<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 24, 1997
INDENET, INC.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
- -------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-18034 68-0158367
- ------------------------ ------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
16000 VENTURA BOULEVARD, SUITE 700, ENCINO, CALIFORNIA 91436
- ------------------------------------------------------ ----------
(Address of Principal Executive Offices) (Zip Code)
(818) 461-8525
--------------------------------------------------
Registrant's Telephone Number, Including Area Code
NOT APPLICABLE
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 24, 1997, IndeNet, Inc. ("Registrant") sold 666,667 shares
(the "Shares") of capital stock of Channelmatic, Inc., a Delaware corporation
("Channelmatic"), to Limt Local Insertion Media Technology AB, a Swedish
corporation ("Buyer"). The Shares represented all of the shares of capital
stock of Channelmatic that were owned by Registrant. At the time of the sale,
a total of 1,000,000 shares of Channelmatic's common stock were outstanding.
Buyer develops digital video products and related applications for the
television industry.
The consideration paid by Buyer for the Shares consisted of the
following: (i) $5,250,000 in cash; (ii) 237,700 shares of Buyer's shares of
common stock; (iii) Buyer's Convertible Subordinated Debenture, dated May 1,
1997, in the amount of SEK (Swedish Krona) 10,697,500 ("Note 1"); and (iv)
Buyer's Subordinated Debenture, dated May 1, 1997, in the principal amount of
SEK 10,696,494 ("Note 2"). Based on the conversion rate in effect between
United States dollars and SEK, Note 1 and Note 2 had an aggregate principal
balance of approximately U.S. $2,802,000 at the time of the sale. The two notes
bear interest at a rate of 5.5% per annum, with interest payable quarterly. The
entire principal balance of Note 1 is due and payable on April 30, 2000. Note 1
provides that its outstanding principal balance, together with any accrued
interest thereon, may be prepaid, in full or in part, at any time prior to
December 31, 1998. After December 31, 1998, Note 1 will be convertible at the
option of the holder into shares of common stock of Buyer at the rate of one
share for each SEK 90 of principal amount to be converted. Note 2 is payable in
12 equal quarterly installments of principal and interest. Note 2 may be prepaid
at any time. If the entire principal balance of Note 2 is prepaid in full prior
to December 31, 1998, such prepayment may be made in the amount of 80% of the
then unpaid principal balance, plus accrued but unpaid interest. In the event
of a default in payment under Note 2, in addition to any other available
remedies, the holder of Note 2 may convert the unpaid portion of the Note into
Buyer's common stock at a conversion rate equal to 80% of the conversion rate
applicable under Note 1. The issuance of Note 1 requires the approval of the
shareholders of Buyer, which approval will be sought at a meeting of the
shareholders scheduled for April 14, 1997. In the event that the shareholders
of the Buyer fail to approve the issuance of Note 1, Buyer is required to
deliver an additional 118,850 shares of its common stock to Registrant by no
later than April 30, 1997.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
Robert W. Lautz, Jr. has resigned as a member of the Board of
Directors of Registrant, as its Chairman and as its Chief Executive Officer,
all effective as of March 31, 1997. In addition, Mr. Lautz also resigned from
all other positions he held with Registrant's subsidiaries. Andre A. Blay, an
outside member of Registrant's Board of Directors, has been appointed as the
new Chairman of Registrant's Board of Directors, and Graeme R. Jenner has been
appointed as Registrant's new Chief Executive Officer, all effective April 1,
1997. Prior to his appointment as the Chief Executive Officer of Registrant,
Mr. Jenner had been Registrant's Chief Operating Officer.
Commencing on April 1, 1997, the outstanding shares of
Registrant's Series C Preferred Stock became convertible into shares of
Registrant's common stock. As of April 1, 1997, a total of 789 shares of
Series C Preferred Stock were outstanding. The number of shares that can be
converted at any time by any holder of Series C Preferred Stock is subject to
certain limits. In general, these limits provide that a holder of the Series C
Preferred Stock may not convert more than 5% of his holdings into common stock
during any two week period. The number of shares of Common Stock
2
<PAGE> 3
issuable upon the conversion of a share of Series C Preferred Stock (the
"Conversion Rate") is equal to (x) the sum of the original issue price of the
shares ($10,000) and the accretion (at 8% per annum beginning January 1, 1997)
through the conversion date, (y) divided by $5.00. The $5.00 price is subject
to adjustment for stock splits, stock dividends, reorganizations and other
similar events. The outstanding shares of Series C Preferred Stock were issued
on February 14, 1997 and on March 31, 1997 in exchange for previously issued
shares of Series A Preferred Stock. The foregoing exchange was approved by the
stockholders of Registrant at a special meeting of stockholders held on February
13, 1997.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired:
Not applicable.
(b) Pro forma financial information:
Not applicable.
(c) Exhibits:
10.1 Stock Purchase Agreement, dated as of February 14, 1997,
by and among Limt Local Insertion Media Technology AB and
IndeNet, Inc.
10.2 First Amendment (Dated March 21, 1997) to Stock Purchase
Agreement (Dated as of February 14, 1997)
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not applicable.
3
<PAGE> 4
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 thereunto duly authorized.
INDENET, INC.
(Registrant)
Date: April 8, 1997 By: /s/ Richard Parent
______________________________
Richard Parent
Chief Financial Officer
4
<PAGE> 5
EXHIBIT INDEX
Exhibit Page No.
10.1 Stock Purchase Agreement, dated as of February 14,
1997, by and among Limt Local Insertion Media
Technology AB and IndeNet, Inc.
10.2 First Amendment (Date March 21, 1997) to Stock Purchase
Agreement (Dated as of February 7 14, 1997)
5
<PAGE> 1
EXHIBIT 10.1
===============================================================================
STOCK PURCHASE AGREEMENT
DATED AS OF FEBRUARY 14, 1997
BY AND AMONG
LIMT LOCAL INSERTION MEDIA TECHNOLOGY AB (PUBL)
AND
INDENET, INC.
RESPECTING THE ACQUISITION OF STOCK IN
CHANNELMATIC, INC.
===============================================================================
<PAGE> 2
<TABLE>
<S> <C> <C>
ARTICLE I SALE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Sale of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Escrow; Disposition of Deposit . . . . . . . . . . . . . . . . . . . . . 2
(a) Establishment of Escrow . . . . . . . . . . . . . . . . . . . . . 2
(b) Indemnification of Escrow Holder . . . . . . . . . . . . . . . . 2
(c) Nonliability of Escrow Holder . . . . . . . . . . . . . . . . . . 2
(d) Failure to Close . . . . . . . . . . . . . . . . . . . . . . . . 3
(e) Default by Purchaser . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II REPRESENTATIONS OF THE STOCKHOLDER . . . . . . . . . . . . . . . . . . . . . . . . 4
2. Representations of the Stockholder . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Ownership of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Status of Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Subsidiaries and Investments . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Financial Statements and No Material Changes . . . . . . . . . . . . . . 5
2.7 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.8 Title to Properties; Encumbrances . . . . . . . . . . . . . . . . . . . . 5
2.9 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.10 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.12 Restrictive Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.15 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.17 Intellectual Properties . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Patents and Patent Rights . . . . . . . . . . . . . . . . . . . . 9
(b) Trade Secrets . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.18 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.19 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.20 Employment Relations . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.21 Environmental Laws and Regulations . . . . . . . . . . . . . . . . . . . 11
2.22 Interests in Clients, Suppliers, Etc. . . . . . . . . . . . . . . . . . . 12
2.23 Bank Accounts, Powers of Attorney and Compensation of Employees . . . . . 12
2.24 No Changes Since Balance Sheet Date . . . . . . . . . . . . . . . . . . . 12
2.25 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.26 No Default by Stockholder . . . . . . . . . . . . . . . . . . . . . . . . 13
2.27 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . 13
2.28 Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.29 Copies of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE III REPRESENTATIONS OF THE PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . 13
3. Representations of the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Restrictive Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.3 Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.5 Financial Statements and No Material Changes . . . . . . . . . . . . . . 14
3.6 Placement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV COVENANTS PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4. Conduct of Business of the Company . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) Preservation of Relationships . . . . . . . . . . . . . . . . . . . 15
(b) Corporate Matters . . . . . . . . . . . . . . . . . . . . . . . . . 15
(c) Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . 15
(d) Employees and Compensation . . . . . . . . . . . . . . . . . . . . . 15
(e) New Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(f) Dividends and Distributions . . . . . . . . . . . . . . . . . . . . 16
(g) Liabilities and Claims . . . . . . . . . . . . . . . . . . . . . . . 16
(h) Existing Agreements . . . . . . . . . . . . . . . . . . . . . . . . 16
(i) Consents; Consultation with Purchaser . . . . . . . . . . . . . . . 16
4.2 Exclusive Dealing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.4 Review of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Review of the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE V CONDITIONS TO PURCHASER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . 18
5. Conditions to Purchaser's Obligations . . . . . . . . . . . . . . . . . . . . . . 18
5.1 Opinion of the Company's Counsel . . . . . . . . . . . . . . . . . . . . 18
5.2 Good Standing and Other Certificates . . . . . . . . . . . . . . . . . . 18
5.3 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . 18
5.4 Truth of Representations and Warranties . . . . . . . . . . . . . . . . . 18
5.5 Killion Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.6 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . 19
5.7 No Litigation Threatened . . . . . . . . . . . . . . . . . . . . . . . . 19
5.8 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.9 Intra-Company Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.10 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.11 Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.12 NCC Contract Performance . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI CONDITIONS TO THE STOCKHOLDER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . 19
6. Conditions to the Stockholder's Obligations . . . . . . . . . . . . . . . . . . . 20
6.1 Opinion of the Purchaser's Counsel . . . . . . . . . . . . . . . . . . . 20
6.2 Truth of Representations and Warranties . . . . . . . . . . . . . . . . . 20
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
6.3 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . 20
6.5 Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7. Obligations at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.1 Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.2 Stockholder's Obligations at Closing . . . . . . . . . . . . . . . . . . 21
7.3 Purchaser's Obligations at Closing . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII OBLIGATIONS AFTER CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8. Post-Closing Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1 Seller's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2 Killion Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(a) Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(b) Renegotiation . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3 Repurchase Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.4 Future Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.5 Source Code Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.6 Purchaser's Indemnification . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IX TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.1 Default by Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.2 Failure to Close . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10. Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.1 Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . 26
10.2 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.5 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.6 Captions; Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.9 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.12 Litigation Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.13 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.15 Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
-iii-
<PAGE> 5
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("Agreement") dated as of February 14, 1997,
by and between Limt Local Insertion Media Technology AB, a Swedish corporation
("Purchaser"), and IndeNet, Inc., a Delaware corporation, ("Stockholder"),
being the majority shareholder of Channelmatic, Inc., a Delaware corporation
(the "Company").
STATEMENT OF BACKGROUND INFORMATION
A. Stockholder owns 666,667 shares of common stock of the Company
(the "Stock"), comprising 67% of the outstanding shares of such common stock.
