As filed with the Securities and
Exchange Commission, March 15, 1996.
Securities Act File No. 33-31205
Exchange Act File No. 0-18034
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________
INDENET, INC.
(Formerly Independent TeleMedia Group, Inc.)
(Exact Name of Registrant as Specified in its Charter)
Delaware 68-0158367
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
1640 North Gower Street
Los Angeles, California 90028
(213) 466-6388
(Address, including Zip Code, and Telephone Number,
including Area Code, of Registrant's Principal Executive
Offices)
_____________________
LEWIS K. EISAGUIRRE, Chief Financial Officer
INDENET, INC.
1640 North Gower Street
Los Angeles, California 90028
(213) 466-6388
(Name, Address, including Zip Code, and Telephone
Number, including Area Code, of Agent for Service)
____________________
Copies of Communications to:
Roger V. Davidson, Esq.
Cohen Brame & Smith
Professional Corporation
1700 Lincoln Street, Suite 1800
Denver, Colorado 80203
(303) 837-8800
Approximate date of commencement of proposed sale to
public:
As soon as practicable after the registration statement becomes
effective
__________________________
If the only securities being registered on this Form are
being offered pursuant to dividend or interest investment plans,
please check the following box. [ ]
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, check the following box. [X]
Title of each Class of Common Stock, $0.001 par value
Securities being Registered
Amount being 1,433,030 Shs.
Registered
Proposed $5.50 (1)(2)
Maximum Offering
Price Per Share
Proposed Maximum $7,881,665
Aggregate Offering
Price
Amount of $2,718.00
Registration Fee
Total. . . . . . . . $2,718.00
(1) Closing price on the Nasdaq Stock Market on February 21,
1996.
(2) Estimated solely for the purpose of determining the
registration fee and calculated pursuant to Rule 457(a).
No separate registration fee is required for the warrants
pursuant to Rule 457(g).
(3) This registration statement covers an additional
indeterminate number of shares of common stock which may be
issued in accordance with Rule 416.
_____________________
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
PROSPECTUS
SELLING SHAREHOLDER OFFERING
IndeNet, Inc.
$.001 Par Value Common Stock
The Company has registered for offer and sale, on behalf of
certain of its security holders, a total of 300,000 shares.
These shares underlie outstanding Options. (See: "Selling
Shareholders".) The first 60,000 Options are exercisable at
$2.50, for one share of the Common Stock, par value $0.001 per
share; the second 60,000 Options are exercisable at $2.75, for
one share of the Common Stock, par value $0.001 per share; the
third 60,000 Options are exercisable at $3.00, for one share of
the Common Stock, par value $0.001 per share; the fourth 60,000
Options are exercisable at $3.25, for one share of the Common
Stock, par value $0.001 per share; and the last 60,000 Options
are exercisable at $3.50, for one share of the Common Stock, par
value $0.001 per share, beginning immediately, and terminating
six (6) months after the date of this prospectus.
Also being registered hereby are 33,030 shares which were
issued to minority shareholders of Mediatech in the Mediatech
acquisition which occurred in February, 1995 and up to 1,100,000
shares, 224,795 which are actually issued and the balance of
which are reserved for issuance upon the conversion of a
$3,000,000 promissory note in the name of GFL Performance Fund
Ltd. ("GFL"). The conversion rights include principal and any
accrued interest and the conversion ratio is based on 82% of the
closing bid price of INDE's shares on Nasdaq for the five days
preceding the day notice of conversion is given (subject to
certain adjustments). (See "Recent Developments.") The shares
offered hereby are being sold for the accounts of these certain
shareholders (the "Selling Shareholders") and the Company will
not receive any proceeds from the sale of shares by the Selling
Shareholders. The Company has agreed to indemnify GFL against
certain liabilities, including certain liabilities under the
Securities Act of 1933, and, to the extent any indemnification by
an indemnifying party is prohibited or limited by law, the
Company has agreed to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under such
indemnification provision to the fullest extent permitted by law.
(See: "Plan of Distribution".) The Common Stock is traded on
the Nasdaq Stock Market ("Nasdaq") under the trading symbol
"INDE". The reported closing price on Nasdaq on February 21,
1996 was $5.50 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THERE ARE CERTAIN RISKS INVOLVED WITH THE OWNERSHIP OF THE
COMPANY'S SECURITIES, INCLUDING RISKS RELATED TO ITS BUSINESS
AND THE MARKETS FOR ITS SECURITIES. (SEE "RISK FACTORS".)
The Company, pursuant to agreements with the Selling
Shareholders, has agreed to pay substantially all of the
expenses of any offering and sale hereunder (not including
commissions and discounts of underwriters, dealers, or agents),
estimated to be $8,000.
The Securities will be sold directly, through agents,
underwriters, or dealers as designated from time to time, or
through a combination of such methods on terms to be determined
at the time of sale, at market prices obtainable at the time
of sale or otherwise in privately negotiated transactions at
prices determined by negotiation.
The date of this Prospectus is ________, 1996.
No dealer, salesman, or other person has been authorized to
give any information or to make any representation other than
those contained in or incorporated by reference to this
Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized
by the Company, the Selling Shareholders, or any underwriter,
dealer, or agent. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of
the Company since the date hereof. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy
the securities offered hereby by anyone in any jurisdiction in
which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to
do so or to any person to whom it is unlawful to make such offer
or solicitation in such jurisdiction.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other
information concerning the Company may be inspected and copied at
the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; at the
Commission's Regional Office at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and Seven World Trade Center,
Thirteenth Floor, New York, New York 10048. Copies of such
material can also be obtained upon written request addressed to
the Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, such
material can be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street,
Washington, DC 20006.
The Company has filed with the Commission a registration
statement on Form S-3 (herein, together with all amendments and
exhibits, referred to as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration
Statement which may be inspected and copied in the manner and at
the sources described above. With respect to each such
agreement, instrument, or other document filed as an exhibit to
the Registration Statement, reference is made to the exhibit for
a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the
Commission pursuant to the Exchange Act (file number 0-18034) are
incorporated herein by reference:
(1) Report on Form 8-K for event occurring February 3,
1995.
(2) The Company's Annual Report on Form 10-KSB for the year
ended December 31, 1994, as amended on Form 10-KSB/A-2.
(3) The Company's Quarterly Reports on Form 10-QSB for the
periods ended March 31, 1995 (as amended on Form
10-QSB/A), June 30, 1995, September 30, 1995, and
December 31, 1995.
(4) Report on Form 8-K for event occurring May 12, 1995
relative to change of year end to March 31.
(5) Report on Form 8-K for event occurring October 11,
1995.
(6) Report on Form 8-K for event occurring November 27,
1995.
(7) Report on Form 8-K for event occurring February 7,
1996.
(8) Report on Form 8-K for event occurring February 29,
1996.
(9) All documents filed by the Company pursuant to Sections
13(a) or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of
the Offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof
from the date of filing of such documents.
(10) The Company's Registration Statement on Form 8-A filed
October 12, 1989 (File No. 0-18034), as amended.
Any statement contained herein or in a document incorporated
or deemed to be incorporated herein by reference shall be deemed
to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained in any subsequently filed
document (which is deemed to be incorporated by reference herein)
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to
whom a copy of this Prospectus is delivered, on the written or
oral request of such person, a copy of any or all of the
documents incorporated herein by reference (other than exhibits
thereto, unless such exhibits are specifically incorporated by
reference into the information that this Prospectus
incorporates). Written or telephone requests for such copies
should be directed to the Company's principal office: IndeNet,
Inc., 1640 North Gower Street, Los Angeles, California 90028,
(213) 466-6388.
PROSPECTUS SUMMARY
The following information is qualified in its entirety by
the detailed information and financial statements found elsewhere
in the Prospectus, the December 31, 1994 Form 10-KSB/A-2, as well
as the other documents referred to herein under "Incorporation of
Certain Documents by Reference." As used in this Prospectus, the
term "the Company" refers to IndeNet, Inc. and its subsidiaries,
unless otherwise stated or indicated by the context.
The Company
IndeNet, Inc. was originally founded as a Colorado
corporation on April 4, 1988 and was re-organized under the laws
of the State of Delaware on July 17, 1995. The Company's
operations service the media and communications industries.
Effective October 31, 1993, the Registrant sold all of its
operating assets. Management's intent was to transition into a
new line of business utilizing the proceeds from the sale.
Completion of the asset sale resulted in a company with
approximately $5.8 million in cash and notes receivable,
liabilities of approximately $1.5 million, and shareholders'
equity of $4.3 million. At December 31, 1994, the Registrant's
asset base consisted primarily of cash and promissory notes
relating to the aforementioned sale of its operating assets.
Effective February 3, 1995, the Company acquired Mediatech,
Inc., which became the principal operating subsidiary of the
Company. On November 27, 1995, the Company acquired 66.67% of
Channelmatic, Inc. ("Channelmatic") and on February 7, 1996 it
completed the acquisition of Starcom Television Services, Inc.
("Starcom"). The Company continues to seek other business
combinations.
