As filed with the Securities and
Exchange Commission, May 13, 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. 2
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)
_____________________
RICHARD J. PARENT, 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 May 13, 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 as amended on Form 8-K/A filed April 22, 1996.
(8) Report on Form 8-K for event occurring February 29,
(9) Report on Form 8-K dated May 10, 1996.
1996.
(10) 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.
(11) 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 management.
While the Company has employment agreements with management,
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 by the Company in whole or in part anytime after
90 days from closing in an amount equal to 122% of the principal
balance of the Note.
On April 26, 1996, the Company completed a private placement
of 1,200 shares of its Series A preferred stock for gross
proceeds totaling $12,000,000 to 15 accredited, institutional
investors. The Series A preferred shares are not entitled to
any dividends but are convertible to common shares. One-third
of the shares purchased by each investor are convertible
commencing June 26, 1996, an additional one-third commencing
July 26, 1996 and the final one-third commencing August 25,
1996. The conversion ratio is the lesser of $7.00 per share or
85% of the average closing bid price for the five trading days
immediately preceding the date of conversion plus a number of
shares at the conversion ratio equal to 6% per annum. The
Company is obligated to register the common shares underlying
the conversion privileges within sixty days of the closing date
and certain penalties apply should it fail to accomplish that
conversion. All Series A preferred shares are automatically
converted on the 25th day of April, 1999. The Company, in an
amount equal to the above conversion ratio, has the right to
redeem the Class A preferred shares at the time it receives
notice of the shareholders' intent to convert or, at its
election, commencing on or after April 26, 1997 at a premium to
the original purchase price that declines from 130% to 115% over
a period of two years commencing April 26, 1997.
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
and other selling shareholders 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 Company's 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.
The financial statements of Mediatech, Inc. incorporated by
reference in this Prospectus have been audited by Deloitte &
Touche LLP, independent certified public accountants, to the
extent and for the period set forth in their report 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. The financial statements of
Channelmatic, Inc. incorporated by reference in this Prospectus
have been audited by Arthur Andersen LLP, independent certified
public accountants, to the extent and for the periods as set
forth in their report 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.
The financial statements of Starcom Television Services, Inc.
incorporated by reference in this Prospectus have been audited
by Jay J. Shapiro, C.P.A. a Professional Corporation,
independent certified public accountants, to the extent and for
the periods set forth in their report 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
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**
4.1 Certificate of Designation of Series A Preferred
Stock*
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**
10.6 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*
23.3 Consent of Deloitte & Touche LLP*
23.4 Consent of Arthur Andersen LLP*
23.5 Consent of Jay J. Shapiro, C.P.A. a Professional
Corporation*
_________________
* 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 Exchange 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,
Amendment No. 2, to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of Los Angeles, State of
California on the 9th day of May, 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 5/9/96
Robert W. Lautz, Jr. Executive Officer
and Director
/s/ Thomas H. Baur Chief Executive 5/9/96
Thomas H. Baur Officer of Mediatech,
Inc. and Director
/s/ Richard J. Parent Chief Financial 5/9/96
Richard J. Parent Officer and Secretary
/s/ William A. Kunkel Director 5/9/96
William A. Kunkel
/c/ Cary S. Fitchey Director 5/9/96
Carey S. Fitchey
/s/ William D. Killion Director 5/9/96
William D. Killion
/s/ Andre Blay Director 5/9/96
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**
4.1 Certificate of Designation of Series A Preferred
Stock*
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**
10.6 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*
23.3 Consent of Deloitte & Touche LLP*
23.4 Consent of Arthur Andersen LLP*
23.5 Consent of Jay J. Shapiro, C.P.A. a Professional
Corporation*
_________________
* Filed herewith.
** Previously filed.
CERTIFICATE OF DESIGNATION OF
SERIES A PREFERRED STOCK
OF
INDENET, INC.
It is hereby certified that:
1. The name of the Company (hereinafter called the
"Company") is Indenet, Inc.,a Delaware corporation.
2. The certificate of incorporation of the Company
authorize the issuance of Ten Million (10,000) shares of
preferred stock, $.0001 par value per share, and expressly vests
in the Board of Directors of the Company the authority provided
therein to issue any or all of said shares in one (1) or more
series and by resolution or resolutions to establish the
designation and number and to fix the relative rights and
preferences of each series to be issued.
