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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 26, 1998
ENTERPRISE SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-18034 68-0158367
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation)
38705 Seven Mile Road, Suite 435, Livonia, Michigan 48152
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 380-6070
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
------------
Copies of all of the contracts identified under Item 7 are filed as
exhibits to this Form 8-K, and the terms of such contracts are incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
Financial Statements - None
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Exhibits -
- --------
<TABLE>
<CAPTION>
Exhibit Reference
Number Exhibit Description
----------------- -------------------
<S> <C>
10(a) Investment and Loan Agreement dated March 26, 1998 between the Registrant and Allied Capital
Corporation, a Maryland corporation ("Allied")
10(b) First Amendment to Investment and Loan Agreement dated September 1, 1998 between the Registrant and
Allied
10(c) Subordinated Debenture dated March 26, 1998 issued by the Registrant to Allied in the principal
amount of $9 million
10(d) Subordinated Debenture dated September 1, 1998 issued by the Registrant to Allied in the principal
amount of $6 million
10(e) Guaranty dated March 26, 1998 by CCMS and ESGI in favor of Allied
10(f) Guaranty dated September 1, 1998 by REVIVE in favor of Allied
10(g) Stock Purchase Warrant dated March 26, 1998 issued by the Registrant to Allied
10(h) Stock Purchase Warrant dated September 1, 1998 issued by the Registrant to Allied
10(i) Security Agreement dated March 26, 1998 among the Registrant, Computerized Management Systems,
Inc., a Michigan corporation ("CCMS"), Enterprise Systems Group, Inc., a New York corporation
("ESGI"), and Allied
10(j) Security Agreement for intellectual Property dated March 26, 1998 between CCMS and Allied
10(K) Security Agreement dated September 1, 1998 between Software Acquisition Corp., a Delaware
corporation whose name has been changed to REVIVE Technologies Incorporation ("REVIVE"), and Allied
10(L) Stock Pledge Agreement dated March 26, 1998 among the Registrant, Enterprise Systems Group Limited,
a company registered in the United Kingdom, and Allied
10(M) Stock Pledge Agreement dated September 1, 1998 among the Registrant, REVIVE, and Allied
</TABLE>
-2-
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<TABLE>
<CAPTION>
Exhibit Reference
Number Exhibit Description
----------------- -------------------
<S> <C>
10(n) Collateral Assignment of Lease dated September 1, 1998 between REVIVE and Allied
10(o) Collateral Assignment of Lease dated September 1, 1998 between REVIVE and Allied
10(p) Shareholders Agreement dated March 26, 1998 between the Registrant and Allied
</TABLE>
-3-
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Enterprise Software, Inc.
January 19, 1999 By: /s/ Andre A. Blay
------------------------------
Andre A. Blay
Chairman of the Board and
Chief Executive Officer
S-1
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Reference
Number Exhibit Description
----------------- -------------------
<S> <C>
10(a) Investment and Loan Agreement dated March 26, 1998 between the Registrant and Allied Capital
Corporation, a Maryland corporation ("Allied")
10(b) First Amendment to Investment and Loan Agreement dated September 1, 1998 between the Registrant and
Allied
10(c) Subordinated Debenture dated March 26, 1998 issued by the Registrant to Allied in the principal
amount of $9 million
10(d) Subordinated Debenture dated September 1, 1998 issued by the Registrant to Allied
in the principal amount of $6 million
10(e) Guaranty dated March 26, 1998 by CCMS and ESGI in favor of Allied
10(f) Guaranty dated September 1, 1998 by REVIVE in favor of Allied
10(g) Stock Purchase Warrant dated March 26, 1998 issued by the Registrant to Allied
10(h) Stock Purchase Warrant dated September 1, 1998 issued by the Registrant to Allied
10(i) Security Agreement dated March 26, 1998 among the Registrant, Computerized Management Systems,
Inc., a Michigan corporation ("CCMS"), Enterprise Systems Group, Inc., a New York corporation
("ESGI"), and Allied
10(j) Security Agreement for Intellactual Property dated March 26, 1998 between CCMS and Allied
10(k) Security Agreement dated September 1, 1998 between Software Acquisition Corp., a Delaware
corporation whose name has been changed to REVIVE Technologies Incorporation ("REVIVE"), and Allied
10(l) Stock Pledge Agreement dated March 26, 1998 among the Registrant, Enterprise Systems Group Limited,
a company registered in the United Kingdom, and Allied
10(m) Stock Pledge Agreement dated September 1, 1998 among the Registrant, REVIVE, and Allied
10(n) Collateral Assignment of Lease dated September 1, 1998 between REVIVE and Allied
10(o) Collateral Assignment of Lease dated September 1, 1998 between REVIVE and Allied
10(p) Shareholders Agreement dated March 26, 1998 between the Registrant and Allied
</TABLE>
E-1
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EXHIBIT 10 (a)
INDENET, INC.
Livonia, Michigan
$15,000,000
INVESTMENT AND LOAN AGREEMENT
March 26, 1998
Financing provided by
ALLIED CAPITAL CORPORATION
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TABLE OF CONTENTS
PAGE
PREAMBLE 7
Parties 7
Recitals 7
ARTICLE 1 - LOAN 7
Section 1.1 Funding 7
Section 1.2 Collateral 8
Section 1.3 Senior Debt; Subordinated Agreements 8
Section 1.4 Conditions to the Initial Loan 9
Section 1.5 Future Acquisition. Conditions to 10
Funding Subsequent Loan
ARTICLE 2 - EQUITY 11
Section 2.1 Stock Purchase Warrants 11
Section 2.2 Valuation of Warrants 11
ARTICLE 3 - INTENTIONALLY OMITTED 12
ARTICLE 4 - EXECUTIVE'S AGREEMENT 12
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES 12
Section 5.1 Due Organization. Authority. Binding. 12
Obligation. Opinion of Counsel.
Section 5.2 Principal Business; Title To Assets 13
Section 5.3 Litigation 13
Section 5.4 Taxes 13
(a) Generally 13
(b) No Open Returns 13
(c) Excess Parachute Payments 14
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PAGE
(d) Deferred Intercompany 14
Transactions
Section 5.5 Financial Statements 14
Section 5.6 Leases; Material Contracts 14
(a) Leases 14
(b) Material Contracts 14
Section 5.7 Disclosure 14
Section 5.8 Management History 15
Section 5.9 Subsidiaries 15
Section 5.10 Incumbency 15
Section 5.11 No Material Change 15
Section 5.12 No Side Agreements 15
Section 5.13 Non-Contravention 16
Section 5.14 Fee & Brokerage 16
Section 5.15 Other Debts; Sources and Uses 16
Section 5.16 Capital Structure 16
Section 5.17 Solvency 16
Section 5.18 Regulatory Compliance 17
Section 5.19 Employee Benefit Matters 17
Section 5.20 Collective Bargaining 17
Section 5.21 Employees Contracts and 17
Non-competition Agreements
Section 5.22 No Competing Business Interests 18
Section 5.23 No Conflicting Non-Competition 18
Agreements
ARTICLE 6 - AFFIRMATIVE COVENANTS 18
Section 6.1 Monthly Financials 18
Section 6.2 Form 10Q 18
Section 6.3 Certification of Non Default 18
Section 6.4 Form 10K 18
Section 6.5 Projected Financials 19
<PAGE> 4
PAGE
Section 6.6 Regulatory Filings 19
Section 6.7 Notice of Litigation 19
Section 6.8 Notice of Defaults or Judgments 19
Section 6.9 Board Meetings 19
Section 6.10 Insurance 20
Section 6.11 Use of Proceeds; Certification 20
Section 6.12 Intentionally Omitted 20
Section 6.13 Intentionally Omitted 20
Section 6.14 Payments and Other Debts 21
Section 6.15 Maintain Copies; Financing Statements 21
Section 6.16 Information Requests 21
Section 6.17 Protect the Collateral 21
Section 6.18 Further Assurance 21
ARTICLE 7 - NEGATIVE COVENANTS 27
Section 7.1 Change of Organization 27
Section 7.2 Equity Issuance or Redemption 27
Section 7.3 Dividends 27
Section 7.4 Directors 27
Section 7.5 Mergers, Etc. 28
Section 7.6 Capital Expenditures 28
Section 7.7 Employee Compensation 28
Section 7.8 Indebtedness 28
Section 7.9 Affiliate Transactions 28
Section 7.10 Change of Site or Business 28
Section 7.11 Change in Company, etc. 28
Section 7.12 New Debt Provisions 29
Section 7.13 Judgments 29
Section 7.14 Cross-Default 29
Section 7.15 Diversion of Proceeds 29
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PAGE
ARTICLE 8 - TERMINATION OF AGREEMENT 25
ARTICLE 9 - DEFAULT 25
Section 9.1 Events of Default 25
(a) Principal and Interest Payments 25
(b) Representations and Warranties 25
(c) Covenants 25
(d) Loan Documents 25
(e) Other Debt to Holders 25
(f) Cross Default to Other Obligations 26
(g) Involuntary Bankruptcy or 26
Receivership Proceedings
(h) Voluntary Petitions 26
(i) Assignments for Benefit of 26
Creditors
(j) Undischarged Judgments 26
(k) Attachment 27
(l) No Assumption 27
(m) Loss of Key Employees 27
Section 9.2 Remedies 27
ARTICLE 10 - FEES AND COSTS 27
Section 10.1 Closing Costs 28
Section 10.2 Commitment Fee 28
Section 10.3 Hourly Fee 28
Section 10.4 Expenses 28
Section 10.5 Costs and Fees 28
(a) Suits 28
(b) Liability 28
ARTICLE 11 - INDEMNIFICATION; ENVIRONMENTAL 28
LIABILITY
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PAGE
ARTICLE 12 - REMEDIES 29
Section 12.1 Cumulation. Receivership 29
Section 12.2 No Implied Waiver 30
ARTICLE 13 - PARTIES 30
ARTICLE 14 - NOTICE 30
ARTICLE 15 - RELATIONSHIP OF THE PARTIES 31
ARTICLE 16 - CONTROLLING LAW; VENUE AND 32
JURISDICTION; SERVICE OF PROCESS
ARTICLE 17 - WAIVER OF TRIAL BY JURY 32
ARTICLE 18 - CAPTIONS; SEVERANCE 33
ARTICLE 19 - COUNTERPARTS; ENTIRE AGREEMENT 33
ARTICLE 20 - DEFINITIONS AND RULES OF CONSTRUCTION 33
Section 20.1 Definitions 33
Section 20.2 Rules of Construction 33
TABLE OF EXHIBITS 39
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THIS INVESTMENT AND LOAN AGREEMENT is made by and among IndeNet, Inc.,
a Delaware corporation (the "Borrower"), and Allied Capital Corporation, a
Maryland corporation (collectively with its successors and assigns, the
"Holder").
RECITALS
A. Under terms of a letter dated February 16, 1998, by and between the
Holder and the Borrower (the "Commitment Letter"), the Borrower committed to
issue to the Holder subordinated debentures and warrants to purchase shares of
the Borrower's common stock, in consideration for an initial loan in the
aggregate amount of Nine Million Dollars ($9,000,000) (the "Initial Loan") and
subsequent loans in the aggregate amount of Six Million Dollars ($6,000,000),
each loan to be made in accordance with the terms and conditions set forth
herein (collectively with all modifications, renewals, extensions and
replacements thereof and therefor, the "Loans").
B. Under terms of the Commitment Letter, the Borrower has agreed to use
the Loans to repay a portion of its Senior Debt (as defined later), satisfy its
working capital needs and fund future acquisitions, as provided herein.
C. The Borrower and the Holder wish to set out their agreement and
understandings with respect to the foregoing.
PROVISIONS
In consideration of the premises and the covenants herein, the Holder
and the Borrower each agree as set forth below.
ARTICLE 1
Loan
Section 1.1 Funding. At Closing hereunder, the Holder will fund the Initial
Loan to the Borrower upon the satisfaction of conditions set forth in this
Agreement. In addition, at any time during the six month period following the
Closing Date, if the Borrower desires to make any future acquisitions which have
been approved in writing by the Holder, in its sole discretion ("Future
Acquisitions"), the Holder agrees, upon the satisfaction of conditions set forth
in this Agreement, to make one or more loans to the Borrower, in such amounts
requested by the Borrower, which in the aggregate will not exceed Six Million
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Dollars ($6,000,000), but shall be made in increments of Two Million Dollars
($2,000,000) or more (the "Subsequent Loans"), for the sole purpose of funding
such Future Acquisitions. The Initial Loan and each of the Subsequent Loans will
be evidenced by, and repaid according to the terms of certain subordinated
debentures, in the form attached hereto as EXHIBIT 1.1A (the "Initial
Debenture") or EXHIBIT 1.1B (the "Subsequent Debenture"), as applicable
collectively, the Initial Debenture and any Subsequent Debentures with all
modifications, extensions, renewals and replacements thereof and therefor, the
"Debentures"), each of which will be issued by the Borrower to the Holder at
Closing or, if applicable, the Future Acquisition Closing (as defined herein).
Section 1.2 Collateral. Subject to the prior liens described in Section 1.3
below, the Debentures and the Holder's rights herein shall be secured against
all of the Borrower's realty and personalty and other property of any kind, all
accessions thereto, substitutions for and all replacements, products and
proceeds thereof, including without limitation the collateral described below.
The Borrower hereby grants to the Holder continuing security interests in all of
the foregoing. At Closing, the Borrower shall execute and deliver or, if not a
party thereto, deliver to the Holder each of the following documents
(collectively, with all modifications, extensions, renewals and replacements
thereof and therefor, the "Collateral Documents"):
(a) a Security Agreement in the form attached hereto as EXHIBIT 1.02A;
(b) UCC-1 Financing Statements in the form attached hereto as
EXHIBIT 1.02B;
(c) a Security Agreement for Intellectual Property, covering all of the
CCMS's patents, trademarks and other intellectual properties, in the form of
EXHIBIT 1.02C hereto;
(d) a Collateral Assignment of the Borrower's leasehold interests in
real property, in the form of EXHIBIT 1.02D hereto;
(e) a Guaranty, duly executed by each of Guarantors, in the form of
EXHIBIT 1.02E hereto; and
The Collateral Documents, this Agreement and the Debentures, collectively with
all modifications, extensions, renewals and replacements thereof and therefor,
are sometimes hereinafter referred to as the "Loan Documents".
Section 1.3 Senior Debt; Subordination Agreements. (a) From time to time, the
Borrower may, subject to the conditions set forth herein, (i) obtain debt
financing from
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institutional lenders in the amounts and on terms consistent with Section 7.8
hereof and (ii) obtain purchase money and true lease financing for tangible
assets in its ordinary course of business. Such financings are sometimes
hereinafter collectively called the "Senior Debt." In no case shall the
Borrower incur any Senior Debt if such proposed Senior Debt financing will (a)
violate the ratio requirements of Section 7.8 hereof, or (b) breach any covenant
contained in the Loan Documents.
(b) So long as no Event of Default has occurred, the Holder will at the
Borrower's written request from time to time execute reasonable and customary
subordination agreements in favor of institutional lenders proposing to provide
Senior Debt on reasonable and customary terms. Such subordination agreements may
upon demand of such institutional lenders, include provisions for subordination
of lien priority under the Loan Documents, cessation of payments under the Loan
in case any Senior Debt facility is in default, and a moratorium on exercise of
Holder's remedies against the Companies for one hundred twenty (120) days after
such a default. So long as the conditions herein for the incurring of Senior
Debt are met, the Holder shall execute such subordination agreements without
undue delay.
Section 1.4 Conditions to Funding of the Initial Loan. The obligation of the
Holder to fund the Initial Loan on the date hereof (the "Closing Date") is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following documents:
(a) The Borrower shall have performed and complied in all material
respects with all of the covenants, agreements, obligations and conditions
required hereunder;
(b) The Holder shall have received an opinion of the Borrower's
counsel, Miller, Canfield, Paddock and Stone, P.L.C. dated the Closing Date, in
form and substance satisfactory to the Holder;
(c) The Borrower shall have delivered to the Holder each of the
following documents, duly executed by it or such other persons, if applicable:
(i) an Initial Debenture;
(ii) an Initial Stock Purchase Warrant;
(iii) a Executive Agreement duly executed by all parties, in the
form of EXHIBIT 1.04 attached hereto;
(iv) each of the other Loan Documents; and
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(v) any other documents reasonably requested by the Holder in
connection therewith.
(d) The Holder shall have received copies of the certificate of
incorporation and any other publicly filed organizational documents of each U.S.
Company, certified by the respective states of incorporation for the U.S.
Companies;
(e) The Holder shall have received certified (as of the Closing Date)
copies of all corporate action taken by each U.S. Company, including resolutions
of their respective Board of Directors, authorizing the execution, delivery and
performance of the Loan Documents; and
(f) The Holder shall have received a certificate as to the legal
existence and good standing of each U.S. Company, issued by the Secretary of
State of the State of Delaware or appropriate public official in each of its
jurisdiction of incorporation and foreign qualification.
Section 1.5 Future Acquisitions, Conditions to Funding Subsequent Loan. In the
event that the Borrower desires the Holder to make a Subsequent Loan in
connection with a Future Acquisition which has been previously approved in
writing by the Holder, the closing of the Subsequent Loan shall take place on
such date and at such place as shall be mutually agreed upon by the parties (the
"Future Acquisition Closing Date"). On each Future Acquisition Closing Date, the
Holder and the Borrower shall take the following actions, with the obligations
of each party subject to the performance by the other of its obligations under
this Section:
1. The Borrower shall have delivered to the Holder a certificate
certifying (i) that the representations and warranties relating to the Borrower
contained in Article 5 of this Agreement are true and correct in all material
respects, as of the Future Acquisition Closing Date as though such
representations and warranties had been made on or as of such Future Acquisition
Closing Date, and (ii) the Borrower's continued performance of and compliance
with each of its covenants, obligations and agreements required by this
Agreement;
2. The Borrower shall have delivered to the Holder each of the
following documents duly executed by it or such other persons, if applicable:
(a) a Subsequent Debenture in the amount of the Subsequent Loan;
(b) a Subsequent Stock Purchase Warrant; and
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(c) any other documents reasonably requested by the Holder in
connection therewith; and
3. The Holder shall by wire transfer pay to the Borrower the proceeds
of the Subsequent Loan, net of (i) a closing fee owed to the Holder of One
Percent (1%) of the amount of the Subsequent Loan, and (ii) any fees and
expenses of the Holder or Holder's attorneys as required under Article 10
hereof.
ARTICLE 2
Equity
Section 2.1 Stock Purchase Warrants.
(a) At Closing, the Borrower will issue and sell to the Holder a stock
purchase warrant (collectively, with all modifications, extensions, renewals and
replacements thereof and therefor, the "Initial Warrant") in the form of EXHIBIT
2.01A hereto, to acquire shares of the Borrower's common stock ("Shares") which
will entitle the Holder to receive that number of the Borrower's authorized but
unissued Shares that will provide the Holder, in the aggregate, with Two and One
Tenth Percent (2.1%) of the Borrower's capital stock, calculated on a fully
diluted basis in accordance with the terms set forth therein. The purchase price
of the Initial Warrant shall be $60.
(b) At each Future Acquisition Closing, the Borrower will issue and
sell to the Holder a stock purchase warrant (collectively, with all
modifications, extensions, renewals and replacements thereof and therefor, a
"Subsequent Warrant", which together with the Initial Stock Purchase Warrant are
collectively referred to herein as the "Warrants") in the form of EXHIBIT 2.01B
hereto, to acquire Shares which will entitle the Holder to receive, for each Two
Million Dollars ($2,000,000) of Subsequent Loan amount, that number of the
Borrower's authorized but unissued Shares that will provide the Holder, in the
aggregate, with .467% of the Borrower's capital stock, calculated on a fully
diluted basis in accordance with the terms set forth therein. The purchase price
of the Subsequent Warrant shall be $13.33 for each $2,000,000 of Subsequent Loan
amount.
Section 2.2 Valuation of Warrants. The Holder and the Borrower hereby agree that
as of the Closing, the fair market value of the Warrants shall be the purchase
price thereof, and that they shall prepare and maintain their books of account,
financial statements and tax returns in a manner consistent therewith.
ARTICLE 3
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[Intentionally Omitted]
ARTICLE 4
Executive's Agreement
Reference is made to that certain Executive's Agreement being executed
herewith. The Borrower consents to the entry by all parties into such
Executive's Agreement for all purposes.
ARTICLE 5
Representations and Warranties
To induce the Holder to enter the transactions contemplated herein and
purchase the Debentures and Warrants, the Borrower represents and warrants as
set out below. All representations and warranties in this Article are being made
by the Borrower on and as of the Closing Date, shall refer to facts as they
exist at Closing and shall survive the Closing.
Section 5.1 Due Organization; Authority; Binding Obligation; Opinion of Counsel.
Each Company is duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation having a Certificate of
Incorporation, as amended, and By-Laws, or, if applicable, such other
organizational documents (all terms of which are in full force and effect) as
previously furnished to the Holder, and true copies of which, together with all
other material constituent documents of such Company, are attached hereto as
part of EXHIBIT 5.01A. Each Company is duly qualified to conduct business as
proposed and is in good standing as a foreign corporation in all jurisdictions
in which the nature of its business or location of its properties require such
qualification and where the failure to so qualify could have a material adverse
effect on it, evidence of which qualification and good standing with respect to
each of the U.S. Companies are attached hereto as EXHIBIT 5.01B. Each U.S.
Company has full power and authority to enter into the Loan Documents to which
it is a party, and to consummate the transactions contemplated hereby or
thereby, and to carry out the provisions hereof and thereof. Each U.S. Company
has taken all corporate action necessary for the execution and performance of
the Loan Documents to which it is a party, and to consummate the transactions
contemplated hereby or thereby as evidenced by the resolutions set forth in
EXHIBIT 5.01C. This Agreement and each document to be executed by each U.S.
Company herewith will constitute a valid and binding obligation of the U.S.
Company party thereto, enforceable in accordance with their respective terms
when executed and delivered; and
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each U.S. Company has caused its counsel to deliver a letter opining as to such
authority and related matters in the form set forth in EXHIBIT 5.01D.
Section 5.2 Principal Business; Title to Assets. The Companies are primarily
engaged in marketing and selling traffic and programming systems for broadcast
systems. Each Company has good and marketable title to and ownership of all real
and personal property it purports to own, free and clear of all liens, claims,
security interests and encumbrances except for liens created hereunder, liens
securing the Senior Debt and liens for taxes and assessments not delinquent or
which are contested in good faith.
Section 5.3 Litigation. None of the Companies have been made a party to or
threatened by any suits, actions, claims, investigations by governmental bodies
or legal, administrative or arbitrational proceedings, except to the extent such
proceeds could not have a material adverse effect, whether individually or in
the aggregate, on such Company and as set out in the litigation schedule
attached hereto as EXHIBIT 5.03 (hereinafter "Litigation Schedule"). None of
the Companies nor their officers or directors know of any basis or grounds for
any such suit or proceeding. There are no outstanding orders, judgments, writs,
injunctions or decrees of any court, government agency or arbitrational tribunal
against or affecting any Company or its properties, assets or business.
Section 5.4 Taxes.
(a) Generally. Each Company has filed all tax returns, federal, state
and local, which are required to be filed, and has duly paid or fully reserved
for all taxes or installments thereof (including any interest or penalties),
which have or may become due pursuant thereto or pursuant to any assessment
received by such Company.
(b) No Open Returns. No federal, state, local, foreign or other return
of any Company for tax years that remain open under any applicable statute of
limitations, has been examined by the Internal Revenue Service or other tax
authorities; or if so examined no deficiencies have been asserted or assessments
made as a result of such examinations (including all penalties and interest).
There are no waivers, agreements or other arrangements providing for any
extension of time with respect to the assessment or collection of any unpaid
tax, interest or penalties relating to any Company. No issues have been raised
by (or are currently pending before) the Internal Revenue Service or any other
taxing authority in connection with any return of any Company, which could
reasonably be expected to have a material adverse effect on the financial
condition of such Company if decided adversely to such Company, nor are there
any such issues which have not been so raised but if so raised by the Internal
Revenue Service, or any other taxing authority, could reasonably be expected to
have such a material adverse effect.
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(c) Excess Parachute Payments. No Company has made, has become
obligated to make, or will, as a result of the transactions contemplated by this
Agreement, make or become obligated to make, any "excess parachute payment" as
defined in Internal Revenue Code Section 280G.
(d) Deferred Intercompany Transactions. Each Company and its affiliates
have not engaged in any "deferred intercompany transactions" within the meaning
of Section 1.1502-13 of the regulations promulgated under the Internal
Revenue Code.
Section 5.5 Financial Statements. The consolidated or consolidating financial
statements for the fiscal year ending March 31, 1997 as audited by BDO Seidman,
LLP, attached as EXHIBIT 5.05(a), and the Borrower's unaudited consolidated or
consolidating financial statements for the nine month period ending December 31,
1997 attached as EXHIBIT 5.05(b) are prepared in accordance with GAAP, are true
and correct in all material respects, and fairly state the results of the
Companies' operations and their financial position at such dates and for the
periods stated, subject, in the case of such unaudited financial statements, to
normal year-end adjustments which, in the aggregate, are not material.
Section 5.6 Leases; Material Contracts.
(a) Leases. A complete list of all real property leases to which each
Company is a party are attached hereto as EXHIBIT 5.06(A). Each Company's
possession of its leased property has not been disturbed, and no claim has been
asserted against such Company adverse to its leasehold interests. All lease
obligations of each Company are current in all material respects.
(b) Material Contracts. The listing of the Companies' customer
contracts and the other information set out in the Companies' Order Book of
January 31, 1998 was true and correct in all material respects as of such date,
and there has been no material adverse change in the status of such contracts
since that date; all such customer contracts to which any Company is a party are
valid and binding agreements, enforceable according to their terms, and no party
is in default thereunder; the form of customer contract attached hereto as
EXHIBIT 5.06(B) is substantially similar to the form of, and contains
substantially similar terms to, the customer contract of each Company. All
accounts payable and any other indebtedness of the Companies are current in all
material respects.
