UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of
1934
Report for Event: February 29, 1996
INDENET, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-18034 68-0158367
(State of other (Commission (IRS Employer
jurisdiction of File No.
Identification No.)
incorporation)
1640 N. Gower Street, Los Angeles, CA 90028
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (213)
466-6388
Not applicable
(Former name and address)
Item 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
Not applicable.
Item 3. Bankruptcy or Receivership
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable
Item 5. Other Events.
On February 29, 1996, the Company completed a Regulation D
private placement of 224,795 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. The Company has
agreed to file a Form S-3 registration statement to register the
common shares which were issued and common shares underlying the
Note.
Item 6. Resignations of Registrant's Directors.
Not applicable
Item 7. Financial Statements and Exhibits.
2.a. Registration Rights Agreement
2.b. Note Purchase Agreement
Item 8. Change in Fiscal Year.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
INDENET, INC.
Date: March 15, 1996 /s/ Lewis K. Eisaguirre
Lewis K. Eisaguirre
Its: Chief Financial
Officer and Secretary
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:
