EXHIBIT 99.3
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement is made as of August 6, 1998,
by and between IMARK Technologies, Inc., a Delaware corporation with its
principal office at 580 Herndon Parkway, Suite 100, Herndon, VA 20170-5225
("IMARK") and International Advance, Inc., a Delaware corporation ("Advance").
WHEREAS, Advance has extended credit of $400,000 (the "Existing
Credit") to IMARK, which credit is due on demand as of the date hereof;
WHEREAS, IMARK has requested that Advance defer any call with
respect to the Existing Credit and provide to IMARK additional credit in the
principal amount of up to $600,000 (the "Additional Credit"); and
WHEREAS, Advance is willing to defer any call with respect to
the Existing Credit and to provide the Additional Credit (together the "Loan"),
but only upon the terms hereof, including but not limited to receipt of
security for the Existing Credit and the Additional Credit by the grant by
IMARK of a security interest in, and uninhibited access to IMARK's present and
future technologies, and the grant of a security interest in all of IMARK's
other assets; and
WHEREAS, Robert Wiedemer and David Wiedemer have previously
pledged 400,000 shares of the Common Stock of IMARK to Advance to secure the
Existing Credit and hereby the Loan, and have delivered or simultaneously
herewith are delivering to Advance stock certificates representing such pledged
shares and stock powers duly endorsed in blank;
WHEREAS, IMARK is willing to grant Advance a security interest
in, and uninhibited access to IMARK's present and future technologies, and to
grant a security interest in all of IMARK's other assets; and
WHEREAS, IMARK wishes to evidence the Loan by delivering to
Advance two notes with an aggregate principal amount of up to $1,000,000 each
due October 15, 1998, and each bearing interest at the rate of twelve percent
(12%) per annum, with one note in principal amount of $100,000 also being
convertible into a number of shares of the common stock, par value $0.01 per
share the "Common Stock"), of IMARK equal to 19.9% of the Common Stock then
outstanding.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions contained herein and using the defined terms described
in Section 9, the parties agree as follows:
<PAGE> 2
Section 1. Restructuring of Debt.
1.1 IMARK hereby acknowledges that it is currently
indebted to Advance in the principal amount of $400,000 plus interest.
1.2 From the date hereof through October 10, 1998,
Advance may, at Advance's sole and unfettered discretion, and provided that no
default or Event of Default shall have occurred hereunder, lend to IMARK up to
the principal amount of $600,000. IMARK shall request such additional loans
not more than once every two weeks, by delivering to Advance a borrowing
request accompanied by a detailed description of the uses of all credit
provided by Advance to IMARK through the date of the request and the proposed
uses of the additional funds requested on the date of the borrowing request.
Advance shall not be obligated to provide such additional funds, but this
agreement shall govern the repayment of and security for IMARK's obligation to
repay any funds lent hereunder.
1.3 To evidence the Loan, contemporaneously with the
execution of this Agreement, IMARK is issuing to Advance a convertible
promissory note in the principal face amount of $100,000 in the form of Exhibit
A-1 attached hereto (the "Convertible Note") and a promissory note in the
principal face amount of up to $900,000 in the Form of Exhibit A-2 attached
hereto (together, the "Restructured Notes" or the "Notes").
Section 2. Security Interest.
2.1 Secured Obligations. So long as the Loan or either
of the Restructured Notes or any other Obligation remains outstanding, as
security therefor, IMARK hereby assigns, transfers, pledges and grants to
Advance a continuing general lien upon and a security interest in (a) all of
its Technology and Products, specifically including but not limited to all such
Technology that may be developed on or after the date of this Agreement and (b)
all of its other assets, including but not limited to all Accounts, Chattel
Paper, Inventory, Documents, Equipment, Instruments, General Intangibles (as
such terms are defined in the Uniform Commercial Code as adopted by the State
of Virginia), and all other goods and personal property, including without
limitation, furniture and fixtures, whether tangible or intangible, whether now
existing or hereafter acquired by way of replacement, substitution, addition,
accession or otherwise, and all books and records of account, documents and
papers relating thereto ((a) and (b) collectively, the "Collateral").