Killer Barn, Inc., a California corporation, owns 333,333 shares of the common
stock ("Killion Shares"), comprising the remaining 33% of the outstanding
shares. Stockholder holds an option to purchase the Killion Shares ("Killion
Option");
B. Stockholder desires to sell, and Purchaser desires to purchase,
the Stock pursuant to this Agreement. Stockholder will agree to exercise the
Killion Option at the direction of Purchaser and Purchaser will purchase the
Killion Shares from Stockholder;
C. Purchaser, with the assistance of D. Carnegie AB, has conducted a
sale of its common stock in a private placement transaction (the "Placement");
and
D. It is the intention of the parties hereto that, upon consummation
of the purchase and sale of the Stock pursuant to this Agreement, and the
acquisition of the Killion Shares upon the exercise of the Killion Option,
Purchaser shall own all of the outstanding shares of capital stock of the
Company.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties contained in this agreement, the parties agree
as follows:
ARTICLE I
SALE OF SHARES
1. Sale of Shares. Subject to the terms and conditions herein
stated, Stockholder agrees to sell, assign, transfer and deliver to Purchaser
on the Closing Date, and Purchaser agrees to purchase from Stockholder on the
Closing Date, the Stock:
1.1 Purchase of Stock. Subject to the terms and
conditions herein stated, Stockholder agrees to sell, assign, transfer and
deliver to Purchaser on the Closing Date, and Purchaser agrees to purchase from
Stockholder on the Closing Date, the Stock.
-1-
<PAGE> 6
(a) Price. In full consideration for the
purchase by Purchaser of the Stock, Purchaser shall pay to Stockholder cash in
the aggregate amount of Seven Million Dollars ($7,000,000) (all references to
currency herein are to United States Dollars unless clearly indicated to the
contrary), and common stock in Purchaser, computed and paid as follows:
(1) Cash Portion. The cash portion of the
purchase price shall be paid to Stockholder as follows:
(i) Deposit. Upon execution of
this Agreement, the parties shall open an escrow at Chicago Title Company,
____________________ ("Escrow Holder"), and Purchaser shall deposit into escrow
cash in the amount of Five Hundred Thousand Dollars ($500,000.00) ("Deposit").
The Deposit shall be invested by Escrow Holder in a federally-insured
interest-bearing account with any interest accruing thereon to be paid or
credited to Purchaser. At the Closing, Escrow Holder shall deliver the Deposit
(including accrued interest) to Stockholder to be applied to the purchase
price. If for any reason the Closing fails to occur, the Deposit shall be
returned to Purchaser or paid to Stockholder, as provided in Section 1.2,
below.
(ii) Balance. At Closing, Purchaser
shall deliver a bank cashier's check or other immediately available funds,
payable to the order of Stockholder the balance of the cash portion of the
purchase price.
(2) Share Portion. Purchaser shall deliver
to Stockholder Six Hundred Thousand (600,000) shares of Purchaser's common
stock (the "LIMT Shares"), at an issue price of SEK 86.33.
1.2 Escrow; Disposition of Deposit.
(a) Establishment of Escrow. Written escrow
instructions in accordance with the terms of this Agreement shall be prepared
by parties jointly, and such instructions shall be signed by the parties and
delivered to Escrow Holder within five (5) days following the execution of this
Agreement.
(b) Indemnification of Escrow Holder. If this
Agreement or any matter relating hereto shall become the subject of any
litigation or controversy, Purchaser and Stockholder agree, jointly and
severally, to hold Escrow Holder free and harmless from any loss or expense,
including attorneys' fees, that may be suffered by it by reason thereof. In
the event conflicting demands are made or notices served upon Escrow Holder
with respect to this Agreement, the Purchaser and Stockholder expressly agree
that Escrow Holder shall be entitled to file a suit in interpleader and obtain
an order from the court requiring Purchaser and Stockholder to interplead and
litigate their several claims and rights among themselves. Upon the filing of
the action in interpleader, Escrow Holder shall be fully released and
discharged from any obligations imposed upon it by this Agreement.
(c) Nonliability of Escrow Holder. Escrow Holder
shall not be liable for the sufficiency or correctness as to form, manner,
execution or validity of any instrument deposited with it, nor as to the
identity, authority or rights of any
-2-
<PAGE> 7
person executing such instrument, nor for failure to comply with any of the
provisions of any agreement, contract or other instrument filed with Escrow
Holder or referred to herein. Escrow Holder's duties hereunder shall be
limited to the safekeeping of such money, instruments or other documents
received by it as Escrow Holder, and for their disposition in accordance with
the terms of this Agreement.
(d) Failure to Close. In the event the
conditions specified in Articles V and VI are not satisfied or waived and the
Closing fails to occur due to the default of Purchaser, the Deposit, including
any accrued interest, shall be paid over to Stockholder within two (2) business
days after Escrow Holder's receipt of written notice from Stockholder of the
failure to close. In the event the conditions specified in Articles V and VI
are not satisfied or waived and the Closing fails to occur for any reason other
than the default of Purchaser, the Deposit, including any accrued interest,
shall be returned to Purchaser within two (2) business days after Escrow
Holder's receipt of written notice from Purchaser of the failure to close.
Escrow fees shall be borne one-half (1/2) by Stockholder and one-half (1/2) by
Purchaser and all other charges shall be borne by the party incurring same.
(e) DEFAULT BY PURCHASER. BY PLACING THEIR
INITIALS HERE:
_______ PURCHASER'S INITIALS _______ STOCKHOLDER'S INITIALS
_______ _______
PURCHASER AND STOCKHOLDER MUTUALLY AGREE AS FOLLOWS: IN THE
EVENT THE CLOSING AND THE CONSUMMATION OF THE TRANSACTION HEREIN CONTEMPLATED
DOES NOT OCCUR AS HEREIN PROVIDED BY REASON OF ANY DEFAULT OF PURCHASER,
PURCHASER AND STOCKHOLDER AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY
DIFFICULT TO ESTIMATE THE DAMAGES WHICH STOCKHOLDER MAY SUFFER. THEREFORE
PURCHASER AND STOCKHOLDER DO HEREBY AGREE THAT A REASONABLE ESTIMATE OF THE
TOTAL NET DETRIMENT THAT STOCKHOLDER WOULD SUFFER IN THE EVENT THAT PURCHASER
DEFAULTS AND FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY IS AND SHALL BE, AS
STOCKHOLDER'S SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY), AN
AMOUNT EQUAL TO THE DEPOSIT (WHICH INCLUDES ANY ACCRUED INTEREST THEREON).
SAID AMOUNT SHALL BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR THE BREACH OF
THIS AGREEMENT BY PURCHASER, ALL OTHER CLAIMS TO DAMAGES OR OTHER REMEDIES
BEING HEREIN EXPRESSLY WAIVED BY STOCKHOLDER. THE PAYMENT OF SUCH AMOUNT AS
LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE
MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO
CONSTITUTE LIQUIDATED DAMAGES TO STOCKHOLDER PURSUANT TO CALIFORNIA CIVIL CODE
SECTIONS 1671, 1676 AND 1677. STOCKHOLDER HEREBY WAIVES THE PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 3389. UPON DEFAULT BY PURCHASER, THIS AGREEMENT
SHALL BE TERMINATED AND NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR
OBLIGATIONS HEREUNDER EXCEPT FOR THE RIGHT OF STOCKHOLDER TO COLLECT SUCH
LIQUIDATED DAMAGES.
-3-
<PAGE> 8
ARTICLE II
REPRESENTATIONS OF THE STOCKHOLDER
2. Representations of the Stockholder. Stockholder represents,
warrants and agrees that the statements contained in this Article are true,
correct and complete as of the date of this Agreement, except as set forth in
the Disclosure Schedules (the various schedules referenced in this Article and
in Article III to be prepared and attached to this Agreement are referred to
herein as the "Disclosure Schedules"). The Disclosure Schedules described in
this Article shall be prepared by Stockholder and delivered to Purchaser on or
before February 21, 1997 ("Disclosure Date").
2.1 Ownership of Stock. Except as set forth in Schedule
2.1, Stockholder is the lawful owner of the Stock, free and clear of all liens,
encumbrances, restrictions and claims of every kind; Stockholder has full legal
right, power and authority to enter into this Agreement and to sell, assign,
transfer and convey the Stock pursuant to this Agreement; the delivery to
Purchaser of the Stock pursuant to the provisions of this Agreement will
transfer to Purchaser valid title thereto, free and clear of all liens,
encumbrances, restrictions and claims of every kind.
2.2 Status of Stockholder. Stockholder is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Stockholder has the power to own its property and to carry
on its business as now being conducted. Stockholder is duly qualified to do
business and is in good standing in the state of California.
2.3 Existence and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has the power to own its property
and to carry on its business as now being conducted. The Company is duly
qualified to do business and is in good standing in the states of California
and [list relevant states and foreign jurisdictions], which are the only
jurisdictions in which the character or location of the properties owned or
leased by the Company or the nature of the business conducted by the Company
makes such qualification necessary.
2.4 Capital Stock. The Company has an authorized
capitalization consisting of 1,000,000 shares of common stock, $.001 par value,
of which 1,000,000 shares are issued and outstanding and no shares are held in
the Company's treasury. All such outstanding shares have been duly authorized
and validly issued and are fully paid and nonassessable. There are no
outstanding options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, plans or other agreements of any character providing for
the purchase, issuance or sale of any shares of the capital stock of the
Company, other than as contemplated by this Agreement.
2.5 Subsidiaries and Investments. The Company does not
own, directly or indirectly, any capital stock or other equity or ownership or
proprietary
-4-
<PAGE> 9
interest in any corporation, partnership, association, trust, joint venture or
other entity, except as set forth in Schedule 2.5.
2.6 Financial Statements and No Material Changes.
Stockholder has heretofore furnished the Purchaser with the unaudited balance
sheet of the Company as of December 31, 1996, and the related unaudited
statements of income, shareholders' equity and other supporting schedules,
reflecting operations from the inception of the Company through the period then
ended (the balance sheet and other financial statements of the Company as at
December 31, 1996, are hereinafter referred to as the "Balance Sheet." A copy
of the Balance Sheet is attached hereto as Exhibit "1"). Such financial
statements, including the footnotes thereto, except as indicated therein, have
been prepared in accordance with United States generally accepted accounting
principles consistently followed throughout the periods indicated. The Balance
Sheet fairly presents the financial condition of the Company at the date
thereof and the related statements of income, shareholders' equity and changes
in financial position fairly present the results of the operations of the
Company and the changes in its financial position for the period indicated.
Since December 31, 1996 (the "Balance Sheet Date"), there has been (i) no
material adverse change in the assets or liabilities, or in the business or
condition, financial or otherwise, or in the results of operations or
prospects, of the Company, whether as a result of any legislative or regulatory
change, revocation of any license or rights to do business, fire, explosion,
accident, casualty, labor trouble, flood, drought, riot, storm, condemnation or
act of God or other public force or otherwise and (ii) no change in the assets
or liabilities, or in the business or condition, financial or otherwise, or in
the results of operations or prospects, of the Company except in the ordinary
course of business; and to the best knowledge, information and belief of
Stockholder, no fact or condition exists or is contemplated or threatened which
might cause such a change in the future.
2.7 Books and Records. The minute book of the Company
contains accurate records of all meetings of, and corporate action taken by
(including action taken by written consent) the shareholders and Board of
Directors of the Company. Except as set forth in Schedule 2.7 attached hereto,
the Company does not have any of its records, systems, controls, data or
information recorded, stored, maintained, operated or otherwise wholly or
partly dependent upon or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of the Company.