3. The Board of Directors of the Company, pursuant to the
authority expressly vested in it as aforesaid, has previously
created a Series B Preferred Stock, $.0001 par value, with
250,000 authorized shares and 216,667 shares outstanding and has
adopted the following resolutions creating a Series A issue of
Preferred Stock:
RESOLVED, that One Thousand Two Hundred (1,200) of the Ten
Million (10,000,000) authorized shares of Preferred Stock of the
Company shall be designated Series A Preferred Stock, $.0001 par
value per share, and shall possess the rights and preferences set
forth below:
Section 1. Designation and Amount. The shares of such
series shall have a par value of $.0001 per share and shall be
designated as Series A Preferred Stock (the "Series A Preferred
Stock") and the number of shares constituting the Series A
Preferred Stock shall be One Thousand Two Hundred (1,200). The
Series A Preferred Stock shall be offered at a purchase price of
Ten Thousand Dollars ($10,000) per share (the "Original Series A
Issue Price"), with a six percent (6%) per annum accretion rate
as set forth herein.
Section 2. Rank. The Series A Preferred Stock shall
rank: (i) junior to the Series B Preferred Stock and to any other
class or series of capital stock of the Company hereafter created
specifically ranking by its terms senior to the Series A
Preferred Stock (collectively, the "Senior Securities"); (ii)
prior to all of the Company's Common Stock, $.001 par value per
share ("Common Stock"); (iii) prior to any class or series of
capital stock of the Company hereafter created not specifically
ranking by its terms senior to or on parity with any Series A
Preferred Stock of whatever subdivision (collectively, with the
Common Stock, "Junior Securities"); and (iv) on parity with any
class or series of capital stock of the Company hereafter created
specifically ranking by its terms on parity with the Series A
Preferred Stock ("Parity Securities") in each case as to
distributions of assets upon liquidation, dissolution or winding
up of the Company, whether voluntary or involuntary (all such
distributions being referred to collectively as "Distributions").
Section 3. Dividends. The Series A Preferred Stock will
bear no dividends, and the holders of the Series A Preferred
Stock ("Holders") shall not be entitled to receive dividends on
the Series A Preferred Stock.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or
winding up of the Company, either voluntary or involuntary, the
Holders of shares of Series A Preferred Stock shall be entitled
to receive, immediately after any distributions to Senior
Securities required by the Company's Certificate of Incorporation
or any certificate of designation, and prior in preference to any
distribution to Junior Securities but in parity with any
distribution to Parity Securities, an amount per share equal to
the Original Series A Issue Price for each outstanding share of
Series A Preferred Stock and (ii) an amount equal to six percent
(6%) of the Original Series A Issue Price per annum for the
period that has passed since the date that, in connection with
the consummation of the purchase by Holder of shares of Series A
Preferred Stock from the Company, the escrow agent first had in
its possession funds representing full payment for the shares of
Series A Preferred Stock (such amount being referred to herein as
the "Premium"). If upon the occurrence of such event, and after
payment in full of the preferential amounts with respect to the
Senior Securities, the assets and funds available to be
distributed among the Holders of the Series A Preferred Stock and
Parity Securities shall be insufficient to permit the payment to
such Holders of the full preferential amounts due to the Holders
of the Series A Preferred Stock and the Parity Securities,
respectively, then the entire assets and funds of the Company
legally available for distribution shall be distributed among the
Holders of the Series A Preferred Stock and the Parity
Securities, pro rata, based on the respective liquidation amounts
to which each such series of stock is entitled by the Company's
Certificate of Incorporation and any certificate(s) of
designation relating thereto.
(b) Upon the completion of the distribution required
by subsection 4(a), if assets remain in this Company, they shall
be distributed to holders of Junior Securities in accordance with
the Company's Certificate of Incorporation including any duly
adopted certificate(s) of designation.
(c) At each Holder's option, a sale, conveyance or
disposition of all or substantially all of the assets of the
Company to a private entity, the common stock of which is not
publicly traded, shall be deemed to be a liquidation, dissolution
or winding up within the meaning of this Section 4; provided
further that an event described in the prior clause that the
Holder does not elect to treat as a liquidation and a
consolidation, merger, acquisition, or other business combination
of the Company with or into any other company or companies shall
not be treated as a liquidation, dissolution or winding up within
the meaning of this Section 4, but instead shall be treated
pursuant to Section 5(f) hereof.