2.2 Obligation(s). "Obligation(s)" shall mean all
amounts that may be owed by IMARK to Advance under the Note or this Agreement
or otherwise.
-2-
<PAGE> 3
Section 3. Representations and Warranties.
IMARK represents, warrants and agrees that:
3.1 Information. All information delivered or to be
delivered to Advance pursuant to the replacement and restructure of debt
evidenced by the Replaced Notes is true, correct and complete in all material
respects.
3.2 Ownership of Technology and Collateral. Except as
disclosed in SCHEDULE 3.2, IMARK is the legal and equitable owner of the
Collateral, free and clear of any lien, claim, charge, license, security
interest or encumbrance of any kind and has good right and lawful authority to
pledge, assign the Collateral (including to deliver the use of the Technology)
in the manner hereby done or contemplated; and no consent or approval of any
person, entity, governmental body or regulatory authority is or will be
necessary to the validity of the rights created under this Agreement as to the
Technology or the Collateral.
3.3 Non-Infringement. IMARK warrants that the Technology
does not infringe any patent, trade secret or copyright of any third party.
IMARK hereby indemnifies Advance against and agrees to hold Advance harmless
against any cost, expense, claim or liability arising from any claim of any
such infringement.
3.4 Financial Statements. IMARK has previously delivered
to Advance its unaudited balance sheet as of June 30, 1998 and its unaudited
income statement for the twelve months ended June 30, 1998. Each of such
statements was prepared in accordance with generally accepted accounting
principles ("GAAP"), consistently applied, and such statements present fairly,
in all material respects, the financial position of IMARK as of June 30, 1998
and the results of IMARK's operations for the twelve month period described
herein, subject to normal year-end audit adjustments.
3.5 Interim Period. During the period from July 1, 1998
through the date hereof, except for transactions with Advance, IMARK has not
(a) entered into any transaction outside of the ordinary course of IMARK'
business, (b) incurred any long-term debt, or (c) issued any of its capital
stock or any rights (including warrants and options) to purchase any of its
capital stock.
3.6 Authorization. The Board of Directors of IMARK has
taken all corporate action necessary to approve, execute, deliver and perform
the Restructured Notes, this Agreement, and the License Agreement delivered to
Advance on the date hereof. Except as set forth on Schedule 3.6, no consents
of any person, private entity or governmental entity are required in order for
IMARK to enter into the above agreements or to perform its obligations
thereunder.
3.7 Execution. This Agreement has been duly and validly
executed and delivered by IMARK and constitutes the valid and binding agreement
of IMARK enforceable against IMARK in accordance with its terms.
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3.8 Corporate Existence, Power and Good Standing. IMARK
is a corporation duly organized, validly existing and in good standing under
the laws of Delaware. IMARK has the power and authority to own and lease its
properties and to carry on its business as and where such business is now being
conducted. IMARK is qualified to do business as a foreign corporation in
Virginia, and is not required to be qualified in any other jurisdiction where
failure to so qualify would have a material adverse effect on the business or
financial condition of IMARK or its assets.
3.9 No Conflict; No Consents. Except as set forth on
Schedule 3.9, the execution, delivery and performance of this Agreement by
IMARK does not and will not:
(a) conflict with or result in a breach of the Articles of
Incorporation or Bylaws of IMARK;
(b) conflict with or result in a breach of any contract or
commitment to which IMARK is a party or by which it is bound, or result in the
right of acceleration or any similar right of any other party under any such
contract or commitment;
(c) violate or conflict with any laws, ordinances, codes, rules,
regulations, judgments, orders or decrees of governmental, administrative or
judicial authorities applicable to IMARK or any of its businesses or
properties;
(d) require any authorization, consent, order, permit, license or
approval of, or notice to, or filing, registration or qualification with, any
governmental, administrative or judicial authority; or
(e) require any notice to, filing with or authorization,
registration, consent or approval of any Person (other than a governmental
agency) pursuant to any contracts, agreement, indentures, credit agreements,
leases or otherwise.