The Offering
Common Shares Outstanding Prior to,
the Offering and the Warrant Exercise . . .11,915,859
Outstanding Shares Offered by Selling Shareholders. . . .257,825
(All Proceeds to Selling Shareholders)
Common Shares Underlying Promissory Note
Conversion--up to. . . . . . . . . . . . . . . . . . .875,205
Shares Underlying Options . . . . . . . . . . . . . . . .300,000
Nasdaq Stock Market Symbol . . . . . . . . . . . . . . . . INDE
RISK FACTORS
Risk Factors Relating to the Company and This Offering
1. Success Dependent on Management. Success of the
Company depends on the active participation of Messrs. Lautz,
Baur, Derham, Killion, Blay and Eisaguirre. While the Company
has employment agreements with all of these persons, the loss of
their services could adversely affect development of the
Company's business and its likelihood of continuing operations.
2. Competition. The Company faces substantial competition
from other businesses engaged in similar businesses with similar
products, operations and channels of distribution, many of which
competitors are well established and have significant financial
and other resources.
3. Possible Changes in Technology. Management believes
the technology of the business in which it is engaged may be
subject to change. Although the Company's sales actually
increased in the most recent fiscal year, the Company believes
that being able to deliver commercial messages and programming in
immediate digital format may be important to maintaining sales
and customers in the future.
4. Dependence on a Few Major Customers. While no single
customer represents more than 10% of IndeNet's annual revenues,
there are certain customer relationships which are of great
importance to IndeNet. Among these are relationships with
McDonald's Corporation and their agencies - especially Leo
Burnett; Coca Cola and their agencies - especially McCann
Erickson; King World Syndicated Programming, Questar Home
Video, TCI, Time Warner, QPC, Prime Cable Network and Post
Newsweek. No formal contractual agreements exist with any of
these customers but they represent long term relationships with
Mediatech and have provided a substantial percentage of
Mediatech's sales over the past several years.
5. Scarcity of and Competition for Merger or Acquisition
Prospects. While INDE has consummated the acquisition of
Mediatech, Channelmatic and Starcom, it continues to seek
additional acquisitions. INDE is and will continue to be an
insignificant participant in the business of seeking mergers with
and acquisitions of small privately financed companies. A large
number of established and well-financed entities, including
venture capital firms, have recently increased their merger and
acquisition activities. Some such entities have significantly
greater financial resources, technical expertise and managerial
capabilities than INDE and, consequently, INDE may be at a
competitive disadvantage in identifying suitable merger or
acquisition candidates and successfully concluding a proposed
merger or acquisition.
6. Possible Change in Control and Management - Additional
Dilution. Management contemplates that a material acquisition or
merger may be completed on terms requiring the issuance of
additional INDE common shares to shareholders of a merger
candidate. While INDE's shareholders may be entitled to vote on
any such proposed merger or acquisition, under Delaware law a
shareholder vote may not be required if INDE is the surviving
corporation and the number of shares of INDE outstanding after
the acquisition/merger does not exceed by 20% the number of
shares outstanding prior to the transaction. While shareholder
approval was required and obtained in order to dispose of the
Company's operating assets in 1993, as a result of the limited
number of new shares issued in the acquisition of Mediatech,
Channelmatic and Starcom shareholder approval of those
transactions was not required. The successful completion of a
merger or acquisition may result in substantial dilution to the
percentage of common shares of INDE held by present and
prospective shareholders and may result in a change of control of
INDE. It is also likely that any such change in control may also
result in the resignation or removal of INDE's present officers
and directors or the terms of a merger agreement may require that
the officers and directors resign.
7. Public Market for INDE's Securities. Although there
presently exists a market for INDE's common stock, there can be
no assurance that such market will continue.
8. Effect of Certain Selling Shareholders' Sales. INDE
has on file an additional effective registration statement in
which it has registered, for offer and sale, 1,187,236 shares of
common stock by selling shareholders, most of whom are or were
officers and directors of INDE. The selling shareholders may
concurrently elect to sell their shares into the public market,
which could have a depressing or overhanging effect on the market
price for the securities offered by this prospectus. Such effect
could impede the exercise of INDE's common stock purchase
warrants, thus (a) depriving INDE from receiving additional
working capital from the exercise of its common stock purchase
warrants at a time when working capital might not otherwise be
available, and (b) depriving the common stock purchase
warrant holders from realizing any economic gain from the sale of
their warrants and/or underlying shares.
9. Dividends. No dividends have been paid on the Common
Stock since INDE's inception and none are contemplated at any
time in the foreseeable future.
USE OF PROCEEDS
All of the proceeds to be realized from this offering will
be paid to the Selling Shareholders. The Company will not
receive any of such proceeds.
Any net proceeds that the Company may realize from the
exercise of the Options will be used for working capital,
including the deployment of a digital distribution network.
SELLING SHAREHOLDERS
The following table shows for the Selling Shareholders, (i)
the number of Shares and Shares underlying the Options of the
Company beneficially owned by them as of February 22, 1996, (ii)
the number of Shares covered by this Prospectus, and (iii) the
number of Shares to be retained after this offering, if any.
Woodrock
Selling Partners Peter William GFL Performance
Shareholder Inc.(2) Wouters Scheer Fund Ltd. (3)
Shares of
Common Stock
Owned Prior
to the
Offering -0- 23,580 9,450 224,795
Number of
Common Shares
Covered by This
Prospectus 300,000 23,580 9,450 1,100,000
Common Shares
Retained
Subsequent to
This Offering(1) -0- -0- -0- -0-
_________________
(1) None of the Selling Shareholders will own in excess of one
(1%) percent of the Company's outstanding shares subsequent
to the offering.
None of the Selling Shareholders named herein are, or have
ever been Officers or Directors of the Company.
Information set forth in the tables regarding the securities
owned by each Selling Shareholder is provided to the best
knowledge of the Company based on information furnished to
the Company by the respective Selling Shareholder and/or
available to the Company through its stock transfer records.
(2) All 300,000 shares underlie options exercisable at prices
from $2.75 per share to $3.50 until six months after the
date of this prospectus.
(3) Includes 224,795 shares issued and outstanding and
875,205 shares underlying rights to convert a $3,000,000
promissory note (including accrued interest) to stock.
RECENT DEVELOPMENTS
Effective February 7, 1996, the Company completed the
acquisition of Starcom Television Services, Inc. in an all stock
transaction. Under the terms of the agreement, approximately
1,000,000 shares of INDE's common stock are to be exchanged for
100% of Starcom's outstanding shares and for the repayment of
certain debts owed to Starcom shareholders. At closing, INDE
issued 500,000 shares of its common stock with the balance of the
shares to be determined based on Starcom's operating results
during the period commencing January 1, 1996 through March 31,
1996. The balance of the shares will be issued upon the
completion of an audit of the results for this three- month
period and certain other true-up provisions.
Andre Blay, an affiliate of Starcom, will serve on INDE's
board of directors for a period of three years as part of the
acquisition agreement. Additionally, INDE has arranged and
agreed to act as a guarantor on a $2,000,000 asset based credit
facility for Starcom.
Starcom's core business is the delivery of syndicated
television programming and television commercials to television
stations, cable systems and other television providers. Starcom
formerly competed directly with INDE's Chicago-based wholly-owned
subsidiary Mediatech, Inc.
On February 29, 1996, the Company completed a private
placement of 224,795 shares of its common stock for $1,000,000
and a Convertible Note ("the Note") for $3,000,000 to a single
accredited institutional investor. The Note accrues interest at
a rate of 7% annually, payable quarterly in cash or the Company's
common stock at the Company's option and has a term of two (2)
years. The principal amount of the Note, together with interest
is convertible in one-hundred-eighty (180) days at 82% of the
average closing bid price for the five (5) days immediately
preceding the conversion date. The Company shall have the right
to convert all or part of the promissory note any time after six
(6) months from closing date. The Note is redeemable in whole or
in part anytime after 90 days from closing in an amount equal to
122% of the principal balance of the Note.
PLAN OF DISTRIBUTION
The Common Shares offered hereby may be sold by the Selling
Shareholders or by pledgees, donees, transferees or other
successors-in-interest (including sales after exercise of options
or warrants). Such sales may be made in the over-the-counter
market through the Nasdaq Stock Market, in privately negotiated
transactions, or otherwise, at prices and at terms then
prevailing, at prices related to the then current market prices
or at negotiated prices. The Common Shares may be sold by one or
more of the following methods: (a) a block trade in which the
broker or dealer so engaged will attempt to sell the stock as
agent but may position and resell a portion of the block as
principal in order to consummate the transaction; (b) a purchase
by a broker or dealer as principal, and the resale by such broker
or dealer for its account pursuant to this Prospectus, including
resale to another broker or dealer; or (c) ordinary brokerage
transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by a
Selling Shareholder may arrange for other brokers or dealers to
participate. Any such brokers or dealers will receive
commissions or discounts from a Selling Shareholder in amounts to
be negotiated immediately prior to the sale. Such brokers or
dealers and any other participating brokers or dealers may be
deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended. Any gain realized by such a broker or
dealer on the sale of shares which it purchases as a principal
may be deemed to be compensation to the broker or dealer in
addition to any commission paid to the broker by a Selling
Shareholder.
The securities covered by this Prospectus may in the future
also be sold under Rule 144 instead of under this Prospectus.