(d) In the event that, immediately prior to the
closing of a transaction described in Section 4(c) which would
constitute a liquidation event, and the cash distributions
required by Section 4(a) or Section 6, the Company shall either:
(i) cause such closing to be postponed until such cash
distributions have been made, or (ii) cancel such transaction, in
which event the rights of the Holders of Series A Preferred Stock
shall be the same as existing immediately prior to such proposed
transaction.
Section 5. Conversion. The record Holders of this
Series A Preferred Stock shall have conversion rights as follows
(the "Conversion Rights"):
(a) Right to Convert. Each record Holder of Series A
Preferred Stock shall be entitled (at the times and in the
amounts set forth below) and subject to the Company's right of
redemption set forth in Section 6(a), at the office of the
Company or any transfer agent for the Series A Preferred Stock
(the "Transfer Agent"), to convert (in multiples of one (1) share
of Series A Preferred Stock), either pursuant to an effective
shelf registration statement for the Common Stock issuable upon
conversion of the Series A Preferred Stock under the Securities
Act of 1933, as amended (the Registration Statement ) or, if the
Registration Statement is not effective, then pursuant to
Regulation S and applicable exemptions, as follows: (x) up to
one-third (1/3) of the shares of Series A Preferred Stock
initially issued to such Holder at any time beginning sixty (60)
days following the date of the last closing of a purchase and
sale of Series A Preferred Stock that occurs pursuant to the
offering of the Series A Preferred Stock by the Company (the
"Last Closing Date") and at any time thereafter, (y) up to an
additional one-third (1/3) of the shares of Series A Preferred
Stock initially issued to such Holder at any time beginning
ninety (90) days following the Last Closing Date and at any time
thereafter, and (z) all remaining Series A Preferred Stock held
by such Holder at any time beginning one hundred twenty (120)
days following the Last Closing Date (each of the time periods
referenced in subclauses (x), (y) and (z) is hereinafter referred
to singularly as a Conversion Gate ) at the office of the
Company or any Transfer Agent for the Series A Preferred Stock,
into that number of fully-paid and non-assessable shares of
Common Stock (defined in Section 2) of the Company calculated in
accordance with the following formula (the "Conversion Rate"):
Number of shares issued upon conversion of one (1) share of
Series A Preferred Stock =
(.06)(N/365)(10,000)/ + 10,000/
5 Day Average Price Conversion Price
where,
. 5 Day Average Price = 100% the average Closing Bid Price, as
that term is defined below, of the Company's Common Stock
for the five (5) trading days immediately preceding the Date
of Conversion.
. N= the number of days between (i) the date that, in
connection with the consummation of the initial purchase by
Holder of shares of Series A Preferred Stock from the
Company, the escrow agent first had in its possession funds
representing full payment for the shares of Series A
Preferred Stock for which conversion is being elected, and
(ii) the applicable Date of Conversion (as defined in
Section 5(c)(iv) below) for the shares of Series A Preferred
Stock for which conversion is being elected, and
. Conversion Price = the lesser of (x) $7.00 (the "Fixed
Conversion Price"), or (y) 85% of the average Closing Bid
Price, as that term is defined below, of the Company's
Common Stock for the five (5) trading days immediately
preceding the Date of Conversion, as defined below (the
Variable Conversion Price ).
For purposes hereof, the term "Closing Bid Price" shall mean
the closing bid price on the Nasdaq National Market System, or if
no longer traded on the Nasdaq National Market, the closing bid
price on the Nasdaq Small Cap Market or the principal national
securities exchange on which the Common Stock is so traded and if
not available, the mean of the high and low prices on the
principal national securities exchange or the Nasdaq Stock Market
on which the Common Stock is so traded.
(b) Corporation's Intention to Redeem.
Notwithstanding anything contained in this Certificate of
Designation of Series A Preferred Stock ( Certificate of
Designation ) to the contrary, the Company intends to exercise
its discretion to redeem Series A Preferred Stock pursuant to
Section 6(a) in the event that the exercise of conversion rights
by the Holders of the Series A Preferred Stock pursuant to
Section 5(a) above or in the event of an automatic conversion
pursuant to Section 5(e) above would result in the issuance of
greater than 2,394,605 shares of Common Stock in the aggregate
pursuant to conversion of Series A Preferred Stock.