3.10 Litigation. Except as set forth on SCHEDULE 3.10 and
except for claims resulting from IMARK's failure to pay its creditors in a
timely fashion, no claim, suit, action, governmental investigation or
litigation, or legal, administrative, arbitration or other proceeding of any
kind (domestic or foreign) is pending or threatened against, relating to or
involving IMARK (whether as plaintiff or defendant), or its property or
business, nor does IMARK know of any ground for any such claim, suit, IMARK,
investigation, litigation or proceeding. Except as set forth on SCHEDULE 3.10,
IMARK is not subject to any outstanding order, writ or decree of any court or
other governmental authority (domestic or foreign).
3.11 SEC Documents. IMARK is a corporation subject to the
reporting requirements of the Securities Exchange Act of 1934 (the "Exchange
Act"). IMARK has filed all required reports, schedules, forms, statements, and
other documents with the Commission since August 13, 1996 (the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act or the
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Exchange Act, as the case may be, and the rules and regulations of the
Commission promulgated thereunder applicable to such SEC Documents, and none of
the SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of IMARK included in the
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the
case of unaudited financial statements, as permitted by SEC Form 10-Q) applied
on a consistent basis during the periods involved (except as may be indicated
in the notes thereto) and fairly present the financial position of IMARK as of
the date thereof and its statements of operations, changes in shareholders'
equity and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set
forth in the SEC Documents, to IMARK's knowledge, IMARK does not have any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a balance sheet of IMARK or
in the notes thereto, other than liabilities and obligations incurred in the
ordinary course of business consistent with the past practice and experience
since March 31, 1998.
Section 4. Covenants.
4.1 Payment Covenant. IMARK will pay all amounts due
under the Restructured Notes in accordance with their terms and provisions.
4.2 Board Representation. Until both of the Restructured
Notes are satisfied in full, IMARK will use its best efforts to cause up to two
designees of Advance to be elected to IMARK's Board of Directors. Without
limiting the generality of the foregoing, IMARK shall:
(a) increase the size of the current Board of Directors
by up to two positions and shall appoint Advance's designee or
designees to a vacancy created by this increase;
(b) nominate and support the election of up to two
designees of Advance as part of management's proposed directors
at any meeting of shareholders called for the purpose of
electing directors; and
(c) in any election of directors, solicit proxies of
shareholders for the purpose of electing Advance's designees and
vote any shareholder's proxy which IMARK's management has the
discretion to vote for the election of Advance's designees.
In the event that notwithstanding such best efforts, Advance's
designee is not elected to IMARK's Board, or in the event that Advance notifies
IMARK that it does not wish its designees to serve on IMARK's Board, then,
until both the Restructured Notes are fully paid, IMARK shall invite (with
suitable prior written notice) up to two Advance designees (or one
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designee if an Advance designated director is on the Board) to each meeting of
IMARK's Board of Directors, to each meeting of each committee of IMARK's Board
of Directors, and shall invite at least two representatives of Advance to each
meeting of IMARK's shareholders. IMARK shall provide to any Advance designees
the same information as the information which any director of IMARK receives or
is entitled to receive. Furthermore, IMARK shall give Advance reasonable prior
written notice of any action proposed to be taken by IMARK's Directors or
shareholders upon the receipt of a requisite number of signed consents.
4.3 Maintenance of Collateral. IMARK will maintain the
Collateral as is appropriate to protect IMARK against loss from fire, theft,
computer failure or other casualty and will not waste or destroy the Collateral
or any part of it and will defend the Collateral against the claims and demands
of all third persons. Nothing in this Section will prohibit IMARK from
destroying or not pursuing work in progress which IMARK determines to be
commercially impractical.