Rule 144 provides an exemption from registration for the resale
of securities by persons other than the issuer after the
securities have been held by persons for at least two (2) years
from original issuance, and such securities are sold in strict
compliance with Rule 144 "Manner of Sale" requirements and
maximum number of shares requirements. The Company will not
receive any portion of the proceeds of the securities sold by the
Selling Shareholders, but will receive amounts upon exercise of
Warrants, which funds will be used for working capital. There is
no assurance that the Selling Shareholders will sell any or all
of the Shares offered hereby.
The Selling Shareholders have been advised by the Company
that during the time each is engaged in distribution of the
securities covered by this Prospectus, each must comply with
Rules 10b-5 and 10b-6 under the Securities Exchange Act of 1934,
as amended, and pursuant thereto: (i) each must not engage in
any stabilization activity in connection with the Company's
securities; (ii) each must furnish each broker through which
securities covered by this Prospectus may be offered the number
of copies of this Prospectus which are required by each broker;
and (iii) each must not bid for or purchase any securities of the
Company or attempt to induce any person to purchase any of the
Company's securities other than as permitted under the Securities
Exchange Act of 1934, as amended. Any Selling Shareholders who
may be "affiliated purchasers" of the Company as defined in Rule
10b-6, have been further advised that pursuant to Securities
Exchange Act Release 34-23611 (September 11, 1986), they must
coordinate their sales under this Prospectus with each other and
the Company for purposes of Rule 10b-6. The Company has agreed
to indemnify GFL against certain liabilities, including certain
liabilities under the Securities Act of 1933, and, to the extent
any indemnification by an indemnifying party is prohibited or
limited by law, the Company has agreed to make the maximum
contribution with respect to extent permitted by law.
LEGAL MATTERS
Certain legal matters with respect to the shares offered
hereby have been passed upon for the Company by Cohen Brame &
Smith, Professional Corporation, Denver, Colorado. Roger V.
Davidson, a shareholder of the firm is a former Director of the
Company.
EXPERTS
The consolidated financial statements incorporated by
reference in this Prospectus have been audited by BDO Seidman
LLP, independent certified public accountants, to the extent and
for the periods set forth in their report (which contains an
explanatory paragraph regarding uncertainties as to the outcome
of certain litigation) incorporated herein by reference, and are
incorporated herein in reliance upon such report given upon the
authority of said firm as experts in auditing and accounting.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses of the offering, all of which are to
be borne by the Company, are as follows:
Total
Registration Fee Under Securities Act of 1933. . . . . $
2,718..00
Printing and Engraving . . . . . . . . . . . . . . . . 200.00*
Accounting Fees and Expenses . . . . . . . . . . . . . 1,500.00*
Legal Fees and Expenses. . . . . . . . . . . . . . . . 3,000.00*
Blue Sky Fees and Expenses (including related
legal fees). . . . . . . . . . . . . . . . . . . 500.00*
Transfer Agent Fees. . . . . . . . . . . . . . . . . . 82.00*
Miscellaneous. . . . . . . . . . . . . . . . . . . . . -0-
Total. . . . . . . . . . . . . . . . . . . . $ 8,000.00
*Estimated
Item 15. Indemnification of Directors and Officers.
Article X of Company's Certificate of Incorporation provides
that the corporation may indemnify each director, officer, and
any employee or agent of the corporation, his heirs, executors,
and administrators, against expenses reasonably incurred or any
amounts paid by him in connection with any action, suit, or
proceeding to which he may be made a party by reason of his being
or having been a director, officer, employee or agent of the
corporation in the same manner as is provided by the laws of the
State of Delaware as summarized below.
The Delaware General Corporation Law gives each corporation
the power to indemnify against liability any current or former
directors, officers, employees and agents. Del Corp Law section
145. As provided in section 145, a Director must show that (1)
he conducted himself in good faith, (2) that his conduct was not
opposed to the corporation's best interests, or if acting in his
official capacity, that his conduct was in the corporation's best
interests and (3) that in a criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful. The
Delaware General Corporation Law also gives each corporation the
power to eliminate or limit the personal liability of a Director
to the Corporation or its shareholders for monetary damages for
breach of fiduciary duty as a director unless the breach of
fiduciary duty involves breach of loyalty to the corporation or
its shareholders, acts or omissions involving intentional
misconduct or a knowing violation of law, acts specified in
sections 172 and 174 (improper distribution of assets, dividends
or share repurchase) or any transaction whereby the Director
derived an improper personal benefit. Del Corp Law section
102(b)(7).
Item 16. Exhibits
The following Exhibits are filed as part of this Form S-3
Registration Statement pursuant to Item 601 of Regulation SK by
incorporation by reference to other filings:
3.1 IndeNet, Inc. Certificate of Incorporation**
3.2 IndeNet, Inc. Bylaws**
5.1 Opinion of Cohen Brame & Smith Professional
Corporation**
10.1 Mediatech Stock Purchase Agreement**
10.2 Channelmatic Stock Purchase Agreement
(Incorporated by reference to Exhibit 10.1 and
10.2 to Form 8-K dated December 12, 1995).
10.3 Starcom Stock Exchange Agreement (Incorporated by
reference to Exhibit II to the Form 10-QSB
dated December 31, 1995.)
10.4 Robert Lautz Employment Agreement**
10.5 Lewis Eisaguirre Employment Agreement**
10.6 Registration Rights Agreement** (Incorporated by
reference to Exhibit I to the Form 8-K for event
which occurred on February 29, 1996.)
10.7 Note Purchase Agreement** (Incorporated by
reference to Exhibit II to the Form 8-K for event
which occurred on February 29, 1996.)
22 Subsidiaries of the Registrant**
23.1 Consent of Cohen Brame & Smith, Professional
Corporation** (included in Exhibit 5.1 above)
23.2 Consent of BDO Seidman LLP*
_________________
* Filed herewith.
** Previously filed.
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Company hereby undertakes:
(1) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for the purposes of determining any liability
under the Securities Act of 1933, each filing of the Company's
annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchanges Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is
incorporated be reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Company certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3, and
has duly caused this Form S-3 Registration Statement to be signed
on its behalf by the undersigned thereunto duly authorized, in
the City of Los Angeles, State of California on the 14th day of
March, 1996.
INDENET, INC.
By: /s/ Robert W. Lautz, Jr.
Robert W. Lautz, Jr., President,
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933,
this Form S-3 Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Robert W. Lautz, Jr. President, Chief 3/14/96
Robert W. Lautz, Jr. Executive Officer
and Director
/s/ Thomas H. Baur Chief Executive
Thomas H. Baur Officer of Mediatech,
Inc. and Director
/s/ Lewis K. Eisaguirre Chief Financial and 3/14/96
Lewis K. Eisaguirre Accounting Officer,
Secretary and Director
/s/ William A. Kunkel Director 3/14/96
William A. Kunkel
/s/ Cary S. Fitchey Director 3/14/96
Carey S. Fitchey
William D. Killion Director
William D. Killion
Andre Blay Director
Andre Blay
SEC File Nos. 33-31205
0-18034
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
INDENET, INC.
(Name of Company as specified in charter)
INDENET, INC.
("INDE")
FORM S-3 REGISTRATION STATEMENT
The following Exhibits are filed as part of the Company's
Form S-3 Registration Statement pursuant to Item 601 of
Regulation S-B.
Exhibit Number
in Amendment
No. 1 to
Form S-3 Description
3.1 IndeNet, Inc. Certificate of
Incorporation
3.2 IndeNet, Inc. Bylaws
5.1 Opinion of Cohen Brame & Smith
Professional Corporation
10.1 Mediatech Stock Purchase Agreement
10.2 Channelmatic Stock Purchase Agreement
(Incorporated by reference to
Exhibit 10.1 and 10.2 to Form 8-K
dated December 12, 1995)
10.3 Starcom Stock Exchange Agreement
(Incorporated by reference to
Exhibit II to the Form 10-QSB dated
December 31, 1995.)
10.4 Robert Lautz Employment Agreement
10.5 Lewis Eisaguirre Employment
Agreement
10.6 Registration Rights Agreement** (Incorporated by
reference to Exhibit I to the Form 8-K for event
which occurred on February 29, 1996.)
10.7 Note Purchase Agreement** (Incorporated by
reference to Exhibit II to the Form 8-K for event
which occurred on February 29, 1996.)
22 Subsidiaries of the Registrant
23.1 Consent of Cohen Brame & Smith
Professional Corporation
(included in Exhibit 5.1
above)
23.2 Consent of BDO Seidman LLP
Annex II
to
Subscription
Agreement
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of
February 28, 1996 (this "Agreement"), is made by and between
INDENET, INC., a Delaware corporation (the "Company"), and the
person named on the signature page hereto (the "Initial
Investor").
W I T N E S S E T H:
WHEREAS, in connection with the Subscription Agreement,
dated as of February 28, 1996, between the Initial Investor and
the Company (the "Subscription Agreement"), the Company has
agreed, upon the terms and subject to the conditions of the
Subscription Agreement, to issue and sell to the Initial Investor
shares (the "Shares") of Common Stock, $.001 par value (the
"Common Stock"), of the Company upon the terms and subject to the
conditions of the Subscription Agreement;
WHEREAS, in connection with the Note Purchase
Agreement, dated as of February 28, 1996, between the Initial
Investor and the Company (the "Note Purchase Agreement"), the
Company has agreed, upon the terms and subject to the conditions
of the Note Purchase Agreement, to issue and sell to the Initial
Investor a Convertible Note (the "Note") issued by the Company
which will be convertible into shares (the "Conversion Shares")
of Common Stock, in accordance with the terms of the Note; and
WHEREAS, to induce the Initial Investor to execute and
deliver the Subscription Agreement and the Note Purchase
Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar successor
statute (collectively, the "Securities Act"), and applicable
state securities laws with respect to the Shares and the
Conversion Shares;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Initial Investor hereby agree
as follows:
1. Definitions.
(a) As used in this Agreement, the following terms
shall have the following meanings:
(i) "Investor" means the Initial Investor and any
transferee or assignee who agrees to become bound by the
provisions of this Agreement in accordance with Section 9 hereof.