Section 5.7 Disclosure. All representations made in the Borrower's Confidential
Offering Memorandum of December 1997 attached as EXHIBIT 5.07A hereto, the
Perfection Certificates provided to the Holder attached as EXHIBIT 5.07B, the
list of indebtedness of the Companies attached as EXHIBIT 5.07C hereto and in
any other document described herein or previously supplied to the Holder in
regard to this financing, are true and correct
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in all material respects as of this date, and all projections provided in such
documents are reasonable; there are no material facts relating to the Companies
known to any Company, its officers or directors or able to be learned by
reasonable diligence, which are not fully disclosed in the above documents to
the holder; no representation, covenant or warranty made by the Companies herein
or in any such document, statement or writing furnished to the Holder in
connection with the transactions contemplated herein contains or will contain
any untrue statement of material fact, or omits to state a material fact
necessary to make a statement therein not misleading.
Section 5.8 Management History. During the past ten (10) years neither Andre
Blay, nor Robert Blay, Richard Schleufer, Robert McConnell, Lester Green, John
Sorensen, David Martin or Clint Buckley Company has been arrested for or
convicted of any felony or petitioned or been granted any relief in bankruptcy.
Section 5.9 Subsidiaries. SCHEDULE 5.9 hereto correctly reflects the
organization of the Companies. Except as set forth on such Schedule, no Company
has any subsidiaries, partners or any other commonly controlled or related
entities.
Section 5.10 Incumbency. Attached hereto as EXHIBIT 5.10 is a true and
complete list of officers and directors of each Company and stockholders of each
Company (except, in the case of the stockholders of the Borrower, only those
stockholders which own more than 1,000,000 shares of the Borrower's common
stock).
Section 5.11 No Material Change. Since February 16, 1998, no Company has
suffered any material adverse change in its condition (financial or otherwise)
or its overall business prospects, nor entered into any material transactions,
or incurred any material debt, obligation or liability, absolute or contingent,
nor sustained any material loss or damage to its property, whether or not
insured except as proposed herein, nor suffered any material interference with
its business or operations, present or proposed; and there has been no sale,
lease, abandonment or other disposition by any Company of its property, real or
personal, or any interest therein or relating thereto, that is material to the
financial position of such Company.
Section 5.12 No Side Agreements. None of the Companies or any of their officers,
directors are party to any agreement with the Holder except for this Agreement
and the other documents mentioned herein or listed as exhibits hereto; except
for this Agreement and such other documents, no Company is a party to any
agreement calling for any action by it outside the ordinary course of its
business; there exists no agreement or understanding calling for any payment or
consideration from a customer or supplier of any Company to an officer, director
or shareholder of such Company in respect of any transaction between the Company
and such supplier or customer.
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Section 5.13 Non-Contravention. Except for matters set out in the Litigation
Schedule, each Company is not in breach of, default under, or in violation of
any applicable law, decree, order, rule or regulation which may materially and
adversely affect it; or any indenture, contract, agreement, deed, lease, loan
agreement, commitment, bond, note, deed of trust, restrictive covenant, license
or other instrument or obligation to which it is a party, or by which it is
bound, or to which any of its assets are subject which could have a material
adverse effect upon such Company's financial condition or business; the
execution, delivery and performance of this Agreement and the other documents
mentioned herein will not constitute any such breach, default or violation, or
require consent or approval of any court, governmental agency or body, except as
expressly provided contemplated herein.
Section 5.14 Fees & Brokerage. Except as provided in the Commitment Letter, no
brokerage or similar fees are due to any party in respect to the transactions
contemplated herein.
Section 5.15 Other Debts; Sources and Uses. Except for the Senior Debt, the
matters set out in the Litigation Schedule, and other debts of the types and in
the amounts described in the Financial Statements included herein as EXHIBIT
5.05(A) and EXHIBIT 5.05(B), each Company has no material, whether individually
or in the aggregate, debts, liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise, arising out of any transaction
entered into or any state of facts existing prior hereto, including without
limitation, liabilities or obligations on account of taxes or government
charges, penalties, interest or fines thereon or in respect thereof; each
Company does not know, and has no reasonable grounds to know, of any basis for
any claim against it as of the date of this Agreement, or of any debt, liability
or obligation other than those mentioned herein; EXHIBIT 5.15 hereto correctly
states the uses of the Initial Loan.
Section 5.16 Capital Structure. The authorized capital stock of each Company is
as set forth on EXHIBIT 5.16A. All securities reflected thereon have been duly
issued in accordance with applicable laws including federal and state
securities laws. Except as set forth therein there are no options, warrants or
other securities which are convertible or exchangeable for capital stock of any
Company, and no preemptive rights in respect to capital stock of any Company.
There are no issued and outstanding shares of Series B or C preferred stock or
authorized but unissued shares of Series B or C preferred stock of the Borrower.
EXHIBIT 5.16B correctly reflects the form of the management options set out in
EXHIBIT 5.16.
Section 5.17 Solvency. As of the date hereof, and giving effect to the
transactions contemplated by this Agreement, the present fair saleable value of
each Company's assets is greater than the amount required to pay such Company's
total indebtedness (contingent or otherwise), and is greater than the amount
that will be required to pay such indebtedness as it matures and as it becomes
absolute and matured; the transactions contemplated hereby
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are being effectuated without intent to hinder, delay or defraud present or
future creditors of any Company; it is each Company's intention that it will
maintain the above-referenced solvent financial condition, giving effect to the
debt incurred hereunder, as long as each Company is obligated to the Holder
under this Agreement or in any other manner whatsoever; each Company has
sufficient capital to carry on its previous operations as they are now
conducted, and to consummate the transactions contemplated herein.
Section 5.18 Regulatory Compliance. Each Company has complied in all material
respects with all laws, ordinances and regulations applicable to it and to its
business, including without limitation laws, ordinances and regulations relating
to securities, patent, trademark, zoning, labor, food and drug, the Occupational
Safety & Health Act, the Employees Retirement Income Security Act, and all
federal and state environmental laws and regulations.
Section 5.19 Employee Benefit Matters. There is no existing single-employer
plan defined in Section 4021(a) of ERISA in respect of which each Company is,
an "employer" or a "substantial employer" as defined in Sections 3(5) and
4001(a)(2) of ERISA, respectively; each Company has delivered to the Holder
copies, as listed on EXHIBIT 5.19 attached hereto, of each plan described in
Section 4021(a) of ERISA, in respect of which each Company will be liable to
make contributions or pay benefits; to the Companies' knowledge there have been
no reportable events as set forth in Section 4043(b) of ERISA in respect of any
such plan, and no termination of any such plan since the effective date of
ERISA, which could result in any tax, penalty or liability being imposed upon
any Company; each Company has not participated in, nor will the purchase of the
Debentures or the Warrants by the Holder involve, any "prohibited transaction"
(as defined in Section 4975 of the Internal Revenue Code of 1986, as amended)
that could subject any Company or the Holder to any tax or penalty imposed by
said Section 4975; since the effective date of ERISA, each Company has not
incurred any "accumulated funding deficiency", as such term is defined in
Section 302 of ERISA, to which such Company could be subject or for which it
might be liable; each Company is not, and immediately after the Closing will not
be, a party to, and none of the operations of such Company is or after the
Closing will be covered by, a multi-employer plan, as defined in Section 3(37)
of ERISA.
Section 5.20 Collective Bargaining. No Company is a party to or subject to any
collective bargaining agreements or union contracts. There are no labor disputes
pending or threatened against any Company which have affected, or so far as any
Company can reasonably foresee may affect, materially and adversely the
condition of any Company.
Section 5.21 Employee Contracts and Non-competition Agreements. The Borrower has
delivered to the Holder copies of all employment, compensation and
non-competition agreements, between the Companies and Messrs. Andre Blay,
Richard Schleufer, Robert McConnell, Lester Green and John Sorensen, and all
such copies are attached to EXHIBIT
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5.21; all such agreements are in full force and effect, no such officer or key
employee of the Companies has advised it (orally or in writing) that he or she
intends to terminate his employment.
Section 5.22 No Competing Business Interests. Messrs. Andre Blay, Richard
Schleufer, Robert McConnell, Les Green and John Sorensen have no direct or
indirect interest (except as the holder of not more than one percent (1%) of the
outstanding shares of a corporation whose stock is listed on any national or
regional securities exchange or reported by The National Association of
Securities Dealers, Inc. Automated Quotation System or any successor thereto),
including, but not limited to, the ownership of stock in any corporation, in
any business, that is involved in any way with, competes with, or conducts any
business similar to any of the businesses conducted by the Companies.
Section 5.23 No Conflicting Non-Competition Agreements. None of the Companies or
any of their officers, directors or employees are subject to any contract or
agreement purporting to limit their rights to compete in any market in which any
Company presently provides, or proposes to provide, goods or services; or
purporting to restrict their rights to disclose information in respect to such
competition.
ARTICLE 6
Affirmative Covenants
The Borrower shall, and shall cause each Company, to:
Section 6.1 Monthly Financials. Maintain a standard modern system of accounting;
make, to the best of its knowledge, full, true and correct entries in such
system of all dealings and transactions in relation to its business and
affairs; forward, or cause to be forwarded to the Holder the Borrower's monthly
year-to-date consolidated and consolidating financial statements (including a
monthly and year-to-date balance sheet, profit and loss statement);
Section 6.2 Form 10Q. Provide the Holder within 45 days of the end of each
calendar quarter with such information required to be disclosed in a Quarterly
Report on Form 10Q pursuant to the Securities Exchange Act of 1934, as amended,
and with such financial information prepared in accordance with any applicable
accounting rules relating thereto; such quarterly information shall be delivered
to the Holder irrespective of whether (a) the Borrower has failed to make such
filing with the Securities and Exchange Commission (the "SEC") or (b) the
Borrower is required to make such filing with the SEC;
Section 6.3 Certification of Non-Default. Provide to the Holder in writing each
quarter a written certification by the Chief Executive Officer and Chief
Financial Officer of the
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Borrower, that no default has occurred under the Debentures or this Agreement,
or any Senior Debt; or if any such default exists, stating the nature of such
default;
Section 6.4 Form 10K. Within ninety (90) days of each fiscal year-end, provide
to the Holder with such information required to be disclosed in an Annual Report
on Form 10K pursuant to the Securities Exchange Act Of 1934, as Amended, and
with such financial information prepared in accordance with any applicable
accounting rules relating thereto; such annual information shall be delivered to
the Holder irrespective of whether (a) the Borrower has failed to make such
filing with the SEC or (b) the Borrower is required to make such filing with the
SEC;
Section 6.5 Projected Financials. Prior to each accounting year-end, provide the
Holder with projected financial statements for the coming three (3) years and
monthly projections for the coming year, in the same format as used for Section
6.1;
Section 6.6 Regulatory Filings. Within thirty (30) days of filing, provide the
Holder with copies of all returns and material documents filed with federal,
state or local government agencies, including without limitation the Internal
Revenue Service, the Environmental Protection Agency, the Occupational Safety &
Health Administration and the Securities & Exchange Commission; routine payroll
tax withholding items shall be excluded;
Section 6.7 Notice of Litigation. Notify the Holder of any litigation to which
any Company is a party wherein the amount at issue is in excess of Seven Hundred
Fifty Thousand ($750,000) by mailing to the Holder, in accordance with the
provisions of Article 14 hereof, within thirty (30) days of receipt thereof, a
copy of the Complaint, Motion for Judgment or other such pleadings served on or
by a Company; and any litigation to which a Company is not a party but which
could substantially affect the operations of a Company's business or the
collateral pledged under this Agreement, by mailing to the Holder, in accordance
with the provisions of Article 14 hereof, a copy of all Complaints and Answers
obtained by a Company in regard to such litigation, or if no pleadings are
obtained, a letter setting out the facts known about the litigation within
thirty (30) days of receipt or knowledge thereof; a Company shall not be obliged
by this paragraph to give notice of suits wherein a Company is a creditor
seeking collection of account debts;
Section 6.8 Notice of Defaults or Judgments. Give the Holder notice of default
declared in regard to any loan or lease of a Company or any judgment entered
against a Company which could have a material adverse effect upon the financial
condition or business of such Company by mailing a copy to the Holder within ten
(10) days of receipt thereof;
Section 6.9 Board Meetings. Hold periodic meetings of its Board of Directors;
give the Holder prior notice of such meeting at the same time that notice is
given to members of
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the Board of Directors; allow one designee of the Holder to attend such board
meeting at the Borrower's expense; notwithstanding the foregoing, if the
Borrower's Board of Directors desires to act by unanimous consent in lieu of
meeting, they may do so provided that the Holder is sent a copy of the
resolutions adopted at least ten (10) days following to their adoption;
Section 6.10 Insurance. Maintain all-risk hazard insurance on its assets, with a
mortgagee clause in favor of the Holder, in such reasonable amounts and forms as
acceptable to the Holder; this shall include federal flood insurance if any
assets are in a designated flood plain; and supply the Holder annually with a
certification of such insurance from the relevant insurers in the form set
forth as EXHIBIT 6.10;
Section 6.11 Use of Proceeds; Certification. Use the proceeds of the Loans only
in the manner set forth on EXHIBIT 5.15. The Holder shall be entitled to
review, at any time, the Borrower's use of the proceeds of the Loans.
Section 6.12 [Intentionally Omitted]
Section 6.13 [Intentionally Omitted]
Section 6.14 Payments and Other Debts. Make all payments of principal, interest
and expenses as and when due under the Debentures, without setoff and regardless
of any claim the Borrower may have against the Holder except for setoff rights
and claims which have been reduced to a final judgment against the Holder by a
court of competent jurisdiction; and comply in all respects with all terms,
conditions and covenants relating to other debt obligations of the Borrower;
Section 6.15 Maintain Copies; Financing Statements. Maintain an original or a
true copy of this Agreement and any modifications hereof, which shall be
available for inspection as called for herein or in the Debentures; and pay the
taxes and costs of, or incidental to, any recording or filing of any financing
statements concerning any collateral for the Debentures;
Section 6.16 Information Requests. Furnish from time to time to the Holder at
the Borrower's expense all information that the Holder may reasonably request to
enable the Holder to prepare and file any report or form required of the Holder
by the Securities and Exchange Commission or any other regulatory authority;
Section 6.17 Protect the Collateral. Take all necessary steps to administer,
supervise, preserve and protect the collateral for the Debentures and to perfect
and maintain the Holder's security interest in such collateral; regardless of
any action taken by the Holder, there shall be no duty upon the Holder in this
respect; and
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Section 6.18 Further Assurance. From time to time promptly execute and deliver
to the Holder such additional documents, and take such other reasonable steps,
as the Holder may reasonably require to carry out the purposes hereof and of the
other Loan Documents, or to protect the Holder's rights thereunder, including
(without limiting the generality of the foregoing) the execution of recordable
documents to reflect the Holder's interests in any collateral for the Loans, and
the recording thereof at Borrower's expense in the relevant public records.
ARTICLE 7
Negative Covenants
The Borrower shall not do any of the following acts, and shall cause
each of the Companies to refrain from doing any of the following acts, without
the prior written consent of the Holder. Holder's consent to such acts shall not
be unreasonably withheld or delayed with respect to the covenants contained in
Sections 7.1, 7.2, 7.4, 7.6, 7.7, 7.9 and (except in the case of proposed Future
Acquisitions for which the Borrower will seek a Subsequent Loan from the Holder)
7.10.
Section 7.1 Change of Organization. Make or suffer any material change in its
organization (including amendments to its charter or bylaws if such change will
adversely affect the Holder's rights or interest hereunder), cause or suffer any
change in its percentage ownership of its subsidiaries, or establish any parent
or subsidiary entities in which the Holder will not have a direct or indirect
pro rata equity interest;
Section 7.2 Equity Redemption. Except as contemplated by EXHIBIT 5.15, redeem
any capital stock of any class or any convertible debt or other equity security
of the Borrower except as required by the Warrants;
Section 7.3 Dividends. Except in the case of dividends made by the Companies
(other than the Borrower) to the Borrower, whether directly or indirectly,
declare or pay any dividend or distribution of any type on any class of its
equity securities;
Section 7.4 Directors. Suffer Mr. Andre Blay or Mr. Richard Schleufer to resign
or otherwise cease to be a Director of the Borrower;
Section 7.5 Mergers, Etc. Become a party to any merger or consolidation, except
where the relevant Company is the surviving corporation, with any other
corporation, company or entity, or dispose of assets necessary to continue its
present or proposed business operations;
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Section 7.6 Capital Expenditures. Make capital expenditures in any fiscal year
in excess of One Million Six Hundred Thousand DOLLARS ($1,600,000), except to
the extent such expenditures are included in a capital improvements budget
approved by the Board of Directors and the Holder; provided, however, that the
limit on capital expenditures hereunder shall either be increased or decreased
at the beginning of each fiscal year commencing on April 1, 1999, commensurate
with the percentage of the Borrower's annual increase or, if applicable,
decrease of gross profits during the prior fiscal year, for example, if the
Borrower experienced an annual increase of gross profits of ten percent (10%)
during the prior fiscal year then the limit on capital expenditures hereunder
shall be increased by ten percent (10%) for the following fiscal year or,
conversely, if the Borrower experienced an annual decrease of gross profits of
ten percent (10%) the prior fiscal year then the limit on capital expenditures
hereunder shall be decreased by ten percent (10%) during the following fiscal
year; provided, further, that, under no circumstances, shah the limit on capital
expenditures hereunder be less than One Million Six Hundred Thousand Dollars
($1,600,000); or prepay any debt except for that incurred hereunder;
Section 7.7 Employee Compensation. Pay a salary or other compensation or advance
to any employee in excess of Six Hundred Thousand Dollars ($600,000) per year
(inclusive of any bonuses approved by the Board of Directors, without any
interested Director voting in favor of such award);
Section 7.8 Indebtedness and Financial Ratios. Incur, suffer or maintain
indebtedness, calculated on a consolidated basis for all the Companies, such
that
(a) at the end of each calendar quarter, the ratio of the Companies'
total indebtedness to their EBITDA for the twelve (12) calendar month period
then ending is greater than 4.0 to 1, PROVIDED, HOWEVER, that so long as the
Borrower does not acquire Boss, Inc. or its assets, the ratio applicable to this
sub-section (a) shall be 4.25 to 1 instead of 4.0 to 1 for the first twelve (12)
months after the date hereof; and
(b) at the end of each calendar quarter through December 31, 2001, the
ratio of the Companies' EBITDA for the twelve (12) calendar month period then
ending, to its debt service required in the relevant month (including principal
and interest) is less than 1.5 to 1;
(c) at the end of each calendar quarter beginning with March 31, 2002,
the ratio of the Companies' EBITDA for the twelve (12) calendar month period
then ending, to its debt service required in the relevant month (including
principal and interest) is less than 2.0 to 1; and
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(d) at the end of each calendar month preceding a month when the
Borrower is to make a material acquisition, the Companies shall be in compliance
with the financial ratios set out in sub-sections (a), (b) and (c) above;
PROVIDED, HOWEVER, that the Borrower shall not be in breach of this covenant
solely by virtue of its incurring and maintaining Senior Debt up to an aggregate
amount of $5,000,000 and Loans hereunder in an aggregate amount up to
$9,000,000; PROVIDED FURTHER that in calculating EBITDA under this Section 7.8
and in the definition of EBITDA at Section 20.1, below, (x) in cases where the
Borrower has acquired any operations after the date hereof, the acquired
entity's average monthly EBITDA during the twenty-four months prior to the
acquisition or, if elected by the Borrower and the Borrower has notified the
Holder of such election, during the twelve months prior to the acquisition shall
be included in the calculation of the Companies' EBITDA on a pro forma basis for
each of the twelve (12) months after the acquisition, and adjustments may be
made to reflect on a pro-forma basis operating cost savings reasonably expected
to result from the acquisition, and (y) capital leases may, at the Borrower's
option, be treated either as debt such that the total lease obligations are
included in the calculation of total indebtedness and the relevant rents are
treated as interest and principal payments; or capital leases may be treated as
if they were operating leases, such that the lease obligations are excluded from
the calculation of total indebtedness, the relevant rents are deducted in full
from gross revenues in calculating net income, and no portion of such rents
shall be treated as an interest expense; AND provided, further, that
indebtedness under that certain hedging facility at Barclays Bank PLC shall not
be included in any calculation of indebtedness herein so long as such facility
continues to be collateralized in full by cash or cash equivalents.
Section 7.9 Affiliate Transactions. Purchase or sell any property or services or
borrow or lend money or property from or to, or co-invest in any transaction
with, any officer, director, employee or other affiliate, or any affiliate of
any such officer, director, employee or affiliate, except for transactions
wherein the terms are no less favorable to such entity than the best terms
available from an unaffiliated person;
Section 7.10 Change of Business. Expend or invest any funds in any manner not
strictly related to the business of producing, selling and providing support
services for computer software;
Section 7.11 Change, etc. Alter its charter, bylaws or other constituent
documents, reorganize the current business entities, or, in the case of the
Borrower only, invest more than Two Million Dollars ($2,000,000) in any
affiliates or other entities;
Section 7.12 New Debt Provisions. Enter any lease or debt agreement which
explicitly precludes the Holder from curing defaults thereunder; this Section
shall not be construed to require the Holder to cure any such defaults;
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Section 7.13 Judgments. Permit any material final judgment obtained against it
to remain unpaid for over twenty (20) days without obtaining a stay of execution
or bond;
Section 7.14 Cross-Default. Incur any declared default under any material
lease, loan or other agreement pertaining to another debt or material obligation
of it; or
Section 7.15 Diversion of Proceeds. Divert any proceeds of the Loans or Warrants
from the purposes set out in Section 6.10, above.
ARTICLE 8
Termination of Agreement
This Agreement shall automatically terminate and shall no longer be of
any force or effect when the Debentures and the Loans have been fully and
indefeasibly repaid.
ARTICLE 9
Default
Section 9.1 Events of Default. Any of the following events shall be an "Event of
Default" as that term is used herein:
(a) Principal and Interest Payments. The Borrower fails to make payment
when due of any principal or interest installment on the Debentures;
(b) Representations and Warranties. Any representation or warranty
made by the Borrower proves to have been incorrect in any material respect as of
the date thereof and remains incorrect after ten (10) days' notice; or any
representation, statement (including financial statements), certificate or data
furnished or made by the Borrower (or any officer, accountant or attorney of the
Borrower) under this Agreement, proves to have been untrue in any material
respect, as of the date as of which the facts therein set forth were stated or
certified;
(c) Covenants. The Borrower defaults in the observance or performance
of any of the covenants or agreements contained in this Agreement (other than a
default under any other subsections of this Section 9.1) or a default occurs
under the Executive Agreement attached as EXHIBIT 1.04 hereto, and such default
continues unremedied for a period of ten (10) days after the earlier of (i)
notice thereof being given by the Holder to the Company, or (ii) such default
otherwise becoming known to the officers or chief financial officer of the
Borrower;
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(d) Loan Documents. The Borrower defaults in the observance or
performance of any of the covenants or agreements contained in any Loan Document
which continues beyond the expiration of any notice and cure period pertaining
thereto;
(e) Other Debt to Holders. The Borrower defaults in the payment of any
amounts due to the Holder, or the Holder declares a default by the Borrower
(which has not been cured within any applicable cure periods), in connection
with the observance or performance of any of the covenants or agreements
contained in any credit agreements, notes, collateral or other documents
relating to any indebtedness of the Borrower to the Holder, other than the
Debentures;
(f) Cross Default to Other Obligations. Without implying that such
other indebtedness is permitted, a Company defaults in the payment of any
amounts due to any person (other than the Holder), or in the observance or
performance of any of the covenants or agreements contained in any credit
agreements, notes, leases, collateral or other documents relating to any
obligation of a Company in excess of $750,000 to any person (other than the
Holder), after any grace period applicable to such default has elapsed;
(g) Involuntary Bankruptcy or Receivership Proceedings. A receiver,
conservator, liquidator or trustee of a Company or of its property is appointed
by order or decree of any court or agency or supervisory authority having
jurisdiction; or an order for relief is entered against a Company under the U.S.
Bankruptcy Code; or a Company is adjudicated bankrupt or insolvent; or any
material portion of the properties of a Company is sequestered by court order
and such order remains in effect for more than fifty (50) days after a Company
obtains knowledge thereof; or a petition is filed against a Company under any
state, reorganization, arrangement, insolvency, readjustment of debt,
dissolution, liquidation or receivership law of any jurisdiction, whether now or
hereafter in effect, and such petition is not dismissed within sixty (60) days;
(h) Voluntary Petitions. A Company files a petition under the U.S.
Bankruptcy Code or seeks relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, or
consents to the filing of any case or petition against it under any such law;
(i) Assignments for Benefit of Creditors. A Company makes a general
assignment for the benefit of its creditors, or admits in writing its inability
to pay its debts generally as they become due, or consents to the appointment of
a receiver, trustee or liquidator of all or any part of its property;
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(j) Undischarged Judgments. Judgment for the payment of money, which is
not covered by insurance, is rendered by any court or other governmental body
against the Company, and such Company does not discharge the same or provide for
its discharge in accordance with its terms, or procure a stay of execution
thereof within twenty (20) days from the date of entry thereof, and within said
period of twenty (20) days from the date of entry thereof or such longer period
during which execution of such judgment shall have been stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal while providing
such reserves therefor as may be required under GAAP;
(k) Attachment. A writ or warrant of attachment, seizure or any similar
process shall be issued by any court against all or any material portion of the
property of a Company, and such writ or warrant of attachment or any similar
process is not released or bonded within twenty (20) days after its entry; and
(1) No Assumption. Substantially all of the ownership interest in a
Company, or any Company's assets, are sold, exchanged or transferred.
With respect to any breach described above that is capable of being cured and
for which no cure period is already specified (a "Curable Default"), the
occurrence of such Curable Default shall not constitute an Event of Default
hereunder if such Curable Default is fully cured and/or corrected within thirty
(30) days (ten (10) days, if such Curable Default may be cured by payment of a
sum of money) of notice thereof to Borrower given in accordance with the
provisions hereof; provided, however, that this provision shall not require
notice to Borrower and an opportunity to cure any Curable Default of which
Borrower has had actual knowledge for the requisite number of days set forth.
Section 9.2 Remedies. Upon the occurrence of any Event of Default, the Holder
may
(a) by written notice to the Borrower, declare the entire principal
amount of the Loans then outstanding, including interest accrued thereon,
together with all other fees and charges payable in connection with the Loans,
to be immediately due and payable without presentment, demand, protest, notice
of protest or dishonor or other notice of default of any kind, all of which are
hereby expressly waived by the Borrower; and
(b) exercise any of the rights or remedies provided in the Collateral
Documents or avail themselves of any other rights or remedies provided by
applicable law; and
(c) set-off any funds of the Borrower in the possession of the Holder
against any amounts then due by the Borrower to the Holder pursuant to this
Agreement.