4.4 Perfecting Security Interest. IMARK agrees to perform
any and all steps requested by Advance to perfect the security interest granted
herein by way of filing notices of lien, financing statements, continuation
statements or amendments thereto, and grants to Advance the right to sign on
behalf of IMARK and file any of the above in which IMARK's signature is
required. Where Collateral or any of the proceeds thereof are in the hands of
third parties, agents or custodians of IMARK, IMARK shall, after default and on
Advance's request, notify such third parties, agents or custodians of Advance's
security interest therein, and instruct them to hold the same for Advance's
account and subject to Advance's instructions. IMARK will also execute
Financing Statements to be filed in the State of Virginia and the Circuit Court
of the County of Fairfax that will give notice of Advance's rights under the
License Agreement between IMARK and Advance.
4.5 Payment of Charges by IMARK. IMARK shall pay prior
to delinquency all taxes, charges, liens and assessments against the
Collateral. Upon IMARK's failure to pay, Advance at its option may pay any
tax, charge, lien or assessment and shall be the sole judge of the legality or
validity thereof and the amount necessary to discharge the same. Such payment
by Advance shall be reimbursed by IMARK immediately upon demand, with interest
thereon from the date of payment by Advance at the maximum rate of interest
permitted by applicable law with respect to IMARK.
4.6. Collateral Control; Insurance. IMARK shall provide
Advance promptly with any information (in addition to the insurance policies
described below) concerning the Collateral which shall be reasonably required
by Advance. So long as no event of default exists under this Agreement, IMARK
shall be entitled to receive and collect, compromise and settle all proceeds of
the Collateral. Upon a default under this Agreement, IMARK's right to collect
said proceeds shall be terminated and IMARK shall hold all of said proceeds in
trust for the account of Advance in a separate lock box or specifically
designated account, and shall deliver the same to Advance in the identical form
received. IMARK shall maintain appropriate policies of insurance, insuring all
of IMARK's chattels and real property as shall be required by Advance,
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which policies shall be in form satisfactory to Advance and shall be issued by
insurers licensed and authorized to issue such policies.
4.7 Reservation of Shares. IMARK covenants that it will
at all times reserve and keep available out of its authorized Common Stock,
solely for the purpose of issue upon exercise of the Convertible Note, such
number of shares of Common Stock as shall then be issuable upon conversion of
the Convertible Note. IMARK covenants that all shares of Common Stock which
shall be issuable upon conversion of the Convertible Note shall be duly and
validly issued and fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue.
4.8 Negative Covenants. During the term of this
Agreement, IMARK shall not (without Advance's prior written consent):
(a) take any action which will interfere or conflict in
any respect with Advance's interest in the Technology as
contemplated herein; or
(b) take or permit any action that may impair the value
or security of any Collateral, including to sell, assign,
mortgage or grant a security interest or suffer any lien against
any of the Collateral unless the Advance shall have signed a
subordination agreement acceptable to Advance.
4.9 Financial Statements. IMARK shall deliver to Advance
the following:
(a) within 30 days after the end of each monthly
accounting period of IMARK, an unaudited financial report that
includes a profit and loss statement for such month, together
with a cumulative profit and loss statement from the first day
of the current fiscal year to the last day of such month which
reports shall be prepared in accordance with GAAP except for
footnotes customarily required by GAAP and normal year-end
adjustments.
4.10 Non-Disturbance. IMARK shall obtain the written
agreement of each person who presently holds a security interest in any
Collateral, if any, (in the form of an intercreditor agreement acceptable to
Advance) to the effect that, so long as Advance is not in default under the
License Agreement, such security holder's lien shall be subordinate to
Advance's lien and such securityholder not interfere with the exercise by
Advance of its rights under this Agreement or the License Agreement (a
"Non-Disturbance Agreement").