(ii) "register," "registered," and "registration"
refer to a registration effected by preparing and filing a
Registration Statement or Statements in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act
or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement by the United States
Securities and Exchange Commission (the "SEC").
(iii) "Registrable Securities" means the
Shares, the Conversion Shares and any shares of Common Stock
issued by the Company in lieu of payment of cash interest on the
Note in accordance with the terms thereof.
(iv) "Registration Statement" means a registration
statement of the Company under the Securities Act.
(b) As used in this Agreement, the term Investor
includes (i) each Investor (as defined above) and (ii) each
person who is a permitted transferee or assignee of the
Registrable Securities pursuant to Section 9 of this Agreement.
(c) Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in
the Subscription Agreement and the Note Purchase Agreement.
2. Registration.
(a) Mandatory Registration. The Company shall
prepare, and on or prior to the date which is 15 days after the
date of the closings under the Subscription Agreement and the
Note Purchase Agreement (the "Closing Date"), file with the SEC a
Registration Statement on Form S-3 covering at least 1,100,000
shares of Common Stock as Registrable Securities, and which
Registration Statement shall state that, in accordance with Rule
416 under the Securities Act, such Registration Statement also
covers such indeterminate number of additional shares of Common
Stock as may become issuable upon conversion of the Note to
prevent dilution resulting from stock splits, stock dividends or
similar transactions or by reason of changes in the conversion
price of the Note in accordance with the terms thereof. If at
any time the number of shares included in the Registration
Statement required to be filed as provided in the first sentence
of this Section 2(a) shall not be sufficient to cover the number
of shares of Common Stock issuable on conversion in full of the
unpaid and unconverted principal amount of the Note, then
promptly, but in no event later than 20 days after such
insufficiency shall occur, the Company shall file with the SEC an
additional Registration Statement on Form S-3 or other applicable
form covering such number of shares of Common Stock as shall be
sufficient to permit such conversion. For all purposes of this
Agreement (other than Section 2(c) hereof) such additional
Registration Statement shall be deemed to be the Registration
Statement required to be filed by the Company pursuant to Section
2(a) of this Agreement, and the Company and the Investors shall
have the same rights and obligations (other than Section 2(c)
hereof) with respect to such additional Registration Statement as
they shall have with respect to the initial Registration
Statement required to be filed by the Company pursuant to this
Section 2(a).
(b) If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an
underwritten offering, the Investors who hold a majority in
interest of the Registrable Securities subject to such
underwritten offering shall have the right to select one legal
counsel and an investment banker or bankers and manager or
managers to administer the offering, which investment banker or
bankers or manager or managers shall be reasonably satisfactory
to the Company. The Investors who hold the Registrable
Securities to be included in such underwriting shall pay all
underwriting discounts and commissions and other fees and
expenses of such investment banker or bankers and manager
or managers so selected in accordance with this Section 2(b)
(other than fees and expenses relating to registration of
Registrable Securities under federal or state securities laws,
which are payable by the Company pursuant to Section 5 hereof)
with respect to their Registrable Securities and the fees and
expenses of such legal counsel so selected by the Investors.
(c) Payments by the Company. If the Registration
Statement covering the Registrable Securities required to be
filed by the Company pursuant to Section 2(a) hereof is not
effective within 75 days after the Closing Date, then the Company
will make payments to the Initial Investor in U.S. dollars in
such amounts and at such times as shall be determined pursuant to
this Section 2(c). The amount to be paid by the Company to the
Initial Investor shall be determined as of each Computation Date,
and such amount shall be equal to two percent (2%) of the
aggregate purchase price paid by the Initial Investor for the
Shares purchased by the Initial Investor pursuant to the
Subscription Agreement for each Computation Date (each such
amount, as applicable, the "Periodic Amount"); provided, however,
that the Company may elect in lieu of payment of any Periodic
Amount in cash to deliver to the Initial Investor not later than
the due date of such cash payment shares of Common Stock having a
Computed Value equal to the amount of the Periodic Amount if, but
only if, such shares will be included in the Registration
Statement required to be filed pursuant to this Section 2(a).
The full amount of the Periodic Amount shall be paid by the
Company in immediately available funds within three business days
after each Computation Date.
As used in this Section 2(c), the following term shall
have the following meaning:
"Average Market Price" of any security for any period
shall be computed as the arithmetic average of the closing bid
price of such security for each trading day in such period on the
principal trading market for such security.
"Computation Date" means (1) the date which is 76 days
after the Closing Date, unless the Registration Statement
required to be filed by the Company pursuant to Section 2(a)
theretofore has been declared effective by the SEC, and, (2) if
the Registration Statement required to be filed by the Company
pursuant to Section 2(a) has not theretofore been declared
effective by the SEC, each date which is 30 days after a
Computation Date.
"Computed Value" of any share of Common Stock as of any
Computation Date means the product obtained by multiplying (a)
such number of shares of Common Stock times (b) 82% of the
Average Market Price of the Common Stock for the Measurement
Period for such Computation Date.
"Measurement Period" means the period of five
consecutive trading days for the Common Stock ending on (or, if
such Computation Date is not a trading day, on the last trading
day preceding) each Computation Date.
(d) Piggy-Back Registrations. If at any time the
Company shall determine to prepare and file with the SEC a
Registration Statement relating to an offering for its own
account or the account of others under the Securities Act of any
of its equity securities, other than on Form S-4 or Form S-8 or
their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or
business or equity securities issuable in connection with stock
option or other employee benefit plans, the Company shall send to
each Investor who is entitled to registration rights under this
Section 2(d) written notice of such determination and, if within
ten (10) days after receipt of such notice, such Investor shall
so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable
Securities such Investor requests to be registered, except that
if, in connection with any underwritten public offering for the
account of the Company the managing underwriter(s) thereof shall
impose a limitation on the number of shares of Common Stock which
may be included in the Registration Statement because, in such
underwriter(s)' judgment, such limitation is necessary to effect
an orderly public distribution, then the Company shall be
obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to
which such Investor has requested inclusion hereunder. Any
exclusion of Registrable Securities shall be made pro rata among
the Investors seeking to include Registrable Securities, in
proportion to the number of Registrable Securities sought to be
included by such Investors; provided, however, that the Company
shall not exclude any Registrable Securities unless the Company
has first excluded all outstanding securities the holders of
which are not entitled by right to inclusion of securities in
such Registration Statement; and provided further, however, that,
after giving effect to the immediately preceding proviso, any
exclusion of Registrable Securities shall be made pro rata with
holders of other securities having the right to include such
securities in the Registration Statement, based on the number of
securities for which registration is requested except to the
extent such pro rata exclusion of such other securities is
prohibited under any written agreement entered into by the
Company with the holder of such other securities prior to the
date of this Agreement, in which case such other securities shall
be excluded, if at all, in accordance with the terms of such
agreement. No right to registration of Registrable Securities
under this Section 2(d) shall be construed to limit any
registration required under Section 2(a) hereof. The obligations
of the Company under this Section 2(d) may be waived by Investors
holding a majority in interest of the Registrable Securities and
shall expire after the Company has afforded the opportunity for
the Investors to exercise registration rights under this Section
2(d) for two registrations; provided, however, that any Investor
who shall have had any Registrable Securities excluded from any
Registration Statement in accordance with this Section 2(d) shall
be entitled to include in an additional Registration Statement
filed by the Company the Registrable Securities so excluded.
Notwithstanding any other provision of this Agreement, if the
Registration Statement required to be filed pursuant to Section
2(a) of this Agreement shall have been ordered effective by the
SEC and the Company shall have maintained the effectiveness of
such Registration Statement as required by this Agreement and if
the Company shall otherwise have complied in all material
respects with its obligations under this Agreement, then the
Company shall not be obligated to register any Registrable
Securities on such Registration Statement referred to in this
Section 2(d).
(e) Eligibility for Form S-3. The Company
represents and warrants that it meets the requirements for the
use of Form S-3 for registration of the sale by the Initial
Investor and any Investor of the Registrable Securities and the
Company shall file all reports required to be filed by the
Company with the SEC in a timely manner so as to maintain such
eligibility for the use of Form S-3.