ARTICLE 10
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Fees and Costs
The Borrower shall pay:
Section 10.1 All closing costs, brokerage commissions, due diligence costs and
other fees and expenses incurred by the Holder in connection with the
transactions contemplated by this Agreement, including fees of KPMG Peat Marwick
not to exceed $10,000;
Section 10.2 A closing fee to the Holder of One Percent (1%) of all Loans made
at the Closing of, if applicable, any Future Acquisition Closing.
Section 10.3 The hourly fees and expenses of the Holder's attorneys for work
done in connection with the transactions contemplated by this Agreement;
Section 10.4 All of Holder's expenses of any nature which may be reasonably
necessary, either before or after a default hereunder, for the enforcement or
preservation of the Holder's rights under this Agreement, the Debentures, the
Warrants, or any other agreement of the Borrower mentioned herein, including but
not limited to reasonable attorneys' fees, appellate costs and fees, and costs
incurred by the Holder as a participant in any bankruptcy proceeding, workout,
debt restructuring, extension of maturity or document amendment, involving the
Borrower or any other obligor under the Debentures;
Section 10.5 All costs and fees, including attorneys' fees and expenses,
incurred by the Holder or its affiliates in connection with:
(a) any suit, action or claim of the Holder to enforce the provisions
of this Agreement or any other document related hereto; and
(b) any suit, action, claim or other liability asserted against the
Holder or its affiliates by a Company or Mr. Blay, in either case, in which
such parties do not prevail with respect to substantially all of their claims.
ARTICLE 11
Indemnification. Environmental Liability
The Borrower will indemnify the Holder and its directors, officers,
employees, agents and controlling persons (hereinafter "Indemnitees") against,
and hold the Holder and each such Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses (including attorneys' fees
and expenses) incurred by or asserted against the
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<PAGE> 28
Holder or any such Indemnitee arising out of, in any way connected with, or
resulting from the following:
(a) this Agreement, the other documents contemplated hereby, the
performance by the parties hereto and thereto of their respective obligations
hereunder and thereunder, or consummation of the transactions contemplated
hereby and thereby;
(b) any and all liability and loss with respect to or resulting from
any and all claims for or on account of any broker's or finder's fees or
commissions with respect to this transaction as may have been created by
Borrower or its officers, partners, employees or agents, together with any stamp
or excise taxes which may become payable in connection with this transaction or
the issuance of stock hereunder;
(c) the spilling, leaking, pumping, pouring, unsettling, discharging,
leaching or releasing of hazardous substances on property owned by the Borrower
or any violations by the Borrower of CERCLA, the Federal Clean Water Act or any
other Federal, state or local environmental law, regulation or ordinance; and
(d) any claim, litigation investigation or proceeding relating to any
of the foregoing, whether or not the Holder or any such person is a party
thereto;
PROVIDED, HOWEVER, that any such indemnity shall not apply to any such
losses, claims, damages, liabilities or related expenses arising from the
Holder's gross negligence or willful misconduct.
The provisions of this Section shall remain operative and in full force
and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of the
Debentures, the invalidity or unenforceability of any term or provision of this
Agreement, the Debentures or any Collateral Documents, or any investigation made
by or on behalf of the Holder. All amounts due under this Article shall be
payable on written demand therefor.
ARTICLE 12
Remedies
Section 12.1 Cumulation. Receivership. None of the rights or remedies of the
Holder provided herein shall be exclusive, but each shall be cumulative with and
in addition to every other right or remedy of the Holder, now or hereafter
existing, at law or in equity, by statute, agreement or otherwise. In any action
under this Agreement, the Debentures or
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<PAGE> 29
the Warrants, the Holder shall be entitled to appointment of a receiver to
administer the Borrower, or all or any portion of its assets as may be subject
to Holder's claims.
Section 12.2 No Implied Waver. No course of dealing between the Holder and any
other party hereto, or any failure or delay on the part of the Holder in
exercising any rights or remedies hereunder, shall operate as a waiver of any
rights or remedies of the Holder under this or any other applicable agreement.
No single or partial exercise of any rights or remedies hereunder shall operate
as a waiver or preclude the exercise of any other rights or remedies hereunder.
ARTICLE 13
Parties
This Agreement will bind and accrue to the benefit of Borrower the
Holder, any holders of the Warrants or the Debentures, and their successors and
assigns. Any purchaser, assignee, transferee or pledgee of the Warrants or
Debentures, or any document arising in connection with the transaction subject
to this Agreement (or any of them), sold, assigned, transferred, pledged or
repledged by a Holder shall forthwith become vested with and entitled to
exercise all rights and remedies provided herein to the Holder, as if said
purchaser, assignee, transferee or pledgee were originally named in this
Agreement in place of the Holder.
ARTICLE 14
Notice
All notices or communications under this Agreement or the Warrants or
Debentures shall be in writing and mailed, postage prepaid, or delivered as
follows:
To Holder: 1666 K Street, N.W., 9th Floor
Washington, D.C. 20006
Attn: Mr. Scott S. Binder, Principal
and to
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
Attn: David P. Parker, Esquire
29
<PAGE> 30
To the Company: IndeNet, Inc.
Fairway III Drive
Northville, MI 48167
38705 Seven Mile Road, Suite 435
Livonia, MI 48152-1056
Attn: Mr. Robert Blay
and to
Miller Canfield, Paddock and Stone, P.L.C.
150 West Jefferson
Suite 2500
Detroit, MI 48226-4415
Attn: David K. McCleod, Esq.
or, to such subsequent addresses as may hereafter be specified by the parties.
Rejection or other refusal to accept, or the inability to deliver because of a
changed address of which no notice was given, shall not affect the date of such
notice sent in accordance with the foregoing provisions. Each such notice,
request or other communication shall be deemed sufficiently given, served, sent
and received for all purposes at such time as it is delivered to the addressee
(with the return receipt, the delivery receipt, the affidavit of the messenger
or the answer back being deemed conclusive [but not exclusive] evidence of such
delivery), or at such time as delivery is refused by addressee upon
presentation.
ARTICLE 15
Relationship of the Parties
This Agreement provides, among other things, for the making, of loans
by the Holder, in its capacity as a lender, to the Borrower, in its capacity as
a borrower, and for the payment of interest and repayment of principal by the
Borrower to the Holder. The provisions herein for compliance with financial
covenants and delivery of financial statements are intended solely for the
benefit of the Holder to protect its interests as a lender in assuring, payments
of interest and repayment of principal, and as warrant or stock holder in
preserving its equity stake in the Borrower. Nothing contained in this
Agreement shall be construed as permitting or obligating the Holder to act as
financial or business advisors or consultants to the Borrower, as permitting or
obligating the Holder to control the Borrower or to conduct the Borrower's
operations, as creating any fiduciary obligation on the part of the Holder to
the Borrower, or as creating any joint venture, agency or other relationship
between the parties, other than as explicitly and specifically stated in this
Agreement. The Holder is not, and shall not be construed as, a partner, joint
venturer, alter-ego, manager, controlling person, operator or other business
participant of any kind of the Borrower, neither the Holder nor the Borrower
intend the Holder to assume such
30
<PAGE> 31
status, and, accordingly, the Holder shall not be deemed responsible for or a
participant in any acts or omissions of the Borrower. The Borrower represents
that it has had the advice of experienced counsel of its own choosing in
connection with the negotiation and execution of this agreement and with respect
to all matters contained herein.
ARTICLE 16
Controlling Law; Venue and Jurisdiction; Service of Process,
This Agreement shall be interpreted, and the rights and liabilities of
the parties hereto determined, in accordance with the laws of the District of
Columbia, without regard to its principles of conflicts of law. Venue for any
adjudication hereof shall be only in the courts of the District of Columbia or
the Federal courts in such District, to the jurisdiction of which courts all
undersigned parties hereby submit as the agreement of such parties, as not
inconvenient, and as not subject to review by any court other than such courts
in the District of Columbia. All parties intend and agree that the courts of
jurisdictions in which the Borrower is incorporated and conducts its business
shall afford full faith and credit to any judgment rendered by a court of the
District of Columbia against the Borrower or other obligees hereunder, and that
such District of Columbia and federal courts shall have in personam jurisdiction
to enter a valid judgment against the Borrower or other obligees hereunder.
Service of any summons and/or complaint and any other process which may be
served on the Borrower in any action in respect hereto, may be made by mailing
via registered mail, or delivering a copy of such process to the Borrower at its
address specified above. The parties hereto agree that this submission to
jurisdiction and consent to service of process are reasonable and made for the
express benefit of the Holder.
ARTICLE 17
Waiver of Trial by Jury
Each party to this Agreement waives all right to trial by jury of all
claims, defenses counterclaims and suits of any kind directly or indirectly
arising from or relating to this Agreement or the Loan Documents or the dealings
of the parties in respect thereto. The parties hereto acknowledge and agree that
this Article is a material term of this Agreement and that the Holder would not
extend any funds under this Agreement if this waiver of jury trial were not a
part of this Agreement. Each party hereto acknowledges that this is a waiver of
a legal right and that it makes this waiver voluntarily and knowingly after
consultation with, or the opportunity to consult with, counsel of its choice.
Each party hereto agrees that all such claims, defenses, counterclaims and suits
shall be tried before a judge of competent jurisdiction, without a jury.
31
<PAGE> 32
ARTICLE 18
Captions; Severance.
The captions in this Agreement and the Warrants and Debentures are
inserted for reference only and shall be construed neither to limit nor amplify
the meaning of the other text of such documents. To the extent any provision
herein violates any applicable law, such provision shall be void and the balance
of this Agreement shall remain unchanged.
ARTICLE 19
Counterparts; Entire Agreement
This Agreement may be executed in as many counterpart copies and
counterpart signature pages as may be convenient. It shall not be necessary that
the signature of, or on behalf of, each party appear on each counterpart, but it
shall be sufficient that the signature of, or on behalf of, each party appear on
one or more of the counterparts. All counterparts shall collectively constitute
a single agreement. It shall not be necessary in any proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties. This Agreement,
the Warrants, the Debentures, the exhibits hereto and the documents mentioned
herein set forth the entire agreements and understandings of the parties hereto
in respect of this transaction. Any verbal agreements in respect of this
transaction are hereby terminated. The terms herein may not be changed verbally
but only by a writing signed by the party against which enforcement of the
change is sought.
ARTICLE 20
Definitions and Rules of Construction
Section 20.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms shall have the meanings as
follow:
(a) "Agreement" is defined as this Investment and Loan Agreement and
the exhibits and schedules hereto, as the same may be amended, supplemented,
extended, modified or replaced in accordance with the terms hereof;
(b) "Borrower" shall have the definition set out in the preamble
hereof;
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<PAGE> 33
(c) "Closing" is defined as the consummation of this Agreement;
(d) "Closing Date" shall have the meaning set forth in Section 1.4
hereof;
(e) "Collateral Documents" shall have the definition set out in
Section 1.2 hereof;
(f) "Commitment Letter" shall have the meaning set forth in Recital A
hereof;
(g) "Companies" shall mean the Borrower, Enterprise Systems Group
Limited, an English company, Cable Computerized Management Systems, Inc., a
Michigan corporation, Enterprise Broadcast Systems Limited, an English
registered company, Enterprise Systems Group, Inc., a New York corporation,
Enterprise Air-Time Systems Limited, an English registered company, Enterprise
Systems Group (Australia) Pty Limited, an Australian registered company, Media
Information Services Limited, an English registered company;
(h) Cable Computerized Management Systems, Inc., a Michigan
corporation;
(i) "Debentures" shall have the definition set out in Section 1.1
hereof;
(j) "EBITDA" is defined as (a) net income; plus, (b) in each case, to
the extent deducted in determining net income for the relevant period (i) taxes,
(ii) interest expenses as determined with reference to Section 7.8 hereof and
(iii) amortization, depreciation and similar non cash charges; and minus (c) to
the extent included in determining net income for such period, extraordinary
gains; all calculated in accordance with GAAP;
(k) "ERISA" is defined as the Employee Retirement Income Security Act
of 1974;
(l) "fully diluted basis" shall mean, in respect to a corporation or
other legal entity, the condition wherein all outstanding options, warrants and
other securities of such entity which are exercisable or exchangeable for
capital stock or other equity interests in the entity, are, for the purpose of
calculating relative ownership rights, presumed to have been exercised or
exchanged in full;
(m) "Future Acquisition" shall have the meaning set forth in Section
1.1 hereof;
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<PAGE> 34
(n) "Future Acquisition Closing" shall mean the consummation of any
Subsequent Loans by the Holder to the Borrower to finance a Future Acquisition;
(o) "Future Acquisition Closing Date". shall have the meaning set forth
in Section 1.5 hereof;
(p) "GAAP" is defined as generally accepted accounting principles of
the United States as established from time-to-time by the Financial Accounting
Standards Board, consistently applied and maintained throughout the period
indicated;
(q) "Guarantors" shall mean Cable Computerized Management Systems, Inc.
a Michigan corporation, and Enterprise Systems Group, Inc., a New York
corporation.
(r) "Holder" shall have the definition set out in the preamble hereof;
(s) "Indebtedness" shall mean all obligations for borrowed money,
obligations arising from installment purchases of property or services,
capitalized lease obligations, and the face amount of letters of credit and
without duplication all drafts drawn thereunder;
(t) "Initial Debenture" shall have the meaning set forth in Section 1.1
hereof;
(u) "Initial Loan" shall have the meaning set forth in Recital A
hereof;
(v) "Initial Warrant" shall have the meaning set forth in Section 2.1
hereof;
(w) "Liens" is defined as any interest in property securing an
obligation owed to, or a claim by, a person other than the owner of such
property, whether such interest is based on common law, statute or contract, and
including, but not limited to, the security interest, security title or lien
arising from a security agreement, mortgage, deed of trust, deed to secure debt,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes;
(x) "Litigation Schedule" shall have the meaning set forth in Section
5.3 hereof;
(y) "Loans" shall have the meaning set forth in Recital B hereof;
(z) "Loan Documents" shall have the definition set out in Section 1.2
hereof
(aa) "Permitted Liens " shall have the definition set out in Recital C,
hereof;
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<PAGE> 35
(ab) "The Securities Act" is defined as the Securities Act of 1933, as
amended;
(ac) "Senior Debt" shall have the definition set out in Section 1.3
hereof;
(ad) "Shares" shall have the meaning set forth in Section 2.1 hereof;
(ae) "Subsequent Debenture" shall have the meaning set forth in Section
1.1 hereof;
(af) "Subsequent Loans" shall have the meaning set forth in forth in
Section 1. 1 hereof;
(ag) "Subsequent Warrant" shall have the meaning set forth in Section
2.1 hereof;
(ah) "U.S. Companies" shall mean the Borrower and the Guarantors;
(ai) "Warrants" shall mean either or both the Initial Warrant and the
Subsequent Warrants.
Section 20.2 Rules of Construction. The rule of ejusdem generis shall not be
applicable herein to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned. Unless the context otherwise requires:
(a) A term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) Provisions apply to successive events and transactions;
(d) "Herein", "Hereof", "Hereto", "Hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision unless otherwise so provided;
(e) The word "person" shall mean any natural person, partnership,
corporation, nation, state, government, union, association, agency, tribunal,
board, bureau and any other form of business or legal entity;
35
<PAGE> 36
(f) All words or terms used in this Agreement, regardless of the number
or gender in which they are used, shall be deemed to include any other number
and any other gender; and
(g) All financial terms used herein and not capitalized shall have the
meaning accorded them under GAAP.
36
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed as of the date first above written.
INDENET, INC.
By: Robert Blay
------------------------------------
Robert Blay, Vice-President
ALLIED CAPITAL CORPORATION
By: Scott S. Binder
------------------------------------
Scott S. Binder, Principal
37
<PAGE> 38
EXHIBITS
<TABLE>
<CAPTION>
Document Number
<S> <C>
Initial Debenture 1.1A
Subsequent Debenture 1.1B
Security Agreement 1.02A
UCC-1 Financing Statements 1.02B
Security Agreement for Intellectual Property 1.02C
Form of Collateral Assignment of Lease 1.02D
Guaranty 1.02E
Executive's Agreement 1.04
Initial Warrant 2.01A
Subsequent Warrant 2.01B
Charter and Bylaws 5.01A
Foreign Qualifications 5.01B
Resolutions of Boards of Directors of Borrower and Guarantors 5.01C
Legal Opinion of Borrower's Counsel 5.01D
Litigation Schedule 5.03
March 31, 1997 Financial Statements 5.05(a)
December 31, 1997 Financial Statements 5.05(b)
List of Leases 5.06A
Form of Customer Contract 5.06B
Offering Memorandum of December 1997 5.07A
Perfection Certificates 5.07B
List of Indebtedness of Companies 5.07C
Organization Chart 5.09
Incumbency Certificate 5.10
Loan Sources and Uses 5.15
Capitalization Chart 5.16A
Form of Management Option 5.16B
Insurance Certificate 6.10
</TABLE>
38
<PAGE> 1
EXHIBIT 10(b)
FIRST AMENDMENT TO INVESTMENT AND LOAN AGREEMENT
This First Amendment to Investment and Loan Agreement (this "Amendment") is
entered into as of September 1, 1998 between ENTERPRISE SOFTWARE, INC., a
Delaware corporation formerly named IndeNet, Inc. ("Company") AND ALLIED CAPITAL
CORPORATION, a Maryland corporation ("Holder").
Background
A. Company proposes to enter into an Agreement of Merger (the "Agreement of
Merger") among Company, Software Acquisition Corporation, a Delaware corporation
and a wholly-owned subsidiary of Company ("SAC") and REVIVE Technologies
Incorporated, a Delaware corporation ("REVIVE"), pursuant to which, among other
things, on the Closing Date (as defined therein) REVIVE will merge with and into
SAC, with SAC being the surviving corporation of such merger, and the issued and
outstanding shares of capital stock of REVIVE will be converted into a right to
receive shares of Company common stock and cash (the "Merger").
B. In order to fund the cash purchase price of the Merger, in connection
with the closing of the Merger Company intends to borrow up to $6,000,000 in
additional funds from Holder (the "Subsequent Loan") pursuant to that certain
Investment and Loan Agreement dated March 26, 1998 between Company and Holder
("Loan Agreement"), which borrowing will be evidenced by a Subsequent Debenture
(as defined in the Loan Agreement).
C. Pursuant to Section 1.5 of the Loan Agreement, in addition to satisfying
other conditions precedent to the Subsequent Loan, Company is required to obtain
the consent of Holder to the Merger and to execute and deliver on the date of
the funding of such Subsequent Loan, a Subsequent Debenture (as defined in the
Loan Agreement) and a Subsequent Warrant (as defined in the Loan Agreement).
D. Pursuant to Section 7.8 of the Loan Agreement, Company is prohibited
from incurring, suffering or maintaining indebtedness, calculated on a
consolidated basis for Company and all of its subsidiaries, in an amount in
excess of the limitations set forth in such Section (the "EBITDA Ratios"). In
connection with the Merger and the Subsequent Loan, Company is expected to
exceed such limitations.
E. Company and Holder are entering into this Amendment in order for Holder
to consent to the Merger, for Holder and Company to modify the EBITDA Ratios set
forth in Section 7.8 of the Loan Agreement, for Company to agree to modify the
terms of the Subsequent Warrant to increase the amount of shares issuable to
Holder pursuant to such Subsequent Warrant, and for the other purposes set forth
in this Amendment.
<PAGE> 2
Agreement
In consideration for the recitals set forth above and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Company and Holder agree as follows:
1. Pursuant to Sections 1.5, 7.1, and 7.11 of the Loan Agreement, Holder
hereby consents to the Merger on the terms and conditions set forth in the
Agreement of Merger, a copy of which is attached hereto as Exhibit 1.
2. The effectiveness of Section 7.8 of the Loan Agreement shall be
suspended from the time of the Merger through March 31, 1999.
3. Holder agrees to make the Subsequent Loan to Company on the closing date
of the Merger upon satisfaction by Company of the conditions precedent set forth
in the Loan Agreement.
4. As provided in Section 2.1(b) of the Loan Agreement, on the date of the
funding of the Subsequent Loan, Company will issue to Holder a Subsequent
Warrant, except that such Subsequent Warrant shall be in the form of Exhibit 4
hereto instead of Exhibit 2.01 to the Loan Agreement.
5. Holder hereby consents, and waives any default or event of default with
respect to, Company's amendment to its certificate of incorporation in July
1998, which amendment changed the name of Company and effected a 1-4 reverse
stock split (the "Reverse Stock Split"), in the form of Exhibit 5 hereto.
6. Holder hereby acknowledges and agrees that, pursuant to Section 5(h) of
the Initial Warrant (as defined in the Loan Agreement), as a result of the
Reverse Stock Split, the Exercise Price (as defined in the Initial Warrant) has
increased from $2.50 per share to $10.00 per share.
7. The following is hereby added as an additional negative covenant to the
Loan Agreement, as Section 7.16:
7.16 Funding of REVIVE Entity. Loan to, invest in, or otherwise provide to
Software Acquisition Corporation ("SAC") any funds in excess of Two Million
Dollars ($2,000,000) in the aggregate.
8. The definition of the term "Companies set out in Section 20.1(g) of the
Loan Agreement, is hereby amended to add, at the end thereof, the following:
and Software Acquisition Corporation, a Deleware corporation;
9. Except as modified by this Amendment, the Loan Agreement shall remain in
full force and effect, including Section 6.18 thereof, pursuant to which Company
agrees to deliver to Holder the items listed on Schedule I hereto, within 30
days hereof.
<PAGE> 3
10. This Amendment shall be governed in all respects, whether as to
validity, construction, capacity, performance, or otherwise, by the laws of the
District of Columbia applicable to contracts made and to be performed within the
District of Columbia.
11. No action or inaction taken pursuant to this Amendment shall be deemed
to constitute a waiver of compliance with any covenants or agreements contained
herein. Any waiver by either party of a breach by the other party of any
provisions of this Amendment shall be in writing and shall not operate or be
construed as a waiver of any other or subsequent breach.
12. If any term or provision of this Amendment, or any application thereof
to any circumstances, shall, to any extent and for any reason, be held to be
invalid or unenforceable, the remainder of this Amendment, or the application of
such term or provision to circumstances other than those to which it is held
invalid or unenforceable, shall not be affected thereby and shall be construed
as if such invalid or unenforceable provision had never been contained herein,
and each term and provision of this Amendment shall be valid and enforceable to
the fullest extent permitted by law.
13. No amendment of this Amendment shall be of any force or effect unless
in writing and signed by the parties.
14. This Amendment may be executed in counterparts, which counterparts
shall together constitute a single Amendment.
15. This Amendment shall inure to the benefit of and be binding upon the
parties hereto and their successors and assigns.
IN WITNESS WHEREOF, Holder and Company have caused this Amendment to be
executed on the date first written above.
ENTERPRISE SOFTWARE, INC.
By: Robert A. Blay
------------------------------
Robert A. Clay
Its: Vice President
ALLIED CAPITAL CORPORATION
By: /s/
------------------------------
Scott S. Binder
Its: Principal
<PAGE> 4
SCHEDULE I
1. Lease related to Livonia facility.
2. List of real estate leases - Exhibit 50.6A
3. Incumbency Certificate - Exhibit 5.10
4. Insurance Certificate for Business Interruption Coverage-Exhibit 6.10
5. Copy of equity related document set forth in Schedule 5.16A
<PAGE> 1
EXHIBIT 10(c)
ANY SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED IN A TRANSACTION NOT
INVOLVING ANY PUBLIC OFFERING AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SAID ACT AND LAWS.
SUBORDINATE DEBENTURE
$9,000,000 Washington, D.C.
March 26, 1998
FOR VALUE RECEIVED, INDENET, Inc., a Delaware corporation, (the
"Company"), promises to pay to the order of ALLIED CAPITAL CORPORATION, a
Maryland corporation (hereinafter "Holder"), the principal sum of Nine Million
Dollars ($9,000,000), together with interest as set out herein at its offices in
the District of Columbia or such other place as Holder may designate in writing,
or by wire transfer to Holder's designated bank account.
1. Investment and Loan Agreement: This Subordinated Debenture (this
"Debenture"), has been issued under the terms of an Investment and Loan
Agreement between the Company and the Holder, dated this date (the "Agreement").
This Debenture evidences the obligation of the Company to repay a loan in the
aggregate principal amount of Nine Million Dollars ($9,000,000), made pursuant
to the Agreement. The Holder is entitled to the benefits of the Agreement and
all of the exhibits thereto, and reference is made thereto for a description of
all rights and remedies thereunder. Neither reference to the Agreement, nor any
provision thereof or security for the other obligations evidenced hereby, shall
affect or impair the absolute and unconditional obligation of the Company to
pay, when due, the principal amount hereof, together with all expenses and
interest accrued thereon. Capitalized terms not otherwise defined herein shall
have the meanings set forth in the Agreement.
2. Interest Rate; Late Fee. From date of advance and thereafter until
repayment, interest shall accrue on every portion of principal hereof at the
rate of Fourteen and One-Half percent (14 1/2%) per annum. In respect of any
installment not paid within fifteen (15) days of its due date, the applicable
interest rate shall be Eighteen Percent (18%) per annum.
3. Interest Payments: Interest shall be paid on the principal balance
hereof monthly, in arrears, on the first day of each month commencing on the
first day of April, 1998 and continuing until the entire balance hereof shall
have been paid.
<PAGE> 2
4. Balloon Payment of Principal: At maturity, a balloon payment of all
principal and accrued interest shall be due.
5. Maturity: The entire indebtedness hereunder shall become due and
payable April 1, 2003, if not previously paid in full or brought to maturity by
the provisions herein for acceleration.
6. Prepayment: The entire principal balance hereof may be prepaid at
any time in its entirety in one lump sum with all unreimbursed expenses, and all
interest accrued through the date of such prepayment being paid simultaneously
in full. Such prepayments shall be subject to the provisions of paragraph 7
below and shall be accompanied by any additional amounts and sums provided in
such paragraph. Otherwise, no payment of any installment of principal may be
made prior to the maturity date thereof.
7. Make-Whole Provision for First Three Years of Loan Term: If prior to
the third anniversary of the date hereof any principal hereof shall be prepaid,
the Company shall pay Holder an additional amount equal to the present value at
the time of such prepayment of the sum of all interest which would, but for the
prepayment, have accrued hereunder from the date of such prepayment through such
third anniversary, calculated with a discount rate of the federal rate for debt
instruments as determined by the Internal Revenue Service in accordance with
Section 1274(d) of the Internal Revenue Code of 1986, as amended and in effect
on the date of prepayment.