4.11 Ratification of Subscription Agreement. IMARK and
Advance each agree to use their best efforts to perform their respective
obligations under the Subscription Agreement dated as of June 15, 1998 (the
"Subscription Agreement") between IMARK and Advance and to consummate the
transactions thereunder. IMARK also agrees, in lieu of obtaining a waiver of
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the requirement of shareholder approval of the transactions contemplated by the
Subscription Agreement, to promptly take all steps necessary or desirable to
obtain shareholder approval of such transactions prior to October 15, 1998
including but not limited to promptly filing a preliminary proxy statement with
the Securities and Exchange Commission and using its best efforts thereafter to
cause such preliminary Proxy Statement to be approved by the SEC and
distributed to its shareholders. It is anticipated that if IMARK is able to
timely obtain shareholder approval and satisfy the conditions precedent
contained in the Subscription Agreement, the closing of the transactions
contemplated by the Subscription Agreement will be the source of repayment of
the Restructured Notes; however, IMARK shall remain bound to repay the
Restructured Notes in accordance with their terms whether or not the
transactions contemplated by the Subscription Agreement are consummated.
Section 5. Duties of Advance.
5.1 Duty of Care. Advance shall use reasonable care in
the custody and the preservation of the Technology in Advance's possession.
5.2 Confidentiality. Advance covenants and agrees that
at all times it will keep secret all Technology designated by IMARK to be
confidential and that, except as contemplated or permitted by the License
Agreement, it will not divulge the same to any person, firm or corporation
without prior written consent of IMARK. The provisions of this Section 5.2
shall not apply to information which is or becomes part of the public domain
from sources other than Advance, information which Advance has in its
possession or knowledge (other than as provided to Advance by IMARK) as of the
date of this Agreement, information which Advance receives from third parties
owing no obligation of confidentiality to IMARK, and information which Advance
independently develops subsequent to the date of this Agreement. Advance
covenants and agrees to take all precautions reasonably necessary to ensure
that persons purchasing, leasing or using the Technology are made aware that
title to the Technology resides in IMARK for any purpose other than use in
connection with Advance's products, and such users may not copy (except as
permitted in agreements between IMARK and Advance), disclose, attempt to
disassemble or decompose software which implements the Technology.
Notwithstanding the foregoing, it is understood that in the event of any
inconsistency between the provision of this Section 5.2 and the provisions of
any other confidentiality agreement between Advance and IMARK, the provisions
of such other agreement shall govern, except that no provision in this
Agreement is intended to preclude Advance from incorporating IMARK's Technology
and/or products into products sold by Advance or to require Advance to obtain
confidentiality agreements (other than such confidentiality agreements as
Advance is able to obtain from its customers in the ordinary course of its
business) from customers who purchase products from Advance which incorporate
IMARK's Technology or Products or both, or from sublicensing the Technology
pursuant to the License Agreement.
5.3 Non-liability of Advance. So long as Advance has not
breached its obligations under Section 5.2 above or under any other
Confidentiality Agreement with IMARK, Advance shall not be responsible in any
way for any depreciation in the value of the Technology, nor shall any duty or
responsibility whatsoever rest upon Advance to take necessary steps to
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preserve rights against prior parties or to enforce rights in the Technology by
legal proceedings or otherwise.
5.4 Insider Trading. Advance covenants that it will not,
and it will inform its officers, directors, employees, advisors or affiliates
that they may not, trade in shares of IMARK while in possession of material
non-public information.
Section 6. Default.
6.1 Events of Default. IMARK shall be in default under
this Agreement and it shall be deemed to constitute an Event of Default
hereunder if any of the following events or conditions occurs:
(a) Default in the payment of any amount due under the
Restructured Notes or any other Obligation.
(b) If any warranty, representation, or statement made or
furnished to Advance by or in behalf of IMARK proves to have
been false in any material respect when made or furnished or as
of the date on which this Agreement is executed.
(c) Failure of IMARK to perform any covenant made in this
Agreement which failure continues for a period of thirty (30)
days after IMARK receives written notice from Advance specifying
such default.