3. Obligations of the Company. In connection with
the registration of the Registrable Securities, the Company
shall:
(a) prepare promptly, and file with the SEC not later
than 15 days after the Closing Date, a Registration Statement
with respect to the number of Registrable Securities provided in
Section 2(a), and thereafter to use its best efforts to cause
each Registration Statement relating to Registrable Securities to
become effective as soon as possible after such filing, and keep
the Registration Statement effective pursuant to Rule 415 at all
times until such date as is three years after the Closing Date,
which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in
which they were made, not misleading;
(b) prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with
the Registration Statement as may be necessary to keep the
Registration Statement effective at all times until such date as
is three years after the Closing Date, and, during such period,
comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company
covered by the Registration Statement until such time as all of
such Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;
(c) furnish to each Investor whose Registrable
Securities are included in the Registration Statement and its
legal counsel, (1) promptly after the same is prepared and
publicly distributed, filed with the SEC or received by the
Company, one copy of the Registration Statement and any amendment
thereto, each preliminary prospectus and prospectus and each
amendment or supplement thereto, each letter written by or on
behalf of the Company to the SEC or the staff of the SEC and each
item of correspondence from the SEC or the staff of the SEC
relating to such Registration Statement (other than any portion
of any thereof which contains information for which the Company
has sought confidential treatment) and (2) such number of copies
of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents, as
such Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Investor;
(d) use reasonable efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement
under such securities or blue sky laws of such jurisdictions as
the Investors who hold a majority in interest of the Registrable
Securities being offered reasonably request, (ii) prepare and
file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations
and qualifications as may be necessary to maintain the
effectiveness thereof at all times until such date as is three
years after the Closing Date, (iii) take such other actions as
may be necessary to maintain such registrations and
qualifications in effect at all times until such date as is three
years after the date such Registration Statement is first ordered
effective by the SEC and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for
sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition
thereto (I) to qualify to do business in any jurisdiction where
it would not otherwise be required to qualify but for this
Section 3(d), (II) to subject itself to general taxation in any
such jurisdiction, (III) to file a general consent to service of
process in any such jurisdiction, (IV) to provide any
undertakings that cause more than nominal expense or burden to
the Company or (V) to make any change in its charter or by-laws,
which in each case the Board of Directors of the Company
determines to be contrary to the best interests of the
Company and its stockholders;
(e) in the event Investors who hold a majority in
interest of the Registrable Securities being offered in the
offering select underwriters for the offering, enter into and
perform its obligations under an underwriting agreement, in usual
and customary form, including, without limitation, customary
indemnification and contribution obligations, with the
underwriters of such offering;
(f) as promptly as practicable after becoming aware of
such event, notify each Investor of the happening of any event of
which the Company has knowledge, as a result of which the
prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and use
its best efforts promptly to prepare a supplement or amendment to
the Registration Statement to correct such untrue statement or
omission, and deliver a number of copies of such supplement or
amendment to each Investor as such Investor may reasonably
request.
(g) as promptly as practicable after becoming aware of
such event, notify each Investor who holds Registrable Securities
being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance by the SEC of any stop
order or other suspension of effectiveness of the Registration
Statement at the earliest possible time;
(h) permit a single firm of counsel designated as
selling stockholders' counsel by the Investors who hold a
majority in interest of the Registrable Securities being sold to
review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their
filing with the SEC;
(i) make generally available to its security holders
as soon as practical, but not later than ninety (90) days after
the close of the period covered thereby, an earnings statement
(in form complying with the provisions of Rule 158 under the
Securities Act) covering a twelve-month period beginning not
later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement;
(j) at the request of the Investors who hold a
majority in interest of the Registrable Securities being sold,
furnish on the date that Registrable Securities are delivered to
an underwriter, if any, for sale in connection with the
Registration Statement (i) a letter, dated such date, from the
Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters; and (ii) an opinion, dated such
date, from counsel representing the Company for purposes of such
Registration Statement, in form and substance as is customarily
given in an underwritten public offering, addressed to the
underwriters and the Investors;
(k) make available for inspection by any Investor, any
underwriter participating in any disposition pursuant to the
Registration Statement, and any attorney, accountant or other
agent retained by any such Investor or underwriter (collectively,
the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary
to enable each Inspector to exercise its due diligence
responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may
reasonably request for purposes of such due diligence; provided,
however, that each Inspector shall hold in confidence and shall
not make any disclosure (except to an Investor) of any Record or
other information which the Company determines in good faith to
be confidential, and of which determination the Inspectors are so
notified, unless (i) the disclosure of such Records is necessary
to avoid or correct a misstatement or omission in any
Registration Statement, (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction or (iii) the
information in such Records has been made generally available to
the public other than by disclosure in violation of this or any
other agreement. The Company shall not be required to disclose
any confidential information in such Records to any Inspector
until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to
the Company) with the Company with respect thereto, substantially
in the form of this Section 3(k). Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in
or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the
Records deemed confidential. The Company shall hold in
confidence and shall not make any disclosure of information
concerning an Investor provided to the Company pursuant to
Section 4(e) hereof unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of
competent jurisdiction or (iv) such information has been made
generally available to the public other than by disclosure in
violation of this or any other agreement. The Company agrees
that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental
body of competent jurisdiction or through other means, give
prompt notice to such Investor, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a
protective order for, such information;
(l) use its best efforts (i) to cause all the
Registrable Securities covered by the Registration Statement to
be listed on the Nasdaq SmallCap Market or such other principal
securities market on which securities of the same class or series
issued by the Company are then listed or traded or (ii) if
securities of the same class or series as the Registrable
Securities are not then listed on the Nasdaq SmallCap Market or
any such other securities market, to arrange for at least two
market makers to register with the National Association of
Securities Dealers, Inc. ("NASD") as such with respect to such
Registrable Securities;
(m) provide a transfer agent and registrar, which may
be a single entity, for the Registrable Securities not later than
the effective date of the Registration Statement;
(n) cooperate with the Investors who hold Registrable
Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends)
representing Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates to be in such
denominations or amounts as the case may be, as the managing
underwriter or underwriters, if any, or the Investors may
reasonably request and registered in such names as the managing
underwriter or underwriters, if any, or the Investors may
request; and, within three business days after a Registration
Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause
legal counsel selected by the Company to deliver, to the transfer
agent for the Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such
Registration Statement) an instruction substantially in the form
attached hereto as Exhibit 1 and an opinion of such counsel, if
required by the Company's transfer agent, in the form attached
hereto as Exhibit 2; and
(o) take all other reasonable actions necessary to
expedite and facilitate disposition by the Investor of the
Registrable Securities pursuant to the Registration Statement.
4. Obligations of the Investors. In connection
with the registration of the Registrable Securities, the
Investors shall have the following obligations:
(a) It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant
to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of
the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable
Securities and shall execute such documents in connection with
such registration as the Company may reasonably request. At
least four (4) days prior to the first anticipated filing date of
the Registration Statement, the Company shall notify each
Investor of the information the Company requires from each such
Investor (the "Requested Information") if any of such Investor's
Registrable Securities are eligible for inclusion in the
Registration Statement. If at least one (1) business day prior
to the filing date the Company has not received the Requested
Information from an Investor (a "Non-Responsive Investor"), then
the Company may file the Registration Statement without including
Registrable Securities of such Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as
reasonably requested by the Company in connection with the
preparation and filing of the Registration Statement hereunder,
unless such Investor has notified the Company in writing of such
Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement;
(c) In the event Investors holding a majority in
interest of the Registrable Securities being registered determine
to engage the services of an underwriter, each Investor agrees to
enter into and perform such Investor's obligations under an
underwriting agreement, in usual and customary form, including,
without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registrable
Securities, unless such Investor has notified the Company in
writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration
Statement;
(d) Each Investor agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 3(f) or 3(g), such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until
such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or 3(g) and, if
so directed by the Company, such Investor shall deliver to the
Company (at the expense of the Company) or destroy (and deliver
to the Company a certificate of destruction) all copies in such
Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such
notice; and
(e) No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell
such Investor's Registrable Securities on the basis provided in
any underwriting arrangements approved by the Investors entitled
hereunder to approve such arrangements, (ii) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements and (iii)
agrees to pay its pro rata share of all underwriting discounts
and commissions and other fees and expenses of investment bankers
and any manager or managers of such underwriting and legal
expenses of the underwriters applicable with respect to its
Registrable Securities, in each case to the extent not payable by
the Company pursuant to the terms of this Agreement.
5. Expenses of Registration. All reasonable
expenses, other than underwriting discounts and commissions and
other fees and expenses of investment bankers and other than
brokerage commissions, incurred in connection with registrations,
filings or qualifications pursuant to Section 3, including,
without limitation, all registration, listing and qualifications
fees, printers and accounting fees and the fees and disbursements
of counsel for the Company and the Investors, shall be borne by
the Company; provided, however, that the Investors shall bear the
fees and out-of-pocket expenses of the one legal counsel selected
by the Investors pursuant to Section 2(b) hereof.