8. Computation of Interest: Interest hereunder shall be computed on the
per annum basis of a year of three hundred sixty five (365) days for the actual
number of days (including the first day but excluding the last day), elapsed.
9. Interest Rate Limit. The provisions herein and in all agreements
between Company and Holder, whether now existing or hereafter arising and
whether written or oral, are hereby expressly limited so that in no contingency
or event whatsoever, whether by reason of demand or acceleration of the maturity
hereof or otherwise, shall the amount paid or agreed to be paid ("Interest") to
Holder for the use, forbearance or retention of the money to be loaned hereunder
exceed the maximum amount permissible under applicable law. If, from any
circumstance whatsoever, performance or fulfillment of any provision hereof or
of any agreement between Company and Holder shall, at the time such performance
or fulfillment shall be due, exceed the limit for Interest prescribed by law,
then ipso facto the obligation to be performed or fulfilled shall be reduced to
such limit and if, from any circumstance whatsoever, Holder should ever receive
as Interest an amount which would exceed the highest lawful rate, the amount
which would be excessive Interest shall be applied to the reduction of the
principal balance owing hereunder in the inverse order of its maturity (whether
or not then due), or at the option of Holder be paid over to Company, and not to
the payment of Interest. In determining whether or not the Interest
<PAGE> 3
paid or payable under any specific contingency exceeds the maximum amount
payable under applicable law, Company and Holder shall, to the maximum extent
permitted under applicable law, (i) treat all loans by Holder to Company as but
a single extension of credit, (ii) characterize any nonprincipal payment as an
expense, fee or premium rather than as interest, (iii) exclude voluntary
prepayments and the effects thereof and (iv) "spread" the total amount of
Interest throughout the entire period the indebtedness was outstanding
(including the period of any renewal or extension hereof) so that the Interest
hereon for such full period will not exceed the maximum amount permitted by
applicable law. This paragraph will control all agreements between Company and
Holder.
10. Other Payment Provisions. The Company shall make each payment
hereunder not later than 4:00 P.M. (Eastern time) on the day when due, without
offset, in lawful money of the United States of America to the Holder in same
day funds. All payments will be applied first to costs and fees owing hereunder,
second to the payment of interest accrued through the date of payment and third
to the payment of principal. If the date for any payment or prepayment hereunder
falls on a day which is not a business day, then for all purposes of this
Debenture the same shall be deemed to have fallen on the next following business
day, and such extension of time shall in such case be included in the
computation of payments of interest.
11. Collateral: This Debenture is secured by certain collateral under
the terms of the Agreement.
12. Related Debentures: This Debenture and certain other Debentures
which may be issued by the Company to the Holder in consideration for a
Subsequent Loan (collectively, the "Related Debentures") are or will be issued
pursuant to the Agreement and are secured by the Collateral Documents (as
defined in the Agreement), without preference or priority, it being the
intention of the parties that such debentures shall be co-equal and coordinate
in right of payment of principal, interest and expenses. An Event of Default
under any of the Related Debentures shall, at the option of the Holder, be
deemed an Event of Default under this Debenture, entitling the Holder to
exercise all of its rights and remedies provided herein.
13. Subordination: The indebtedness herein is subordinated to certain
Senior Debt of the Company, according to the terms of the Agreement.
14. Default and Acceleration: If payments are not made as provided
herein, or if an Event of Default should occur, as defined in the Agreement,
then a default may be declared at the option of the Holder without presentment,
demand, protest, or further notice of any kind (all of which arc hereby
expressly waived). In such event the Holder shall be entitled to be paid in full
the balance of any unpaid principal amount hereunder
<PAGE> 4
plus accrued interest and any costs including reasonable attorney's fees, and to
any other remedies which may be available under any applicable law.
15. Non-Waiver: No course of dealing between the Holder and the Company
or any failure or delay on the part of the Holder in exercising any rights or
remedies hereunder shall operate as a waiver of any rights or remedies of the
Holder under this or any other applicable instrument. No single or partial
exercise of any rights or remedies hereunder shall operate as a waiver or
preclude the exercise of any other rights or remedies hereunder.
16. Choice of Law, Venue and Jurisdiction. Service of Process. This
Debenture shall be interpreted, and the rights and liabilities of the parties
hereto determined, in accordance with the laws of the District of Columbia,
without regard to its principles of conflicts of law. Venue for any adjudication
hereof shall be only in the courts of the District of Columbia or the Federal
courts in the District, to the jurisdiction of which courts all parties hereby
submit, as the agreement of such parties, as not inconvenient and as not subject
to review by any court other than such courts in the District of Columbia. The
Company intends and agrees that the courts of the jurisdictions in which the
Company is incorporated and conducts business shall afford full faith and credit
to any judgment rendered by a court of the District of Columbia against the
Company hereunder, and that such District of Columbia state and federal courts
shall have in personam jurisdiction to enter a valid judgment against the
Company. Service of any summons and/or complaint hereunder and any other process
which may be served on the Company in any action in respect hereto, may be made
by mailing via registered mail or delivering a copy of such process, to the
address last provided by Company to Holder. The Company agrees that this
submission to jurisdiction and consent to service of process are reasonable and
made for the express benefit of Holder.
17. WAIVER OF JURY TRIAL, THE COMPANY WAIVES ALL RIGHT TO TRIAL BY JURY
OF ALL CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND DIRECTLY OR
INDIRECTLY ARISING FROM OR RELATING TO THIES DEBENTURE OR THE DEALINGS OF THE
PARTIES IN RESPECT HERETO. THE COMPANY ACKNOWLEDGES AND AGREES THAT THIS
PROVISION IS A MATERIAL TERM OF THIES DEBENTURE AND THAT HOLDER WOULD NOT EXTEND
ANY FUNDS HEREUNDER IF THIS WAIVER OF JURY TRIAL WERE NOT A PART OF THIS
DEBENTURE. THE COMPANY ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL RIGHT AND
THAT IT MAKES THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH, OR
THE OPPORTUNITY TO CONSULT WITH, COUNSEL OF ITS CHOICE. THE COMPANY AGREES THAT
ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS SHALL BE TRIED BEFORE A JUDGE
OF A COURT OF COMPETENT JURISDICTION, WITHOUT A JURY.
<PAGE> 5
18. Expenses: The Company shall pay all expenses of any nature, whether
incurred in or out of court, and whether incurred before or after this Debenture
shall become due at its maturity date or otherwise (including but not limited to
reasonable attorneys fees and costs), which Holder may deem necessary or proper
in connection with the satisfaction of indebtedness or the administration,
supervision, preservation, protection of (including, but not limited to, the
maintenance of adequate insurance) or the realization upon any collateral.
Holder is authorized to pay at any time and from time to time any or all of such
expenses, add the amount of such payment to the amount of principal outstanding
and charge interest thereon at the rate specified herein.
19. Definitions: The term indebtedness shall mean the debts evidenced
by this Debenture, including principal, interest and expenses whether
contingent, now due or hereafter to become due, and whether heretofore or
contemporaneously herewith or hereafter contracted. Whenever used, the singular
number shall include the plural, the plural the singular, and the use of any
gender shall include all genders.
[Remainder of page intentionally left blank]
<PAGE> 6
IN WITNESS WHEREOF, the Company affixes its hand as of the date first
above written.
SEAL: INDENET, INC.
By: Robert A. Blay
-----------------------
Name: Robert Blay
Title: Vice-President
<PAGE> 7
STATE OF MICHIGAN )
) ss:
COUNTY OF OAKLAND )
I, Ronda Faye Mindingall hereby certify on this 26th day of March,
1998, before me, the subscriber, a Notary Public of the jurisdiction aforesaid,
personally appeared Robert Blay, known to me (or satisfactorily proven) to be
the person whose name is subscribed to the within instrument as the Vice
President of IndeNet, Inc., and acknowledged that he executed the same on behalf
of IndeNet, Inc. for the purposes therein contained, such instrument having been
executed in my presence.
AS WITNESS my hand and notarial seal the day and year above written.
Ronda Faye Mindingall
-----------------------------
Notary Public
My Commission Expires:
RONDA FAYE MINDINGALL
Notary Public Oakland County, Michigan
My Commission Expires April 19, 2000
<PAGE> 1
EXHIBIT 10(d)
ANY SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED IN A TRANSACTION NOT
INVOLVING ANY PUBLIC OFFERING AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SAID ACT AND LAWS.
SUBORDINATED DEBENTURE
$6,000,000 Washington, D.C.
September 1, 1998
FOR VALUE RECEIVED, ENTERPRISE SOFTWARE, INC., a Delaware corporation
formerly named IndeNet, Inc., (the "Company"), promises to pay to the order of
ALLIED CAPITAL CORPORATION, a Maryland corporation (hereinafter "Holder"), the
principal sum of Six Million Dollars ($ 6,000,000), together with interest as
set out herein at its offices in the District of Columbia or such other place as
Holder may designate in writing, or by wire transfer to Holder's designated bank
account.
1. Investment and Loan Agreement: This Subordinated Debenture (this
"Debenture"), has been issued under the terms of an Investment and Loan
Agreement between the Company and the Holder, dated March 26, 1998 (the
"Agreement"). This Debenture evidences the obligation of the Company to repay a
loan in the aggregate principal amount of Six Million Dollars ($ 6,000,000),
made pursuant to the Agreement. The Holder is entitled to the benefits of the
Agreement and all of the exhibits thereto, and reference is made thereto for a
description of all rights and remedies thereunder. Neither reference to the
Agreement, nor any provision thereof or security for the other obligations
evidenced hereby, shall affect or impair the absolute and unconditional
obligation of the Company to pay, when due, the principal amount hereof,
together with all expenses and interest accrued thereon. Capitalized terms not
otherwise defined herein shall have the meanings set forth in the Agreement.
2. Interest Rate; Late Fee. From date of advance and thereafter until
repayment, interest shall accrue on every portion of principal hereof at the
rate of Fourteen and One-Half percent (14 1/2%) per annum. In respect of any
installment not paid within fifteen (15) days of its due date, the applicable
interest rate shall be Eighteen Percent (18%) per annum.
3. Interest Payments: Interest shall be paid on the principal balance
hereof monthly, in arrears, on the first day of each month commencing on the
first day of October, 1998 and continuing until the entire balance hereof shall
have been paid.
1
<PAGE> 2
4. Balloon Payment of Principal: At maturity, a balloon payment of all
principal and accrued interest shall be due.
5. Maturity: The entire indebtedness hereunder shall become due and
payable April 1, 2003, if not previously paid in full or brought to maturity by
the provisions herein for acceleration.
6. Prepayment: The entire principal balance hereof may be prepaid at
any time in its entirety in one lump sum with all unreimbursed expenses, and all
interest accrued through the date of such prepayment being paid simultaneously
in full Such prepayments shall be subject to the provisions of paragraph 7 below
and shall be accompanied by any additional amounts and sums provided in such
paragraph. Otherwise, no payment of any installment of principal may be made
prior to the maturity date thereof.
7. Make-Whole Provision for First Three Years of Loan Term: If prior to
the third anniversary of the Agreement any principal hereof shall be prepaid,
the Company shall pay Holder an additional amount equal to the present value at
the time of such prepayment of the sum of all interest which would, but for the
prepayment, have accrued hereunder from the date of such prepayment through such
third anniversary, calculated with a discount rate of the federal rate for debt
instruments as determined by the Internal Revenue Service in accordance with
Section 1274(d) of the Internal Revenue Code of 1986, as amended and in effect
on the date of prepayment.
8. Computation of Interest: Interest hereunder shall be computed on the
per annum basis of a year of three hundred sixty five (365) days for the actual
number of days (including the first day but excluding the last day), elapsed.
9. Interest Rate Limit. The provisions herein and in all agreements
between Company and Holder, whether now existing or hereafter arising and
whether written or oral, are hereby expressly limited so that in no contingency
or event whatsoever, whether by reason of demand or acceleration of the maturity
hereof or otherwise, shall the amount paid or agreed to be paid ("Interest") to
Holder for the use, forbearance or retention of the money to be loaned hereunder
exceed the maximum amount permissible under applicable law. If, from any
circumstance whatsoever, performance or fulfillment of any provision hereof or
of any agreement between Company and Holder shall, at the time such performance
or fulfillment shall be due, exceed the limit for Interest prescribed by law,
then ipso facto the obligation to be performed or fulfilled shall be reduced to
such limit and if, from any circumstance whatsoever, Holder should ever receive
as Interest an amount which would exceed the highest lawful rate, the amount
which would be excessive Interest shall be applied to the reduction of the
principal balance owing hereunder in the inverse order of its maturity (whether
or not then due), or at the option of Holder be paid over to Company, and not to
the payment of Interest. In determining whether or not the Interest
2
<PAGE> 3
paid or payable under any specific contingency exceeds the maximum amount
payable under applicable law, Company and Holder shall, to the maximum extent
permitted under applicable law, (i) treat all loans by Holder to Company as but
a single extension of credit, (ii) characterize any nonprincipal payment as an
expense, fee or premium rather than as interest, (iii) exclude voluntary
prepayments and the effects thereof and (iv) "spread" the total amount of
Interest throughout the entire period the indebtedness was outstanding
(including the period of any renewal or extension hereof) so that the Interest
hereon for such full period will not exceed the maximum amount permitted by
applicable law. This paragraph will control all agreements between Company and
Holder.
10. Other Payment Provisions. The Company shall make each payment
hereunder not later than 4:00 P.M. (Eastern time) on the day when due, without
offset, in lawful money of the United States of America to the Holder in same
day funds. All payments will be applied first to costs and fees owing hereunder,
second to the payment of interest accrued through the date of payment and third
to the payment of principal. If the date for any payment or prepayment hereunder
falls on a day which is not a business day, then for all purposes of this
Debenture the same shall be deemed to have fallen on the next following business
day, and such extension of time shall in such case be included in the
computation of payments of interest.
11. Collateral: This Debenture is secured by certain collateral under
the terms of the Agreement.
12. Related Debentures: This Debenture, the Initial Debenture, together
with any other Debentures issued by the Company to the Holder in consideration
for Loans (collectively, the "Related Debentures") are, have been or will be
issued pursuant to the Agreement and are secured by the Collateral Documents (as
defined in the Agreement), without preference or priority, it being the
intention of the parties that such debentures shall be co-equal and coordinate
in right of payment of principal, interest and expenses. An Event of Default
under any of the Related Debentures shall, at the option of the Holder, be
deemed an Event of Default under this Debenture, entitling the Holder to
exercise all of its rights and remedies provided herein.
13. Subordination: The indebtedness herein is subordinated to certain
Senior Debt of the Company, according to the terms of the Agreement.
14. Default and Acceleration: If payments are not made as provided
herein, or if an Event of Default should occur, as defined in the Agreement,
then a default may be declared at the option of the Holder without presentment,
demand, protest, or further notice of any kind (all of which are hereby
expressly waived). In such event the Holder shall be entitled to be paid in full
the balance of any unpaid principal amount hereunder
3
<PAGE> 4
plus accrued interest and any costs including reasonable attorney's fees, and
to any other remedies which may be available under any applicable law.
15. Non-Waiver: No course of dealing between the Holder and the Company
or any failure or delay on the part of the Holder in exercising any rights or
remedies hereunder shall operate as a waiver of any rights or remedies of the
Holder under this or any other applicable instrument. No single or partial
exercise of any rights or remedies hereunder shall operate as a waiver or
preclude the exercise of any other rights or remedies hereunder.
16. Choice of Law. Venue and Jurisdiction. Service of Process. This
Debenture shall be interpreted, and the rights and liabilities of the parties
hereto determined, in accordance with the laws of the District of Columbia,
without regard to its principles of conflicts of law. Venue for any adjudication
hereof shall be only in the courts of the District of Columbia or the Federal
courts in the District, to the jurisdiction of which courts all parties hereby
submit, as the agreement of such parties, as not inconvenient and as not subject
to review by any court other than such courts in the District of Columbia. The
Company intends and agrees that the courts of the jurisdictions in which the
Company is incorporated and conducts business shall afford full faith and credit
to any judgment rendered by a court of the District of Columbia against the
Company hereunder, and that such District of Columbia state and federal courts
shall have in personam jurisdiction to enter a valid judgment against the
Company. Service of any summons and/or complaint hereunder and any other process
which may be served on the Company in any action in respect hereto, may be made
by mailing via registered mail or delivering a copy of such process, to the
address last provided by Company to Holder. The Company agrees that this
submission to jurisdiction and consent to service of process are reasonable and
made for the express benefit of Holder.
17. WAIVER OF JURY TRIAL. THE COMPANY WAIVES ALL RIGHT TO TRIAL BY JURY
OF ALL CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND DIRECTLY OR
INDIRECTLY ARISING FROM OR RELATING TO THIS DEBENTURE OR THE DEALINGS OF THE
PARTIES IN RESPECT HERETO. THE COMPANY ACKNOWLEDGES AND AGREES THAT THIS
PROVISION IS A MATERIAL TERM OF THIS DEBENTURE AND THAT HOLDER WOULD NOT EXTEND
ANY FUNDS HEREUNDER IF THIS WAIVER OF JURY TRIAL WERE NOT A PART OF THIS
DEBENTURE. THE COMPANY ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL RIGHT AND
THAT IT MAKES THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH, OR
THE OPPORTUNITY TO CONSULT WITH, COUNSEL OF ITS CHOICE. THE COMPANY AGREES THAT
ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS SHALL BE TRIED BEFORE A JUDGE
OF A COURT OF COMPETENT JURISDICTION, WITHOUT A JURY.
4
<PAGE> 5
18. Expenses: The Company shall pay all expenses of any nature, whether
incurred in or out of court, and whether incurred before or after this Debenture
shall become due at its maturity date or otherwise (including but not limited to
reasonable attorneys fees and costs), which Holder may deem necessary or proper
in connection with the satisfaction of indebtedness or the administration,
supervision, preservation, protection of (including, but not limited to, the
maintenance of adequate insurance) or the realization upon any collateral.
Holder is authorized to pay at any time and from time to time any or all of such
expenses, add the amount of such payment to the amount of principal outstanding
and charge interest thereon at the rate specified herein.
19. Definitions: The term indebtedness shall mean the debts evidenced
by this Debenture, including principal, interest and expenses whether
contingent, now due or hereafter to become due, and whether heretofore or
contemporaneously herewith or hereafter contracted. Whenever used, the singular
number shall include the plural, the plural the singular, and the use of any
gender shall include all genders.
[Remainder of page intentionally left blank]
5
<PAGE> 6
IN WITNESS WHEREOF, the Company affixes its hand as of the date first
above written.
SEAL: ENTERPRISE SOFTWARE, INC., formerly
named IndeNet, Inc.
By Robert A. Blay
-----------------
Name: Robert A. Blay
Title: Vice President
6
<PAGE> 7
STATE OF MICHIGAN )
) ss:
COUNTY OF WAYNE )
I, Holly A. Steffes, hereby certify on this 28th day of August, 1998,
before me, the subscriber, a Notary Public of the jurisdiction aforesaid,
personally appeared Robert A. Blay, known to me (or satisfactorily proven) to be
the person whose name is subscribed to the within instrument as the Vice
President of Enterprise Software, Inc., and acknowledged that he executed the
same on behalf of Enterprise Software, Inc. for the purposes therein contained,
such instrument having been executed in my presence.
AS WITNESS my hand and notarial seat the day and year above written.
Holly A. Steffes
----------------
Notary Public
HOLLY A. STEFFES
Notary Public, Wayne Co., MI
My Comm. Expires Nov. 30, 2001
My Commission Expires:
7
<PAGE> 1
EXHIBIT 10(e)
GUARANTY
March 26 1998
1. Grant. To induce ALLIED CAPITAL CORPORATION, a Maryland corporation (with
successors and assigns, collectively, "Lender"), to make to IndeNet, Inc., a
Maryland corporation (with successors and assigns, collectively, "Debtor"), one
or more loans in an aggregate principal amount up to Fifteen Million Dollars
($15,000,000) in accordance with the terms and conditions of that certain
Investment and Loan Agreement, of even date hereof, by and between the Lender
and the Debtor (the "Loan Agreement"), each of the undersigned parties (with
successors and assigns, a "Guarantor"), hereby unconditionally guarantees to
Lender, its successors and assigns, the due and punctual payment when due,
whether by acceleration or otherwise, in accordance with the terms thereof, of
the principal and interest on and all other sums payable, or stated to be
payable, with respect to (a) the Subordinated Debenture made by the Debtor to
Lender, on the date hereof, in the aggregate principal amount of Nine Million
Dollars ($9,000,000) (with all amendments, renewals, extensions and replacements
thereof and therefor, the "Initial Debenture"), and (b) any Subordinated
Debentures which may be issued from time to time by the Debtor to the Holder
pursuant to the Loan Agreement after the date hereof (with all amendments,
renewals, extensions and replacements thereof and therefor, a "Subsequent
Debenture," and which together with the Initial Debenture are the "Debentures"),
each with interest as stated in such applicable Debenture.
2. Definitions. The Debentures, the interest thereon, any expenses of
collection, including reasonable attorneys' fees, and all other sums payable
with respect thereto are hereinafter collectively called "Liabilities". The term
"Guarantor" herein shall mean each signer of this Guaranty, collectively with
its successors and assigns. The term "collateral" herein shall mean any funds,
guaranties, agreements or other property or rights or interests of any nature
whatsoever, or the proceeds thereof, which may have been, are, or hereafter may
be, mortgaged, pledged, assigned, transferred or delivered directly or
indirectly by or on behalf of the Debtor or any Guarantor or any other party to
Lender or to any Debenture holder, or which may have been, are, or hereafter may
be held by any party as trustee or otherwise, as security, whether immediate or
underlying, for the performance of this Guaranty or the payment of the
Liabilities or any of them or any security therefor.
3. Representations. Each Guarantor represents that this Guaranty is executed
at the request of Debtor for reasons that such Guarantor deems sufficient, that
each Guarantor has established adequate means of obtaining from Debtor on a
continuing basis financial and other information pertaining to Debtor's
financial condition, and that each Guarantor, as a subsidiary of the Debtor,
derives benefit from this Guaranty. Lender has made no representations to any
Guarantor as to the creditworthiness of Debtor. Each Guarantor agrees to keep
adequately informed from such means as they possess of any facts, events or
<PAGE> 2
circumstances which might in any way affect such Guarantor's risks hereunder and
agrees that Lender shall have no obligation, either before or after closing on
the transactions subject hereto, to obtain for or disclose to any Guarantor
information or material acquired in the course of Lender's relationship with
Debtor.
4. Covenants. Each Guarantor agrees:
(a) subject to (e) below, that this Guaranty is irrevocable and shall
continue without limit of time;
(b) that if the Debtor or it should become insolvent or make a general
assignment for the benefit of creditors, or if a petition in bankruptcy or any
insolvency or reorganization proceeding shall be filed or commenced by either of
them, or if a petition shall be filed against either of them under any
bankruptcy, reorganization, insolvency or similar law (and such petition is not
dismissed within sixty (60) days of filing), then, in any of such events, any
and all obligations of it shall, at the Lender's option, immediately become due
and payable without notice;
(c) that if any payment or transfer to the Lender which has been
credited against any of the Liabilities is voided or rescinded or required to be
returned by the Lender, whether or not in connection with any event or
proceeding, this Guaranty shall continue in effect or be reinstated as though
such payment, transfer or recovery had not been made;
(d) that each of the Lender's books and records showing the account
between the Lender and the Debtor shall be admissible in any action or
proceeding, shall be binding upon it for the purpose of establishing the items
therein set forth and shall constitute prima facie proof thereof;
(e) that this Guaranty may be terminated by it only as of the date on
which it has received written notice from the Lender stating that the Debtor has
fully paid and performed all of the Liabilities;
(f) that any termination of this Guaranty shall be applicable only to
transactions having their inception after the effective date of such termination
and shall not affect rights and obligations arising out of transactions having
their inception prior to such date;
(g) that nothing shall discharge or satisfy the liability of it
hereunder except the full payment and performance of all of the Liabilities;
2
<PAGE> 3
(h) that any and all present and future debts and obligations of the
Debtor to it are hereby waived and postponed in favor of and subordinated to the
full payment and performance of the Liabilities; and
(i) that all sums at any time held by the Lender for the account of it
and any of the property of it at any time in the Lender's possession may be held
by the Lender as security for any and all obligations of it to the Lender, no
matter how or when arising, whether absolute or contingent, whether due or to
become due and whether under this Guaranty or otherwise.
5. Waivers. Each Guarantor waives any notice of the incurring by the Debtor
at any time of any of the Liabilities, and waives any and all presentment,
demand, protest or notice of dishonor, nonpayment, or other default with respect
to any of the Liabilities and to any obligation of any party at any time
comprised in the collateral. Each Guarantor waives any claim or defense it may
have against the Lender under the Uniform Commercial Code or any other
applicable law or regulation arising from any action taken or any action not
taken by the Lender in relation to the collateral. Each Guarantor further waives
any defenses arising under any homestead exemption or statute of limitation, or
pursuant to any rights to any valuation, stay or moratorium.
6. Lender's Discretion. Each Guarantor hereby grants to Lender full power, in
its absolute discretion and without notice to or consent from it, but subject to
the provisions of any agreement between the Debtor or any other party and Lender
at the time in force, to deal in any manner with the Liabilities and the
collateral, including, but without limiting the generality of the foregoing, the
following powers: (a) to modify or otherwise change any terms of all or any part
of the Liabilities or the rate of interest thereon, to grant any extension or
renewal thereof and any other indulgence with respect thereto, and to effect any
release, compromise or settlement with respect thereto; (b) to enter into any
agreement of forbearance with respect to all or any part of the Liabilities, or
with respect to all or any part of the collateral, and to change the terms of
any such agreement; (c) to forbear from calling for additional collateral to
secure any of the Liabilities or to secure any obligation comprised in the
collateral; (d) to consent to substitution, exchange, or release of all or any
part of the collateral, whether or not the collateral, if any, received by
Lender upon any such substitution, exchange, or release shall be of the same or
of a different character or value than the collateral surrendered by Lender; and
(e) in the event of the nonpayment when due, whether by acceleration or
otherwise, of any of the Liabilities, or in the event of default in the
performance of any obligation comprised in the collateral, to realize on the
collateral or any part thereof, as a whole or in such parcels or subdivided
interest as Lender may elect, at any public or private sale or sales, for cash
or on credit or for future delivery, without demand, advertisement or notice of
the time or place of sale or any adjournment thereof (each Guarantor hereby
waiving any such demand, advertisement and notice to the extent permitted by
law), or by foreclosure or otherwise, or to forbear from realizing thereon, all
as Lender in its absolute discretion may deem proper, and to purchase all or
3
<PAGE> 4
any part of the collateral for its own account at any such sale or foreclosure,
such powers to be exercised only to the extent permitted by law. The obligations
of each Guarantor hereunder shall not be released, discharged or in any way
affected, nor shall any Guarantor have any rights, defenses or recourse against
Lender by reason of any action Lender may take or omit to take under the
foregoing powers.