2.8 Title to Properties; Encumbrances. Except as set
forth in Schedule 2.8 attached hereto and except for properties and assets
reflected in the Balance Sheet or acquired since the Balance Sheet Date which
have been sold or otherwise disposed of in the ordinary course of business, the
Company has good, valid and marketable title to (a) all of its material
properties and assets (real and personal, tangible and intangible) including,
without limitation, all of the properties and assets reflected in the Balance
Sheet, except as indicated in the notes thereto, and (b) all of the properties
and assets purchased by the Company since the Balance Sheet Date; in each case
subject to no encumbrance, lien, charge or other restriction of any kind or
character, except for (i) liens reflected in the Balance Sheet, (ii) liens
consisting of zoning or planning restrictions, easements, permits and other
restrictions or limitations
-5-
<PAGE> 10
on the use of real property or irregularities in title thereto which do not
materially detract from the value of, or impair the use of, such property by
the Company in the operation of its business, (iii) liens for current taxes,
assessments or governmental charges or levies on property not yet due and
delinquent and (iv) liens described on Schedule 2.8 attached hereto (liens of
the type described in clause (i), (ii) and (iii) above are hereinafter
sometimes referred to as "Permitted Liens").
2.9 Real Property. Schedule 2.9 attached hereto contains
an accurate and complete list of all real property owned in whole or in part by
the Company and includes the name of the record title holder thereof and a list
of all indebtedness secured by a lien, mortgage or deed of trust thereon. The
Company has good and marketable title in fee simple to all the real property
owned by it, free and clear of all encumbrances, liens, charges or other
restrictions of any kind or character, except for Permitted Liens. All of the
buildings, structures and appurtenances situated on the real property owned in
whole or in part by the Company are in good operating condition and in a state
of good maintenance and repair, are adequate and suitable for the purposes for
which they are presently being used and, with respect to each, the Company has
adequate rights of ingress and egress for operation of the business of the
Company in the ordinary course. None of such buildings, structures or
appurtenances (or any equipment therein), nor the operation or maintenance
thereof, violates any restrictive covenant or any provision of any federal,
state or local law, ordinance, rule or regulation, or encroaches on any
property owned by others. Except as set forth in Schedule 2.9, no condemnation
proceeding is pending or, to the best knowledge, information and belief of
Stockholder, threatened which would preclude or impair the use of any such
property by the Company for the purposes for which it is currently used.
2.10 Leases. Schedule 2.10 attached hereto contains an
accurate and complete list and description of the terms of all leases to which
the Company is a party (as lessee or lessor). Each lease set forth in Schedule
2.10 (or required to be set forth in Schedule 2.10) is in full force and
effect; all rents and additional rents due to date on each such lease have been
paid; in each case, the lessee has been in peaceable possession since the
commencement of the original term of such lease and is not in default
thereunder and no waiver, indulgence or postponement of the lessee's
obligations thereunder has been granted by the lessor; and there exists no
event of default or event, occurrence, condition or act (including the purchase
of the Stock hereunder) which, with the giving of notice, the lapse of time or
the happening of any further event or condition, would become a default under
such lease. The Company is not in violation of any of the terms or conditions
under any such lease in any material respect, and, to the best knowledge,
information and belief of Stockholder, all of the covenants to be performed by
any other party under any such lease have been fully performed. The property
leased by the Company is in a state of good maintenance and repair and is
adequate and suitable for the purposes for which it is presently being used.
2.11 Material Contracts. Schedule 2.11 lists all
contracts of the Company involving $25,000 or more, including without
limitation all contracts for the provision of goods or services to customers
entered into, completed or contemplated within the twelve (12) months preceding
the date of this Agreement. Except as set
-6-
<PAGE> 11
forth in Schedule 2.11 attached hereto, the Company is not bound by (a) any
agreement, contract or commitment relating to the employment of any person by
the Company, or any bonus, deferred compensation, pension, profit sharing,
stock option, employee stock purchase, retirement or other employee benefit
plan, (b) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other distribution in
respect of its capital stock, (c) any agreement, contract or commitment
relating to capital expenditures, (d) any loan or advance to, or investment in,
any individual, partnership, joint venture, corporation, trust, unincorporated
organization, government or other entity (each a "Person") or any agreement,
contract or commitment relating to the making of any such loan, advance or
investment, (e) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any person (other than the endorsement of
negotiable instruments for collection in the ordinary course of business), (f)
any management service, consulting or any other similar type contract, (g) any
agreement, contract or commitment limiting the freedom of the Company to engage
in any line of business or to compete with any Person, (h) any agreement,
contract or commitment not entered into in the ordinary course of business
which involves $25,000 or more and is not cancelable without penalty within
thirty (30) days, (i) any agreement, contract or commitment which is or might
reasonably be expected to become subject to cancellation or termination due to
the transactions contemplated by this Agreement, or (j) any agreement, contract
or commitment which might reasonably be expected to have a potential adverse
impact on the business or operations of the Company. Each contract or
agreement set forth in Schedule 2.11 (or required to be set forth in Schedule
2.11) is in full force and effect and there exists no default or event of
default or event, occurrence, condition or act (including the purchase of the
Stock hereunder) which, with the giving of notice, the lapse of time or the
happening of any other event or condition, would become a default or event of
default thereunder. The Company has not violated any of the terms or
conditions of any contract or agreement set forth in Schedule 2.11 (or required
to be set forth in Schedule 2.11) in any material respect, and, to the best
knowledge, information and belief of Stockholder, all of the covenants to be
performed by any other party thereto have been fully performed. Each and every
contract or agreement between Company and Stockholder has been at arm's length
and each party thereto has received fair and adequate consideration.
2.12 Restrictive Documents. Except as set forth in
Schedule 2.12 attached hereto, neither the Company nor Stockholder is subject
to, or a party to, any charter, by-law, mortgage, lien, lease, license, permit,
agreement, contract, instrument, law, rule, ordinance, regulation, order,
judgment or decree, or any other restriction of any kind or character, which
materially and adversely affects the business practices, operations or
condition of the Company or any of its assets or property, or which would
prevent consummation of the transactions contemplated by this Agreement,
compliance by Stockholder with the terms, conditions and provisions hereof or
the continued operation of the Company's business after the date hereof or the
Closing Date (as hereinafter defined) on substantially the same basis as
heretofore operated or which would restrict the ability of the Company to
acquire any property or conduct business in any area.
2.13 Litigation. Except as set forth in Schedule 2.13
attached hereto, there is no action, suit, proceeding at law or in equity,
arbitration or administrative or
-7-
<PAGE> 12
other proceeding by or before (or to the best knowledge, information and belief
of Stockholder, any investigation by) any governmental or other instrumentality
or agency, pending, or, to the best knowledge, information and belief of
Stockholder, threatened, against or affecting the Company, or any of its
properties or rights which could materially and adversely affect the right or
ability of the Company to carry on its business as now conducted, or which
could materially and adversely affect the condition, whether financial or
otherwise, or properties of the Company; and Stockholder does not know of any
valid basis for any such action, proceeding or investigation. The Company is
not subject to any judgment, order or decree entered in any lawsuit or
proceeding which may have a material adverse effect on any of its operations,
business practices or on its ability to acquire any property or conduct
business in any area.
2.14 Taxes. The Company has filed or caused to be filed,
within the times and within the manner prescribed by law, all federal, state,
local and foreign tax returns and tax reports which are required to be filed
by, or with respect to, the Company or any of its operations. Such returns and
reports reflect accurately all liability for taxes of the Company for the
periods covered thereby. All federal, state, local and foreign income,
profits, franchise, sales, use, occupancy, excise and other taxes and
assessments (including interest and penalties) payable by, or due from, the
Company have been fully paid or adequately disclosed and fully provided for in
the books and financial statements of the Company. No examination of any tax
return of the Company is currently in progress. There are no outstanding
agreements or waivers extending the statutory period of limitation applicable
to any tax return of the Company.
2.15 Liabilities. The Company has no outstanding claims,
liabilities or indebtedness, contingent or otherwise, except as set forth in
the Balance Sheet or referred to in the footnotes thereto, other than
liabilities incurred subsequent to the Balance Sheet Date in the ordinary
course of business not involving borrowings by the Company. The Company is not
in default in respect of the terms or conditions of any indebtedness. As of
the date of this Agreement, the Company is indebted to Stockholder in the
amount of $831,145.00, including accrued interest through December 31, 1996
("Stockholder Loan"). As of December 31, 1996, Stockholder is indebted to the
Company pursuant to that certain promissory note dated as November 27, 1995, in
the original principal amount of $2,995,000, in the amount of $559,236,
including accrued interest ("Capital Loan"). At closing, as much of the
Stockholder Loan as necessary to pay the Capital Loan in full shall, including
interest through the date of Closing, be applied in payment of the Capital Loan
and the balance of the Stockholder Loan shall be assigned to Purchaser pursuant
to an assignment in the form attached hereto as Exhibit "2."
2.16 Insurance. Set forth in Schedule 2.16 attached
hereto is a complete list of insurance policies which the Company maintain with
respect to its business, properties or employees. Such policies are in full
force and effect and are free from any right of termination on the part of the
insurance carriers. Such policies, with respect to their amounts and types of
coverage, are adequate to insure fully against risks to which the Company, and
its property and assets are normally exposed in the operation of its business.
Since January 1, 1996, there has not been any
-8-
<PAGE> 13
material adverse change in the Company's relationship with its insurers or in
the premiums payable pursuant to such policies.
2.17 Intellectual Properties. Schedule 2.17 is a complete
schedule of all Intellectual Properties (as hereinafter defined) owned by the
Company or in which it has any rights, licenses, or immunities. The operation
of the business of the Company requires no rights under Intellectual Property
other than rights listed on Schedule 2.17 and rights granted to the Company
pursuant to agreements listed on Schedule 2.17. The business of the Company,
including the business as conducted by the predecessor of the Company, has made
use of no Intellectual Property rights other than rights under Intellectual
Property listed on Schedule 2.17 and rights granted to the Company pursuant to
agreements listed on Schedule 2.17. Except as otherwise set forth on Schedule
2.17, the Company owns all right, title and interest in the Intellectual
Property listed on Schedule 2.17 including, without limitation, exclusive
rights to use and license the same. Each item of Intellectual Property listed
on Schedule 2.17 has been duly registered with, filed in, or issued by the
appropriate domestic or foreign governmental agency, to the extent required,
and each such registration, filing and issuance remains in full force and
effect. Except as set forth on Schedule 2.17, no claim adverse to the
interests of the Company in the Intellectual Property or agreements listed in
Schedule 2.17 has been made in litigation. To the best knowledge, information
and belief of Stockholder, no such claim has been threatened or asserted, no
basis exists for any such claim, and no Person has infringed or otherwise
violated the Company's rights in any of the Intellectual Property or agreements
listed on Schedule 2.17. Except as set forth on Schedule 2.17, no litigation
is pending wherein the Company is accused of infringing or otherwise violating
the Intellectual Property right of another, or of breaching a contract
conveying rights under Intellectual Property. To the best knowledge,
information and belief of Stockholder, no such claim has been asserted or
threatened against the Company, nor are there any facts that would give rise to
such a claim. For purposes of this Agreement, "Intellectual Property" means
domestic and foreign patents, patent applications, registered and unregistered
trade marks and service marks, registered and unregistered copyrights, computer
programs, data bases, trade secrets and proprietary information.