(c) Mechanics of Conversion. In order to convert
Series A Preferred Stock into full shares of Common Stock, the
Holder shall (i) fax, on or prior to 11:59 p.m., New York City
time (the Conversion Notice Deadline ) on the date of
conversion, a copy of a fully executed notice of conversion
("Notice of Conversion") to the Company at the office of the
Company (with a copy to its designated transfer agent (the
Transfer Agent ) for the Series A Preferred Stock, by facsimile)
stating that the Holder elects to convert, which notice shall
specify the date of conversion, the number of shares of Series A
Preferred Stock to be converted, the applicable conversion price
and a calculation of the number of shares of Common Stock
issuable upon such conversion (together with a copy of the front
page of each certificate to be converted) and (ii) surrender to a
common courier, for either overnight or two (2) day delivery to
the office of the Transfer Agent, the original certificates
representing the Series A Preferred Stock being converted (the
Preferred Stock Certificates ), duly endorsed for transfer;
provided, however, that the Company shall not be obligated to
issue certificates evidencing the shares of Common Stock issuable
upon such conversion unless either the Preferred Stock
Certificates are delivered to the Company or its Transfer Agent
as provided above, or the Holder notifies the Company or its
Transfer Agent that such certificates have been lost, stolen or
destroyed (subject to the requirements of subparagraph (i)
below). In the case of a reasonable dispute as to the
calculation of the Conversion Rate, the Company shall promptly
issue to the Holder the number of Shares that are not disputed
and shall submit the disputed calculations to its outside
accountant via facsimile within three (3) business days of
receipt of Holder's Notice of Conversion. The Company shall
cause the accountant to perform the calculations and notify
Company and Holder of the results no later than two (2) business
days from the time it receives the disputed calculations.
Accountant's calculation shall be deemed conclusive absent
manifest error.
(i) Lost or Stolen Certificates. Upon receipt by
the Company of evidence of the loss, theft, destruction or
mutilation of any Preferred Stock Certificates representing
shares of Series A Preferred Stock, and (in the case of loss,
theft or destruction) of indemnity or security reasonably
satisfactory to the Company, and upon surrender and cancellation
of the Preferred Stock Certificate(s), if mutilated, the Company
shall execute and deliver new Preferred Stock Certificate(s) of
like tenor and date. However, Company shall not be obligated to
re-issue such lost or stolen Preferred Stock Certificates if
Holder contemporaneously requests Company to convert such Series
A Preferred Stock into Common Stock.
(ii) Delivery of Common Stock Upon Conversion. The
Transfer Agent or the Company (as applicable) shall, no later
than 6:00 p.m. (New York City time) on the third (3rd) business
day (the Deadline ) after receipt by the Transfer Agent of all
necessary documentation duly executed and in proper form required
for conversion, including the original Preferred Stock
Certificates to be converted (or after provision for security or
indemnification in the case of lost or destroyed certificates, if
required), issue and surrender to a common courier for either
overnight or (if delivery is outside the United States) two (2)
day delivery to the Holder at the address of the Holder as shown
on the stock records of the Company a certificate for the number
of shares of Common Stock to which the Holder shall be entitled
as aforesaid.
(iii) No Fractional Shares. If any conversion
of the Series A Preferred Stock would create a fractional share
of Common Stock or a right to acquire a fractional share of
Common Stock, such fractional share shall be disregarded and the
number of shares of Common Stock issuable upon conversion, in the
aggregate, shall be the next higher number of shares.
(iv) Date of Conversion. The date on which
conversion occurs (the "Date of Conversion") shall be deemed to
be the date such Notice of Conversion is faxed to the Company,
provided (i) that the advance copy of the Notice of Conversion
is faxed to the Company before 5:00 p.m., New York City time, on
the Date of Conversion, and (ii) that the original Preferred
Stock Certificates representing the shares of Series A Preferred
Stock to be converted are surrendered by depositing such
certificates with a common courier for either overnight or two
(2) day delivery, as provided above, and received by the Transfer
Agent or the Company within five (5) business days thereafter.
The person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all
purposes as the record Holder or Holders of such shares of Common
Stock on the Date of Conversion. If the original Preferred Stock
Certificates representing the Series A Preferred Stock to be
converted are not received by the Transfer Agent or the Company
within five (5) business days after the Date of Conversion or if
the facsimile of the Notice of Conversion is not received by the
Company or its designated Transfer Agent prior to the Conversion
Notice Deadline, the Notice of Conversion, at the Company's
option, may be declared null and void.