7. No Duty to Exhaust Collateral or Other Remedies. In case the Debtor shall
fail to pay all or any part of the Liabilities when due, after the expiration of
applicable notice and cure periods, if any, whether by acceleration or
otherwise, according to the terms thereof, each Guarantor, immediately upon the
written demand of Lender, shall pay to Lender the amount due and unpaid by the
Debtor as aforesaid, plus any expenses of collection including reasonable
attorneys' fees, in like manner as if such amount constituted the direct and
primary obligation of such Guarantor. Lender shall not be required, prior to any
such demand on, or payment by, a Guarantor, to make any demand upon or pursue or
exhaust any of Lender's rights or remedies against the Debtor or other obligors
under the Liabilities, or to pursue or exhaust any of Lender's rights or
remedies with respect to any part of the collateral.
8. Subrogation, etc. Each Guarantor shall have no night of subrogation
whatsoever with respect to the Liabilities or the collateral unless and until
Lender shall have received full and indefeasible payment of all the Liabilities.
Each Guarantor hereby waives any claim, right or remedy which such guarantors
may now have or hereafter acquire against the Debtor that arises hereunder
and/or from the performance by any guarantor including, without limitation, any
claim, remedy or right of subrogation, reimbursement, exoneration, contribution,
indemnification, or participation in any claim, right or remedy of Lender
against the Debtor or any security which Lender now has or hereafter acquires,
whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law, or otherwise. Each Guarantor waives and releases
Lender from any damages which it may incur as a result of any intentional or
unintentional or negligent action or inaction of Lender impairing, diminishing
or destroying any rights of subrogation which such Guarantor may have upon
payment of any of the Debtor's obligations.
9. No Release. The obligations of any Guarantor, and the rights of Lender in
the collateral, shall not be released, discharged or in any way affected, nor
shall any Guarantor have any rights against Lender: by reason of the fact that
any of the collateral provided to the Lender may be subject to default remedies
at the time of acceptance thereof by Lender or later; nor by reason of the fact
that a valid lien in any of the collateral may not be conveyed to, or created in
favor of, Lender; nor by reason of the fact that any of the collateral may be
subject to equities or defenses or claims in favor of others or may be invalid
or defective in any way; nor by reason of the fact that any of the Liabilities
may be invalid for any reason whatsoever, or may be avoided or discharged in
bankruptcy, in any insolvency or similar proceeding, or otherwise; nor by reason
of the fact that the value of any of the collateral, or the financial condition
of the Debtor or of any obligor under or
4
<PAGE> 5
guarantor of any of the collateral, may not have been correctly estimated or may
have changed or may hereafter change; nor by reason of any deterioration, waste,
or loss by fire, theft, or otherwise of any of the collateral.
10. Investment and Loan Agreement. Each Guarantor agrees to the terms and
conditions expressed in the Loan Agreement, and will comply with all provisions
in such instrument calling for Guarantor's performance thereunder. In the event
of any inconsistency between the terms of this Guaranty and the terms of the
said Agreement, the terms of this Guaranty shall prevail.
11. Liability; Captions. All liability hereunder shall continue
notwithstanding the incapacity, lack of authority, death or disability of a
Guarantor. Failure by Lender or its assigns to file or enforce a claim against
the estate of such Guarantor shall not operate to release any other Guarantor of
the Liabilities. The failure of any other person to sign this Guaranty shall not
release or affect the liability of any signer hereof. The captions in this
Guaranty shall not be construed as part of the text hereof.
12. Joint and Several Liability. If more than one party signs this Guaranty,
their liability herein shall be joint and several.
13. Attorneys' Fees. If Lender employs the services of one or more attorneys
to enforce its rights herein, each Guarantor shall pay or reimburse the
reasonable fees and expenses incurred by Lender thereby.
14. Choice of Law, Venue and Jurisdiction. Service of Process. This Guaranty
shall be interpreted, and the rights and liabilities of the parties hereto
determined, in accordance with the laws of the District of Columbia, without
regard to its principles of conflicts of law. Venue for any adjudication hereof
shall be only in the courts of the District of Columbia or the Federal courts in
the District of Columbia, to the jurisdiction of which courts all parties hereby
submit, as the agreement of such parties, as not inconvenient and as not subject
to review by any court other than such courts in the District. Each Guarantor
intends and agrees that the courts of the jurisdictions in which such Guarantor
is resident shall afford full faith and credit to any judgment rendered by a
court of the District of Columbia against such Guarantor hereunder, and that
such District and federal courts shall have in personam jurisdiction to enter a
valid judgment against the Guarantor. Service of any summons and/or complaint
hereunder and any other process which may be served on any Guarantor in any
action in respect hereto, may be made by mailing via registered mail or
delivering a copy of such process, to the address last provided by such
Guarantor to Lender. Each Guarantor agrees that this submission to jurisdiction
and consent to service of process are reasonable and made for the express
benefit of Lender.
5
<PAGE> 6
15. WAIVER OF JURY TRIAL. EACH GUARANTOR WAIVES ALL RIGHT TO TRIAL BY JURY OF
ALL CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND DIRECTLY OR INDIRECTLY
ARISING FROM OR RELATING TO THIS GUARANTY OR THE DEALINGS OF THE PARTIES IN
RESPECT HERETO. EACH GUARANTOR ACKNOWLEDGES AND AGREES THAT THIS PROVISION IS A
MATERIAL TERM OF THIS GUARANTY AND THAT LENDER WOULD NOT EXTEND ANY FUNDS TO THE
DEBTOR IF THIS WAIVER OF JURY TRIAL WERE NOT A PART HEREOF. EACH GUARANTOR
ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT IT MAKES THIS
WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH, OR THE OPPORTUNITY TO
CONSULT WITH, COUNSEL OF ITS CHOICE. EACH GUARANTOR AGREES THAT ALL SUCH CLAIMS,
DEFENSES, COUNTERCLAIMS AND SUITS SHALL BE TRIED BEFORE A JUDGE OF A COURT OF
COMPETENT JURISDICTION, WITHOUT A JURY.
16. Severability. In the event that any provision of this Guaranty shall be
unenforceable provision shall instead be legally enforceable to the extent
permitted by applicable law, and any court of competent jurisdiction shall
enforce such provision or modify it to make it enforceable.
17. Entirety. This Guaranty embodies the final, entire Agreement of each
Guarantor and Lender with respect to such Guarantor's guaranty of the
liabilities and supersedes any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof. This Guaranty is intended by each Guarantor and Lender as
a final and complete expression of the terms of the Guaranty, and no course of
dealing between any Guarantor and Lender, no course of performance, no trade
practices, and no evidence of prior, contemporaneous or subsequent oral
agreements or discussions or other extrinsic evidence of any nature shall be
used to contradict, vary, supplement or modify any term of this Guaranty
Agreement. There are no oral agreements between any Guarantor and Lender.
18. Interest Rate Limit. The provisions of this Guaranty and of all
agreements between Debtor and Lender, whether now existing or hereafter arising
and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of the Debentures or otherwise, shall the amount paid or agreed to
be paid ("Interest") to Lender for the use, forbearance or retention of the
money to be loaned thereunder exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, performance or fulfillment
of any provision hereof or of any agreement between Debtor and Lender shall, at
the time of performance of fulfillment of such provision shall be due, exceed
the limit for Interest prescribed by applicable law, then ipso facto the
obligation to be performed or fulfilled shall be reduced to such limit and if,
from any circumstance whatsoever, Lender should ever receive as Interest an
amount which would exceed the highest lawful rate, the amount
6
<PAGE> 7
which would be excessive Interest shall be applied to the reduction of the
principal balance owing hereunder in the inverse order of its maturity (whether
or not then due), or at the option of Lender be paid over to Debtor, and not
applied to the payment of Interest. In determining whether or not the Interest
paid or payable under any specific contingency exceeds the maximum amount
payable under applicable law, Debtor, Lender and each Guarantor shall, to the
maximum extent permitted under applicable law, (i) treat all loans by Lender to
Debtor as but a single extension of credit, (ii) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (iii) exclude
voluntary prepayments and the effects thereof and (iv) "spread" the total amount
of Interest throughout the entire period the Liabilities were outstanding
(including the period of any renewal or extension hereof) so that the Interest
hereon for such full period will not exceed the maximum amount permitted by
applicable law. This paragraph will control all agreements between each
Guarantor, Debtor and Lender.
7
<PAGE> 8
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the
date first above written.
CABLE COMPUTERIZED MANAGEMENT
SYSTEMS, INC.
Robert Blay
-----------
By: Robert Blay
Title: Secretary
ENTERPRISE SYSTEMS GROUP, INC.
Robert Blay
-----------
By: Robert Blay
Title: Secretary
8
<PAGE> 9
STATE OF Michigan)
) TO WIT:
COUNTY OF Oakland)
On the 26th day of March, 1998, before me personally came Robert Blay,
known to me (or satisfactorily proven) to be the person whose name is subscribed
to the within instrument as the Secretary of Cable Computerized Management
Systems, Inc. and who executed the above document on behalf of Cable
Computerized Management Systems, Inc. for the purposes contained therein, such
instrument having been executed in my presence.
[Seal]
Ronda Faye Mindingall
- -------------------------
Notary Public
My commission expires:
RONDA FAYE MINDINGALL
Notary Public Oakland County, Michigan
My Commission Expires April 19, 2000
9
<PAGE> 10
STATE OF MICHIGAN)
TO WIT:
COUNTY OF OAKLAND)
On the 26th day of March, 1998, before me personally came Robert Blay,
known to me (or satisfactorily proven) to be the person whose name is subscribed
to the within instrument as the Secretary of Enterprise Systems Group, Inc. and
who executed the above document on behalf of Enterprise Systems Group, Inc. for
the purposes contained therein, such instrument having been executed in my
presence.
[Seal]
Ronda Faye Mindingall
- -------------------------
Notary Public
My commission expires:
RONDA FAYE MINDINGALL
Notary Public Oakland County, Michigan
My Commission Expires April 19, 2000
10
<PAGE> 1
EXHIBIT 10(f)
GUARANTY
September 1, 1998
1. Grant. To induce ALLIED CAPITAL CORPORATION, a Maryland corporation (with
successors and assigns, collectively, "Lender"), to make to ENTERPRISE SOFTWARE,
INC., a Delaware corporation formerly named INDENET, INC. (with successors and
assigns, collectively, "Debtor"), a loan in the principal amount of Six Million
Dollars ($6,000,000) in accordance with the terms and conditions of that certain
Investment and Loan Agreement, dated March 26, 1998 by and between the Lender
and the Debtor (the "Loan Agreement"),the undersigned (with successors and
assigns, "Guarantor"), hereby unconditionally guarantees to Lender, its
successors and assigns, the due and punctual payment when due, whether by
acceleration or otherwise, in accordance with the terms thereof, of the
principal and interest on and all other sums payable, or stated to be payable,
with respect to (a) the Subordinated Debenture dated March 26, 1998 made by the
Debtor to Lender in the principal amount of Nine Million Dollars ($9,000,000)
(with all amendments, renewals, extensions and replacements thereof and
therefor, the "Initial Debenture"), and (b) the Subordinated Debenture in the
principal amount of Six Million Dollars ($6,000,000) issued this date by the
Debtor to the Holder pursuant to the Loan Agreement (with all amendments,
renewals, extensions and replacements thereof and therefor, a "Subsequent
Debenture," and which together with the Initial Debenture are the "Debentures"),
each with interest as stated in such applicable Debenture.
2. Definitions. The Debentures, the interest thereon, any expenses of
collection, including reasonable attorneys' fees, and all other sums payable
with respect thereto are hereinafter collectively called "Liabilities". The term
"Guarantor" herein shall mean each signer of this Guaranty, collectively with
its successors and assigns. The term "collateral" herein shall mean any funds
guaranties, agreements or other property or rights or interests of any nature
whatsoever, or the proceeds thereof, which may have been, are, or hereafter may
be, mortgaged, pledged, assigned, transferred or delivered directly or
indirectly by or on behalf of the Debtor or Guarantor or any other party to
Lender or to any Debenture holder, or which may have been, are, or hereafter may
be held by any party as trustee or otherwise, as security, whether immediate or
underlying, for the performance of this Guaranty or the payment of the
Liabilities or any of them or any security therefor.
3. Representations. Guarantor represents that this Guaranty is executed at
the request of Debtor for reasons that Guarantor deems sufficient, that
Guarantor has established adequate means of obtaining from Debtor on a
continuing basis financial and other information pertaining to Debtor's
financial condition, and that Guarantor, as a subsidiary of the Debtor, derives
benefit from this Guaranty. Lender has made no representations to Guarantor as
to the creditworthiness of Debtor. Guarantor will keep adequately informed from
such means as it has of any facts, events or circumstances which might in any
way
<PAGE> 2
affect Guarantor's risks hereunder and agrees that Lender shall have no
obligation, either before or after closing on the transactions subject hereto,
to obtain for or disclose to Guarantor information or material acquired in the
course of Lender's relationship with Debtor.
4. Covenants. Guarantor agrees:
(a) subject to (e) below, that this Guaranty is irrevocable and shall
continue without limit of time;
(b) that if the Debtor or it should become insolvent or make a general
assignment for the benefit of creditors, or if a petition in bankruptcy or any
insolvency or reorganization proceeding shall be filed or commenced by either of
them, or if a petition shall be filed against either of them under any
bankruptcy, reorganization, insolvency or similar law (and such petition is not
dismissed within sixty (60) days of filing), then, in any of such events, any
and all obligations of it shall, at the Lender's option, immediately become due
and payable without notice;
(c) that if any payment or transfer to the Lender which has been
credited against any of the Liabilities is voided or rescinded or required to be
returned by the Lender, whether or not in connection with any event or
proceeding, this Guaranty shall continue in effect or be reinstated as though
such payment, transfer or recovery had not been made;
(d) that each of the Lender's books and records showing the account
between the Lender and the Debtor shall be admissible in any action or
proceeding, shall be binding upon it for the purpose of establishing the items
therein set forth and shall constitute prima facie proof thereof;
(e) that this Guaranty may be terminated by it only as of the date on
which it has received written notice from the Lender stating that the Debtor has
fully paid and performed all of the Liabilities;
(f) that any termination of this Guaranty shall be applicable only to
transactions having their inception after the effective date of such termination
and shall not affect rights and obligations arising out of transactions having
their inception prior to such date;
(g) that nothing shall discharge or satisfy the liability of it
hereunder except the full payment and performance of all of the Liabilities;
2
<PAGE> 3
(h) that any and all present and future debts and obligations of the
Debtor to it are hereby waived and postponed in favor of and subordinated to the
full payment and performance of the Liabilities; and
(i) that all sums at any time held by the Lender for the account of it
and any of the property of it at any time in the Lender's possession may be held
by the Lender as security for any and all obligations of it to the Lender, no
matter how or when arising, whether absolute or contingent, whether due or to
become due and whether under this Guaranty or otherwise.
5. Waivers. Guarantor waives any notice of the incurring by the Debtor at any
time of any of the Liabilities, and waives any and all presentment, demand,
protest or notice of dishonor, nonpayment, or other default with respect to any
of the Liabilities and to any obligation of any party at any time comprised in
the collateral. Guarantor waives any claim or defense it may have against the
Lender under the Uniform Commercial Code or any other applicable law or
regulation arising from any action taken or any action not taken by the Lender
in relation to the collateral. Guarantor further waives any defenses arising
under any homestead exemption or statute of limitation, or pursuant to any
rights to any valuation, stay or moratorium.
6. Lender's Discretion. Guarantor hereby grants to Lender full power, in its
absolute discretion and without notice to or consent from it, but subject to the
provisions of any agreement between the Debtor or any other party and Lender at
the time in force, to deal in any), manner with the Liabilities and the
collateral, including, but without limiting the generality of the foregoing, the
following powers: (a) to modify or otherwise change any terms of all or any part
of the Liabilities or the rate of interest thereon, to grant any extension or
renewal thereof and any other indulgence with respect thereto, and to effect any
release, compromise or settlement with respect thereto; (b) to enter into any
agreement of forbearance with respect to all or any part of the Liabilities, or
with respect to all or any part of the collateral, and to change the terms of
any such agreement; (c) to forbear from calling for additional collateral to
secure any of the Liabilities or to secure any obligation comprised in the
collateral; (d) to consent to substitution, exchange, or release of all or any
part of the collateral, whether or not the collateral, if any, received by
Lender upon any such substitution, exchange, or release shall be of the same or
of a different character or value than the collateral surrendered by Lender; and
(e) in the event of the nonpayment when due, whether by acceleration or
otherwise, of any of the Liabilities, or in the event of default in the
performance of any obligation comprised in the collateral, to realize on the
collateral or any part thereof, as a whole or in such parcels or subdivided
interest as Lender may elect, at any public or private sale or sales, for cash
or on credit or for future delivery, without demand, advertisement or notice of
the time or place of sale or any adjournment thereof (Guarantor hereby waiving
any such demand, advertisement and notice to the extent permitted by law), or by
foreclosure or otherwise, or to forbear from realizing thereon, all as Lender in
its absolute discretion may deem proper, and to purchase all or
3
<PAGE> 4
any part of the collateral for its own account at any such sale or foreclosure,
such powers to be exercised only to the extent permitted by law. The obligations
of Guarantor hereunder shall not be released, discharged or in any way
affected, nor shall Guarantor have any rights, defenses or recourse against
Lender by reason of any action Lender may take or omit to take under the
foregoing powers.
7. No Duty to Exhaust Collateral or Other Remedies. In case the Debtor shall
fail to pay all or any part of the Liabilities when due, whether by acceleration
or otherwise, after the expiration of applicable notice and cure periods, if any
according to the terms thereof, Guarantor, immediately upon the written demand
of Lender, shall pay to Lender the amount due and unpaid by the Debtor as
aforesaid, plus any expenses of collection including reasonable attorneys' fees,
in like manner as if such amount constituted the direct and primary obligation
of Guarantor. Lender shall not be required, prior to any such demand on, or
payment by, Guarantor, to make any demand upon or pursue or exhaust any of
Lender's rights or remedies against the Debtor or other obligors under the
Liabilities, or to pursue or exhaust any of Lender's rights or remedies with
respect to any part of the collateral.
8. Subrogation, etc. Guarantor shall have no right of subrogation whatsoever
with respect to the Liabilities or the collateral unless and until Lender shall
have received full and indefeasible payment of all the Liabilities. Guarantor
hereby waives any claim, right or remedy which such guarantors may now have or
hereafter acquire against the Debtor that arises hereunder and/or from the
performance by any guarantor including, without limitation, any claim, remedy or
right of subrogation, reimbursement, exoneration, contribution, indemnification,
or participation in any claim, right or remedy of Lender against the Debtor or
any security which Lender now has or hereafter acquires, whether or not such
claim, right or remedy arises in equity, under contract, by statute, under
common law, or otherwise. Guarantor waives and releases Lender from any damages
which it may incur as a result of any intentional or unintentional or negligent
action or inaction of Lender impairing, diminishing or destroying any rights of
subrogation which Guarantor may have upon payment of any of the Debtor's
obligations.
9. No Release. The obligations of Guarantor, and the rights of Lender in the
collateral, shall not be released, discharged or in any way affected, nor shall
Guarantor have any rights against Lender: by reason of the fact that any of the
collateral provided to the Lender may be subject to default remedies at the time
of acceptance thereof by Lender or later; nor by reason of the fact that a valid
lien in any of the collateral may not be conveyed to, or created in favor of,
Lender; nor by reason of the fact that any of the collateral may be subject to
equities or defenses or claims in favor of others or may be invalid or defective
in any way; nor by reason of the fact that any of the Liabilities may be invalid
for any reason whatsoever, or may be avoided or discharged in bankruptcy, in any
insolvency or similar proceeding, or otherwise; nor by reason of the fact that
the value of any of the collateral, or the financial condition of the Debtor or
of any obligor under or guarantor of any of the
4
<PAGE> 5
collateral, may not have been correctly estimated or may have changed or may
hereafter change; nor by reason of any deterioration, waste, or loss by fire,
theft, or otherwise of any of the collateral.
10. Investment and Loan Agreement. Guarantor agrees to the terms and
conditions expressed in the Loan Agreement, and will comply with all provisions
in such instrument calling for Guarantor's performance thereunder. In the event
of any inconsistency between the terms of this Guaranty and the terms of the
said Agreement, the terms of this Guaranty shall prevail.
11. Liability; Captions. All liability hereunder shall continue
notwithstanding the incapacity, lack of authority, death or disability of
Guarantor. Failure by Lender or its assigns to file or enforce a claim against
the estate of Guarantor shall not operate to release any other guarantor of the
Liabilities. The failure of any other person to sign this Guaranty shall not
release or affect the liability of any signer hereof. The captions in this
Guaranty shall not be construed as part of the text hereof.
12. Attorneys' Fees. If Lender employs the services of one or more attorneys
to enforce its rights herein, Guarantor shall pay or reimburse the reasonable
fees and expenses incurred by Lender thereby.
13. Choice of Law. Venue and Jurisdiction. Service of Process. This Guaranty
shall be interpreted, and the rights and liabilities of the parties hereto
determined, in accordance with the laws of the District of Columbia, without
regard to its principles of conflicts of law. Venue for any adjudication hereof
shall be only in the courts of the District of Columbia or the Federal courts in
the District of Columbia, to the jurisdiction of which courts all parties hereby
submit, as the agreement of such parties, as not inconvenient and as not subject
to review by any court other than such courts in the District. Guarantor intends
and agrees that the courts of the jurisdictions in which Guarantor is resident
shall afford full faith and credit to any judgment rendered by a court of the
District of Columbia against Guarantor hereunder, and that such District and
federal courts shall have in personam jurisdiction to enter a valid judgment
against Guarantor. Service of any summons and/or complaint hereunder and any
other process which may be served on Guarantor in any action in respect hereto,
may be made by mailing via registered mail or delivering a copy of such process,
to the address last provided by Guarantor to Lender. Guarantor agrees that this
submission to jurisdiction and consent to service of process are reasonable and
made for the express benefit of Lender.
14. WAIVER OF JURY TRIAL. GUARANTOR WAIVES ALL RIGHT TO TRIAL BY JURY OF ALL
CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND DIRECTLY OR INDIRECTLY
ARISING FROM OR RELATING TO THIS GUARANTY OR THE DEALINGS OF THE PARTIES IN
RESPECT HERETO.
5
<PAGE> 6
GUARANTOR ACKNOWLEDGES AND AGREES THAT THIS PROVISION IS A MATERIAL TERM OF THIS
GUARANTY AND THAT LENDER WOULD NOT EXTEND ANY FUNDS TO THE DEBTOR IF THIS WAIVER
OF JURY TRIAL WERE NOT A PART HEREOF. GUARANTOR ACKNOWLEDGES THAT THIS IS A
WAIVER OF A LEGAL RIGHT AND THAT IT MAKES THIS WAIVER VOLUNTARILY AND KNOWINGLY
AFTER CONSULTATION WITH, OR THE OPPORTUNITY TO CONSULT WITH, COUNSEL OF ITS
CHOICE. EACH GUARANTOR AGREES THAT ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS AND
SUITS SHALL BE TRIED BEFORE A JUDGE OF A COURT OF COMPETENT JURISDICTION,
WITHOUT A JURY.
15. Severability. In the event that any provision of this Guaranty shall be
unenforceable provision shall instead be legally enforceable to the extent
permitted by applicable law, and any court of competent jurisdiction shall
enforce such provision or modify it to make it enforceable.
16. Entirety. This Guaranty embodies the final, entire Agreement of Guarantor
and Lender with respect to Guarantor's guaranty of the liabilities and
supersedes any and all prior commitments, agreements, representations, and
understandings, whether written or oral, relating to the subject matter hereof.
This Guaranty is intended by Guarantor and Lender as a final and complete
expression of the terms of the Guaranty, and no course of dealing between
Guarantor and Lender, no course of performance, no trade practices, and no
evidence of prior, contemporaneous or subsequent oral agreements or discussions
or other extrinsic evidence of any nature shall be used to contradict, vary,
supplement or modify any term of this Guaranty Agreement. There are no oral
agreements between Guarantor and Lender.
17. Interest Rate Limit. The provisions of this Guaranty and of all
agreements between Debtor and Lender, whether now existing or hereafter arising
and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of the Debentures or otherwise, shall the amount paid or agreed to
be paid ("Interest") to Lender for the use, forbearance or retention of the
money to be loaned thereunder exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, performance or fulfillment
of any provision hereof or of any agreement between Debtor and Lender shall, at
the time of performance of fulfillment of such provision shall be due, exceed
the limit for Interest prescribed by applicable law, then ipso facto the
obligation to be performed or fulfilled shall be reduced to such limit and if,
from any circumstance whatsoever, Lender should ever receive as Interest an
amount which would exceed the highest lawful rate, the amount which would be
excessive Interest shall be applied to the reduction of the principal balance
owing hereunder in the inverse order of its maturity (whether or not then due),
or at the option of Lender be paid over to Debtor, and not applied to the
payment of Interest. In determining whether or not the Interest paid or payable
under any specific contingency
6
<PAGE> 7
exceeds the maximum amount payable under applicable law, Debtor, Lender and each
Guarantor shall, to the maximum extent permitted under applicable law, (i) treat
all loans by Lender to Debtor as but a single extension of credit, (ii)
characterize any nonprincipal payment as an expense, fee or premium rather than
as interest, (iii) exclude voluntary prepayments and the effects thereof and
(iv) "spread" the total amount of Interest throughout the entire period the
Liabilities were outstanding (including the period of any renewal or extension
hereof) so that the Interest hereon for such full period will not exceed the
maximum amount permitted by applicable law. This paragraph will control all
agreements between Guarantor, Debtor and Lender.