(d) Loss, theft, substantial damage, destruction, sale,
license, encumbrance, or the making of any levy, seizure, or
attachment of or on the Collateral.
(e) IMARK (i) shall generally not, or be unable to, or
shall admit in writing its inability to, pay its debts as such
debts become due; (ii) shall make an assignment for the benefit
of creditors, petition or apply to any tribunal for the
appointment of a custodian, receiver or trustee for it or a
substantial part of its assets; (iii) shall commence any
proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction, whether now or hereafter in effect; (iv)
shall have had any such petition or application filed or any
such proceeding shall have been commenced, against it, in which
an adjudication or appointment is made or order for relief is
entered, or which petition, application or proceeding remains
undismissed for a period of 60 days or more; (v) by any act or
omission shall indicate its consent to, approval of or
acquiescence in any such petition, application or proceeding or
order for relief or
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the appointment of a custodian, receiver or trustee for all or
any substantial part of its property; or (vi) shall suffer any
such custodianship, receivership or trusteeship to continue
undischarged for a period of 30 days or more.
(f) Breach by IMARK of any of its obligations under the
Subscription Agreement or any other agreement between the
parties.
6.2 Rights in the Event of Default. Upon the occurrence
of an Event of Default and at any time thereafter:
(a) Acceleration. Advance may declare the outstanding
principal of the Restructured Notes, all interest thereon and
all other Obligations to be forthwith due and payable, whereupon
the Restructured Notes, all such interest and all such
Obligations shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by IMARK.
(b) Set off. Advance may withhold from any amount due
from Advance to IMARK under the License Agreement an amount or
amounts equal to the amount of any Obligation that is due and
payable by IMARK under this Agreement. This right of set off
shall not be deemed to be exclusive of any other right or remedy
of Advance, nor shall Advance be required to exhaust any other
remedy before exercising its right of set off hereunder,
provided, however, that if the Event of Default is an event
described in Section 8.1(f) of this Agreement, Advance hereby
waives any right of setoff with respect to amounts due under the
License Agreement and any claim allowable under Section 503(b)
of the Bankruptcy Code arising from IMARK's performance of or
failure to perform the License Agreement.
(c) Direct Recourse. Advance may institute suit directly
against IMARK to collect any Obligations without first
foreclosing on or liquidating any Collateral.
(d) Deficiency. Advance may hold IMARK liable for any
deficiency that may remain after the sale of any Collateral.
(e) Other Creditor Remedies. If an Event of Default
described in Section 6.1(d) shall have occurred, Advance may
also exercise any right or remedy available to a secured
creditor under the Uniform Commercial Code or under any other
law of any
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jurisdiction; provided, however, that if Advance should
foreclose its security interest in the Collateral, it may only
(i) retain the Collateral, or (ii) sell it as part of a sale of
Advance.
(f) Collection of Expenses. Advance may collect from
IMARK (i) all reasonable fees and disbursements of Advance's
attorneys incurred in obtaining advice or representation
relating to the collection or enforcement of any Obligation and
(ii) all reasonable expenses of, or in anticipation of,
litigation including fees and expenses of witnesses, experts and
stenographers and the cost to obtain or produce appraisals. All
such collection fees and expenses shall be due and payable upon
demand and shall be an Obligation secured by all Collateral.
(g) Other Remedies. Advance may exercise any other rights
or remedies it may have under any other agreement with IMARK or
Obligation.
(h) Advance shall have the right to use the Technology in
the conduct of its business and may incorporate the Technology
in products it sells, subject to payment to IMARK for such use
on terms consistent with the best terms and conditions (from the
perspective of a customer) offered to any other customer of
IMARK for the same or similar products or technologies, and the
right to sublicense the Technology subject to the payment of the
Royalties described therein, In each case, payment may be
applied against the Restructured Notes.