(d) Reservation Number of Stock Issuable Upon
Conversion. The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the
Series A Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding Series A Preferred Stock; and
if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of
all then outstanding shares of Series A Preferred Stock, the
Company will take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
(e) Automatic Conversion. Each share of Series A
Preferred Stock outstanding on the date which is three (3) years
after the Last Closing Date (the Automatic Conversion Date )
automatically shall be converted into Common Stock on such date
at the Conversion Rate then in effect (calculated in accordance
with the formula in Section 5(a) above), and the Automatic
Conversion Date shall be deemed the Date of Conversion with
respect to such conversion.
(f) Adjustment to Conversion Rate.
(i) Adjustment to Fixed Conversion Price Due to
Stock Split, Stock Dividend, Etc. If, prior to the conversion
of all of the Series A Preferred Stock, the number of outstanding
shares of Common Stock is increased by a stock split, stock
dividend, or other similar event, the Fixed Conversion Price
shall be proportionately reduced, or if the number of outstanding
shares of Common Stock is decreased by a combination or
reclassification of shares, or other similar event, the Fixed
Conversion Price shall be proportionately increased.
(ii) Adjustment to Variable Conversion Price. If,
at any time when any shares of the Series A Preferred Stock are
issued and outstanding, the number of outstanding shares of
Common Stock is increased or decreased by a stock split, stock
dividend, or other similar event, which event shall have taken
place during the reference period for determination of the
Conversion Price for any conversion of the Series A Preferred
Stock, then the Variable Conversion Price shall be calculated
giving appropriate effect to the stock split, stock dividend,
combination, reclassification or other similar event for all five
(5) trading days immediately preceding the Date of Conversion.
(iii) Adjustment Due to Merger, Consolidation,
Etc. If, prior to the conversion of all Series A Preferred Stock,
there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a
result of which shares of Common Stock of the Company shall be
changed into the same or a different number of shares of the same
or another class or classes of stock or securities of the Company
or another entity or there is a sale of all or substantially all
the Company's assets or there is a change of control transaction
not deemed to be a liquidation pursuant to Section 4(c), then the
Holders of Series A Preferred Stock shall thereafter have the
right to receive upon conversion of Series A Preferred Stock,
upon the basis and upon the terms and conditions specified herein
and in lieu of the shares of Common Stock immediately theretofore
issuable upon conversion, such stock, securities and/or other
assets which the Holder would have been entitled to receive in
such transaction had the Series A Preferred Stock been converted
immediately prior to such transaction, and in any such case
appropriate provisions shall be made with respect to the rights
and interests of the Holders of the Series A Preferred Stock to
the end that the provisions hereof (including, without
limitation, provisions for the adjustment of the Conversion Price
and of the number of shares issuable upon conversion of the
Series A Preferred Stock) shall thereafter be applicable, as
nearly as may be practicable in relation to any securities
thereafter deliverable upon the exercise hereof. The Company
shall not effect any transaction described in this subsection
5(f)(iii) unless (a) it first gives thirty (30) business days, if
commercially practicable, but in no event less than twenty (20)
business days prior notice of such merger, consolidation,
exchange of shares, recapitalization, reorganization, or other
similar event (during which time the Holder shall be entitled to
convert its shares of Series A Preferred Stock into Common Stock)
and (b) the resulting successor or acquiring entity (if not the
Company) assumes by written instrument the obligation of the
Company under this Certificate of Designation, including the
obligation of this subsection 5(f)(iii).
(iv) No Fractional Shares. If any adjustment
under this Section 5(f) would create a fractional share of Common
Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon conversion shall be the next
higher number of shares.
Section 6. Redemption by Company.
(a) Company's Right to Redeem Upon Receipt of Notice
of Conversion At the time of receipt of a Notice of Conversion
pursuant to Section 5, the Company shall have the right, in its
sole discretion, to redeem in whole or in part any Series A
Preferred Stock submitted for conversion, immediately prior to
and in lieu of conversion ( Redemption Upon Receipt of Notice of
Conversion ). If the Company elects to redeem some, but not all,
of the Series A Preferred Stock submitted for conversion, the
Company shall redeem from among the Series A Preferred Stock
submitted by the various shareholders for conversion on the
applicable date, a pro-rata amount from each such Holder so
submitting Series A Preferred Stock for conversion.
(i) Redemption Price Upon Receipt of a Notice of
Conversion. The redemption price per share of Series A Preferred
Stock under this Section 6(a) shall be calculated in accordance
with the following formula ( Redemption Rate ):
[[(.06)(N/365)(10,000)] + [10,000 x 5 Day Average Price]/
Conversion Price
where,
N,"Date of Conversion", "5 Day Average Price" and
"Conversion Price" shall have the same meanings as defined in
Section 5.