Remainder of page intentionally left blank
7
<PAGE> 8
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
first above written.
Software Acquisition Corp.
Robert A. Blay
--------------------
By: Robert A. Blay
Title: President
8
<PAGE> 9
STATE OF Michigan )
) TO WIT:
COUNTY OF Wayne )
On the 28th day of August, 1998, before me personally came Robert A.
Blay, known to me (or satisfactorily proven) to be the person whose name is
subscribed to the within instrument as the President of Software Acquisition
Corporation and who executed the above document on behalf of such corporation
for the purposes contained therein, such instrument having been executed in my
presence.
[Seal]
/s/ Holly A. Steffes
- -----------------------
Notary Public
My commission expires.
HOLLY A. STEFFES
Notary Public, Wayne Co., MI
My Comm. Expires Nov. 30, 2001
9
<PAGE> 1
EXHIBIT 10(g)
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED IN A TRANSACTION NOT
INVOLVING ANY PUBLIC OFFERING AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT AND LAWS.
IndeNet, Inc.
--------------------
STOCK PURCHASE WARRANT
--------------------
March 26, 1998
1. Grant. INDENET, INC., a Delaware corporation (hereinafter, the "Company") for
value received hereby grants to ALLIED CAPITAL CORPORATION, a Maryland
corporation (collectively with successors and registered assigns, "Holder")
under the terms herein the right to purchase that number of the fully paid and
non-assessable shares of the Company's authorized but unissued $.001 par value
common stock, that will provide Holder with Two and one-tenth percent (2.1%) of
such common stock calculated, on a fully diluted basis (that is, calculated as
if all warrants, options and other securities exercisable or exchangeable for
capital stock of the Company, had then been exercised or converted in full) at
the earlier of (i) the time of exercise hereof, or (ii) close of business on the
date on which certain Loans referred to below are fully and indefeasibly repaid.
The Company agrees that it will give the Holder, not less than thirty, or
earlier than sixty days, prior written notice of its intent to repay the Loans
in full. Such percentage is sometimes hereinafter referred to as the "Warrant
Percentage." Such $.001 par value common shares are sometimes hereinafter
referred to as Common Stock. The Common Stock shares issuable under this Warrant
are hereinafter sometimes referred to as the Warrant Shares.
2. Investment and Loan Agreement. This Warrant has been issued, and certain
loans to the Company (the "Loans") are being made, under the terms of an
Investment and Loan Agreement between the Company and the Holder, dated this
date (the "Agreement"). Capitalized terms not otherwise defined herein shall
have the meanings set forth in the Agreement.
3. Term. The right to exercise this Warrant shall expire ten (10) years after
the date hereof.
4. Exercise Price. The exercise price of this Warrant (the "Exercise Price")
shall be $2.50 per share; PROVIDED, HOWEVER, that if there is a Company Sale (as
such term is defined in that certain Shareholders Agreement, of even date
hereof, between the Holder and the Company) when there exists an Event of
Default, such that the holders of the Debentures accelerate the maturity
thereof, the Exercise Price shall decline to the lesser of
<PAGE> 2
(a) the per share par value of Common Stock or (b) $.50 per share. In any case,
the Exercise Price shall be subject to certain adjustments from time to time as
set out below.
5. Anti-dilution Provisions.
(a) Issuance of Additional Stock; Adjustments to Exercise Price.
Whenever the Company issues or sells any Additional Stock (as hereinafter
defined) for a consideration per share less than the Exercise Price in effect on
the date of such issuance or sale, immediately upon such issuance or sale the
Exercise Price shall be reduced to equal the net per-share consideration
received by the Company with respect to such issuance or sale.
(b) Additional Stock. For purposes hereof "Additional Stock" shall
mean any Common Stock issued after the date hereof other than Common Stock
issued upon the exercise of this Warrant, or Common Stock issued by the Company
as a stock dividend on, or upon the subdivision or combination of, the
outstanding shares of Common Stock;
(c) Options and Warrants. In case the Company shall at any time other
than pursuant to this Warrant issue or grant any options or rights to subscribe
for or to purchase Common Stock, all shares of Common stock which the holders of
such options or rights shall be entitled to subscribe for or to purchase shall
be deemed to be issued as of the date of such issuing or granting of such
options or rights; and the minimum aggregate consideration specified in such
options or rights for the shares covered thereby, plus the cash consideration,
if any, received by the Company for the issuance of such options or rights,
shall be deemed to be the consideration actually received by the Company for the
issuance of such shares;
(d) Convertible Securities. In case the Company shall at any time
other than pursuant to this Warrant issue any stock or obligations directly or
indirectly convertible into or exchangeable for Common Stock, then such issue
shall be deemed to be an issue (as of the date of issue of such stock or
obligations) of the total maximum number of shares of Common Stock necessary to
effect the exchange or conversion of all such stock or obligations. The amount
received or receivable by the Company in consideration for the issue of such
stock or obligations (deducting therefrom any commissions or expenses paid or
incurred by the Company for any underwriting of, or otherwise in connection
with, such issue, plus the minimum aggregate amount of premiums, if any, payable
to the Company upon exchange of conversion), shall be deemed to be the
consideration actually received by the Company for the issue of such Common
Stock;
(e) Calculation of Consideration. In the case of an issue of shares
of Common Stock for cash, the consideration received by the Company therefor
shall be deemed to be the net proceeds received for such shares, deducting
therefrom any commissions or expenses paid or incurred by the Company for any
underwriting of, or otherwise in
2
<PAGE> 3
connection with, the issue of such shares; provided, however, that in any such
case where the shares of Common Stock so issued are part of a unit or
combination of securities of the Company consisting of one or more shares of
Common Stock and other securities of the Company, if the amount of the cash
consideration received by the Company for the shares of Stock so issued is not
determinable at the time of such issuance, such amount shall be deemed to be
such portion of the total cash consideration received by the Company for such
units or combinations as reasonably determined in good faith by the Company's
Board of Directors, regardless of the accounting treatment thereof by the
Company;
(f) Non-Cash Consideration. In the case of an issue (otherwise than
as a dividend of other distribution on any Common Stock of the Company or upon
conversion or exchange of other securities of the Company) of shares of Common
Stock for a consideration part or all of which shall be other than cash, the
amount of the consideration other than cash therefore shall be deemed to be the
fair value of such consideration as reasonably determined in good faith by the
Company's Board of Directors, regardless of the accounting treatment thereof by
the Company;
(g) Resale of Treasury Stock. The sale or other disposition of any
shares of Common Stock of the Company or other securities held in the treasury
of the Company today, or of any securities resulting from any reclassification
or reclassifications of such shares or other securities which were effected
while they were held in the treasury of the Company, shall be deemed an issuance
thereof; provided, however, that if any such share or other security is sold or
disposed of and subsequently re-acquired by the Company, no future sale or other
disposition thereof shall be deemed an issuance thereof.
(h) Stock Split or Dividend; Adjustment to Number of Warrant Shares.
In case the shares of Common Stock at any time outstanding shall be subdivided
into a greater or combined into a lesser number of shares of Common Stock, by
stock-split, reverse split or otherwise, or in case shares of Common Stock shall
be issued as a stock dividend, the Exercise Price shall be increased or
decreased, as applicable, to an amount which shall bear the same relation to the
Exercise Price in effect immediately prior to such subdivision, combination or
stock dividend as the total number of shares of Common Stock outstanding
immediately prior to such subdivision, combination or stock dividend shall bear
to the total number of shares of Common Stock outstanding immediately after such
subdivision, combination or stock dividend; likewise, in case of such a
subdivision, combination or stock dividend after the Loans have been repaid but
prior to the date of exercise hereof, the number of Warrant Shares shall be
increased or decreased as applicable, to the number which shall bear the same
relation to the number of Warrant Shares obtainable hereunder immediately prior
to such event, as the total number of shares of Common Stock outstanding
immediately after such event shall bear to the total number of shares of Common
Stock outstanding immediately prior to such event, it being understood
3
<PAGE> 4
that after such an increase or decrease the number of Warrant Shares may or may
not correspond to the Warrant Percentage;
(i) Merger. In case of any capital reorganization, or any
reclassification of the Common Stock of the Company, or in case of any
consolidation of the Company with or the merger of the Company into any other
corporation (other than a consolidation or merger in which the Company is the
continuing corporation) or in case of the sale of the properties and assets of
the Company, as or substantially as, an entirety to any other corporation, this
Warrant shall after such reorganization, reclassification, consolidation, merger
or sale be exercisable upon the terms and conditions specified herein, for the
number of shares of stock or other securities or property of the Company, or of
the corporation resulting from such consolidation or surviving such merger or to
which such sale shall be made, as the case may be, to which the Common Stock
issuable hereunder at the time of such reorganization, reclassification,
consolidation, merger or sale, would have entitled the holder hereof under the
terms of such reorganization, reclassification, consolidation, merger or sale.
In any such case, if necessary, the provision set forth in this Warrant with
respect to the rights and interests thereafter of the Holder shall be
appropriately adjusted so as to be applicable, as nearly as may reasonably be,
to any shares of stock or other securities or property thereafter deliverable on
the exercise of this Warrant. The subdivision or combination of shares of Common
Stock at any time outstanding into a greater or lesser number of shares of
Common Stock shall not be deemed to be a reclassification of the Common Stock of
the Company for the purposes of this section. The Company shall not effect any
such consolidation, merger, or sale, unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume, by written instrument executed and delivered to the
Company, the obligation to deliver to the Holder such shares of stock,
securities or assets to which in accordance with the foregoing provisions, such
Holder may be entitled, as well as any other obligations arising under this
Warrant;
(j) Dividends in Kind. If the Company shall declare a dividend upon
shares of Common Stock payable otherwise than out of earnings or earned surplus
or otherwise than in shares of the Company's Common Stock or in stock or
obligations directly or indirectly convertible into or exchangeable for Common
Stock, the holder of this Warrant shall, upon exercise in whole or in part, be
entitled, in addition to the number of shares of Common Stock deliverable upon
such exercise, to the cash, stock or other securities or property which Holder
would have received as dividends if continuously since the date hereof such
Holder
(i) had been the holder of record of the number of shares of
Common Stock deliverable upon such exercise, and
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<PAGE> 5
(ii) had retained all dividends in stock or other securities
(other than shares of Common Stock or such convertible or exchangeable stock or
obligations) paid or payable in respect of said number of shares of Common Stock
or in respect of any such stock or other securities so paid or payable as such
dividends.
For purposes of this subparagraph, a dividend payable otherwise than in cash
shall be considered to be payable out of earnings or earned surplus only to the
extent that such earnings or earned surplus shall be charged in an amount equal
to the fair value of such dividend as reasonably determined in good faith by the
Board of Directors of the Company;
(k) Expiration of Options and Warrants. Upon the expiration, in whole
or in part, of any rights, options or securities exchangeable or convertible to
Common Stock, the number of shares of Common Stock for which such rights or
options were exchangeable or convertible shall no longer be deemed issued for
purposes hereof, and no longer included in any calculation of Additional Stock.
6. Below Par Price. If at any time the per share exercise price of this Warrant
shall be less than the par value of one share of Common Stock, the Company shall
take such action as shall be necessary to reduce such par value to an amount
less than the per share exercise price of this Warrant;
7. Notices of Stock Sales. Whenever there is an issuance or sale of Additional
Stock, the Company shall promptly
(a) place on file at the Company's principal office a certificate
signed by the President stating the per share price applicable to the
transaction, a detailed calculation of such per share price, the number of
shares of Common Stock sold or issued, the consideration received, and all fees
and expenses incurred, and further describing the transaction in detail and the
adjustments (if any) to the Exercise Price resulting therefrom; and
(b) cause a copy of such certificate to be sent to the Holder.
8. Exchange of Shares for Exercise Price. The Holder at its option may provide
the exercise price under this Warrant by reducing the number of shares for which
the Warrant is otherwise exercisable by the number of shares having fair market
value equal to the Exercise Price. In the case where the Exercise Price is less
than the value of one (1) share, the said Exercise Price will increase to equal
the fair market value of one (1) share.
9. Exercise Procedure. This Warrant may be exercised by presenting it and
tendering the aggregate Exercise Price in legal tender or by bank's, cashier's
or certified check to the
5
<PAGE> 6
Company at its address specified in the Agreement, along with written
subscription substantially in the form of Exhibit 9.00 hereof. The date on which
this Warrant is thus surrendered, accompanied by tender or payment as herein -
before or hereinafter provided, is referred to herein as the Exercise Date. The
Company shall forthwith at its expense (including the payment of issue taxes),
issue and deliver the proper number of shares of Common Stock, and such shares
shall be deemed issued for all purposes as of the opening of business on the
Exercise Date notwithstanding any delay in the actual issuance;
10. Resale of Warrant or Shares. Neither this Warrant nor other shares of common
stock issuable upon exercise of the conversion rights herein, have been
registered under the Securities Act of 1933 as amended, or under the securities
laws of any state. Neither this Warrant nor any shares when issued may be sold,
transferred, pledged or hypothecated in the absence of (i) an effective
registration statement for this Warrant or the shares, as the case may be, under
the Securities Act of 1933 as amended and such registration or qualification as
may be necessary under the securities laws of any state, or (ii) an opinion of
counsel reasonably satisfactory to the Company that such registration or
qualification is not required. The Company shall cause a certificate or
certificates evidencing all or any of the shares issued upon exercise of the
conversion rights herein prior to said registration and qualification of such
shares to bear the following legend: "The shares evidenced by this certificate
have not been registered under the Securities Act of 1933 as amended, or under
the securities laws of any state. The shares may not be sold, transferred,
pledged or hypothecated in the absence of an effective registration statement
under the Securities Act of 1933, as amended, and such registration or
qualification as may be necessary under the securities laws of any state, or an
opinion of counsel satisfactory to the Company that such registration or
qualification is not required."
11. Transfer. This Warrant shall be registered on the books of the Company which
shall be kept at its principal office for that purpose, and shall be
transferable in whole or in part but only on such books by the Holder in person
or by duly authorized attorney with written notice substantially in the form of
Exhibit 11.00 hereof, and only in compliance with the preceding paragraph. The
Company may issue appropriate stop orders to its transfer agent to prevent a
transfer in violation of the preceding paragraph.
12. Replacement of Warrrant. At the request of the Holder and on production of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and (in the case of loss, theft, or destruction)
if required by the Company, upon delivery of an indemnity agreement with surety
in such reasonable amount as the Company may determine thereof, the Company at
its expense will issue in lieu thereof a new Warrant of like tenor.
13. Investment Covenant. The Holder by its acceptance hereof covenants that this
Warrant is, and any stock issued hereunder will be, acquired for investment
purposes, and
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<PAGE> 7
that the Holder will not distribute the same in violation of any state or
federal law or regulation.
14. Waiver of Jury Trial. THE COMPANY WAIVES ALL RIGHT TO TRIAL BY JURY OF ALL
CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND DIRECTLY OR INDIRECTLY
ARISING FROM OR RELATING TO THIS WARRANT OR THE DEALINGS OF THE PARTIES IN
RESPECT HERETO. THE COMPANY ACKNOWLEDGES AND AGREES THAT THIS PROVISION IS A
MATERIAL TERM OF THIS WARRANT AND THAT THE HOLDER WOULD NOT EXTEND ANY FUNDS
UNDER THE LOAN DOCUMENTS IF THIS WAIVER OF JURY TRIAL WERE NOT A PART OF THIS
WARRANT. THE COMPANY ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL RIGHT AND
THAT IT MAKES THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH, OR
THE OPPORTUNITY TO CONSULT WITH, COUNSEL OF ITS CHOICE. THE COMPANY AGREES THAT
ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS SHALL BE TRIED BEFORE A JUDGE
OF A COURT OF COMPETENT JURISDICTION, WITHOUT A JURY.
REMAINDER OF PAGE INTENTIONALLY left BLANK
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<PAGE> 8
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf by its undersigned officer, and its corporate seal to be hereunto
affixed, as of the date first above written.
INDENET, INC.
By: /s/ Robert Blay
----------------------
Name: Robert Blay
Title: Vice-President
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<PAGE> 9
Exhibit 9.00
IRREVOCABLE SUBSCRIPTION
To: IndeNet, Inc.
Gentlemen:
The undersigned hereby elects to exercise its right under the attached Warrant
by purchasing ________________shares of the Common Stock of your company, and
hereby irrevocably subscribes to such issue. The certificates for such shares
shall be issued in the name of
- ------------------------------------------------------------------------------
(Name)
- ------------------------------------------------------------------------------
(Address)
- ------------------------------------------------------------------------------
(Taxpayer Number)
and deliver to
---------------------------------------------------------------
(Name)
- ------------------------------------------------------------------------------
(Address)
The exercise price of $ is enclosed
----------------
Date:
-----------------------------------------
Signed: (Name of Holder, Please Print)
---------------------------------------
- ------------------------------------------------------------------------------
(Address)
- ------------------------------------------------------------------------------
(Signature)
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<PAGE> 10
Exhibit 11. 00
ASSIGNMENT
FOR VALUE RECEIVED,
-----------------------------------------------------------
- ------------------------------------------------------------------------------
(Name)
- ------------------------------------------------------------------------------
(Address)
_______________________ the attached Warrant together with all right, title and
interest therein, and does hereby irrevocably appoint _______________________
attorney to transfer said Warrant on the books of IndeNet, Inc., with full power
of substitution in the premises.
Done this day of , 19
--------- -------------- --
Signed:
----------------------
By:
--------------------------
Its:
-------------------------
10
<PAGE> 1
EXHIBIT 10(h)
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED IN A TRANSACTION
NOT INVOLVING ANY PUBLIC OFFERING AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SUCH ACT AND LAWS.
ENTERPRISE SOFTWARE, INC.
(formerly named IndeNet, Inc.)
---------------------------
STOCK PURCHASE WARRANT
---------------------------
September 1, 1998
1. Grant. ENTERPRISE SOFTWARE, INC., a Delaware corporation formerly named
IndeNet, Inc. (hereinafter, the "Company"), for value received hereby grants to
ALLIED CAPITAL CORPORATION, a Maryland corporation (collectively with successors
and registered assigns, "Holder") under the terms herein the right to purchase
that number of the fully paid and non-assessable shares of the Company's
authorized but unissued $.001 par value common stock, that will provide Holder
with one and sixty-five hundredths percent (1.65%) of such common stock
calculated, on a fully diluted basis (that is, calculated as if all warrants,
options and other securities exercisable or exchangeable for capital stock of
the Company, had then been exercised or converted in full) at the earlier of (i)
the time of exercise hereof, or (ii) close of business on the date on which
certain Loans referred to below are fully and indefeasibly repaid. The Company
agrees that it will give the Holder, not less than thirty, or earlier than sixty
days, prior written notice of its intent to repay the Loans in full. Such
percentage is sometimes hereinafter referred to as the "Warrant Percentage."
Such $.001 par value common shares are sometimes hereinafter referred to as
Common Stock. The Common Stock shares issuable under this Warrant are
hereinafter sometimes referred to as the Warrant Shares. The Warrant Percentage
is subject to increase as set out in paragraph 6, below.
2. Investment and Loan Agreement. This Warrant has been issued, and certain
loans to the Company (the "Loans") are being made, under the terms of an
Investment and Loan Agreement between the Company and the Holder, dated March
26, 1998 and amended by a certain First Amendment thereto dated this date (as
amended, the "Agreement"). Capitalized terms not otherwise defined herein shall
have the meanings set forth in the Agreement.
3. Term. The right to exercise this Warrant shall expire ten (10) years after
the date of the Agreement.
<PAGE> 2
4. Exercise Price. The exercise price of this Warrant (the "Exercise Price")
shall be Ten Dollars ($10.00) per share; PROVIDED, HOWEVER, that if there is a
Company Sale (as such term is defined in that certain Shareholders Agreement
dated March 26, 1998, between the Holder and the Company when there exists an
Event of Default, such that the holders of the Debentures accelerate the
maturity thereof, the Exercise Price shall decline to the lesser of (a) the per
share par value of Common Stock or (b) $.50 per share. In any case, the Exercise
Price shall be subject to certain adjustments from time to time as set out
below.
5. Anti-dilution Provisions.
(a) Issuance of Additional Stock; Adjustments to Exercise Price. Whenever the
Company issues or sells any Additional Stock (as hereinafter defined) for a
consideration per share less than the Exercise Price in effect on the date of
such issuance or sale, immediately upon such issuance or sale the Exercise Price
shall be reduced to equal the net per-share consideration received by the
Company with respect to such issuance or sale.
(b) Additional Stock. For purposes hereof "Additional Stock" shall mean any
Common Stock issued after the date hereof other than Common Stock issued upon
the exercise of this Warrant, or Common Stock issued by the Company as a stock
dividend on, or upon the subdivision or combination of, the outstanding shares
of Common Stock;
(c) Options and Warrants. In case the Company shall at any time other than
pursuant to this Warrant issue or grant any options or rights to subscribe for
or to purchase Common Stock, all shares of Common Stock which the holders of
such options or rights shall be entitled to subscribe for or to purchase shall
be deemed to be issued as of the date of such issuing or granting of such
options or rights; and the minimum aggregate consideration specified in such
options or rights for the shares covered thereby, plus the cash consideration,
if any, received by the Company for the issuance of such options or rights,
shall be deemed to be the consideration actually received by the Company for the
issuance of such shares;
(d) Convertible Securities. In case the Company shall at any time other than
pursuant to this Warrant issue any stock or obligations directly or indirectly
convertible into or exchangeable for Common Stock, then such issue shall be
deemed to be an issue (as of the date of issue of such stock or obligations) of
the total maximum number of shares of Common Stock necessary to effect the
exchange or conversion of all such stock or obligations. The amount received or
receivable by the Company in consideration for the issue of such stock or
obligations (deducting therefrom any commissions or expenses paid or incurred by
the Company for any underwriting of, or otherwise in connection with, such
issue, plus the minimum aggregate amount of premiums, if any, payable to the
Company
2
<PAGE> 3
upon exchange of conversion), shall be deemed to be the consideration actually
received by the Company for the issue of such Common Stock;
(e) Calculation of Consideration. In the case of an issue of shares of Common
Stock for cash, the consideration received by the Company therefor shall be
deemed to be the net proceeds received for such shares, deducting therefrom any
commissions or expenses paid or incurred by the Company for any underwriting of,
or otherwise in connection with, the issue of such shares; provided, however,
that in any such case where the shares of Common Stock so issued are part of a
unit or combination of securities of the Company consisting of one or more
shares of Common Stock and other securities of the Company, if the amount of the
cash consideration received by the Company for the shares of Stock so issued is
not determinable at the time of such issuance, such amount shall be deemed to be
such portion of the total cash consideration received by the Company for such
units or combinations as reasonably determined in good faith by the Company's
Board of Directors, regardless of the accounting treatment thereof by the
Company;
(f) Non-Cash Consideration. In the case of an issue (otherwise than as a
dividend of other distribution on any Common Stock of the Company or upon
conversion or exchange of other securities of the Company) of shares of Common
Stock for a consideration part or all of which shall be other than cash, the
amount of the consideration other than cash therefore shall be deemed to be the
fair value of such consideration as reasonably determined in good faith by the
Company's Board of Directors, regardless of the accounting treatment thereof by
the Company;
(g) Resale of Treasury Stock. The sale or other disposition of any shares of
Common Stock of the Company or other securities held in the treasury of the
Company today, or of any securities resulting from any reclassification or
reclassifications of such shares or other securities which were effected while
they were held in the treasury of the Company, shall be deemed an issuance
thereof; provided, however, that if any such share or other security is sold or
disposed of and subsequently re-acquired by the Company, no future sale or other
disposition thereof shall be deemed an issuance thereof.
(h) Stock Split or Dividend; Adjustment to Number of Warrant Shares. In case
the shares of Common Stock at any time outstanding shall be subdivided into a
greater or combined into a lesser number of shares of Common Stock, by
stock-split, reverse split or otherwise, or in case shares of Common Stock shall
be issued as a stock dividend, the Exercise Price shall be increased or
decreased, as applicable, to an amount which shall bear the same relation to the
Exercise Price in effect immediately prior to such subdivision, combination or
stock dividend as the total number of shares of Common Stock outstanding
immediately prior to such subdivision, combination or stock dividend shall bear
to the total number of shares of Common Stock outstanding immediately after such
subdivision, combination or stock dividend; likewise, in case of such a
subdivision,
3
<PAGE> 4
combination or stock dividend after the Loans have been repaid but prior to the
date of exercise hereof, the number of Warrant Shares shall be increased or
decreased as applicable, to the number which shall bear the same relation to the
number of Warrant Shares obtainable hereunder immediately prior to such event,
as the total number of shares of Common Stock outstanding immediately after such
event shall bear to the total number of shares of Common Stock outstanding
immediately prior to such event, it being understood that after such an increase
or decrease the number of Warrant Shares may or may not correspond to the
Warrant Percentage;
(i) Merger. In case of any capital reorganization, or any reclassification of
the Common Stock of the Company, or in case of any consolidation of the Company
with or the merger of the Company into any other corporation (other than a
consolidation or merger in which the Company is the continuing corporation) or
in case of the sale of the properties and assets of the Company, as or
substantially as, an entirety to any other corporation, this Warrant shall after
such reorganization, reclassification, consolidation, merger or sale be
exercisable upon the terms and conditions specified herein, for the number of
shares of stock or other securities or property of the Company, or of the
corporation resulting from such consolidation or surviving such merger or to
which such sale shall be made, as the case may be, to which the Common Stock
issuable hereunder at the time of such reorganization, reclassification,
consolidation, merger or sale, would have entitled the holder hereof under the
terms of such reorganization, reclassification, consolidation, merger or sale.