(i) ADVANCE MAY ENFORCE ITS RIGHTS UNDER THIS AGREEMENT
WITHOUT RESORT TO PRIOR JUDICIAL PROCESS OR JUDICIAL HEARING,
AND IMARK EXPRESSLY WAIVES, RENOUNCES AND KNOWINGLY RELINQUISHES
ANY LEGAL RIGHT WHICH MIGHT OTHERWISE REQUIRE ADVANCE TO ENFORCE
ITS RIGHTS BY JUDICIAL PROCESS. IN SO PROVIDING FOR A
NON-JUDICIAL REMEDY, IMARK RECOGNIZES AND CONCEDES THAT SUCH A
REMEDY IS CONSISTENT WITH THE USAGE OF THE TRADE, IS RESPONSIVE
TO COMMERCIAL NECESSITY AND IS THE RESULT OF BARGAINING AT ARM'S
LENGTH. NOTHING IN THIS AGREEMENT IS INTENDED TO PREVENT IMARK
OR ADVANCE FROM RESORTING TO JUDICIAL PROCESS AT EITHER PARTY'S
OPTION;
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(j) Delay. Advance may delay exercising or omit to
exercise any right or remedy under this Agreement without
waiving that or any other past, present or future right or
remedy, except in writing signed by Advance.
(k) Waivers. Advance may remedy any default and may waive
any default without waiving the default remedied or without
waiving any other prior or subsequent default.
(l) Cooperation. IMARK hereby agrees to cooperate fully
with Advance in order to permit Advance to utilize the
Technology.
6.3 IMARK Rights. If Advance has breached its
obligations to IMARK under the Subscription Agreement, IMARK may set off its
damages against any amounts due to Advance under the Restructured Notes.
Section 7. Advance. If IMARK fails to perform any
agreement contained herein, Advance may itself perform or cause performance of,
such agreement, and the expense of Advance incurred in connection therewith
shall be payable by IMARK and secured by this Agreement.
Section 8. Conditions Precedent. Simultaneously with
execution of this Agreement, and prior to the first borrowing under the
Additional Credit, IMARK shall deliver to Advance the following documents:
(a) the Restructured Notes executed by IMARK;
(b) executed Form UCC-1's in form appropriate for filing
in the jurisdictions listed in Section 4.4 and all other
jurisdictions in which filing is necessary to perfect the
security interests created hereunder;
(c) such other documents as are required to be filed to
perfect any other security interests created hereunder;
(d) an opinion letter of Greenberg Traurig reasonably
acceptable to Advance with respect to due incorporation, due
authorization, enforceability and perfection of security
interests;
(e) Subordination and Non-Disturbance Agreements in form
reasonably acceptable to Advance from all secured creditors of
IMARK, including but not limited to those listed on Schedule
3.2; and
(f) the borrowing request described in Section 1.2.
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Section 9. Miscellaneous.
9.1 Assignment Prohibited. This Agreement and/or the
rights granted hereunder may not be assigned by IMARK without the prior written
consent of Advance, which consent may be withheld for any reason or for no
reason at all.
9.2 Term of Agreement. The term of this Agreement shall
commence on the date of this Agreement and end upon full payment of the
Restructured Notes; provided, however, that all warranties, representations and
indemnities shall survive the termination of this Agreement.
9.3 Headings. Headings used in this Agreement are to
facilitate reference only, do not form a part of this Agreement, and shall not
in any way affect the interpretation hereof.
9.4 Pronouns. The pronouns used in this instrument are
in the masculine gender but shall be construed as feminine or neuter as
occasions may require.
9.5 Parties. "Advance" and "IMARK" as used in this
Agreement include the successors, representatives, receivers, and assigns of
those parties.
9.6 Applicable Law. The law governing this secured
transaction shall be that of the Commonwealth of Virginia.
9.7 Entire Agreement. This Agreement and all schedules
and exhibits annexed hereto constitute the entire agreement among the parties
respecting the subject matter hereof and supersedes all prior agreements among
the parties relative to the subject matter hereof. This Agreement may not be
modified or amended except by a writing which states that it is an amendment to
this Agreement and which is signed by a duly authorized representative of each
of the parties.
9.8 Notices. All notices required or permitted to be
given hereunder shall be in writing and shall be valid and sufficient if
dispatched either (i) by telex, cable or facsimile transceiver, with confirming
letter mailed promptly thereafter in accordance with clause (ii) hereof, or
(ii) by reputable overnight express mail courier or by certified mail, postage
prepaid, return receipt requested, deposited in any post offices in the United
States, as the case may be, if to IMARK addressed to the address set forth on
the first page of this Agreement or if to Advance to 11 James Square, London,
England SW1Y4LB, with a copy to Alan Wovsaniker, Esq., Lowenstein Sandler PC,
65 Livingston Avenue, NJ 07068, or to such other addresses as may be
provided, from time to time. Either party may change its address by notice
given to the other party in the manner set forth above. When sent by cable or
facsimile as aforesaid, notices given as herein provided shall be considered to
have been received when sent; otherwise, notices shall be considered to have
been received only upon delivery or attempted delivery during normal business
hours.
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9.9 Severability. In the event of any of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such provision shall not affect the validity,
legality or enforceability of any other terms or provisions of this Agreement
and, to the extent permitted by applicable law, a valid, legal and enforceable
provision substantially similar to the invalid, illegal or unenforceable
provision shall be substituted in lieu thereof.
9.10 Time Waiver. IMARK agrees that in performing any act
under this Agreement and the Note, time shall be of the essence and that
Advance's acceptance of partial or delinquent payments, or failure of Advance
to exercise any right or remedy shall not be a waiver of any obligation of
IMARK or right of Advance or constitute a waiver of any other similar default
subsequently occurring.
9.11 Arbitration. All disputes arising out of or relating
to this Agreement or the transactions contemplated by this Agreement may upon
the request of either party, be settled by arbitration conducted in accordance
with the rules then in effect of the American Arbitration Associations ("AAA")
by a panel of three arbitrators selected by the AAA, at least one of whom must
have substantial experience in computer hardware and software technology
licensing. The arbitration shall be conducted in New Jersey and the decision
and award of the arbitrators shall be final and binding on the parties and a
judgment upon such decision or award may be entered in any court of competent
jurisdiction. The parties shall pay equal shares of the costs and expenses of
the arbitration proceeding but each party shall pay its own legal fees and
other costs.
Section 10. Certain Terms.
10.1 The following terms shall have the meaning specified
in this section for all purposes of this Agreement.
(a) Collateral. "Collateral" shall have the meaning
specified in Section 2.1.
(b) Common Stock. "Common Stock" shall mean shares of
common stock, $0.01 par value per share, authorized by IMARK's
Articles of Incorporation.
(c) Event of Default. "Event of Default" shall mean any
of the events enumerated in Section 6.1.
(d) License Agreement. "License Agreement" shall mean
that certain technology license agreement between IMARK and
Advance dated August __, 1998 as the same may be amended.
(e) Product. "Product" shall mean a hardware, firmware or
software implementation of a version of the Technology.
(f) Technology. "Technology" shall mean all
internet-based and CD-ROM-based electronic commerce services
capabilities whether already developed or
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hereafter developed, or made, owned, discovered or licensed on a
sub-licensable basis by IMARK, including, without limitation,
all versions of NET-MAX and CD-MAX, other software, hardware,
firmware, custom and semi-custom components, algorithms,
know-how, trade secrets, confidential information, Source codes,
object codes, designs, plans, specifications, magnetic media and
other forms of recorded information.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as set forth below, all as of
the date first set forth above.
IMARK TECHONOLOGIES, INC. INTERNATIONAL ADVANCE, INC.
By: /s/ ROBERT A. WIEDEMER By: /s/ EDWARD GUINAN
-------------------------------- --------------------------------
Name: Robert A. Wiedemer Name: Edward Guinan
Title: President Title: President
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