(ii) Mechanics of Redemption Upon Receipt of
Notice of Conversion. The Company shall effect each such
redemption by giving notice of its election to redeem, by
facsimile, by 5:00 p.m. New York City time, within one (1)
business day following the earlier of (x) receipt of a Notice of
Conversion from a Holder by overnight or two-day courier, or (y)
receipt by the Subscriber of a faxed confirmation from the
Company confirming that the Company received a fax copy of the
Notice of Conversion, which faxed confirmation shall be faxed by
the Company to the Subscriber promptly upon the Company's receipt
of a faxed copy of the Notice of Conversion, and the Company
shall provide a copy of such redemption notice by overnight or
two (2) day courier and facsimile, to (A) the Holder of the
Series A Preferred Stock submitted for conversion at the address
and facsimile number of such Holder appearing in the Company's
register for the Series A Preferred Stock and (B) the Company's
Transfer Agent. Such redemption notice shall indicate whether
the Company will redeem all or part of the Series A Preferred
Stock submitted for conversion and the applicable redemption
price.
(b) Company's Right to Redeem at its Election. At any
time, commencing twelve (12) months and one (1) day after the
Last Closing Date, the Company shall have the right, in its sole
discretion, to redeem ("Redemption at Company's Election"), from
time to time, any or all of the Series A Preferred Stock;
provided (i) Company shall first provide thirty (30) days advance
written notice as provided in subparagraph 6(b)(ii) below (which
can be given beginning thirty (30) days prior to the date which
is twelve (12) months and one (1) day after the Last Closing
Date), and (ii) that the Company shall be entitled to redeem
Series A Preferred Stock having an aggregate Stated Value (as
defined below) of a minimum of One Million Five Hundred Thousand
Dollars ($1,500,000). If the Company elects to redeem some, but
not all, of the Series A Preferred Stock, the Company shall
redeem a pro-rata amount from each Holder of the Series A
Preferred Stock.
(i) Redemption Price At Company's Election. The
"Redemption Price At Company's Election" shall be calculated as a
percentage of Stated Value, as that term is defined below, of the
Series A Preferred Stock redeemed pursuant to this Section 6(b),
which percentage shall vary depending on the date of Redemption
at Company's Election (as defined below), and shall be determined
as follows:
Date of Notice of Redemption at
Company's Election % of Stated Value
12 months and 1 day to 18 months
following Last Closing Date 130%
18 months and 1 day to 24 months
following Last Closing Date 125%
24 months and 1 day to 30 months
following Last Closing Date 120%
30 months and 1 day to 36 months
following Last Closing Date 115%
For purposes hereof, "Stated Value" shall mean the Original
Series A Issue Price (as defined in Section 4(a)) of the shares
of Series A Preferred Stock being redeemed pursuant to this
Section 6(b), together with the accrued but unpaid Premium (as
defined in Section 4(a)).
(ii) Mechanics of Redemption at Company's
Election. The Company shall effect each such redemption by
giving at least thirty (30) days prior written notice ( Notice of
Redemption At Company's Election ) to (A) the Holders of the
Series A Preferred Stock selected for redemption, at the address
and facsimile number of such Holder appearing in the Company's
Series A Preferred stock register and (B) the Transfer Agent,
which Notice of Redemption At Company's Election shall be deemed
to have been delivered two (2) business days after the Company's
mailing (by overnight or two (2) day courier, with a copy by
facsimile) of such Notice of Redemption At Company's Election.
Such Notice of Redemption At Company's Election shall indicate
(i) the number of shares of Series A Preferred Stock that have
been selected for redemption, (ii) the date which such redemption
is to become effective (the Date of Redemption At Company's
Election ) and (iii) the applicable Redemption Price At Company's
Election, as defined in subsection (b)(i) above. Notwithstanding
the above, Holder may convert into Common Stock pursuant to
section 5, prior to the close of business on the Date of
Redemption at Company's Election, any Series A Preferred Stock
which it is otherwise entitled to convert, including Series A
Preferred Stock that has been selected for redemption at
Company's election pursuant to this subsection 6(b); provided,
however, that the Company, thereby, would retain its right to
redeem upon receipt of a Notice of Conversion pursuant to section
6(a).