In any such case, if necessary, the provision set forth in this Warrant with
respect to the rights and interests thereafter of the Holder shall be
appropriately adjusted so as to be applicable, as nearly as may reasonably be,
to any shares of stock or other securities or property thereafter deliverable on
the exercise of this Warrant. The subdivision or combination of shares of Common
Stock at any time outstanding into a greater or lesser number of shares of
Common Stock shall not be deemed to be a reclassification of the Common Stock of
the Company for the purposes of this section. The Company shall not effect any
such consolidation, merger, or sale, unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume, by written instrument executed and delivered to the
Company, the obligation to deliver to the Holder such shares of stock,
securities or assets to which in accordance with the foregoing provisions, such
Holder may be entitled, as well as any other obligations arising under this
Warrant;
(j) Dividends in Kind. If the Company shall declare a dividend upon shares of
Common Stock payable otherwise than out of earnings or earned surplus or
otherwise than in shares of the Company's Common Stock or in stock or
obligations directly or indirectly convertible into or exchangeable for Common
Stock, the holder of this Warrant shall, upon exercise in whole or in part, be
entitled, in addition to the number of shares of Common
4
<PAGE> 5
Stock deliverable upon such exercise, to the cash, stock or other securities or
property which Holder would have received as dividends if continuously since the
date hereof such Holder
(i) had been the holder of record of the number of shares of Common Stock
deliverable upon such exercise, and
(ii) had retained all dividends in stock or other securities (other than
shares of Common Stock or such convertible or exchangeable stock or obligations)
paid or payable in respect of said number of shares of Common Stock or in
respect of any such stock or other securities so paid or payable as such
dividends.
For purposes of this subparagraph, a dividend payable otherwise than in cash
shall be considered to be payable out of earnings or earned surplus only to the
extent that such earnings or earned surplus shall be charged in an amount equal
to the fair value of such dividend as reasonably determined in good faith by the
Board of Directors of the Company;
(k) Expiration of Options and Warrants. Upon the expiration, in whole or in
part, of any rights, options or securities exchangeable or convertible to Common
Stock, the number of shares of Common Stock for which such rights or options
were exchangeable or convertible shall no longer be deemed issued for purposes
hereof, and no longer included in any calculation of Additional Stock.
6. Increase In Warrant Percentage. If the companies are not in compliance with
Section 7.8 of the Agreement (without taking into account the First Amendment to
the Agreement being signed herewith) at close of business on December 31, 1998,
the Warrant Percentage shall increase to one and nine-tenths percent (1.9%).
7. Below Par Price. If at any time the per share exercise price of this Warrant
shall be less than the par value of one share of Common Stock, the Company shall
take such action as shall be necessary to reduce such par value to an amount
less than the per share exercise price of this Warrant;
8. Notices of Stock Sales. Whenever there is an issuance or sale of Additional
Stock, the Company shall promptly
(a) place on file at the Company's principal office a certificate signed by
the President stating the per share price applicable to the transaction, a
detailed calculation of such per share price, the number of shares of Common
Stock sold or issued, the consideration received, and all fees and expenses
incurred, and further describing the
5
<PAGE> 6
transaction in detail and the adjustments (if any) to the Exercise Price
resulting therefrom; and
(b) cause a copy of such certificate to be sent to the Holder.
9. Exchange of Shares for Exercise Price. The Holder at its option may provide
the Exercise Price under this Warrant by reducing the number of shares for which
the Warrant is otherwise exercisable by the number of shares having fair market
value equal to the Exercise Price. In the case where the Exercise Price is less
than the value of one (1) share, the said Exercise Price will increase to equal
the fair market value of one (1) share.
10. Exercise Procedure. This Warrant may be exercised by presenting it and
tendering the aggregate Exercise Price in legal tender or by bank's, cashier's
or certified check to the Company at its address specified in the Agreement,
along with written subscription substantially in the form of Exhibit 10.00
hereof. The date on which this Warrant is thus surrendered, accompanied by
tender or payment as hereinbefore or hereinafter provided, is referred to herein
as the Exercise Date. The Company shall forthwith at its expense (including the
payment of issue taxes), issue and deliver the proper number of shares of Common
Stock, and such shares shall be deemed issued for all purposes as of the opening
of business on the Exercise Date notwithstanding any delay in the actual
issuance;
11. Resale of Warrant or Shares. Neither this Warrant nor other shares of common
stock issuable upon exercise of the conversion rights herein, have been
registered under the Securities Act of 1933 as amended, or under the securities
laws of any state. Neither this Warrant nor any shares when issued may be sold,
transferred, pledged or hypothecated in the absence of (i) an effective
registration statement for this Warrant or the shares, as the case may be, under
the Securities Act of 1933 as amended and such registration or qualification as
may be necessary under the securities laws of any state, or (ii) an opinion of
counsel reasonably satisfactory to the Company that such registration or
qualification is not required. The Company shall cause a certificate or
certificates evidencing all or any of the shares issued upon exercise of the
conversion rights herein prior to said registration and qualification of such
shares to bear the following legend:
The shares evidenced by this certificate have not been registered
under the Securities Act of 1933 as amended, or under the
securities laws of any state. The shares may not be sold,
transferred, pledged or hypothecated in the absence of an
effective registration statement under the Securities Act of
1933, as amended, and such registration or qualification as may
be necessary under the securities laws of any state, or an
opinion of counsel satisfactory to the Company that such
registration or qualification is not required.
6
<PAGE> 7
12. Transfer. This Warrant shall be registered on the books of the Company which
shall be kept at its principal office for that purpose, and shall be
transferable in whole or in part but only on such books by the Holder in person
or by duly authorized attorney with written notice substantially in the form of
Exhibit 12.00 hereof, and only in compliance with the preceding paragraph. The
Company may issue appropriate stop orders to its transfer agent to prevent a
transfer in violation of the preceding paragraph.
13. Replacement of Warrant. At the request of the Holder and on production of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and (in the case of loss, theft, or destruction)
if required by the Company, upon delivery of an indemnity agreement with surety
in such reasonable amount as the Company may determine thereof, the Company at
its expense will issue in lieu thereof a new Warrant of like tenor.
14. Investment Covenant. The Holder by its acceptance hereof covenants that this
Warrant is, and any stock issued hereunder will be, acquired for investment
purposes, and that the Holder will not distribute the same in violation of any
state or federal law or regulation.
15. Waiver of Jury Trial. THE COMPANY WAIVES ALL RIGHT TO TRIAL BY JURY OF ALL
CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND DIRECTLY OR INDIRECTLY
ARISING FROM OR RELATING TO THIS WARRANT OR THE DEALINGS OF THE PARTIES IN
RESPECT HERETO. THE COMPANY ACKNOWLEDGES AND AGREES THAT THIS PROVISION IS A
MATERIAL TERM OF THIS WARRANT AND THAT THE HOLDER WOULD NOT EXTEND ANY FUNDS
UNDER THE LOAN DOCUMENTS IF THIS WAIVER OF JURY TRIAL WERE NOT A PART OF THIS
WARRANT. THE COMPANY ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL RIGHT AND
THAT IT MAKES THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH, OR
THE OPPORTUNITY TO CONSULT WITH, COUNSEL OF ITS CHOICE. THE COMPANY AGREES THAT
ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS SHALL BE TRIED BEFORE A JUDGE
OF A COURT OF COMPETENT JURISDICTION, WITHOUT A JURY.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
7
<PAGE> 8
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on its
behalf by its undersigned officer, and its corporate seal to be hereunto
affixed, as of the date first above written.
Seal: ENTERPRISE SOFTWARE, INC.
By: Robert A. Blay
-------------------------
Name: Robert A. Blay
-----------------------
Title: Vice President
----------------------
8
<PAGE> 9
Exhibit 10.00
IRREVOCABLE SUBSCRIPTION
To: Enterprise Software, Inc.
Gentlemen:
The undersigned hereby elects to exercise its right under the attached Warrant
by purchasing___________________shares of the Common Stock of your company, and
hereby irrevocably subscribes to such issue. The certificates for such shares
shall be issued in the name of
- --------------------------------------------------------------------------------
(Name)
- --------------------------------------------------------------------------------
(Address)
- --------------------------------------------------------------------------------
(Taxpayer Number)
and deliver to
------------------------------------------------------------------
(Name)
- --------------------------------------------------------------------------------
(Address)
The exercise price of $ is enclosed.
-------------------
Date:
--------------------------------------------------
Signed: (Name of Holder, Please Print)
-------------------------------------------
- --------------------------------------------------------------------------------
(Address)
- --------------------------------------------------------------------------------
(Signature)
9
<PAGE> 10
Exhibit 12.00
ASSIGNMENT
FOR VALUE RECEIVED,
-------------------------------------------------------------
- --------------------------------------------------------------------------------
(Name)
- --------------------------------------------------------------------------------
(Address)
_________________ the attached Warrant together with all right, title and
interest therein, and does hereby irrevocably appoint__________________attorney
to transfer said Warrant on the books of Enterprise Software, Inc., with full
power of substitution in the premises.
Done this day of , 19 .
---- ---------- --
Signed:
---------------------------------
By:
-------------------------------------
Its:
------------------------------------
10
<PAGE> 1
EXHIBIT 10(i)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of the 26th
day of March, 1998 by IndeNet, Inc., a Delaware corporation (the "Company"),
Cable Computerized Management Systems, Inc., a Michigan corporation, and
Enterprise Systems Group, Inc., a New York corporation (each company with its
successors and assigns is a "Debtor" and collectively are the "Debtors"), in
favor of Allied Capital Corporation, a Maryland corporation, (collectively with
successors and assigns, the "Lender").
I. RECITALS
A. The Debtors have requested a loan from Lender, and Lender is
willing to make an initial loan to the Debtors in the aggregate amount of Nine
Million Dollars ($9,000,000) (the "Initial Loan") and subsequent loans in the
aggregate amount of Six Million Dollars ($6,000,000) (the "Subsequent Loans") in
consideration for the issuance by (a) the Debtors of certain Subordinated
Debentures to the Lender in connection with the making of the Initial Loan and
Subsequent Loan and (b) the Company to the Lender of certain Warrants to acquire
shares of the Company's common stock in connection with the making of the
Initial Loan and Subsequent Loan, each to be made in accordance with the terms
and conditions set forth in the Investment and Loan Agreement to be entered into
by such parties in connection herewith (the "Investment and Loan Agreement").
B. The obligations of the Debtors under the Subordinated
Debentures and the Holder's rights therein shall be secured by certain
collateral of the Debtors and certain other documents related thereto (all of
which documents, including the Investment and Loan Agreement, each Debenture,
this Agreement and any other Collateral Document (as defined in the Investment
and Loan Agreement), with all modifications, extensions, renewals, and
replacements thereof and therefor, are hereinafter collectively referred to as
the ("Loan Documents").
II. PROVISIONS
In consideration of the premises and other good and valuable
consideration, the receipt of which is hereby acknowledged, each Debtor hereby
agrees and grants as set forth below.
1. Grant. As security for the payment of the indebtedness created
under the Loan Documents, each Debtor hereby grants to Lender a continuing
security interest in all of such Debtor's now owned and hereafter acquired
tangible and intangible personal property, wherever located, and the proceeds
and products thereof. Without limiting the generality of the foregoing, such
security interest shall include all of each Debtor's now
<PAGE> 2
owned and hereafter acquired property and assets, and types of property,
wherever located, as follows:
(a) machinery, equipment, tools, furniture and
fixtures, and all replacements and substitutions therefor and thereof, and all
attachments, accessories and accessions thereto or for use therewith (the
"Equipment");
(b) inventory, raw materials, work-in-process, finished
goods, supplies and returned and/or repossessed inventory; and all replacements,
and substitutions therefor and thereof, and all accessions thereto, (the
"Inventory");
(c) general intangibles, licenses, permits, deposits,
things in action, contracts, contractual rights, leases of real property,
uncertificated securities and goodwill (the "General Intangibles");
(d) intellectual property, literary rights, rights to
performance, inventions, processes, systems, computer programs, databases and
software (including source and object codes); copyrights, patents, patent
applications, service marks, trademarks, trade names, trade secrets, and all
goodwill associated with the foregoing, including, in respect to all the
foregoing, the right to sue for past, present or future violations or
infringements thereof, all reissues, divisions, renewals, extensions,
continuations and continuations-in-part thereof, and all improvements thereon,
(the "Intellectual Property);
(e) accounts and rights to payment for goods sold or
leased or for services rendered (the "Accounts");
(f) chattel paper and leases of personal property (the
"Chattel Paper");
(g) instruments (negotiable or otherwise), notes,
bonds, certificated securities, letters of credit, items of payment, negotiable
documents, and documents of title (the "Instruments");
(h) all books, ledgers, records, customer lists,
correspondence, computer hardware and software, and magnetic or other data
storage media relating to any of the Equipment, Inventory, General Intangibles,
Intellectual Property, Accounts, Chattel Paper, Instruments or Proceeds (as
hereinafter defined), whether in the possession of such Debtor or otherwise (the
"Records"); and
(i) all cash and noncash proceeds and products,
including insurance proceeds of, and any indemnity or warranty payable by reason
of damage to or loss of, the
2
<PAGE> 3
Equipment, Inventory, General Intangibles, Intellectual Property, Accounts,
Chattel Paper, Instruments or Records (the "Proceeds").
Each Debtor's Equipment, Inventory, Intellectual Property, Accounts, General
Intangibles, Chattel Paper, Instruments, Records and Proceeds are hereinafter
referred to collectively as the "Collateral". Lender shall have all of the
rights and remedies of a secured party under the applicable Uniform Commercial
Code with respect to the Collateral. Notwithstanding any of the foregoing, the
security interests granted herein shall be subordinate to Senior Debt (as such
term is defined in the Investment and Loan Agreement) according to the terms of
the Investment and Loan Agreement.
2. Each Debtor's Representations and Warranties. Each Debtor
represents and warrants to Lender with respect to itself as follows:
(a) No Uniform Commercial Code Financing Statement
that names Debtor as a debtor or which lists any of the Collateral as collateral
has been filed in any jurisdiction except in connection with Senior Debt; Debtor
has not signed any financing statement or any security agreement authorizing any
other secured party thereunder to file any such financing statement except in
connection with Senior Debt; and the security interests granted to Lender under
this Agreement are second priority security interests subordinate only to the
Senior Debt (as defined in the Investment and Loan Agreement).
(b) The address for Debtor set forth on Exhibit A to
this Agreement is Debtor's correct mailing address and the address of Debtor's
principal place of business; Debtor has never had a principal place of business
at any other address, changed its name or used any other name or any trade name,
within the twelve (12) years immediately preceding the date of this Agreement;
Debtor's Equipment and Inventory are located at Debtor's principal place of
business set forth above; and none of Debtor's Inventory is stored with or in
the possession of any bailee, warehouseman, subcontractor, or other similar
person.
3. Covenants of Each Debtor. Each Debtor covenants and
agrees with respect to itself as follows:
(a) Debtor shall promptly execute and deliver any
Uniform Commercial Code Financing Statement or other document reasonably
required, or procure any document reasonably required (including Uniform
Commercial Code Financing Statement termination statements, as necessary), pay
all costs to record such documents and otherwise, and pay any documentary or
stamp tax or recording fee, to perfect and maintain perfected the security
interest, and the priority of the security interest, granted under this
Agreement. To the extent any of the Collateral is of a type as to which it is
necessary or desirable for Lender to take possession in order to perfect, or
maintain the priority of, Lender's security interest, then upon Lender's
request, Debtor shall deliver such
3
<PAGE> 4
Collateral to Lender. A carbon, photographic, photocopy or other reproduction of
a security agreement or financing statement shall be sufficient as a financing
statement.
(b) In the event of Default, Debtor shall provide
Lender from time to time within five working days of the written request of
Lender with: (i) written statements or schedules identifying and describing the
Collateral, and all additions, substitutions, and replacements thereof and
thereto; (ii) copies of customers' invoices or billing statements; (iii)
evidence of shipment or delivery of goods or merchandise to or performance of
services for customers; (iv) a listing and aging report for the Accounts; (v)
proof of the sale or lease of goods or satisfactory performance of services
which gave rise to the Accounts; and (vi) such other schedules and information
as Lender reasonably may require. The items to be provided under this Section
shall be in form satisfactory to Lender, in such detail as Lender may require
and are to be executed and delivered to the Lender from time to time solely for
Lender's convenience in maintaining Records of the Debtor's Collateral. The
Debtor's failure to give any of such items to Lender shall not affect,
terminate, modify or otherwise limit Lender's security interest in the
Collateral.
(c) Upon reasonable advance notice, Debtor shall allow
Lender access to the Debtor's places of business during normal business hours at
intervals to be determined by Lender, before or after a Default, and without
hindrance or delay, to audit, inspect, verify, check and make extracts or
photocopies from the Records of the Debtor and other data relating to the
Collateral.
(d) The Debtor shall pay or reimburse Lender for all
expenses of any nature which may be reasonably necessary, before or after
Default hereunder, for the enforcement or preservation of Lender's rights under
this Agreement or under the Loan Documents, including but not limited to
reasonable attorneys' fees, appellate costs and fees, and costs incurred by
Lender as a participant in any bankruptcy proceeding, workout, debt
restructuring, extension of maturity or document amendment, involving the Debtor
under the Loan Documents.
4. Additional Terms Relating to Contracts. In respect to any
contracts, agreements and other documents included in the Collateral, and both
before and after a Default, (a) each Debtor shall remain liable under such
contracts, agreements and documents to the extent set forth therein, to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed; (b) the exercise by Lender of any of the rights
hereunder shall not release any Debtor from any of its duties or obligations
thereunder; and (c) Lender shall have no obligation or liability under any such
contracts, agreements and other documents by reason of this Agreement, nor shall
Lender be obligated to perform any of the obligations or duties of a Debtor
thereunder or to take any action to collect or enforce any such contract,
agreement or other document.
4
<PAGE> 5
5. Further Assurances. Each Debtor will promptly and duly
execute and deliver to Lender such further documents and assurances, and take
such further action as Lender may from time to time reasonably request, in order
to carry out the intent and purpose of this Agreement, and to establish and
protect the rights and remedies created, or intended to be created, in favor of
Lender hereunder.
6. Default. A Debtor shall be deemed to be in default
hereunder ("Default") if (a) any Debtor shall be in breach of any warranty or
covenant herein, after provision of any notice and lapse of any cure period
provided in the Loan Documents expressly in respect to breaches of this
Agreement, or (b) a default shall occur or exist under any of the Loan
Documents, which is not cured after any notice and within any period of time
expressly allowed therein.
7. Remedies. In the event of Default, Lender may exercise
any one or more of its remedies under common or statutory law, and at any time
do any one or more of the following, all of which arc hereby authorized by each
Debtor:
(a) Require each Debtor (at such Debtor's sole
expense), to forward promptly any or all of the Equipment and Inventory to
Lender at such location as shall be reasonably required by Lender; or enter upon
the premises where any such Equipment or Inventory is located and take immediate
possession of and remove the Equipment or Inventory by summary proceedings or
otherwise, all without liability from Lender to Debtor for or by reason of such
entry or taking of possession, whether for the restoration of damage to property
caused by such taking, or otherwise;
(b) Sell or otherwise dispose of the Collateral at a
commercially reasonable public or private sale or otherwise, at such price as it
may deem best, for cash, credit, or otherwise, and, in case of any deficiency,
collect such deficiency from any Debtor;
(c) Exercise any other right or remedy which may be
available to it under this Agreement, the Loan Documents or applicable law; or
proceed by appropriate court action to enforce the terms hereof or to recover
damages for the breach hereof;
(d) Take or release other security for the obligations
of a Debtor under the Loan Documents; release any party primarily or secondarily
liable for any such obligations; grant extensions, renewals or indulgences with
respect to such obligations; and apply any other security therefor held by
Lender to the satisfaction of such obligations, all without prejudice to any
rights hereunder.
8. Additional Remedies of Lender. Each Debtor hereby
irrevocably appoints such Lender as Debtor's attorney-in-fact, with power of
substitution, to do, after a Default hereunder and during the continuance of
such Default, in the name of such Debtor
5
<PAGE> 6
or in the name of Lender or otherwise, for the use and benefit of Lender, but
at the cost and expense of such Debtor, and without notice to such Debtor each
of the following:
(a) notify the account debtors obligated on any Accounts to make
payments thereon directly to Lender, and to take control of the cash and
non-cash proceeds of any Collateral;
(b) compromise, release, exchange, surrender, make substitutions for,
extend, or renew any or all of the Collateral, or otherwise deal with the same
as Lender may deem advisable;
(c) remove from any Debtor's place of business any or all Records;
(d) make such use of any Debtor's place or places of business as may be
reasonably necessary to administer, control, collect or otherwise dispose of the
Collateral;
(e) repair, alter or supply goods, if any, necessary to fulfill in
whole or in part the purchase order of any account debtor;
(f) demand, collect, receipt for and give renewals, extensions,
discharges and releases of any of the Collateral;
(g) institute and prosecute legal and equitable proceedings to enforce
collection of, or realize upon, any of the Collateral;
(h) settle, renew, extend, compromise, compound, exchange or adjust
claims with respect to any of the Collateral or any legal proceedings brought
with respect thereto;
(i) endorse the name of any Debtor upon any instruments or items of
payment relating to the Collateral, or upon any proof of claim in bankruptcy
against an account debtor;
(j) institute and prosecute legal and equitable proceedings to reclaim
any of the goods sold to any account debtor obligated on an Account at a time
when such account debtor was insolvent; and
(k) receive and open all mail addressed to any Debtor, and notify the
postal authorities to change the address for the delivery of mail to any Debtor
to such address as Lender may designate.
6
<PAGE> 7
9. Collection of Accounts After Default. Upon the request of Lender at
any time after a Default, each Debtor shall deposit, or cause to be deposited,
all checks, drafts, cash and other remittances in payment of, or on account of
payment of, any and all Accounts (all of the foregoing herein collectively
referred to as "items of payment") to an account (the "Collateral Account")
designated by Lender at a bank or other financial institution designated by
Lender. Lender shall not be responsible for the solvency of any such bank or
other financial institution, or the management and administration of the
Collateral Account. Lender alone shall have the power to access and make
withdrawals from the Collateral Account. Each Debtor shall deposit such items of
payment for credit to the Collateral Account within one (1) banking day of the
receipt thereof and in precisely the form received, except for the endorsement
of a Debtor where necessary to permit the collection of such items of payment,
which endorsement each Debtor hereby agrees to make. Pending such deposit, each
Debtor will not commingle any such items of payment with any of its other funds
or property, but will hold them separate and apart. Lender shall be entitled to
apply the funds in the Collateral Account against the obligations secured hereby
from time to time in Lender's discretion.
10. No Marshalling. Notwithstanding the existence of any other collateral
security for the obligations secured hereby, Lender shall have the right to
determine the order in which any or all of the Collateral shall be subjected to
the remedies provided herein. Lender shall have the right to determine the order
in which any or all portions of the obligations secured hereby are satisfied
from the proceeds realized upon exercise of the remedies provided herein. Each
Debtor, any party who becomes liable for any Debtor's obligations and covenants
under the Loan Documents, and any party who now or hereafter acquires a security
interest in the Collateral, or any portion thereof, hereby waives any and all
right to require any marshalling of assets in connection with the exercise of
any remedy provided herein, in any of the Loan Documents or by applicable law.
11. Notices. All notices hereunder shall be given in accordance with the
notice provisions in the Loan Documents. Each Debtor agrees that five (5) days
prior notice of the time and place of any public sale of the Collateral, or of
the time after which a private sale of the Collateral will be made, is
commercially reasonable notice.
12. Costs and Fees. Each Debtor shall be liable for all legal fees and
other costs and expenses incurred by reason of any Default, or in the exercise
of Lender's remedies with respect thereto.
13. No Exclusive Remedies. No remedy referred to in this Agreement is
intended to be exclusive, but each shall be cumulative, and shall be in addition
to any other remedy referred to herein or otherwise available under the Loan
Documents, at law or in equity.
7
<PAGE> 8
14. Non-Waiver. The failure of Lender to exercise, or delay in the
exercise of, the rights granted hereunder, either before or after Default shall
not constitute a waiver of any such right.
15. Choice of Law, Venue and Jurisdiction, Service of Process. This
Agreement shall be interpreted, and the rights and liabilities of the parties
hereto determined, in accordance with the laws and decisions of the District of
Columbia, without regard to its principles of conflicts of law. Venue for any
adjudication hereof shall be only in the courts of the District of Columbia or
the Federal courts in the District of Columbia, to the jurisdiction of which
courts all parties hereby consent, as the agreement of the parties, as not
inconvenient and as not subject to review by any court other than such courts in
the District. Each Debtor intends that the courts of the jurisdictions in which
such Debtor is incorporated and conducts business shall afford full faith and
credit to any judgment rendered by a court of the District of Columbia or the
Federal courts in the District of Columbia, against such Debtor hereunder, and
hold that such District courts have in person jurisdiction to enter a valid
judgment against such Debtor. Service of any summons and/or complaint hereunder,
and any other process which may be served on a Debtor in any action in respect
hereto, may be made by mailing via registered mail or delivering a copy of such
process, to the address last provided by such Debtor to Lender. Each Debtor
agrees that this submission to jurisdiction and consent to service of process
are reasonable and made for the express benefit of Lender.
16. WAIVER OF JURY TRIAL. EACH DEBTOR WAIVES ALL RIGHT TO TRIAL BY JURY
OF ALL CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND ARISING FROM OR
RELATING TO THIS AGREEMENT OR THE DEALINGS OF THE PARTIES IN RESPECT HERETO.
EACH DEBTOR ACKNOWLEDGES AND AGREES THAT THIS PROVISION IS A MATERIAL TERM OF
THIS AGREEMENT AND THAT LENDER WOULD NOT EXTEND ANY FUNDS UNDER THE LOAN
DOCUMENTS IF THIS WAIVER OF JURY TRIAL WERE NOT A PART HEREOF. EACH DEBTOR
ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT IT MAKES THIS
WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH, OR THE OPPORTUNITY TO
CONSULT WITH, COUNSEL OF ITS CHOICE. EACH DEBTOR AGREES THAT ALL SUCH CLAIMS,
DEFENSES, COUNTERCLAIMS AND SUITS SHALL BE TRIED BEFORE A JUDGE OF A COURT OF
COMPETENT JURISDICTION, WITHOUT A JURY.
17. Successors and Assigns. This Agreement shall inure to the benefit of
Lender, its successors and assigns, and shall be binding upon each Debtor, its
successors and assigns.
18. Miscellaneous. This Agreement shall not be amended or altered except
by a document in writing signed by the party against which enforcement of the
change is
8
<PAGE> 9
sought. Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability, without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
9
<PAGE> 10
IN WITNESS WHEREOF, and intending to be legally bound hereby,
each Debtor executes this Agreement as of the date first set forth above.
[Seal]
INDENET, INC.
By: Robert A. Blay
-----------------------
Name: Robert Blay
Title: Vice-President
[Seal] CABLE COMPUTERIZED
MANAGEMENT SYSTEMS, INC.