(a) Patents and Patent Rights. The patents and
applications for patents listed in Schedule 2.17 are valid and in full force
and effect and are not subject to any taxes, maintenance fees, or actions
falling due within ninety (90) days after the Closing Date. Except as set
forth in Schedule 2.17, there have been no interference actions or other
judicial, arbitration, or other adversary proceedings concerning the patents or
applications for patents listed in Schedule 2.17. The manufacture, use, or
sale of the inventions, models, designs, and systems covered by the patents and
applications for patents listed in Schedule 2.17 do not violate or infringe on
any patent or any proprietary or personal right of any person, firm, or
corporation; and the Company has not infringed and is not now infringing on any
patent or other right belonging to any person, firm, or corporation. The
Company have the right and authority to use and to transfer to Purchaser such
inventions, trade secrets, processes, models, designs, and formulas as are
necessary to enable it to conduct and to continue to conduct all phases of its
businesses in the manner
-9-
<PAGE> 14
presently conducted by it, and that use does not, and will not, conflict with,
infringe on, or violate any patent or other rights of others.
(b) Trade Secrets. Schedule 2.17 contains a true
and complete list, without extensive or revealing descriptions, of the
Company's trade secrets, including all secret formulas, customer lists,
processes, know-how, computer programs and routines, and other technical data.
The specific location of each trade secret's documentation, including its
complete description, specifications, charts, procedures, and other material
relating to it, is also set forth with it in that exhibit. Each trade secret's
documentation is current, accurate, and sufficient in detail and content to
identify and explain it and to allow its full and proper use by Purchaser.
The Company has taken all reasonable security measures to protect the secrecy,
confidentiality, and value of these trade secrets; any of its employees and any
other persons who, either alone or in concert with others, developed, invented,
discovered, derived, programmed, or designed these secrets, or who have
knowledge of or access to information relating to them, have been put on notice
and, if appropriate, have entered into agreements that these secrets are
proprietary to the Company and not to be divulged or misused. All these trade
secrets are presently valid and protectible and are not part of the public
knowledge or literature; nor to Stockholder's knowledge have they been used,
divulged, or appropriated for the benefit of any past or present employees or
other persons, or to the detriment of the Company.
2.18 Compliance with Laws. The Company is in compliance
in all material respects with all applicable laws, regulations, orders,
judgments and decrees.
2.19 Accounts Receivable. The amount of all accounts
receivable, unbilled invoices and other debts due or recorded in the respective
records and books of account of the Company as being due to the Company as at
the Closing Date (less the amount of any provision or reserve therefor made in
the respective records and books of account of the Company) will be good and
collectible in full in the ordinary course of business and in any event not
later than 60 days after the Closing Date; and none of such accounts receivable
or other debts is or will at the Closing Date be subject to any counterclaim or
set-off except to the extent of any such provision or reserve. There has been
no material adverse change since the Balance Sheet Date in the amount of
accounts receivable or other debts due the Company or the allowances with
respect thereto, or accounts payable of the Company from that reflected in the
Balance Sheet.
2.20 Employment Relations. Schedule 2.20 attached hereto
is a list of all employment contracts and collective bargaining agreements, and
all pension, bonus, profit-sharing, stock option, or other agreements or
arrangements providing for employee remuneration or benefits to which the
Company is a party or by which the Company is bound. All these contracts and
arrangements are in full force and effect, and neither Company nor any other
party is in default under them. There have been no claims of defaults and, to
the best knowledge of Stockholder, there are no facts or conditions that if
continued, or on notice, will result in a default under these contracts or
arrangements. There is no pending or, to Stockholder's, knowledge, threatened
labor dispute, strike, or work stoppage affecting the Company's business.
Company has complied with all applicable laws for each of their employee
benefit plans,
-10-
<PAGE> 15
including the provisions of the Employee Retirement Income Security Act (ERISA)
if and to the extent applicable. There are no threatened or pending claims by
or on behalf of any such benefit plan, by or on behalf of any employee covered
under any such plan, or otherwise involving any such benefit plan, that allege
a breach of fiduciary duties or violation of other applicable state or federal
law, nor is there, to Stockholder's knowledge, any basis for such a claim.
Except as set forth in Schedule 2.20, the Company has not entered into any
severance or similar arrangement in respect of any present or former employee
that will result in any obligation, absolute or contingent, of Purchaser or
Company to make any payment to any present or former employee following
termination of employment.
2.21 Environmental Laws and Regulations. Schedule 2.21
attached hereto is a list of the following items: (a) the nature and quantities
of any Hazardous Materials (as defined below) generated, transported or
disposed of by the Company during the past three years (other than raw material
awaiting manufacturing work-in-process or finished goods and through the sale
of products in the ordinary course of business), together with a description of
the location of each such activity, and (b) a summary of the nature and
quantities of any Hazardous Materials that have been disposed of or found at
any site or facility owned or operated presently or at any previous time by the
Company (other than raw material awaiting manufacturing, work-in-processor
finished goods and through the sale of products in the ordinary course of
business). The Company is in compliance in all material respects with all
applicable federal, state and local laws and regulations relating to product
registration, pollution control and environmental contamination including, but
not limited to, all laws and regulations governing the generation, use,
collection, discharge, or disposal of Hazardous Materials and all laws and
regulations with regard to record keeping, notification and reporting
requirements respecting Hazardous Materials. Except as disclosed in Schedule
2.21 attached hereto, the Company has not been alleged to be in violation of,
and has not been subject to any administrative or judicial proceeding pursuant
to, such laws or regulations either now or any time during the past three
years. Except as disclosed in Schedule 2.21, there are no facts or
circumstances which the Company reasonably expects could form the basis for the
assertion of any Claim (as defined below) against the Company relating to
environmental matters including, but not limited to, any Claim arising from
past or present environmental practices asserted under CERCLA (as defined
below) and RCRA (as defined below), or any other federal, state or local
environmental statute, which the Company believes might have a material adverse
effect on the business, results of operations, financial condition or prospects
of the Company taken as a whole.
For purposes of this Section 2.21, the following
terms shall have the following meanings: (A) "Hazardous Materials" shall mean
materials defined as "hazardous substances," "hazardous wastes" or "solid
wastes" in (i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section Section 9601-9657, and any amendments
thereto ("CERCLA"), (ii) the Resource Conservation and Recovery Act, 42 U.S.C.
Section Section 6901-6987 and any amendments thereto ("RCRA"), and (iii) any
similar federal, state or local environmental statute; and (B) "Claim" shall
mean any and all claims, demands, causes of actions, suits, proceedings,
administrative proceedings, losses, judgments, decrees, debts, damages,
-11-
<PAGE> 16
liabilities, court costs, attorneys' fees and any other expenses incurred,
assessed or sustained by or against the Company.
2.22 Interests in Clients, Suppliers, Etc. Except as set
forth in Schedule 2.22, neither Stockholder nor any officer or director of the
Company possesses, directly or indirectly, any financial interest in, or is a
director, officer or employee of, any corporation, firm, association or
business organization which is a client, supplier, customer, lessor, lessee, or
competitor or potential competitor of the Company. Ownership of securities of
a company whose securities are registered under the Securities Exchange Act of
1934 not in excess of 1% of any class of such securities shall not be deemed to
be a financial interest for purposes of this Section 2.22.
2.23 Bank Accounts, Powers of Attorney and Compensation of
Employees. Set forth in Schedule 2.23 attached hereto is an accurate and
complete list showing (a) the name and address of each bank in which the
Company has an account or safe deposit box, the number of any such account or
any such box and the names of all persons authorized to draw thereon or to have
access thereto, (b) the names of all persons, if any, holding powers of
attorney from the Company and a summary statement of the terms thereof and (c)
the names of all persons whose compensation from the Company for the fiscal
year ended on the Balance Sheet Date exceeded an annualized rate of $50,000,
together with a statement of the full amount paid or payable to each such
person for services rendered during such fiscal year.
2.24 No Changes Since Balance Sheet Date. Since the
Balance Sheet Date, except as expressly contemplated hereby, the Company has
not (a) incurred any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except in the ordinary course of business,
(b) permitted any of its assets to be subjected to any mortgage, pledge, lien,
security interest, encumbrance, restriction or charge of any kind (other than
Permitted Liens), (c) sold, transferred or otherwise disposed of any assets
except in the ordinary course of business, (d) made any capital expenditure or
commitment therefor, except in the ordinary course of business, (e) declared or
paid any dividend or made any distribution on any shares of its capital stock,
or redeemed, purchased or otherwise acquired any shares of its capital stock or
any option, warrant or other right to purchase or acquire any such shares, (f)
made any bonus or profit sharing distribution or payment of any kind, (g)
increased its indebtedness for borrowed money, except current borrowings from
banks in the ordinary course of business, or made any loan to any Person, (h)
written off as uncollectible any notes or accounts receivable, except
write-offs in the ordinary course of business charged to applicable reserves,
none of which individually or in the aggregate is material to the Company, (i)
granted any increase in the rate of wages, salaries, bonuses or other
remuneration of any executive employee or other employees, except in the
ordinary course of business, (j) cancelled or waived any claims or rights of
substantial value, (k) made any change in any method of accounting or auditing
practice, (1) otherwise conducted its business or entered into any transaction,
except in the usual and ordinary manner and in the ordinary course of business,
or (m) agreed, whether or not in writing, to do any of the foregoing.
2.25 Disclosure. None of this Agreement, the financial
statements referred to in Section 2.6 hereof (including the footnotes thereto),
any Schedule, Exhibit or certificate attached hereto or delivered in accordance
with the terms hereof or any
-12-
<PAGE> 17
document or statement in writing which has been supplied by or on behalf of
Stockholder or by any of the Company's directors or officers in connection with
the transactions contemplated by this Agreement contains any untrue statement
of a material fact, or omits any statement of a material fact necessary in
order to make the statements contained herein or therein not misleading.
2.26 No Default by Stockholder. Except as set forth in
Schedule 2.26, Stockholder have performed each and every agreement, covenant
and action to be performed by it under that certain Asset Purchase and
Contribution Agreement, dated as of September 11, 1995, by which Stockholder
acquired a majority interest in the assets of Company, and in each and every
document provided for therein, including the Killion Option. Each such
agreement is in full force and effect, or has been fully performed, and there
exists no default or event of default or event, occurrence, condition or act
which, with the giving of notice, the lapse of time or the happening of any
other event or condition, would become a default or event of default
thereunder. Stockholder has not violated any of the terms or conditions of the
Killion Option in any material respect.
2.27 Broker's or Finder's Fees. No agent, broker, person
or firm acting on behalf of Stockholder or the Company is, or will be, entitled
to any commission or broker's or finder's fees from Company or Purchaser, or
from any Person controlling, controlled by or under common control with Company
or Purchaser, in connection with any of the transactions contemplated by this
Agreement.
2.28 Purchase for Investment. Stockholder will acquire
the Purchaser's common stock for its own account for investment and not with a
view toward any resale or distribution thereof; provided, however, that the
disposition of Stockholder's property shall at all times remain within the sole
control of Stockholder.
2.29 Copies of Documents. Stockholder have caused to be
made available for inspection and copying by Purchaser and its advisers, true,
complete and correct copies of all documents referred to in this Article II or
in any Disclosure Schedule attached hereto.
ARTICLE III
REPRESENTATIONS OF THE PURCHASER
3. Representations of the Purchaser. Purchaser represents,
warrants and agrees that the statements contained in this Article are true,
correct and complete as of the date of this Agreement, except as set forth in
the Disclosure Schedules. The Disclosure Schedules described in this Article
shall be prepared by Purchaser and delivered to Stockholder on or before the
Disclosure Date:
3.1 Existence and Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the Kingdom of Sweden. Purchaser has the corporate power and authority
to make, execute, deliver and perform this Agreement, and this Agreement has
been duly authorized and approved by all required corporate action of
Purchaser.