6. Indemnification. In the event any Registrable
Securities are included in a Registration Statement under this
Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Investor who holds such
Registrable Securities, the directors, if any, of such Investor,
the officers, if any, of such Investor, each person, if any, who
controls any Investor within the meaning of the Securities Act or
the Exchange Act, any underwriter (as defined in the Securities
Act) for the Investors, the directors, if any, of such
underwriter and the officers, if any, of such underwriter, and
each person, if any, who controls any such underwriter within the
meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Person"), against any losses, claims, damages,
liabilities or expenses (joint or several) incurred
(collectively, "Claims") to which any of them may become subject
under the Securities Act, the Exchange Act or otherwise, insofar
as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations in the
Registration Statement, or any post-effective amendment thereof,
or any prospectus included therein: (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement or any post-effective amendment thereof or
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances
under which the statements therein were made, not misleading or
(iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any
rule or regulation under the Securities Act, the Exchange Act or
any state securities law (the matters in the foregoing clauses
(i) through (iii) being, collectively, "Violations"). Subject to
the restrictions set forth in Section 6(d) with respect to the
number of legal counsel, the Company shall reimburse the
Investors and each such underwriter or controlling person,
promptly as such expenses are incurred and are due and payable,
for any legal fees or other reasonable expenses incurred by them
in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a) (I)
shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any
Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available
by the Company pursuant to Section 3(c) hereof; (II) with respect
to any preliminary prospectus shall not inure to the benefit of
any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof
(or to the benefit of any person controlling such person) if the
untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then
amended or supplemented, if such prospectus was timely made
available by the Company pursuant to Section 3(c) hereof; and
(III) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent
of the Company, which consent shall not be unreasonably withheld.
Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in
which an Investor is participating, each such Investor agrees to
indemnify and hold harmless, to the same extent and in the same
manner set forth in Section 6(a), the Company, each of its
directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, any
underwriter and any other stockholder selling securities pursuant
to the Registration Statement or any of its directors or officers
or any person who controls such stockholder or underwriter within
the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an
"Indemnified Party"), against any Claim to which any of them may
become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon
any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by
such Investor expressly for use in connection with such
Registration Statement; and such Investor will reimburse any
legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section
6(b) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent
of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be
liable under this Section 6(b) for only that amount of a Claim as
does not exceed the amount of the net proceeds to such Investor
as a result of the sale of Registrable Securities pursuant to
such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on
behalf of such Indemnified Party and shall survive the transfer
of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section
6(b) with respect to any preliminary prospectus shall not inure
to the benefit of any Indemnified Party if the untrue statement
or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
(c) The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers
and similar securities industry professionals participating in
any distribution, to the same extent as provided above, with
respect to information so furnished in writing by such persons
expressly for inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the
commencement of any action (including any governmental action),
such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party
under this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified
Party, as the case may be; provided, however, that an Indemnified
Person or Indemnified Party shall have the right to retain its
own counsel with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel
in such proceeding. The Company shall pay for only one separate
legal counsel for the Investors; such legal counsel shall be
selected by the Investors holding a majority in interest of the
Registrable Securities included in the Registration Statement to
which the Claim relates. The failure to deliver written notice
to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that
the indemnifying party is prejudiced in its ability to defend
such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
7. Contribution. To the extent any indemnification
by an indemnifying party is prohibited or limited by law, the
indemnifying party agrees to make the maximum contribution with
respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided,
however, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6,
(b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation and (c) contribution by any seller of
Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. Reports under Exchange Act. With a view to
making available to the Investors the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors
to sell securities of the Company to the public without
registration ("Rule 144"), the Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities
Act and the Exchange Act; and
(c) furnish to each Investor so long as such Investor
owns Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange
Act, (ii) a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the
Company and (iii) such other information as may be reasonably
requested to permit the Investors to sell such securities
pursuant to Rule 144 without registration.
9. Assignment of the Registration Rights. The
rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assigned by the
Investors to any transferee of all or any portion of such
securities (or all or any portion of any note of the Company
which is convertible into such securities) of Registrable
Securities only if: (a) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time
after such assignment, (b) the Company is, within a reasonable
time after such transfer or assignment, furnished with written
notice of (i) the name and address of such transferee or assignee
and (ii) the securities with respect to which such registration
rights are being transferred or assigned, (c) immediately
following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under
the Securities Act and applicable state securities laws, and (d)
at or before the time the Company received the written notice
contemplated by clause (b) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of
the provisions contained herein.
10. Amendment of Registration Rights. Any provision of
this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and Investors who hold a majority in interest of the
Registrable Securities. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each
Investor and the Company.
11. Miscellaneous.
(a) A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of
record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or more
persons or entities with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such
Registrable Securities.
(b) Notices required or permitted to be given
hereunder shall be in writing and shall be deemed to be
sufficiently given when personally delivered (by hand, by
courier, by telephone line facsimile transmission or other means)
or sent by certified mail, return receipt requested, properly
addressed and with proper postage pre-paid (i) if to the Company,
at IndeNet, Inc., 1640 North Gower Street, Los Angeles,
California 90028, Attention: President, (ii) if to the Initial
Investor, at the address set forth under its name in the
Subscription Agreement and (iii) if to any other Investor, at
such address as such Investor shall have provided in writing to
the Company, or at such other address as each such party
furnishes by notice given in accordance with this Section 11(b),
and shall be effective, when personally delivered, upon receipt
and, when so sent by certified mail, four days after deposit with
the United States Postal Service.
(c) Failure of any party to exercise any right or
remedy under this Agreement or otherwise, or delay by a party in
exercising such right or remedy, shall not operate as a waiver
thereof.
(d) This Agreement shall be enforced, governed by and
construed in accordance with the laws of the State of California
applicable to agreements made and to be performed entirely within
such State. In the event that any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any
provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any
other provision hereof.
(e) This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter
hereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein.
This Agreement supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter
hereof.
(f) Subject to the requirements of Section 9 hereof,
this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to
the masculine, feminine or neuter, singular or plural, as the
context may require.
(h) The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) The Company acknowledges that any failure by the
Company to perform its obligations under this Agreement,
including, without limitation, the Company's obligations under
Section 3(n), or any delay in such performance could result in
direct damages to the Investors and the Company agrees that, in
addition to any other liability the Company may have by reason of
any such failure or delay, the Company shall be liable for all
direct and consequential damages caused by any such failure or
delay.
(j) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same agreement. This
Agreement, once executed by a party, may be delivered to the
other party hereto by telephone line facsimile transmission of a
copy of this Agreement bearing the signature of the party so
delivering this Agreement.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed by their respective officers
thereunto duly authorized as of day and year first above written.
INDENET, INC.
By__________________________
Name:
Title:
INITIAL INVESTOR:
GFL PERFORMANCE FUND LIMITED
By__________________________
Name:
Title:
EXHIBIT 1
to
Registration
Rights
Agreement
[Company Letterhead]
[Date]
[Name and address of Transfer Agent]
Ladies and Gentlemen:
This letter shall serve as our irrevocable authorization
and direction to you (1) to transfer or re-register the
certificates for the shares of Common Stock, $.001 par value (the
"Common Stock"), of IndeNet, Inc., a Delaware corporation (the
"Company"), represented by certificate numbers ______ and ______
for an aggregate of _______ shares (the "Outstanding Shares") of
Common Stock presently registered in the name of [Name of
Investor] upon surrender of such certificate to you,
notwithstanding the legend appearing on such certificates, and
(2) to issue shares (the "Conversion Shares") of Common Stock to
or upon the order of the registered holder from time to time on
conversion of the Convertible Note, dated _________, 1996, in the
original principal amount of $________ (the "Note") issued by the
Company upon surrender to you by such registered holder for
conversion of the Note and a properly completed and duly executed
Conversion Notice in the form enclosed herewith. The transfer or
re-registration of the certificates for the Outstanding Shares by
you should be made at such time as you are requested to do so by
the record holder of the Outstanding Shares. The certificate
issued upon such transfer or re-registration should be registered
in such name as requested by the holder of record of the
certificate surrendered to you and should not bear any legend
which would restrict the transfer of the shares represented
thereby. In addition, you are hereby directed to remove any
stop-transfer instruction relating to the Outstanding Shares.
Certificates for the Conversion Shares should not bear any
restrictive legend and should not be subject to any stop-transfer
restriction.
Contemporaneous with the delivery of this letter, the
Company is delivering to you an opinion of ___________________
as to registration of the Outstanding Shares and the Conversion
Shares under the Securities Act of 1933, as amended.
Should you have any questions concerning this matter,
please contact me.
Very truly yours,
INDENET, INC.
By:___________________________
Name:
Title:
Enclosures
cc: [Name of Investor]
EXHIBIT 2
to
Registration
Rights
Agreement
[Date]
[Name and address
of transfer agent]
INDENET, INC.
Shares of Common Stock
Ladies and Gentlemen:
We are counsel to IndeNet, Inc., a Delaware corporation
(the "Company"), and we understand that [Name of Investor] (the
"Holder") has purchased from the Company (1) an aggregate of
__________ shares (the "Shares") of the Company's Common Stock,
$.001 par value (the "Common Stock"), represented by Certificate
No. ______ and (2) a Convertible Note, dated ___________,
1996, in the original principal amount of $________ (the "Note")
issued by the Company. The Shares were purchased by the Holder
pursuant to a Subscription Agreement, dated as of ____________,
1996, between the Holder and the Company (the "Subscription
Agreement"). The Note was purchased by the Holder pursuant to a
Note Purchase Agreement, dated as of __________, 1996, between
the Holder and the Company (the "Note Purchase Agreement").
Pursuant to a Registration Rights Agreement, dated as of
____________, 1996, between the Company and the Holder (the
"Registration Rights Agreement") entered into in connection with
the purchase by the Holder of the Shares and the Note, the
Company agreed with the Holder, among other things, to register
the Shares and shares of Common Stock issuable upon the
conversion of the Note (the "Conversion Shares") under the
Securities Act of 1933, as amended (the "Securities Act"), upon
the terms provided in the Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, on __________, the
Company filed a Registration Statement on Form S-__ (File No.