(c) Company Must Have Immediately Available Funds or
Credit Facilities. The Company shall not be entitled to send any
Redemption Notice and begin the redemption procedure under
Sections 6(a) and 6(b) unless it has:
(i) the full amount of the redemption price in
cash, available in a demand or other immediately available
account in a bank or similar financial institution; or
(ii) immediately available credit facilities,
in the full amount of the redemption price with a bank or similar
financial institution; or
(iii) an agreement with a standby underwriter
willing to purchase from the Company a sufficient number of
shares of stock to provide proceeds necessary to redeem any stock
that is not converted prior to redemption; or
(iv) a combination of the items set forth in (i),
(ii) and (iii) above, aggregating the full amount of the
redemption price.
(d) Payment of Redemption Price. Each Holder
submitting Preferred Stock being redeemed under this Section 6
shall send their Series A Preferred Stock Certificates so
redeemed to the Company or its Transfer Agent no later than the
Date of Redemption at Company's election, and the Company shall
pay the applicable redemption price to that Holder within five
(5) business days of the Date of Redemption at Company's
Election. The Company shall not be obligated to deliver the
redemption price unless the Preferred Stock Certificates so
redeemed are delivered to the Company or its Transfer Agent, or,
in the event one or more certificates have been lost, stolen,
mutilated or destroyed, the Holder has complied with Section
5(c)(i).
(e) Blackout Period. Notwithstanding the foregoing,
the Company may not either send out a redemption notice or effect
a redemption pursuant to Section 6(b) above during a Blackout
Period (defined as a period during which the Company's officers
or directors would not be entitled to buy or sell stock because
of their holding of material non-public information), unless the
Company shall first disclose the non-public information that
resulted in the Blackout Period, provided, however, that no
redemption shall be effected until at least ten (10) days after
the Company shall have given the Holder written notice that the
Blackout Period has been lifted.
Section 7. Voting Rights. The Holders of the Series A
Preferred Stock shall have no voting power whatsoever, except as
otherwise provided by the General Corporation Law of the State of
Delaware ("Delaware Law"), and no Holder of Series A Preferred
Stock shall vote or otherwise participate in any proceeding in
which actions shall be taken by the Company or the shareholders
thereof or be entitled to notification as to any meeting of the
shareholders.
Notwithstanding the above, Company shall provide Holder with
notification of any meeting of the shareholders regarding any
major corporate events affecting the Company. In the event of
any taking by the Company of a record of its shareholders for the
purpose of determining shareholders who are entitled to receive
payment of any dividend or other distribution, any right to
subscribe for, purchase or otherwise acquire any share of any
class or any other securities or property (including by way of
merger, consolidation or reorganization), or to receive any other
right, or for the purpose of determining shareholders who are
entitled to vote in connection with any proposed sale, lease or
conveyance of all or substantially all of the assets of the
Company, or any proposed liquidation, dissolution or winding up
of the Company, the Company shall mail a notice to Holder, at
least ten (10) days prior to the record date specified therein,
of the date on which any such record is to be taken for the
purpose of such dividend, distribution, right or other event, and
a brief statement regarding the amount and character of such
dividend, distribution, right or other event to the extent known
at such time.
To the extent that under Delaware Law the vote of the
Holders of the Series A Preferred Stock, voting separately as a
class, is required to authorize a given action of the Company,
the affirmative vote or consent of the Holders of at least a
majority of the shares of the Series A Preferred Stock
represented at a duly held meeting at which a quorum is present
or by written consent of a majority of the shares of Series A
Preferred Stock (except as otherwise may be required under
Delaware Law) shall constitute the approval of such action by the
class. To the extent that under Delaware Law the Holders of the
Series A Preferred Stock are entitled to vote on a matter with
holders of Common Stock, voting together as one (1) class, each
share of Series A Preferred Stock shall be entitled to a number
of votes equal to the number of shares of Common Stock into which
it is then convertible using the record date for the taking of
such vote of stockholders as the date as of which the Conversion
Price is calculated. Holders of the Series A Preferred Stock
also shall be entitled to notice of all shareholder meetings or
written consents with respect to which they would be entitled to
vote, which notice would be provided pursuant to the Company's
by-laws and applicable statutes.