-13-
<PAGE> 18
3.2 Restrictive Documents. Purchaser is not subject to
any charter, by-law, mortgage, lien, lease, agreement, instrument, order, law,
rule, regulation, judgment or decree, or any other restriction of any kind or
character, which would prevent consummation of the transactions contemplated by
this Agreement.
3.3 Purchase for Investment. Purchaser will acquire the
Stock for its own account for investment and not with a view toward any resale
or distribution thereof; provided, however, that the disposition of Purchaser's
property shall at all times remain within the sole control of Purchaser.
3.4 Capital Stock. Purchaser has an authorized
capitalization consisting of a minimum of 2,000,000 and a maximum of 8,000,000
shares of common stock, SEK 1 par value, of which 2,321,250 shares are issued
and outstanding. All such outstanding shares have been duly authorized and
validly issued and are fully paid and nonassessable. Except as set forth in
Schedule 3.4 attached hereto, there are no outstanding options, warrants,
rights, calls, commitments, conversion rights, rights of exchange, plans or
other agreements of any character providing for the purchase, issuance or sale
of any shares of the capital stock of the Purchaser, other than as contemplated
by this Agreement.
3.5 Financial Statements and No Material Changes.
Purchaser has heretofore furnished Stockholder with the balance sheet of the
Purchaser as of December 31, 1996, and the related statements of income,
shareholders' equity and other supporting schedules, reflecting operations from
the inception of the Company through the period then ended. (the balance sheet
and other financial statements of the Company as at December 31, 1996, are
hereinafter referred to as the "LIMT Balance Sheet"). Such financial
statements, including the footnotes thereto, except as indicated therein, have
been prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods indicated. The Balance Sheet
fairly presents the financial condition of the Purchaser at the date thereof
and, except as indicated therein, reflects all claims against and all debts and
liabilities of the Purchaser, fixed or contingent, as at the date thereof and
the related statements of income, shareholders' equity and changes in financial
position fairly present the results of the operations of the Purchaser and the
changes in its financial position for the period indicated. Since December 31,
1996 (the "LIMT Balance Sheet Date"), there has been (i) no material adverse
change in the assets or liabilities, or in the business or condition, financial
or otherwise, or in the results of operations or prospects, of the Purchaser,
whether as a result of any legislative or regulatory change, revocation of any
license or rights to do business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation or act of God or other
public force or otherwise and (ii) no change in the assets or liabilities, or
in the business or condition, financial or otherwise, or in the results of
operations or prospects, of the Purchaser except in the ordinary course of
business; and to the best knowledge, information and belief of Purchaser, no
fact or condition exists or is contemplated or threatened which might cause
such a change in the future.
3.6 Placement. The common shares to be sold pursuant to
the Placement total 1,000,000 and have been completely subscribed at an issue
price of SEK 90. All information, statements and forecast contained in that
certain Information Memorandum, dated February, 1997, respecting the offering
of 1,000,000 new shares by LIMT Local Insertion Media Technology AB is true,
accurate and complete to the extent and as
-14-
<PAGE> 19
represented therein. A copy of the Information Memorandum is attached hereto
as Exhibit "3".
ARTICLE IV
COVENANTS PRIOR TO CLOSING
4. Conduct of Business of the Company. During the period from
the date of this Agreement to the Closing Date, Stockholder shall cause the
Company to conduct its operations according to the ordinary and usual course of
business. Stockholder agrees not to take any action, or omit to take any
action, which would cause the representations and warranties contained in
Article II hereof to be untrue or incorrect.
4.1 Conduct of Business. The Company will carry on its
business and activities diligently and in substantially the same manner as they
previously have been carried out and shall not make or institute any unusual or
novel methods of manufacture, purchase, sale, lease, management, accounting, or
operation that vary materially from those methods used by the Company as of the
date of this Agreement, including specifically the following:
(a) Preservation of Relationships. The Company will
use its best efforts, without making any commitments on behalf of Purchaser, to
preserve its business organization intact, to keep available to the Company its
present officers and employees, and to preserve its present relationships with
suppliers, customers, and others having business relationships with the
Company;
(b) Corporate Matters. The Company will not (i)
amend its articles of incorporation or bylaws; (ii) issue any shares of its
capital stock; (iii) issue or create any warrants, obligations, subscriptions,
options, convertible securities, or other commitments under which any
additional shares of its capital stock of any class might be directly or
indirectly authorized, issued, or transferred from treasury; or (iv) agree to
do any of the acts listed above without the express written consent of
Purchaser;
(c) Maintenance of Insurance. The Company will
continue to carry its existing insurance, subject to variations in amounts
required by the ordinary operations of its business. At the request of
Purchaser and at Purchaser's sole expense, the amount of insurance against fire
and other casualties that, at the date of this agreement, Company carry on any
of its properties or in respect of its operations shall be increased by the
amount or amounts Purchaser shall specify;
(d) Employees and Compensation. The Company will
not do, or agree to do, any of the following acts: (1) make any change in
compensation payable or to become payable, to any officer, employee, sales
agent, or representative being paid $50,000 per year or more on the Balance
Sheet Date; (2) make any change in benefits payable to any officer, employee,
sales agent, or representative under any bonus or pension plan or other
contract or commitment; or (3) modify any collective bargaining agreement to
which the Company is a party or by which it may be bound;
-15-
<PAGE> 20
(e) New Transactions. The Company will not do or
agree to do, without Purchaser's consent, any of the following acts: (i) enter
into any contract, commitment, or transaction not in the usual and ordinary
course of its business; (ii) enter into any contract, commitment, or
transaction in the usual and ordinary course of business involving an amount
exceeding $100,000 in the aggregate; (iii) make any capital expenditures in
excess of $25,000 for any single item or $100,000 in the aggregate, or enter
into any leases of capital equipment or property under which the annual lease
charge is in excess of $25,000; or (iv) sell or dispose of any capital assets
with a net book value exceeding $25,000;
(f) Dividends and Distributions. The Company will
not do, or agree to do, any of the following acts: (i) declare, set aside, or
pay any dividend or make any distribution in respect of its capital stock; (ii)
directly or indirectly purchase, redeem, or otherwise acquire any shares of its
capital stock; or (iii) enter into any agreement obligating it to do any of the
foregoing prohibited acts;
(g) Liabilities and Claims. The Company will not
do, or agree to do, any of the following acts: (i) pay any obligation or
liability, fixed or contingent, other than current liabilities due under
existing obligations; (ii) waive or compromise any right or claim; or (iii)
cancel, without full payment, any note, loan, or other obligation owing to
Company, Stockholder or any affiliate;
(h) Existing Agreements. The Company will not
modify, amend, cancel, or terminate any of its existing contracts or
agreements, or agree to do any of those acts; and
(i) Consents; Consultation with Purchaser. During
the period from the date of this Agreement to the Closing Date, in the event
the Company wants to take any action prohibited under this Section 4.1, it may
request Purchaser's consent in writing. Any consent requested and not denied
within three (3) business days of receipt shall be deemed approved. Consent
shall not be unreasonably withheld. During the period from the date of this
Agreement to the Closing Date, Stockholder shall cause the Company to confer on
a regular and frequent basis with one or more designated representatives of
Purchaser to report material operational matters and to report the general
status of ongoing operations. Stockholder shall cause the Company to notify
Purchaser of any unexpected emergency or other change in the normal course of
its business or in the operation of its properties and of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), adjudicatory proceedings, budget meetings or
submissions involving any material property of the Company, and to keep
Purchaser fully informed of such events and permit its representatives prompt
access to all materials prepared in connection therewith.
4.2 Exclusive Dealing. During the period from the date
of this Agreement to the Closing Date, Stockholder shall not, and shall cause
the Company to refrain from taking any action to, directly or indirectly,
encourage, initiate or engage in discussions or negotiations with, or provide
any information to, any Person, other than the Purchaser, concerning any
purchase of the Stock, the Killion Shares, or any merger, sale of substantial
assets or similar transaction involving the Company.
-16-
<PAGE> 21
4.3 Disclosure Schedules. On or before the Disclosure
Date, Stockholder shall prepare, or cause to be prepared, and delivered to
Purchaser the Disclosure Schedules, and Purchaser shall have approved any and
all additions to the representations and warranties contained in the Disclosure
Schedules. The Disclosure Schedules shall be deemed part of this Agreement,
whether or not physically attached, as of the Disclosure Date.
4.4 Review of the Company. The Purchaser may, prior to
the Closing Date, through its representatives, review the properties, books and
records of the Company and its financial and legal condition as Purchaser deems
necessary or advisable to familiarize itself with such properties and other
matters; such review shall not, however, affect the representations and
warranties made by Stockholder hereunder or the remedies of the Purchaser for
breaches of those representations and warranties. Stockholder shall cause the
Company to permit the Purchaser and its representatives to have, after the date
of execution of this Agreement, full access to the premises and to all the
books and records of the Company and to cause the officers of the Company to
furnish the Purchaser with such financial and operating data and other
information with respect to the business and properties of the Company as the
Purchaser shall from time to time reasonably request. In the event of
termination of this Agreement, the Purchaser shall keep confidential any
material information obtained from Stockholder or the Company concerning the
Company's properties, operations and business (unless readily ascertainable
from public or published information or trade sources) until the same ceases to
be material (or becomes so ascertainable) and, at the request of Stockholder,
shall return to the Company all copies of any schedules, statements, documents
or other written information obtained in connection therewith.
4.5 Review of the Purchaser. Stockholder may, prior to
the Closing Date, through its representatives, review the properties, books and
records of Purchaser and its financial and legal condition as Stockholder deems
necessary or advisable to familiarize itself with such properties and other
matters; such review shall not, however, affect the representations and
warranties made by Purchaser hereunder or the remedies of the Stockholder for
breaches of those representations and warranties. Purchaser shall permit
Stockholder and its representatives to have, after the date of execution of
this Agreement, full access to the premises and to all the books and records of
Purchaser and to cause the officers of Purchaser to furnish Stockholder with
such financial and operating data and other information with respect to the
business and properties of the Company as Stockholder shall from time to time
reasonably request. In the event of termination of this Agreement, Stockholder
shall keep confidential any material information obtained from Purchaser
concerning Purchaser's properties, operations and business (unless readily
ascertainable from public or published information or trade sources) until the
same ceases to be material (or becomes so ascertainable) and, at the request of
Purchaser, shall return to Stockholder all copies of any schedules, statements,
documents or other written information obtained in connection therewith.
-17-
<PAGE> 22
ARTICLE V
CONDITIONS TO PURCHASER'S OBLIGATIONS
5. Conditions to Purchaser's Obligations. The purchase of the
Stock by Purchaser on the Closing Date is conditioned upon satisfaction, on or
prior to such date, of the conditions set forth below. Purchaser may waive any
or all of these conditions in whole or in part without prior notice; provided,
however, that no such waiver of a condition shall constitute a waiver by
Purchaser of any of its other rights or remedies, at law or in equity, if
Stockholder or the Company shall be in default of any of its representations,
warranties, or covenants under this Agreement:
5.1 Opinion of the Company's Counsel. Stockholder shall
have furnished the Purchaser with a favorable opinion, dated the Closing Date,
of Stockholders' counsel, in form and substance satisfactory to the Purchaser
and its counsel, to the effect set forth in Exhibit "4" attached hereto.