333-__________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") relating to the
Shares and the Conversion Shares, which names the Holder as a
selling stockholder thereunder.
[Other introductory and scope of examination language to
be inserted]
Based on the foregoing, we are of the opinion that the
Shares and the Conversion Shares have been registered under the
Securities Act.
[Other appropriate language to be included.]
Very truly yours,
cc: [Name of Investor]
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT, dated as of the date of
acceptance set forth below, by and between INDENET, INC., a
Delaware corporation, with headquarters located at 1640 North
Gower Street, Los Angeles, California 90028 (the "Company"), and
the undersigned (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in reliance upon the exemption from
securities registration afforded by Rule 506 under Regulation D
("Regulation D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "1933 Act");
WHEREAS, the Buyer wishes to purchase, upon the terms
and subject to the conditions of this Agreement, a convertible
note of the Company which will be convertible into shares of
Common Stock, $.001 par value (the "Common Stock"), of the
Company upon the terms and subject to the conditions of such
note, subject to acceptance of this Agreement by the Company; and
WHEREAS, contemporaneous with the execution and delivery
of this Agreement, the parties hereto are executing and
delivering a Subscription Agreement (the "Subscription
Agreement"), providing for the purchase and sale, upon the terms
and subject to the conditions provided therein, of shares of
Common Stock for an aggregate purchase price of $1,000,000.00;
NOW THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
(a) Purchase. The undersigned hereby agrees to
purchase from the Company a convertible promissory note of the
Company in the principal amount set forth on the signature page
of this Agreement having the terms and conditions and in the form
attached hereto as Annex I (the "Note") at the price set forth on
the signature page of this Agreement. The purchase price for the
Note shall be payable in United States Dollars.
(b) Form of Payment. The Buyer shall pay the purchase
price for the Note by delivering good funds in United States
Dollars to the escrow agent (the "Escrow Agent") identified in
the Joint Escrow Instructions attached hereto as Annex II (the
"Joint Escrow Instructions"). Such delivery of funds shall be
made against delivery by the Company of the Note duly executed on
behalf of the Company. Promptly following payment by the Buyer
to the Escrow Agent of the purchase price of the Note, the
Company shall deliver the Note, duly executed on behalf of the
Company, to the Escrow Agent. By signing this Agreement, the
Buyer and the Company each agrees to all of the terms and
conditions of, and
becomes a party to, the Joint Escrow Instructions, all of the
provisions of which are incorporated herein by this reference as
if set forth in full.
(c) Method of Payment. Payment of the purchase price
for the Note shall be made by wire transfer of funds to:
Citibank, N.A.
153 East 53rd Street
New York, New York 10043
ABA#021000089
For Further Credit to A/C#37179446
for credit to the account of Brian W. Pusch
Attorney
Escrow Account
Reference: GFL/IndeNet
Not later than the date which is three New York Stock Exchange
trading days after the Company shall have accepted this Agreement
and the Subscription Agreement and returned signed counterparts
of this Agreement and the Subscription Agreement to the Buyer,
the Buyer shall deposit with the Escrow Agent the aggregate
purchase price for the Note.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.;
ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and
agrees with, the Company as follows:
(a) The Buyer is purchasing the Note for its own
account for investment only and not with a view towards the
public sale or distribution thereof;
(b) The Buyer is an "accredited investor" as that term
is defined in Rule 501 of the General Rules and Regulations under
the 1933 Act by reason of Rule 501(a)(3);
(c) All subsequent offers and sales of the Note and
the shares of Common Stock issuable upon conversion of, or in
lieu of payment of interest on, the Note (the "Shares" and,
together with the Note, the "Securities") by the Buyer shall be
made pursuant to registration of the Shares under the 1933 Act or
pursuant to an exemption from registration;
(d) The Buyer understands that the Note is being
offered and sold, and the Shares are being offered, to it in
reliance on the exemption from the registration requirements of
the 1933 Act provided by Regulation D and exemptions from state
securities laws, including exemptions available by reason of
satisfying the requirements of Regulation D, and that the Company
is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein
in order to determine the availability of such exemptions and the
eligibility of the Buyer to acquire the Note and to receive an
offer of the Shares;
(e) The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer
and sale of the Note and the offer of the Shares which have been
requested by the Buyer. The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and
have received complete and satisfactory answers to any such
inquiries. Without limiting the generality of the foregoing, the
Buyer has had the opportunity to obtain and to review the
Company's (1) Annual Report on Form 10-K for the fiscal year
ended March 31, 1995, (2) Quarterly Reports on Form 10-Q for the
fiscal quarters ended June 30, 1995, September 30, 1995, and
December 31, 1995, (3) definitive Proxy Statement for its 1995
Annual Meeting of Stockholders and (4) Current Reports on Form
8-K, dated October 11, 1995, November 27, 1995 and February 7,
1996, in each case as filed with the SEC. The Buyer understands
that its investment in the Securities involves a high degree of
risk;
(f) The Buyer understands that no United States
federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of
the Securities; and
(g) This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is
a valid and binding agreement of the Buyer enforceable in
accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of
creditors' rights generally.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyer that:
(a) Concerning the Shares. The Shares have been duly
authorized and, when issued upon conversion of the Note, will be
duly and validly issued, fully paid and non-assessable and will
not subject the holder thereof to personal liability by reason of
being such holder. There are no preemptive rights of any
stockholder of the Company, as such, to acquire the Shares. The
Common Stock is listed for trading on the Nasdaq National Market
("Nasdaq") and (1) the Company and the Common Stock meet the
criteria for continued listing and trading on Nasdaq; (2) the
Company has not been notified since January 1, 1994 by the
National Association of Securities Dealers, Inc. of any failure
or potential failure to meet the criteria for continued listing and
trading on Nasdaq and (3) no suspension of trading in the Common
Stock is in effect.
(b) Note Purchase Agreement; Registration Rights
Agreement and Note.
This Agreement and the Registration Rights
Agreement, the form of which is attached to the Subscription
Agreement as Annex II (the "Registration Rights Agreement"), have
been duly and validly authorized by the Company, this Agreement
has been duly executed and delivered by the Company and this
Agreement is, and the Registration Rights Agreement, when
executed and delivered by the Company, will be, valid and binding
agreements of the Company enforceable in accordance with their
respective terms, subject as to enforceability to general
principles of equity and to bankruptcy, insolvency, moratorium
and other similar laws affecting the enforcement of creditors' rights
generally; and the Note has been duly and validly authorized and,
when executed and delivered on behalf of the Company in
accordance with this Agreement, will be a valid and binding
obligation of the Company in accordance with its terms, subject
to general principles of equity and to bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of
creditors rights generally.
(c) Non-contravention. The execution and delivery of
this Agreement and the Registration Rights Agreement by the
Company and the consummation by the Company of the issuance of
the Securities and the other transactions contemplated by this
Agreement, the Registration Rights Agreement and the Note do not
and will not conflict with or result in a breach by the Company
of any of the terms or provisions of, or constitute a default under,
the certificate of incorporation or by-laws of the Company, or
any indenture, mortgage, deed of trust or other material agreement or
instrument to which the Company is a party or by which it or any
of its properties or assets are bound, or any applicable law,
rule or regulation or any applicable decree, judgment or order of any
court, United States federal or state regulatory body,
administrative agency or other governmental body having
jurisdiction over the Company or any of its properties or assets.
(d) Approvals. No authorization, approval or consent
of, or filing with, any court, governmental body, regulatory
agency, self-regulatory organization, or stock exchange or market
or the stockholders of the Company is required to be obtained or
made by the Company for the issuance and sale of the Securities
as contemplated by this Agreement and the Note, other than (1) the
listing of the Shares on Nasdaq and (2) the requirements of any
applicable blue sky laws.
(e) Information Provided. The information provided by
or on behalf of the Company to the Buyer and referred to in
Section 2(e) of this Agreement does not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading.
(f) Absence of Certain Changes. Since March 31, 1995,
there has been no material adverse change and no material adverse
development in the business, properties, operations, financial
condition, results of operations or prospects of the Company,
except as disclosed in the documents referred to in Section 2(e)
hereof.
(g) Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court,
public board or body pending or, to the knowledge of the Company
or any of its subsidiaries, threatened against or affecting the
Company or any of its subsidiaries, wherein an unfavorable
decision, ruling or finding would have a material adverse effect
on the properties, business, condition (financial or other),
results of operations or prospects of the Company and its
subsidiaries taken as a whole or the transactions contemplated by
this Agreement or any of the documents contemplated hereby or
which would adversely affect the validity or enforceability of,
or the authority or ability of the Company to perform its
obligations under, this Agreement or any of such other documents.