Section 8. Protective Provision. So long as shares of
Series A Preferred Stock are outstanding, the Company shall not
without first obtaining the approval (by vote or written consent,
as provided by Delaware Law) of the Holders of at least sixty-six
and two-thirds percent (66 2/3%) of the then outstanding shares
of Series A Preferred Stock, and at least sixty-six and
two-thirds percent (66 2/3%) of the then outstanding Holders:
(a) alter or change the rights, preferences or
privileges of the Series A Preferred Stock or any Senior
Securities so as to affect adversely the Series A Preferred
Stock; provided, however, that no such change may be approved at
any time on or prior to the fortieth (40th) day following the
Last Closing Date unless such change is unanimously approved by
all Holders;
(b) create any new class or series of stock
having a preference over or on parity with the Series A Preferred
Stock with respect to Distributions (as defined in Section 2
above) or increase the size of the authorized number of Series A
Preferred; or
(c) do any act or thing not authorized or
contemplated by this Designation which would result in taxation
of the holders of shares of the Series A Preferred Stock under
Section 305 of the Internal Revenue Code of 1986, as amended (or
any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
In the event Holders of at least sixty-six and two thirds
percent (66 2/3%) of the then outstanding shares of Series A
Preferred Stock agree to allow the Company to alter or change the
rights, preferences or privileges of the shares of Series A
Preferred Stock, pursuant to subsection (a) above, so as to
affect the Series A Preferred Stock, then the Company will
deliver notice of such approved change to the Holders of the
Series A Preferred Stock that did not agree to such alteration or
change (the Dissenting Holders ) and Dissenting Holders shall
have the right for a period of thirty (30) days to convert
pursuant to the terms of this Certificate of Designation as they
exist prior to such alteration or change (notwithstanding the
sixty (60) day, ninety (90) day, and one hundred twenty (120) day
holding requirements set forth in Section 5(a) hereof), or
continue to hold their shares of Series A Preferred Stock
provided, however, that the Dissenting Holders may not convert
anytime on or before the fortieth (40th) day following the Last
Closing Date.
Section 9. Status of Redeemed or Converted Stock. In
the event any shares of Series A Preferred Stock shall be
redeemed or converted pursuant to Section 5 or Section 6 hereof,
the shares so converted or redeemed shall be canceled, shall
return to the status of authorized but unissued Preferred Stock
of no designated series, and shall not be issuable by the Company
as Series A Preferred Stock.
Section 10. Preference Rights. Nothing contained herein
shall be construed to prevent the Board of Directors of the
Company from issuing one (1) or more series of Preferred Stock
with dividend and/or liquidation preferences junior to the
dividend and liquidation preferences of the Series A Preferred
Stock.
Signed on ____________________, 1996
__________________________________________
________________________________,
President
Attest:
__________________________
_________________, Secretary
EXHIBIT 23.2
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. 2 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 inclusion as an exhibit to the
aforementioned Registration statement of our report
dated May 7, 1996, relating to the consolidated financial
statements of IndeNet, Inc. for the three months ended
May 31, 1995.
We also consent to the reference to us under the caption
"Experts" in the Prospectus.
/s/ BDO SEIDMAN, LLP
Los Angeles, California
May 10, 1996
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in
this Amendment No. 2 to Registration Statement
No. 33-31205 of IndeNet, Inc. ("IndeNet," formerly
Independent Telemedia Group, Inc.) on Form S-3 of our
report dated February 16, 1995 relating to the financial
statements of Mediatech, Inc. ("Mediatech") which
expresses an unqualified opinion and includes an
explanatory paragraph relating to IndeNet acquiring
96.33% of Mediatech on January 27, 1995, appearing in
the Annual Report on Form 10-KSB of IndeNet for the
year ended December 31, 1994.
We also consent to the reference to us under the heading
"Experts" in the Prospectus which is part of the
Registration Statement.
/s/ Deloitte & Touche LLP
Date: May 10, 1996
Deloitte & Touche LLP
Chicago, Illinois
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby
consent to the incorporation by reference in
this Amendment No. 2 to the Registration Statement
on Form S-3 for IndeNet, Inc. of our report dated
February 9, 1995, on the financial statements of
Channelmatic, Inc. as of and for the years ended
December 31, 1994 and 1993 included in IndeNet,
Inc.'s Form 10-Q dated December 31, 1995.
/s/ Arthur Anderson LLP
Date: May 10, 1996
Arthur Anderson LLP
EXHIBIT 23.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
I consent to the incorporation by reference in the
Amendment No. 2 to the Registration Statement on
Form S-3 for Indenet, Inc. (Common Stock - 1,433,030
shares), of my report dated April 12, 1996 appearing
in Form 8-K/A for the event occurring on April 22,
1996 on the financial statements of Starcom Television
Services.
/s/ Jay J. Shapiro, CPA
Date: May 10, 1996
Jay J. Shapiro, CPA,
A Professional Corporation