5.2 Good Standing and Other Certificates. Stockholder
shall have delivered to the Purchaser (a) copies of the Company's charter,
including all amendments thereto, certified by the Secretary of State or other
appropriate official of its jurisdiction of incorporation, (b) a certificate
from the Secretary of State or other appropriate official of their respective
jurisdictions of incorporation to the effect that the Company is in good
standing or subsisting in such jurisdiction and listing all charter documents
of the Company on file, (c) a certificate from the Secretary of State or other
appropriate official in each State in which the Company is qualified to do
business to the effect that the Company is in good standing in such State, (d)
a certificate as to the tax status of the Company from the appropriate official
in its jurisdiction of incorporation and each state in which the Company is
qualified to do business and (e) a copy of the By-Laws of the Company,
certified by the Secretary of the Company as being true and correct and in
effect on the Closing Date.
5.3 No Material Adverse Change. Prior to the Closing
Date, there shall be no material adverse change in the assets or liabilities,
the business or condition, financial or otherwise, the results of operations,
or prospects of the Company, whether as a result of any legislative or
regulatory change, revocation of any license or rights to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation or act of God or other public force or otherwise, and Stockholder
shall have delivered to Purchaser a certificate, dated the Closing Date, to
such effect.
5.4 Truth of Representations and Warranties. The
representations and warranties of Stockholder contained in this Agreement or in
any Disclosure Schedule attached hereto shall be true and correct on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, and Stockholder shall have
delivered to Purchaser a certificate, dated the Closing Date, to such effect.
5.5 Killion Option. Stockholder shall have delivered to
Purchaser a certificate, dated the Closing Date, executed by the holder of the
Killion Shares to the effect that all of the actions to be taken by Stockholder
under the Killion Option have
-18-
<PAGE> 23
been timely performed, that there are no outstanding defaults under the Killion
Option, and that the Killion Option is in full force and effect, enforceable in
accordance with its terms.
5.6 Performance of Agreements. All of the agreements of
Stockholder to be performed on or before the Closing Date pursuant to the terms
hereof shall have been duly performed, and Stockholder shall have delivered to
Purchaser a certificate, dated the Closing Date, to such effect.
5.7 No Litigation Threatened. No action or proceedings
shall have been instituted or, to the best knowledge, information and belief of
Stockholder, threatened before a court or other government body or by any
public authority to restrain or prohibit any of the transactions contemplated
hereby, and Stockholder shall have delivered to Purchaser a certificate, dated
the Closing Date, to such effect.
5.8 Governmental Approvals. All governmental and other
consents and approvals, if any, necessary to permit the consummation of the
transactions contemplated by this Agreement shall have been received.
5.9 Intra-Company Debt. Other than the Stockholder Loan,
all indebtedness of Stockholder (including its directors, officers and
employees) to the Company and all indebtedness of the Company (including its
directors, officers and employees) to Stockholder, including any and all
intercompany accounts receivable, shall be reconciled and repaid in full at the
Closing. The Stockholder Loan shall have been assigned to Purchaser, as
reduced by the amount necessary to pay in full the Capital Loan, as provided in
Section 2.15.
5.10 Resignations. Stockholder shall have delivered to
Purchaser, except as otherwise requested by Purchaser, the written resignations
of those directors of the Company appointed by Stockholder, and will cause any
other action to be taken with respect to these resignations that Purchaser may
reasonably request.
5.11 Corporate Action. The execution and delivery of this
Agreement by Stockholder and the Company, and the performance of their
covenants and obligations under it, shall have been duly authorized by all
necessary corporate action, and Purchaser shall have received copies of all
resolutions pertaining to that authorization, certified respectively by the
secretaries of Stockholder and the Company.
5.12 NCC Contract Performance. The performance of Company
under that certain Agreement for Purchase of Equipment and License of Software,
dated April 29, 1996, by and between National Cable Communications, L.P. and
Company shall be substantially completed so that NCC shall have accepted the
performance and authorized final payment of all sums due thereunder.
ARTICLE VI
CONDITIONS TO THE STOCKHOLDER'S OBLIGATIONS
-19-
<PAGE> 24
6. Conditions to the Stockholder's Obligations. The sale of the
Stock by Stockholder on the Closing Date is conditioned upon satisfaction, on
or prior to such date, of the following conditions:
6.1 Opinion of the Purchaser's Counsel. Purchaser shall
have furnished Stockholder with an opinion, dated the Closing Date, of
Purchaser's counsel to the effect that:
(a) Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of Sweden, and has the
corporate power and authority to make, execute, deliver and perform the Stock
Purchase Agreement.
(b) The Stock Purchase Agreement has been duly
authorized, executed and delivered by each Purchaser and is a valid and binding
obligation of Purchaser, enforceable in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy and other laws of general
application relating to creditors' rights or general principles of equity.
6.2 Truth of Representations and Warranties. The
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such
date, and Purchaser shall have delivered to Stockholder a certificate, dated
the Closing Date, to such effect.
6.3 Governmental Approvals. All governmental consents
and approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received.
6.4 Performance of Agreements. All of the agreements of
Purchaser to be performed on or before the Closing Date pursuant to the terms
hereof shall have been duly performed, and Purchaser shall have delivered to
Stockholder a certificate, dated the Closing Date, to such effect.
6.5 Corporate Action. The execution and delivery of this
Agreement by Purchaser, and the performance of its covenants and obligations
under it, shall have been duly authorized by all necessary corporate action,
and Stockholder shall have received copies of all resolutions pertaining to
that authorization, certified by the secretary of Purchaser.
ARTICLE VII
THE CLOSING
7. Obligations at Closing. Upon fulfillment of the conditions
specified in Articles V and VI, the following actions shall occur:
7.1 Time and Place. The sale referred to in Section 1.1
shall take place at 10:00 A.M. at the offices of Lorenz Alhadeff Cannon & Rose,
LLP, 550 West "C" St. Nineteenth Floor, San Diego, California, on February 27,
1997, or at such other time and
-20-
<PAGE> 25
date as the parties hereto shall by written instrument designate. Such time
and date are herein referred to as the "Closing Date."
7.2 Stockholder's Obligations at Closing. At the
Closing, Stockholder shall deliver to Purchaser the following instruments, in
form and substance satisfactory to Purchaser and its counsel, against delivery
of the items specified in Section 7.3:
(a) A certificate or certificates representing the
Stock, registered in the name of Stockholder, duly endorsed by Stockholder for
transfer or accompanied by an assignment of the Stock duly executed by
Stockholder, with signatures guaranteed by a member of the New York Stock
Exchange or by a bank or trust company, and with all required documentary stock
transfer stamps affixed. On submission of that certificate or certificates to
Company for transfer, Company shall issue to Purchaser a certificate
representing the Stock, registered in the Purchaser's name. Purchaser
acknowledges that this certificate to be issued to Purchaser by Company will
bear such legends as may be required under applicable federal or state
securities regulations.
(b) The stock books, stock ledgers, minute books,
and corporate seals of Company.
(c) The opinion of counsel as provided in Section
5.1.
(d) Termination of Financing Statement (Form UCC-2)
respecting the UCC-1 filed on behalf of Killer Barn, Inc.
(e) Except as otherwise specified by Purchaser, the
written resignations of officers and directors of Company, as provided in
Section 5.13.
(f) Certified resolutions of Stockholder's board of
directors, in form satisfactory to counsel for Purchaser, authorizing the
execution and performance of this Agreement and all actions to be taken by
Stockholder under this Agreement; and
(g) A certificate executed by the president or vice
president and the secretary or treasurer of Stockholder certifying that all
Stockholder's representations and warranties under this agreement are true as
of the Closing Date, as though each of those representations and warranties had
been made on that date, and that each of the conditions to closing specified in
Sections 5.3, 5.4, 5.6 and 5.7 are true and correct as of the Closing Date.
(h) All copies in the possession of control of
Stockholder of any documents, memoranda, notes or other written, recorded or
graphic materials, including any and all records kept by electronic,
photographic or mechanical means, that depict, reflect or describe any of the
Intellectual Property.
(i) The certificate of the holder of the Killion
Shares acknowledging that the Killion Option is valid and enforceable, as
provided in Section 2.6, together with evidence that all option payments due on
or before March 31, 1997, have been paid in full (or are paid at the Closing).
-21-
<PAGE> 26
(j) The assignment of the Stockholder Loan, as
provided in Section 2.15.
7.3 Purchaser's Obligations at Closing. At the Closing,
Purchaser shall deliver to Stockholder the following instruments and documents
against delivery of the items specified in Section 7.2:
(a) The bank cashier's check or other immediately
available funds in the amount of the balance of the $7,000,000, as provided in
Section 1.1(a)(1);
(b) A certificate representing the LIMT Shares to be
issued and delivered at the Closing under Section 1.1(a)(2);
(c) The opinion of Purchaser's counsel, dated the
Closing Date, as provided for in Section 6.1;
(d) A Voting Agreement, in the form attached hereto
as Exhibit "5", executed by shareholders in Purchaser holding not less than 51%
of the voting power in the corporation, pursuant to which Stockholder shall be
entitled to one seat on the Board of Directors of Purchaser for so long as
Stockholder owns at least 8% of the combined voting power in Purchaser.
(e) Certified resolutions of Purchaser's board of
directors, in form satisfactory to counsel for Stockholder, authorizing the
execution and performance of this Agreement and all actions to be taken by
Purchaser under this Agreement; and
(f) A certificate executed by the president or vice
president and the secretary or treasurer of Purchaser certifying that all
Purchaser's representations and warranties under this agreement are true as of
the Closing Date, as though each of those representations and warranties had
been made on that date.
ARTICLE VIII
OBLIGATIONS AFTER CLOSING
8. Post-Closing Obligations. From and after the Closing Date,
the parties shall have the following obligations:
8.1 Seller's Indemnification. Stockholder shall
indemnify, defend, and hold harmless Purchaser against and in respect of any
and all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries, and deficiencies, including interest, penalties, and
reasonable attorneys' fees, that it shall incur or suffer, which arise, result
from, or relate to any breach of, or failure by Stockholder to perform, any of
its representations, warranties, covenants, or agreements in this Agreement or
in any schedule, certificate, exhibit, or other instrument furnished or to be
furnished by Stockholder under this Agreement. Stockholder's liability under
this paragraph shall not, however, exceed the aggregate amount of the
consideration receivable hereunder by Stockholder. Notwithstanding any other
provision of this Agreement, Stockholder shall
-22-
<PAGE> 27
not be liable to Purchaser on any warranty, representation, or covenant made by
Stockholder in this Agreement, or under any of its indemnities in this
Agreement, regarding any single claim, loss, expense, obligation, or other
liability that does not exceed $25,000; provided, however, that when the
aggregate amount of all such claims, losses, expenses, obligations, and
liabilities not exceeding $25,000 each, reaches $100,000, Stockholder shall,
subject to the above limitation on its maximum aggregate liability, thereafter
be liable in full for all breaches and indemnities and regarding all those
claims, losses, expenses, obligations, and liabilities. Purchaser shall
promptly notify Stockholder of the existence of any claim, demand, or other
matter to which Stockholder's indemnification obligations would apply and shall
give Stockholder a reasonable opportunity to defend the same at its own expense
and with counsel of its own selection; provided that Purchaser shall at all
times also have the right to fully participate in the defense at its own
expense. If Stockholder shall, within a reasonable time after this notice,
fail to defend, Purchaser shall have the right, but not the obligation, to
undertake the defense of, and to compromise or settle (exercising reasonable
business judgment), the claim or other matter on behalf, for the account, and
at the risk, of Stockholder. If the claim is one that cannot by its nature be
defended solely by Stockholder (including, without limitation, any federal or
state tax proceeding), then Purchaser shall make available, and cause the
Company to make available, all information and assistance that Stockholder may
reasonably request.