(h) Absence of Events of Default. No Event of
Default, as defined in the Note, and no event which, with the
giving of notice or the passage of time or both, would become an
Event of Default (as so defined), has occurred and is continuing.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
(a) Transfer Restrictions. The Buyer acknowledges
that (1) the Note has not been and is not being registered under the
provisions of the 1933 Act and, except as provided in the
Registration Rights Agreement, the Shares have not been and are
not being registered under the 1933 Act, and may not be
transferred unless (A) subsequently registered thereunder for
resale or (B) the Buyer shall have delivered to the Company an
opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Securities to be
sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Securities
made in reliance on Rule 144 promulgated under the 1933 Act may
be made only in accordance with the terms of said Rule and further,
if said Rule is not applicable, any resale of such Securities
under circumstances in which the seller, or the person through
whom the sale is made, may be deemed to be an underwriter, as
that term is used in the 1933 Act, may require compliance with some
other exemption under the 1933 Act or the rules and regulations
of the SEC thereunder; and (3) neither the Company nor any other
person is under any obligation to register the Securities (other
than pursuant to the Registration Rights Agreement) under the
1933 Act or to comply with the terms and conditions of any exemption
thereunder.
(b) Restrictive Legend. The Buyer acknowledges and
agrees that the Note, and, until such time as the Shares have
been registered under the 1933 Act as contemplated by the Registration
Rights Agreement, the certificates for the Shares, may bear a
restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the
certificates for the Shares):
The securities represented by this certificate have not
been registered under the Securities Act of 1933, as
amended. The securities have been acquired for
investment and may not be sold, transferred or assigned
in the absence of an effective registration statement
for the securities under the Securities Act of 1933, as
amended, or an opinion of counsel that registration is
not required under said Act.
(c) Registration Rights Agreement. The parties hereto
agree to enter into the Registration Rights Agreement, in the
form attached to the Subscription Agreement as Annex II, on or before
the Closing Date.
(d) Form D. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to
provide a copy thereof to the Buyer promptly after such filing.
(e) Nasdaq Listing; Reporting Status. On or before
the Closing Date, the Company shall file with Nasdaq an application
or other document required by Nasdaq for the listing of the Shares
and shall provide evidence of such filing to the Buyer promptly
after such filing. So long as the Buyer beneficially owns any of
the Securities, the Company shall file all reports required to be
filed with the SEC pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the Company shall not, prior to the date which is three years
after the Closing Date, terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would permit such termination.
(f) Use of Proceeds. The Company will use the
proceeds from the sale of the Note for the Company's internal working
capital purposes and shall not, directly or indirectly, use such
proceeds for any loan to or investment in any other corporation,
partnership enterprise or other person (other than transfers to
majority-owned subsidiaries of the Company or for the acquisition
of a majority interest in companies in a business complimentary
to the Company's business).
(g) Blue Sky Laws. On or before the Closing Date, the
Company shall take such action as shall be necessary to qualify,
or to obtain an exemption for, the Securities for sale to the
Buyer pursuant to this Agreement and on conversion of the Note
under such of the securities or "blue sky" laws of jurisdictions
in the United States as shall be applicable to the sale of the
Securities to the Buyer pursuant to this Agreement and on
conversion of the Note. The Company shall furnish copies of all
filings, applications, orders and grants or confirmations of
exemptions relating to such securities or "blue sky" laws on or
before the Closing Date.
5. TRANSFER AGENT INSTRUCTIONS.
Prior to the Closing Date, the Company will irrevocably
instruct its transfer agent to issue certificates for the Shares
from time to time upon conversion of the Note in such amounts as
specified from time to time by the Company to the transfer agent,
bearing the restrictive legend specified in Section 4(b) of this
Agreement prior to registration of the Shares under the 1933 Act,
registered in the name of the Buyer as set forth on the signature
page of this Agreement or its nominee and in such denominations
to be specified by the Buyer in connection with each conversion of
the Note. The Company warrants that no instruction other than
such instructions referred to in this Section 5 and stop transfer
instructions to give effect to Section 4(a) hereof prior to
registration of the Shares under the 1933 Act will be given by
the Company to the transfer agent and that the Shares shall otherwise
be freely transferable on the books and records of the Company as
and to the extent provided in this Agreement and the Registration
Rights Agreement. Nothing in this Section shall affect in any
way the Buyer's obligations and agreement to comply with all
applicable securities laws upon resale of the Securities. If the
Buyer provides the Company with an opinion of counsel reasonably
satisfactory to the Company that registration of a resale by the
Buyer of any of the Securities in accordance with clause (1)(B)
of Section 4(a) of this Agreement is not required under the 1933
Act, the Company shall permit the transfer of the Securities and, in
the case of the Shares, promptly instruct the Company's transfer
agent to issue one or more share certificates in such name and in
such denominations as specified by the Buyer.
6. NOTE DELIVERY INSTRUCTIONS.
The Note shall be delivered by the Company to the Escrow
Agent pursuant to Section 1(b) hereof on a delivery against
payment basis at the closing.
7. CLOSING DATE.
The date and time of the issuance and sale of the Note
(the "Closing Date") shall be 12:00 noon, New York City time, on
the date which is three New York Stock Exchange trading days
after the date on which the Buyer shall have deposited the purchase
price for the Note with the Escrow Agent in accordance with
Section 1(c) hereof, or such other mutually agreed to time. The
closing shall occur on the Closing Date at the offices of the
Escrow Agent.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to
sell the Note to the Buyer pursuant to this Agreement is
conditioned upon:
(a) The receipt and acceptance by the Company of this
Agreement as evidenced by execution of this Agreement by the
Company and the return of an executed copy hereof to the Buyer
and its legal counsel;
(b) Delivery by the Buyer to the Escrow Agent of good
funds as payment in full of an amount equal to the purchase price
for the Note in accordance with Section 1(c) hereof; and
(c) The accuracy on the Closing Date of the
representations and warranties of the Buyer contained in this
Agreement as if made on the Closing Date and the performance by
the Buyer on or before the Closing Date of all covenants and
agreements of the Buyer required to be performed on or before the
Closing Date.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to
purchase the Note is conditioned upon:
(a) Delivery by the Company to the Escrow Agent of the
Note in accordance with this Agreement;
(b) The accuracy on the Closing Date of the
representations and warranties of the Company contained in this
Agreement as if made on the Closing Date and the performance by
the Company on or before the Closing Date of all covenants and
agreements of the Company required to be performed on or before
the Closing Date;
(c) On the Closing Date, the Buyer having received an
opinion of counsel for the Company, dated the Closing Date, in
form, scope and substance reasonably satisfactory to the Buyer,
substantially in the form of Annex III attached to the
Subscription Agreement; and
(d) The closing under the Subscription Agreement shall
have occurred.
10. GOVERNING LAW; MISCELLANEOUS.
This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California. A facsimile
transmission of this signed
Agreement shall be legal and binding on all parties hereto. The
headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this
Agreement. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This
Agreement may be amended only by an instrument in writing signed
by the party to be charged with enforcement. Any notices
required or permitted to be given under the terms of this Agreement shall
be sent by mail or delivered personally or by courier and shall
be effective five days after being placed in the mail, if mailed, or
upon receipt, if delivered personally or by courier, in each case
addressed to a party at such party's address shown in the
introductory paragraph or on the signature page of this Agreement
or such other address as a party shall have provided by notice to
the other party in accordance with this provision. The Buyer
shall have the right to assign its rights and obligations under
this Agreement with respect to the purchase of all or any portion
of the principal amount of the Note either with the prior written
consent of the Company, which consent shall not be unreasonably
withheld or delayed, or to one or more funds advised by Genesee
Advisers, in which case no consent is required; provided, in
either case, such assignee, by written instrument duly executed
by such assignee, assumes all obligations of the Buyer hereunder
with respect to the purchase of the portion of the principal amount of
the Note so assigned and makes the same representations and
warranties with respect thereto as the Buyer makes in this
Agreement, whereupon the Buyer shall be relieved of any further
obligations, responsibilities and liabilities with respect to the
purchase of all or the portion of the principal amount of the
Note the obligation for the purchase of which has been so assigned.
In the case of any such assignment, the Company shall agree in
writing with such assignee to make available to such assignee the
benefits of the Registration Rights Agreement with respect to the
Shares issuable on conversion of the Note or the portion of the
principal amount thereof with respect to which the purchase under
this Agreement has been so assigned.
IN WITNESS WHEREOF, this Agreement has been duly
executed by the Buyer or one of its officers thereunto duly
authorized as of the date set forth below.
PRINCIPAL AMOUNT OF NOTE: $3,000,000
PURCHASE PRICE: $3,000,000
NAME OF BUYER: GFL PERFORMANCE FUND LIMITED
SIGNATURE
Title:
Date:
Address: c/o CITCO
Kaya Flamboyan 9
Curacao, Netherlands Antilles
This Agreement has been accepted as of the date set
forth below.
INDENET, INC.
By:
Title:
Date:
EXHIBIT 23.2
CONSENT OF BDO SEIDMAN LLP
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
IndeNet, Inc.
(formerly Independent TeleMedia Group, Inc.)
Los Angeles, California
We hereby consent to the incorporation by reference in the
Prospectus constituting a part of the Registration Statement on
Amendment No. 1 to Form S-3 of our report dated January 30,
1995, except for Note K, as to which the date is March 13, 1995,
which contains an explanatory paragraph regarding uncertainties
as to the outcome of a lawsuit and another matter relating to the
consolidated financial statements of Independent TeleMedia Group,
Inc. appearing in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1994.
We also consent to the reference to us under the caption
"Experts" in the Prospectus.
/s/ BDO SEIDMAN, LLP
Los Angeles, California
March 14, 1996