8.2 Killion Option. Stockholder agrees to keep in full
force and effect the Killion Option in accordance with its terms, provided that
Stockholder shall be responsible for the quarterly option payments due
thereunder only for those payments falling due through March 31, 1997. All
option payments due thereafter shall be paid by Purchaser. At any time prior
to the expiration of the Killion Option, Stockholder will exercise the Killion
Option, upon such terms and conditions as Purchaser may in writing direct, to
acquire the Killion Shares. Stockholder shall thereupon sell, assign, transfer
and deliver to Purchaser the Killion Shares, and Purchaser agrees to purchase
from Stockholder the Killion Shares. Stockholder shall deliver to Purchaser a
certificate or certificates representing the Killion Shares, registered in the
name of Stockholder, duly endorsed by Stockholder for transfer or accompanied
by an assignment of the Killion Shares duly executed by Stockholder, with
signatures guaranteed by a member of the New York Stock Exchange or by a bank
or trust company, and with all required documentary stock transfer stamps
affixed.
(a) Price. In full consideration for the purchase
by Purchaser of the Killion Shares, Purchaser shall pay to Stockholder on the
date of transfer the lesser of (i) such sum as Stockholder shall have paid to
exercise the Killion Option, in cash or the fair market value of the shares in
Stockholder on the date of exercise, or (ii) Six Million Dollars
($6,000,000.00). The purchase price shall be paid by delivering a bank
cashier's check (or other immediately available funds) in the appropriate
amount, payable to the order of Stockholder, contemporaneously with the
requirement that funds be delivered to the holder of the Killion Shares.
(b) Renegotiation. Stockholder and Purchaser
acknowledge and agree that Purchaser may, at any time following execution of
this Agreement, enter into negotiations with the holder of the Killion Shares
to effect a renegotiation of the terms and conditions upon which such option is
exercisable. In the event Purchaser and holder
-23-
<PAGE> 28
of the Killion Shares shall arrive at a satisfactory agreement under which
Purchaser can effect the acquisition of the Killion Shares, upon notice to
Stockholder from Purchaser and holder, the Killion Option shall terminate and
Stockholder shall have no further rights or duties thereunder.
8.3 Repurchase Option. Pursuant to a Stock Option
Agreement in the form attached hereto as Exhibit "6", Stockholder shall grant
to Purchaser or its designee or assignee the option, exercisable for a period
of one (1) year following the Closing Date, to purchase up to Three Hundred
Thousand (300,000) of the LIMT Shares at a price of SEK 86.33.
8.4 Future Cooperation. The parties agree that it is in
their mutual best to cooperate in the future respecting the sales and marketing
of their respective products and services. Following the Closing the parties
agree that they will negotiate in good faith to enter into such joint or
cooperative agreements respecting sales and marketing as may be desirable.
8.5 Source Code Escrow. Within forty five (45) days
after the Closing, Purchaser and Stockholder shall enter into a three party
escrow agreement (the "Escrow Agreement") with Chicago Title Company or such
other escrow agent to which the parties agree. Such Escrow Agreement will
provide for, among other things, the deposit by Purchaser, by no later than
April 30, 1997, into the escrow account of machine readable and human readable
copies of all source code and related programmer documentation and engineering
design schematics, specifications, and other information and materials required
for support and maintenance of the SpotServer software, including without
limitation, applicable test and analysis tools, test data, and libraries
developed by Purchaser and not available as standard product from third
parties, which are used by Purchaser to develop, modify and maintain the
SpotServer software (the foregoing being collectively referred to as the
"Escrow Materials"), as well as Stockholder's right to obtain the Escrow
Materials for the purposes of supporting, modifying or exploiting the
SpotServer software in the event of certain contingencies to be defined therein
(e.g. the rejection of this Agreement in the event of Purchaser's bankruptcy)
and the right to inspect and verify the contents of all Escrow Material
deposits. Purchaser acknowledges that such Escrow Agreement is and shall be
deemed to be an "agreement supplementary to" this Agreement as provided in
Section 365 (n) of the United States Bankruptcy Code (the "Bankruptcy Code").
Purchaser acknowledges that all rights and licenses granted under or
pursuant to any licenses grant to Stockholder in connection with agreements
this Agreement are, and shall otherwise be deemed to be, for purposes of
Section 365 (n) of the Bankruptcy Code, licenses of rights of the Bankruptcy
Code, licenses of rights to "intellectual property" as defined under Section
101 (56) of the Bankruptcy Code. The parties agree that Stockholder, as a
licensee of such rights, shall retain and may fully exercise all of its rights
and elections under the Bankruptcy Code. Purchaser acknowledges that if
Purchaser as a debtor in possession or a trustee-in-bankruptcy (collectively
"Trustee") in a case under the Bankruptcy Code rejects this Agreement or the
Escrow Agreement, Stockholder may elect to retain its rights under this
Agreement and the Escrow Agreement as provided in Section 365 (n) of the
Bankruptcy Code. After the commencement of a case under the Bankruptcy Code by
or against Purchaser and unless
-24-
<PAGE> 29
and until this Agreement is rejected, upon written request of Purchaser to the
Trustee, Trustee shall, unless Purchaser agrees to perform its obligations
hereunder, (a) provide copies of the Escrow Materials to Stockholder and (b)
not interfere with the rights of Stockholder under this Agreement and the
Escrow Agreement, including Stockholder's right to obtain copies of the Escrow
Materials from the escrow agent pursuant to the Escrow Agreement. If the
Trustee rejects this Agreement or the Escrow Agreement and Stockholder elects
to retain its rights under such agreements, then upon Stockholder's written
request to Trustee, the Trustee provide copies of the Escrow Materials to
Stockholder.
8.6 Purchaser's Indemnification. Purchaser agrees to
indemnify and hold harmless Stockholder against, and in respect of, any and all
claims, losses, expenses, costs, obligations, and liabilities Stockholder may
incur by reason of Purchaser's breach of or failure to perform any of its
warranties, guaranties, commitments, or covenants in this agreement, or by
reason of any act or omission of Purchaser, or any of its successors or
assigns, after the Closing Date, that constitutes a breach or default under, or
a failure to perform, any obligation, duty, or liability of Purchaser or
Company under any loan agreement, lease, contract, order, or other agreement to
which it is a party or by which it is bound at the Closing Date, but only to
the extent to which Purchaser expressly assumes these obligations, duties, and
liabilities under this agreement.
ARTICLE IX
TERMINATION
9. Termination. All parties hereto agree to use their best
efforts to fulfill the requirements of Articles V and VI as soon as
practicable. This Agreement is subject to termination under the following
circumstances:
9.1 Default by Party. Purchaser may terminate this
Agreement by written notice to Stockholder of the material breach of any
covenant, representation or warrant of Stockholder contained in this Agreement.
Stockholder may terminate this Agreement by written notice to Purchaser of the
material breach of any covenant, representation or warranty of Purchaser
contained in this Agreement. Any termination under this Section shall be
without prejudice to any rights the parties may have regarding such breach or
termination.
9.2 Failure to Close. Either party may terminate this
Agreement by written notice to the other if the Closing shall not have occurred
on or before February 28, 1997 for any reason other than a wilful breach of a
covenant, representation or warranty by either party. In the event of a
termination under this Section, all obligations of the parties to one another
hereunder shall cease without liability.
ARTICLE X
MISCELLANEOUS
10. Miscellaneous Provisions. The following general terms and
conditions shall apply to this Agreement:
-25-
<PAGE> 30
10.1 Survival of Representations. The representations and
warranties of the parties contained in this Agreement or in any Disclosure
Schedule attached hereto shall survive the consummation of the transactions
contemplated hereby, irrespective of any investigation or examination conducted
by or on behalf of any party. Such survival shall be for the period of the
twenty-four (24) months following the Closing, except for representations or
warranties relating to taxes, which shall survive indefinitely.
10.2 Knowledge. Where any representation or warranty
contained in this Agreement is expressly qualified by reference to the
knowledge, information and belief of Stockholder or Purchaser, Stockholder and
Purchaser, respectively, confirm that it has made due and diligent inquiry as
to the matters that are the subject of such representations and warranties.
10.3 Expenses. The parties hereto shall pay all of their
own expenses relating to the transactions contemplated by this Agreement,
including, without limitation, the fees and expenses of their respective
counsel and financial advisers.
10.4 Governing Law. The interpretation and construction
of this Agreement, and all matters relating hereto, shall be governed by the
laws of the State of California applicable to agreements executed and to be
performed solely within such State.
10.5 Arbitration. Any controversy or claim arising out
of, or relating to, this Agreement, or the making, performance, or
interpretation of it, shall be settled by arbitration in San Diego, California
under the commercial arbitration rules of the American Arbitration Association
then existing, and judgment on the arbitration award may be entered in any
court having jurisdiction over the subject matter of the controversy.
10.6 Captions; Exhibits. The Article and Section captions
used herein are for reference purposes only, and shall not in any way affect
the meaning or interpretation of this Agreement. Any Exhibit referred to
herein but not attached at the date of execution shall be prepared, reviewed by
counsel and attached hereto by the Disclosure Date.
10.7 Publicity. Except as otherwise required by law, all
notices to third parties and all other publicity concerning the transactions
contemplated by this Agreement shall be jointly planned and coordinated by and
between Purchaser and Stockholder. No party shall act unilaterally in this
regard without the prior written approval of the others; however, this approval
shall not be unreasonably withheld.
10.8 Notices. Any notice or other communication required
or permitted hereunder shall be sufficiently given if delivered in person or
sent by telex, telecopy or by registered or certified mail, postage prepaid,
addressed as follows:
If to Purchaser: Limt Local Insertion Media Technology AB
Varvsgrand 15
S-852 32 Sundsvall
Sweden
Attn: Stefan Ridderheim
-26-
<PAGE> 31
FAX No. 011 46 60 740 00 50
Copy to: Christian Luthman, Esq.
Lagerlof & Leman, Advokatbyra
P.O. Box 5402
S-114 84 Stockholm
Sweden
Fax No. 011 46 8 667 68 83
Mr. Christer Janson
D. Carnegie AB
S-103 38 Stockholm
Sweden
Fax No. 011 46 8 21 28 40
Joseph L. Marshall, Esq.
Lorenz Alhadeff Cannon & Rose, LLP
550 West C Street, 19th Floor
San Diego, CA 92101-3540
FAX No. (619) 231-8323
If to Stockholder: IndeNet, Inc.
16000 Ventura Blvd. Suite 700
Encino, CA 91436
Attn: Mr. Robert Lautz
FAX No. (818) 461-8531
-27-
<PAGE> 32
Copy to: Istvan Benko, Esq.
Troy & Gould
1801 Century Park East, 16th Floor
Los Angeles, CA 90067
Fax No. (310) 201-4756
or such other address or number as shall be furnished in writing by any such
party, and such notice or communication shall be deemed to have been given as
of the date so delivered, sent by telecopier or mailed.
10.9 Parties in Interest. This Agreement may not be
transferred, assigned, pledged or hypothecated by any party hereto, other than
by operation of law, provided that Purchaser may assign its rights hereunder to
any foreign or domestic entity in which it has management control or is at
least a fifty percent (50%) equity owner. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors and assigns.
10.10 Counterparts. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one instrument.
10.11 Entire Agreement. This Agreement, including the other
documents referred to herein which form a part hereof, contains the entire
understanding of the parties hereto with respect to the subject matter
contained herein and therein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
10.12 Litigation Costs. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be
entitled.
10.13 Amendments. This Agreement may not be changed orally,
but only by an agreement in writing signed by Purchaser and Stockholder. Any
provision of this Agreement can be waived, amended, supplemented or modified by
agreement of Purchaser and Stockholder.
10.14 Severability. In case any provision in this Agreement
shall be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
10.15 Third Party Beneficiaries. Each party hereto intends
that this Agreement shall not benefit or create any right or cause of action in
or on behalf of any Person other than the parties hereto.
-28-
<PAGE> 33
IN WITNESS WHEREOF, each of Stockholder and Purchaser has caused its
corporate name to be hereunto subscribed by its duly authorized officer, as of
the day and year first above written.
PURCHASER: Limt Local Insertion Media
Technology AB,
a Swedish corporation
By: /s/ Stefan Ridderheim
________________________________
Stefan Ridderheim,
Its Chairman of the Board
STOCKHOLDER: IndeNet, Inc.,
a Delaware corporation,
By: /s/ Robert W. Lautz
________________________________
Robert D. Lautz, Its President
-29-
<PAGE> 1
EXHIBIT 10.2
===============================================================================
FIRST AMENDMENT
[DATED MARCH 21, 1997]
TO
STOCK PURCHASE AGREEMENT
[DATED AS OF FEBRUARY 14, 1997]
BY AND AMONG
LIMT LOCAL INSERTION MEDIA TECHNOLOGY AB (PUBL)
AND
INDENET, INC.
RESPECTING THE ACQUISITION OF STOCK IN
CHANNELMATIC, INC.
===============================================================================
<PAGE> 2
FIRST AMENDMENT TO
STOCK PURCHASE AGREEMENT
This FIRST AMENDMENT to STOCK PURCHASE AGREEMENT ("Amendment"), dated
March 21, 1997, is made by and between Limt Local Insertion Media Technology
AB, a Swedish corporation ("Purchaser"), and IndeNet, Inc., a Delaware
corporation, ("Stockholder"), being the majority shareholder of Channelmatic,
Inc., a Delaware corporation (the "Company").
STATEMENT OF BACKGROUND INFORMATION
A. Purchaser and Stockholder entered into that certain Stock Purchase
Agreement, dated as of February 14, 1997 ("Agreement"), pursuant to which the
Purchaser was to purchase Stockholder's 666,667 shares of common stock of the
Company (the "Stock"), and an option to acquire the remaining 333,333 shares of
the common stock.
B. The acquisition originally was to have closed on February 27,
1997. On February 26, 1997, Purchaser notified Stockholder that it believed
certain conditions precedent had not been satisfied and that the Agreement was
thereby terminated. The Deposit provided for in Section 1.2 of the Agreement
has been deposited in the Lorenz Alhadeff Cannon & Rose, LLP client trust
account. Negotiations have ensued and the parties have agreed to certain
modifications to the Agreement.
C. Stockholder and Purchaser desire to certain provisions of the
Agreement and to complete the acquisition, as hereinafter provided.
D. Capitalized terms used in this Amendment and not defined shall
have the same meanings assigned in the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties contained in this Amendment, the parties agree
as follows:
1. Section 1.1 of Article I of the Agreement shall be deleted in
its entirety and replaced with the following:
"ARTICLE I
SALE OF SHARES
1. Sale of Shares. Subject to the terms and conditions
herein stated, Stockholder agrees to sell, assign, transfer and
deliver to Purchaser on the Closing Date, and Purchaser agrees to
purchase from Stockholder on the
-1-
<PAGE> 3
Closing Date, the Stock and the right to acquire the Killion Shares
(as provided in Section 8.2), as follows:
1.1 Purchase of Stock. Subject to the terms and
conditions herein stated, Stockholder agrees to sell, assign, transfer
and deliver to Purchaser on the Closing Date, and Purchaser agrees to
purchase from Stockholder on the Closing Date, the Stock.
(a) Price. In full consideration for
the purchase by Purchaser of the Stock and the right to acquire the
Killion Shares, Purchaser shall pay to Stockholder cash in the
aggregate amount of Five Million Two Hundred Fifty Thousand Dollars
($5,250,000) (all references to currency herein are to United States
Dollars unless clearly indicated to the contrary), issue in the name
of Stockholder 237,700 shares of the common stock in Purchaser, and
issue its Convertible Subordinated Debenture I ("Convertible Note") in
the amount of SEK 10.697.500 and its Convertible Subordinated
Debenture II ("Note") in the amount of SEK 10.696.494. The Convertible
Note shall be subject to an option in favor of Stefan Ridderheim to
purchase the Convertible Note from Stockholder for its face amount
during the period from May 1, 1997 through December 31, 1998.
(1) Cash Portion. The cash portion of
the purchase price shall be paid to Stockholder by Purchaser's
delivery of bank cashier's checks or other immediately available
funds, payable to the order of Stockholder the total amount of Five
Million Two Hundred Fifty Thousand Dollars ($5,250,000).
(2) Share Portion. Purchaser shall
deliver to Stockholder evidence that Stockholder is the registered
holder of Two Hundred Thirty Seven Thousand Seven Hundred (237,700)
shares of Purchaser's common stock (the "LIMT Shares").
(3) Note Portion. Purchaser shall
deliver to Stockholder the Convertible Note, dated as of May 1, 1997,
which shall be in the principal amount of SEK 10.697.500, with
interest at the rate of 5.5% per annum payable quarterly via wire
transfer, all due and payable April 30, 2000. The Note shall provide
that the principal, together with any accrued interest thereon, may be
prepaid, in full or in part, at any time prior to December 31, 1998,
and interest shall thereupon cease on the portion so prepaid. The
Note shall also provide that (x) at any time after December 31, 1998,
the Note will be convertible at the option of the registered holder
into shares of the common stock of Purchaser at the rate of one share
for each SEK 90 of principal amount to be converted, (y) a holder
desiring to convert shall give written notice to Purchaser not later
than ten (10) days prior to the end of the term and (z) if not
converted or paid in full on or prior to the end of the term the Note
will thereupon be due and the conversion right will lapse.
Purchaser shall also deliver to Stockholder the Note, dated as of May
1, 1997, which shall be in the principal amount of SEK 10.696.494,
with interest at the
-2-
<PAGE> 4
rate of 5.5% per annum, payable on the last day of each calendar
quarter via wire transfer, in twelve (12) equal quarterly installments
of principal and interest, with any unpaid principal and interest due
and payable three (3) years from the date of issuance. The Note shall
provide that the principal, together with any accrued interest
thereon, may be prepaid, in full or in part, at any time and that if
the Note is paid in full prior to December 31, 1998, such prepayment
may be made in the amount of Eighty Percent (80%) of the then unpaid
principal balance, plus accrued but unpaid interest. The Note shall
also provide that (x) if any payment is not received within ten (10)
days after its due date, Stockholder shall give written notice of such
nonpayment to Purchaser, who shall have thirty (30) days thereafter to
cure the default, (y) in the event payment is not made within such
cure period, Purchaser shall be in default and Stockholder shall have
the right, in addition to any other available remedies, to convert the
unpaid portion of the Note into LIMT Shares at Eighty Percent (80%) of
the conversion rate applicable under the Convertible Note, i.e., at
SEK 72. The Note and Convertible Note will be in the form of Exhibits
1-A and 1-B, respectively, attached hereto.
(b) Delivery of Securities. The parties
understand and agree that the actual delivery of the LIMT Shares shall
be made pursuant to the provisions of the Swedish Securities Account
Act. The LIMT Shares will be issued as interim shares as soon as
Stockholder has taken all necessary steps to open a securities account
at a Swedish bank or stock brokerage firm. The LIMT Shares will be
converted into ordinary shares as soon as the increase in the share
capital in Purchaser has been registered with the Swedish Patent and
Registration Office. The issuance of the Convertible Note requires
the approval of the shareholders of Purchaser, which approval will be
sought at a meeting of the shareholders scheduled for April 14, 1997.
The Convertible Note, in the form of Exhibit 1-B, shall be delivered
to Stockholder not later than April 30, 1997. In the event the
shareholders of Purchaser fail to approve the issuance of the
Convertible Note, Purchaser will deliver an additional 118,850 shares
of the common stock of Purchaser to Stockholder not later than April
30, 1997 in satisfaction of the obligations of Purchaser under Section
1.1(a)(3)."
2. New Sections 1.3 and 1.4 shall be added, as follows:
"1.3 Effective Date. Purchaser shall have all the
rights and duties appurtenant to the ownership of the Shares from and
after the Closing. For accounting purposes, the transfer of ownership
shall be deemed to have occurred as of the close of business on March
31, 1997.
1.4 Exclusion of Intangible. The parties
recognize and agree that the books and records of Stockholder reflect
an intangible asset consisting of the excess purchase price paid by
Stockholder upon the acquisition of the Shares over the fair market
value of the tangible assets of the company. This intangible asset
shall be a remain the asset of Stockholder, subject only to whatever
tax amortization rights Company might have respecting such intangible
asset under applicable law and regulations."
-3-
<PAGE> 5
3. Section 8.3, Repurchase Option, shall be deleted in its
entirety.
4. For purposes of Section 2, and for all other purposes under
the Agreement, the Disclosure Date shall be March 24, 1997.
5. A new Section 3.7 shall be added, as follows:
"3.7 Conformity with Swedish Law. The enforcement
and default terms and conditions of the Convertible Note and the Note,
as described in Section 1.1(a)(3), conform with normal practice for
similar instruments under typical Swedish procedures and represent
valid and enforceable obligations as against Purchaser.
6. Section 7.1 shall be deleted in its entirety and replaced with
the following:
"7.1 Time and Place. The sale referred to in
Section 1.1 shall take place at 2:00 P.M. at the offices of Lorenz
Alhadeff Cannon & Rose, LLP, 550 West "C" St. Nineteenth Floor, San
Diego, California, on March 24, 1997, or at such other time and date
as the parties hereto shall by written instrument designate. Such
time and date are herein referred to as the 'Closing Date.'"
7. Sections 7.3(a) and (b) shall be deleted in their entirety and
replaced with the following:
(a) Bank cashier's checks or other
immediately available funds in the total amount of $5,250,000, as
provided in Section 1.1(a)(1) in such separate instruments as may be
necessary to pay in full all obligations respecting the Killion Option
or that constitute an encumbrance on the shares or on the assets of
the Company, including specifically payment of $3.344,641 to Killer
Barn, Inc. in full satisfaction of the promissory note and $92,900 in
full satisfaction of the payments due under the Killion Option;
(b) Such evidence of the deliveries and
registrations, as provided in Section 1.1(b).
-4-
<PAGE> 6
8. Except as amended hereby, the Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, each of Stockholder and Purchaser has caused its
corporate name to be hereunto subscribed by its duly authorized officer, as of
the day and year first above written.
PURCHASER: Limt Local Insertion Media Technology AB,
a Swedish corporation
By: /s/ Stefan Ridderheim
________________________________
Stefan Ridderheim,
Its Chairman of the Board
STOCKHOLDER: IndeNet, Inc.,
a Delaware corporation,
By: /s/ Robert W. Lautz
________________________________
Robert W. Lautz, Its President
-5-