By: Robert A. Blay
-----------------------
Name: Robert Blay
Title: Secretary
[Seal] ENTERPRISE SYSTEMS
GROUP, INC.
By: Robert A. Blay
-----------------------
Name: Robert Blay
Title: Secretary
10
<PAGE> 11
CORPORATE ACKNOWLEDGMENT
_____________)
) SS:
_____________)
On this the __ day of March, 1998, before me, a notary public in and
for the jurisdiction set out above, personally appeared Robert Blay, who
acknowledged himself to be the Vice President of IndeNet, Inc., a corporation,
and that he, as such Vice President, being authorized so to do, executed the
foregoing document for the purposes therein contained, by signing the name of
the corporation by himself as Vice-President.
WITNESS my hand and official seal this __ day of March, 1998.
Ronda Faye Mindingall
---------------------------
Notary Public
[Notarial Seal]
My Commission Expires: ___________
RONDA FAYE MINDINGALL
Notary Public Oakland County, Michigan
My Commission Expires April 19, 2000.
11
<PAGE> 12
CORPORATE ACKNOWLEDGMENT
_____________)
) SS:
_____________)
On this the __ day of March, 1998, before me, a notary public in and
for the jurisdiction set out above, personally appeared Robert Blay, who
acknowledged himself to be the Secretary of Cable Computerized Management
Systems, Inc., a corporation, and that he, as such Secretary, being authorized
so to do, executed the foregoing document for the purposes therein contained, by
signing the name of the corporation by himself as Secretary.
WITNESS my hand and official seal this 26th day of March, 1998.
Ronda Faye Mindingall
---------------------------
Notary Public
[Notarial Seal]
My Commission Expires: ___________
RONDA FAYE MINDINGALL
Notary Public Oakland County, Michigan
My Commission Expires April 19, 2000.
12
<PAGE> 13
CORPORATE ACKNOWLEDGMENT
_____________)
) SS:
_____________)
On this the __ day of March, 1998, before me, a notary public in and
for the jurisdiction set out above, personally appeared Robert Blay, who
acknowledged himself to be the Secretary of Enterprise Systems Group, Inc., a
corporation, and that he, as such Secretary, being authorized so to do, executed
the foregoing document for the purposes therein contained, by signing the name
of the corporation by himself as Secretary.
WITNESS my hand and official seal this 26th day of March, 1998.
Ronda Faye Mindingall
---------------------------
Notary Public
[Notarial Seal]
My Commission Expires: ___________
RONDA FAYE MINDINGALL
Notary Public Oakland County, Michigan
My Commission Expires April 19, 2000.
13
<PAGE> 1
EXHIBIT 10(j)
SECURITY AGREEMENT
FOR INTELLECTUAL PROPERTY
THIS SECURITY AGREEMENT FOR INTELLECTUAL PROPERTY (this "Agreement") is
made as of March 26, 1998 by and between CABLE COMPUTERIZED MANAGEMENT SYSTEMS,
INC., a Michigan corporation (hereinafter "Grantor") with principal offices at
1853 R.W. Berends Drive, S.W. Grand Rapids, MI 49509; and ALLIED CAPITAL
CORPORATION, a Maryland corporation (with successors and assigns collectively,
"Secured Party").
RECITALS
A. Secured Party and IndeNet, Inc., a Delaware corporation have entered
into a certain Investment and Loan Agreement dated this date (hereinafter, with
all modifications, renewals, extensions and replacements thereof and therefor,
the "Loan Agreement"), pursuant to which Secured Party shall fund one or more
loans to IndeNet (hereinafter, with all modifications, renewals, extensions and
replacements thereof and therefor, the "Loan") of up to Fifteen Million Dollars
($15,000,000), to be evidenced by one or more Subordinated Debentures payable to
the order of Secured Party (hereinafter, with all modifications, renewals,
extensions and replacements thereof and therefor, the a Debentures").
B. To induce Secured Party to enter into the Loan Agreement and fund
the Loan, Grantor has guaranteed the Loan and proposed to grant a lien and
security interest in its Intellectual Property, as collateral security for the
Loan.
PROVISIONS
In consideration of the premises and the covenants herein, and for
other good and valuable consideration, the undersigned parties agree as set
forth below.
1. GRANT OF SECURITY INTEREST
Grantor hereby grants to Secured Party a security interest in
all of Grantor's now-existing or hereafter acquired right, title and interest
in, under and to all its patents, trademarks, service marks, mask works,
copyrights, licenses, and other intellectual property including, without
limitation, items identified in Schedule A attached hereto; all patent, service
mark, trademark and mask work applications relating in any way to the subject
matter of the foregoing, and all reissues, renewals, extensions, continuations,
continuations-in-part and divisions thereof, together in each case with the
goodwill of
<PAGE> 2
Grantor's business connected with the use of each trademark or service mark,
and symbolized by the trademark or service mark (all of the foregoing being
hereinafter collectively referred to as the "Intellectual Property"); and any
and all proceeds thereof, including, without limitation, any present and future
claims of Grantor against third parties for infringement of the Intellectual
Property. All the foregoing is hereinafter collectively referred to as
"Collateral".
2. OBLIGATIONS SECURED
This Agreement is made to Secured Party to secure repayment of the Loan,
and any other obligations of Grantor to Secured Party under the Loan Agreement
(hereinafter collectively, "Obligations"). Notwithstanding any of the foregoing,
the security interests granted herein and the Holder's rights hereunder are
subordinate to the rights of the holders of Senior Debt (as defined in the Loan
Agreement) according to the terms of the Loan Agreement.
3. WARRANTIES AND COVENANTS
(a) No Transfer. Except as permitted under the Loan Agreement or in the
ordinary course of business, Grantor will not assign, sell, mortgage, lease,
transfer, pledge, hypothecate, grant a security interest in or lien upon,
encumber, grant an exclusive or non-exclusive license relating to, or otherwise
dispose of any of the Collateral without the prior written consent of Secured
Party, except as such action is expressly permitted hereunder.
(b) Lien Perfection. Grantor will at its own expense perform all acts
necessary to execute, perfect, maintain, record or enforce the security interest
granted herein in the Collateral or otherwise to further the provisions of this
Agreement. Grantor hereby agrees to execute one or more financing statements (or
similar documents) with respect to the Collateral and authorizes Secured Party
to file and/or record same among the public record. Furthermore, Grantor hereby
authorizes the Secured Party to record this Agreement among the records of the
U.S. Patent and Trademark Office.
(c) Notice of Subsequent Applications. In the event that Grantor files
any application for the issuance of a patent, trademark or service mark with the
United States Patent and Trademark Office or any similar office or agency in the
United States or any other country, Grantor shall provide written notice to
Secured Party within ten (10) days following the filing of any such application.
Upon the request of the Secured Party, Grantor shall deliver to Secured Party
copies of any and all application documents and other papers in respect to such
an application.
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<PAGE> 3
(d) No Abandonment. Grantor will neither do any act, nor to do any act,
whereby any patent, trademark or service mark which is part of the Collateral
may or could become abandoned or unenforceable. Grantor shall immediately notify
Secured Party in writing if it knows or has reason to know of any reason why any
application, service mark, trademark or patent may become abandoned, invalidated
or the subject of any suit, action or proceeding.
(e) Maintenance. Grantor will render any assistance necessary to
Secured Party without cost to Secured Party in any proceeding before the United
States Patent and Trademark Office or any similar office or agency in the United
States or any other country to maintain each application which is part of the
Collateral and all Intellectual Property, including, without limitation, the
filing of renewals and paying of annuities.
(f) Duty to Notify. Grantor will promptly notify Secured Party of any
known infringement of the Intellectual Property, and any litigation related to
the Collateral.
4. LENDER'S REMEDIES
Upon an Event of Default (as such term is defined in the Loan
Agreement) under any of the Obligations and in addition to all other rights and
remedies of Secured Party, whether provided by law or otherwise, Secured Party
shall have the following rights and remedies which may be exercised without
notice to, or consent by, Grantor except as such notice or consent is expressly
provided for herein.
(a) Stop Use. Secured Party may require that neither Grantor nor any
affiliate or subsidiary of Grantor make any use of the Intellectual Property for
any purpose whatsoever.
(b) Licenses. Upon ten (10) days notice to Grantor, Secured Party may
grant such license or licenses relating to the Collateral for such term or
terms, on such conditions, and in such manner, as Secured Party shall in its
sole discretion deem appropriate. Such license or licenses may be general,
special or otherwise, and may be granted on an exclusive or non-exclusive basis
throughout the United States of America, its territories and possessions and all
foreign countries.
(c) Sale. Upon ten (10) days prior notice to Grantor, Secured Party may
assign, sell or otherwise dispose of the Collateral or any part thereof, either
with or without special conditions or stipulations. Secured Party shall have the
power to buy the Collateral or any part thereof, and Assignee shall also have
the power to execute assurances and perform all other acts which Secured Party
may, in Secured Party's sole discretion, deem appropriate or proper to complete
such assignment, sale or disposition.
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(d) Power of Attorney. In addition to the foregoing, in order to
implement the assignment, sale or other disposition of any of the Collateral
pursuant to Subparagraph (c) above, Secured Party may at any time after default
under the Obligations execute and deliver on behalf of Grantor, one or more
instruments of assignment of all or any part of the Collateral for application,
letters patent or recording relating thereto), in form suitable for filing,
recording or registration (as the case may be). Grantor agrees to pay when due
all costs incurred in any such transfer of the Collateral, including, but not
limited to, any taxes, fees and attorneys' fees.
(e) Application of Proceeds; Deficiency. Secured Party may first apply
the proceeds actually received from any such license, assignment, sale or other
disposition of Collateral to the reasonable costs and expenses thereof,
including, without limitation, to reasonable attorneys' fees incurred by Secured
Party. Thereafter, Secured Party may apply any remaining proceeds to such of the
Obligations as Secured Party may in its sole discretion determine. Grantor shall
remain liable to Secured Party for any expenses or Obligations remaining unpaid
after the application of such proceeds, and Grantor will pay Secured Party on
demand any such unpaid amount, together with interest at the interest rate set
forth in the Debentures.
(f) Trade Secrets. In the event that any such license, assignment,
sale or other disposition of the Collateral (or any part thereof) is made after
the occurrence of an event of default under any of the Obligations, Grantor
shall supply to Secured Party or Secured Party's designee, Grantor's knowledge
and expertise relating to the manufacture and sale of products according to the
patented inventions and to the provision of services to customers through the
use of the Intellectual Property, and Grantor's customer lists and other records
relating to such products and services.
(g) Uniform Commercial Code. In addition to other rights and remedies
provided herein or otherwise available to the Secured Party, the Secured Party
shall have, in respect to the Collateral, all rights and remedies of a secured
party under Article 9 (or any corresponding article) of the applicable Uniform
Commercial Code, whether or not the said Code would otherwise be applicable to
the Secured Party's rights herein.
5. NO DUTY ON SECURED PARTY; NON-EXCLUSIVE
Nothing herein shall be construed as requiring Secured Party to take
any action provided for herein at any time. All of Secured Party's rights and
remedies, whether provided by law, under terms of the Obligations, in this
Agreement or otherwise, shall be cumulative and not exclusive. Such rights and
remedies may be enforced alternatively, successively or concurrently.
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<PAGE> 5
6. MISCELLANEOUS
(a) Satisfaction. Upon the satisfactory completion of all the terms and
conditions of this Agreement and the Obligations and upon full and undefeasible
payment of all monies due thereunder, Secured Party will execute a release of
its security interest in the Intellectual Property and deliver that release to
Grantor for filing by Grantor at Grantor's expense.
(b) No Waiver. Any failure or delay by Secured Party to require strict
performance by Grantor of any of the provisions, warranties, terms and
conditions contained herein or in any other agreement, document or instrument,
shall not affect Secured Party's right to demand strict compliance and
performance therewith, and any waiver of any default shall not waive or affect
any other default, whether prior or subsequent thereto, and whether of the same
or of a different type. None of the warranties, conditions, provisions, and
terms contained herein or in any other agreement, document or instrument shall
be deemed to have been waived by any act or knowledge of Secured Party, its
agents, officers or employees, but only by an instrument in writing, signed by
an officer of Secured Party and directed to Grantor, specifying such waiver.
(c) Notice. All notices, requests and demands to or upon the respective
parties hereto shall be provided in accordance with, and governed by the terms
of the Loan Agreement.
(d) Severability; Captions. In the event that any provision hereof
shall be deemed to be invalid by any court, such invalidity shall not affect the
remainder of this Agreement, which shall be deemed severable. The captions and
paragraph headings herein shall not be considered part of this Agreement.
(e) Parties; Changes. This Agreement shall be binding upon and inure to
the benefit of the Grantor and the Secured Party, and their respective heirs,
executors, administrators, legal representatives, successors and assigns. No
provision hereof shall be modified, altered or limited except by a written
instrument expressly referring to this Agreement and signed by the party to be
charged thereby.
(f) Choice of Law. Venue and Jurisdiction. Service of Process. This
Agreement shall be interpreted, and the rights and liabilities of the parties
hereto determined, in accordance with the laws of the District of Columbia,
without regard to its principles of conflicts of law. Venue for any adjudication
hereof shall be only in the courts of the District of Columbia or the Federal
courts in the District of Columbia, to the jurisdiction of which courts all
parties hereby submit, as the agreement of such parties, as not inconvenient and
as not subject to review by any), court other than such courts in the District
of Columbia. The Grantor intends and agrees that the courts of the jurisdictions
in
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<PAGE> 6
which the Grantor is incorporated and conducts business shall afford full faith
and credit to any judgment rendered by a court of the District of Columbia
against the Grantor hereunder, and that such District of Columbia and federal
courts shall have in personam jurisdiction to enter a valid judgment against
the Grantor. Service of any summons and/or complaint hereunder and any other
process which may be served on the Grantor in any action in respect hereto, may
be made by mailing via registered mail or delivering a copy of such process, to
the address last provided by Grantor to Secured Party. The Grantor agrees that
this submission to jurisdiction and consent to service of process are reasonable
and made for the express benefit of Secured Party.
7. WAIVER OF JURY TRIAL. GRANTOR WAIVES ALL RIGHT TO TRIAL BY JURY OF
ALL CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND DIRECTLY OR INDIRECTLY
ARISING FROM OR RELATING TO THIS AGREEMENT OR THE DEALINGS OF THE PARTIES IN
RESPECT HERETO. GRANTOR ACKNOWLEDGES AND AGREES THAT THIS PROVISION IS A
MATERIAL TERM OF THIS AGREEMENT AND THAT SECURED PARTY WOULD NOT EXTEND ANY
FUNDS UNDER THE DEBENTURES IF THIS WAIVER OF JURY TRIAL WERE NOT A PART HEREOF.
GRANTOR ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT IT MAKES
THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH, OR THE
OPPORTUNITY TO CONSULT WITH, COUNSEL OF ITS CHOICE. GRANTOR AGREES THAT ALL SUCH
CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS SHALL BE TRIED BEFORE A JUDGE OF A
COURT OF COMPETENT JURISDICTION, WITHOUT A JURY.
8. NO MARSHALLING. Notwithstanding the existence of any other security
interests held by Secured Party or by any other party, Secured Party shall have
the right to determine the order in which any or all of the Collateral shall be
subjected to die remedies provided herein. Secured Party shall have die right to
determine the order in which any or all portions of the Obligations are
satisfied from the proceeds realized upon other exercise of the remedies
provided herein. Grantor, any party who becomes liable for Grantor's obligations
and covenants under this Agreement, and any party who now or hereafter acquires
a security interest in the Collateral, or any portion thereof, hereby waives any
and all right to require any marshalling of assets in connection with the
exercise of any of the remedies permitted by applicable law or provided herein.
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CABLE COMPUTERIZED MANAGEMENT SYSTEMS, INC.
By: __________________________________________
Name:
Title:
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<PAGE> 8
_________________)SS:
_________________)
On this the _____ day of March, 1998, before me, the
undersigned officer, personally appeared _________________, who acknowledged
himself to be the _______ of CABLE COMPUTERIZED MANAGEMENT SYSTEMS, INC., a
corporation, and that he, as such President, being authorized so to do, executed
the foregoing Agreement for the purposes therein contained, by signing the name
of such corporation as its ________________.
WITNESS my hand and official seat this _______ day of March, 1998.
------------------------------
Notary Public
[NOTARIAL SEAL]
My Commission Expires: _____________________
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<PAGE> 9
SCHEDULE A
Schedule of Intellectual Property
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<PAGE> 1
EXHIBIT 10(k)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of September 1,
1998 by SOFTWARE ACQUISITION CORP., a Delaware corporation with principal
offices at 230 East Main Street, Carnegie, Pennsylvania 15106 (the "Grantor"),
in favor of ALLIED CAPITAL CORPORATION, a Maryland corporation, (collectively
with successors and assigns, the "Lender").
A. RECITALS
1. Lender previously advanced a loan to the Grantor's majority
shareholder and parent, Enterprise Software, Inc., a Delaware corporation
formerly named IndeNet, Inc. (the "Debtor") of Nine Million Dollars ($9,000,000)
(the "Initial Loan") and is advancing to the Debtor herewith a subsequent loan
of Six Million Dollars ($6,000,000) (the "Subsequent Loan") in consideration for
the issuance by (a) the Debtor of certain Subordinated Debentures to the Lender
and (b) the Debtor to the Lender of certain Warrants to acquire shares of the
Company's common stock in connection with the making of the Initial Loan and
Subsequent Loan, all to be made in accordance with the terms and conditions set
forth in the Investment and Loan Agreement entered into by such parties under
the date of March 26, 1998 in connection herewith (the "Investment and Loan
Agreement").
2. The obligations of the Debtor under the Subordinated Debentures and
the Holder's rights therein shall be secured by certain property of the Grantor
and certain other documents related thereto (all of which documents, including
the Investment and Loan Agreement, each Debenture, this Agreement and any other
Collateral Document (as defined in the Investment and Loan Agreement), with all
modifications, extensions, renewals, and replacements thereof and therefor, are
hereinafter collectively referred to as the "Loan Documents").
B. PROVISIONS
In consideration of the premises and other good and valuable
consideration, the receipt of which is hereby acknowledged, Grantor hereby
agrees and grants as set forth below.
1. Grant. As security for the payment of the indebtedness created
under the Loan Documents, Grantor hereby grants to Lender a continuing security
interest in all of Grantor's now owned and hereafter acquired tangible and
intangible personal property, wherever located, and the proceeds and products
thereof. Without limiting the generality
<PAGE> 2
of the foregoing, such security interest shall include all of Grantor's now
owned and hereafter acquired property and assets, and types of property,
wherever located, as follows:
(a) machinery, equipment, tools, furniture and fixtures, and all
replacements and substitutions therefor and thereof, and all attachments,
accessories and accessions thereto or for use therewith (the "Equipment");
(b) inventory, raw materials, work-in-process, finished goods,
supplies and returned and/or repossessed inventory; and all replacements, and
substitutions therefor and thereof, and all accessions thereto, (the
"Inventory");
(c) general intangibles, licenses, permits, deposits, things in
action, contracts, contractual rights, leases of real property, uncertificated
securities and goodwill (the "General Intangibles");
(d) intellectual property, literary rights, rights to performance,
inventions, processes, systems, computer programs, databases and software
(including source and object codes); copyrights, patents, patent applications,
service marks, trademarks, trade names, trade secrets, and all goodwill
associated with the foregoing, including, in respect to all the foregoing, the
right to sue for past, present or future violations or infringements thereof,
all reissues, divisions, renewals, extensions, continuations and continuations
- -in-part thereof, and all improvements thereon, (the "Intellectual Property");
(e) accounts and rights to payment for goods sold or leased or for
services rendered (the "Accounts");
(f) chattel paper and leases of personal property (the "Chattel
Paper");
(g) instruments (negotiable or otherwise), notes, bonds, certificated
securities, letters of credit, items of payment, negotiable documents, and
documents of title (the "Instruments");
(h) all books, ledgers, records, customer lists, correspondence,
computer hardware and software, and magnetic or other data storage media
relating to any of the Equipment, Inventory, General Intangibles, Intellectual
Property, Accounts, Chattel Paper, Instruments or Proceeds (as hereinafter
defined), whether in the possession of Grantor or otherwise (the "Records"); and
(i) all cash and noncash proceeds and products, including insurance
proceeds of, and any indemnity or warranty payable by reason of damage to or
loss of, the
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<PAGE> 3
Equipment, Inventory, General Intangibles, Intellectual Property, Accounts,
Chattel Paper, Instruments or Records (the "Proceeds").
Grantor's Equipment, Inventory, Intellectual Property, Accounts, General
Intangibles, Chattel Paper, Instruments, Records and Proceeds are hereinafter
referred to collectively as the "Collateral". Lender shall have all of the
rights and remedies of a secured party under the applicable Uniform Commercial
Code with respect to the Collateral. Notwithstanding any of the foregoing, the
security interests granted herein shall be subordinate to Senior Debt (as such
term is defined in the Investment and Loan Agreement) according to the terms of
the Investment and Loan Agreement.
2. Grantor's Representations and Warranties. Grantor represents and
warrants to Lender as follows:
(a) No Uniform Commercial Code Financing Statement that names Grantor
as a debtor or which lists any of the Collateral as collateral has been filed in
any jurisdiction except in connection with Senior Debt; Grantor has not signed
any financing statement or any security agreement authorizing any other secured
party thereunder to file any such financing statement except in connection with
Senior Debt; and the security interests granted to Lender under this Agreement
are second priority security interests subordinate only to the Senior Debt (as
defined in the Investment and Loan Agreement).
(b) The address for Grantor set forth in the initial paragraph of this
Agreement is Grantor's correct mailing address and the address of Grantor's
principal place of business; Grantor has never had a principal place of business
at any other address, changed its name or used any other name or any trade name,
within the twelve (12) years immediately preceding the date of this Agreement;
Grantor's Equipment and Inventory are located at Grantor's principal place of
business set forth above or at 2990 East Coliseum Boulevard, Fort Wayne, Indiana
46805; and none of Grantor's Inventory is stored with or in the possession of
any bailee, warehouseman, subcontractor, or other similar person.
3. Covenants of Grantor. Grantor covenants and agrees as follows:
(a) Grantor shall promptly execute and deliver any Uniform Commercial
Code Financing Statement or other document reasonably required, or procure any
document reasonably required (including Uniform Commercial Code Financing
Statement termination statements, as necessary), pay all costs to record such
documents and otherwise, and pay any documentary or stamp tax or recording fee,
to perfect and maintain perfected the security interest, and the priority of the
security interest, granted under this Agreement. To the extent any of the
Collateral is of a type as to which it is necessary or desirable for Lender to
take possession in order to perfect, or maintain the priority of, Lender's
security interest, then upon Lender's request, Grantor shall deliver such
Collateral
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<PAGE> 4
to Lender. A carbon, photographic, photocopy or other reproduction of a security
agreement or financing statement shall be sufficient as a financing statement.
(b) In the event of Default, Grantor shall provide Lender from time to
time within five working days of the written request of Lender with: (i) written
statements or schedules identifying and describing the Collateral, and all
additions, substitutions, and replacements thereof and thereto; (ii) copies of
customers' invoices or billing statements; (iii) evidence of shipment or
delivery of goods or merchandise to or performance of services for customers;
(iv) a listing and aging report for the Accounts; (v) proof of the sale or lease
of goods or satisfactory performance of services which gave rise to the
Accounts; and (vi) such other schedules and information as Lender reasonably
may require. The items to be provided under this Section shall be in form
satisfactory to Lender, in such detail as Lender may require and are to be
executed and delivered to the Lender from time to time solely for Lender's
convenience in maintaining Records of the Grantor's Collateral. The Grantor's
failure to give any of such items to Lender shall not affect, terminate, modify
or otherwise limit Lender's security interest in the Collateral.
(c) Upon reasonable advance notice, Grantor shall allow Lender access
to the Grantor's places of business during normal business hours at intervals to
be determined by Lender, before or after a Default, and without hindrance or
delay, to audit, inspect, verify, check and make extracts or photocopies from
the Records of the Grantor and other data relating to the Collateral.
(d) The Grantor shall pay or reimburse Lender for all expenses of any
nature which may be reasonably necessary, before or after Default hereunder, for
the enforcement or preservation of Lender's rights under this Agreement or under
the Loan Documents, including but not limited to reasonable attorneys' fees,
appellate costs and fees, and costs incurred by Lender as a participant in any
bankruptcy proceeding, workout, debt restructuring, extension of maturity or
document amendment, involving the Grantor under the Loan Documents.
4. Additional Terms Relating to Contracts. In respect to any
contracts, agreements and other documents included in the Collateral, and both
before and after a Default, (a) Grantor shall remain liable under such
contracts, agreements and documents to the extent set forth therein, to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed; (b) the exercise by Lender of any of the rights
hereunder shall not release Grantor from any of its duties or obligations
thereunder; and (c) Lender shall have no obligation or liability under any such
contracts, agreements and other documents by reason of this Agreement, nor shall
Lender be obligated to perform any of the obligations or duties of Grantor
thereunder or to take any action to collect or enforce any such contract,
agreement or other document.
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<PAGE> 5
5. Further Assurances. Grantor will promptly and duly execute and
deliver to Lender Such Further Documents and Assurances, and take such further
action as Lender may from time to time reasonably request, in order to carry out
the intent and purpose of this Agreement, and to establish and protect the
rights and remedies created, or intended to be created, in favor of Lender
hereunder.
6. Default. Grantor shall be deemed to be in default hereunder
"Default" if (a) Grantor shall be in breach of any warranty or covenant herein,
after provision of any notice and lapse of any cure period provided in the Loan
Documents expressly in respect to breaches of this Agreement, or (b) a default
shall occur or exist under any of the Loan Documents, which is not cured after
any notice and within any period of time expressly allowed therein.
7. Remedies. In the event of Default, Lender may exercise any one or
more of its remedies under common or statutory law, and at any time do any one
or more of the following, all of which are hereby authorized by Grantor:
(a) Require Grantor (at Grantor's sole expense), to forward promptly
any or all of the Equipment and Inventory to Lender at such location as shall be
reasonably required by Lender; or enter upon the premises where any such
Equipment or Inventory is located and take immediate possession of and remove
the Equipment or Inventory by summary proceedings or otherwise, all without
liability from Lender to Grantor for or by reason of such entry or taking of
possession, whether for the restoration of damage to property caused by such
taking, or otherwise;
(b) Sell or otherwise dispose of the Collateral at a commercially
reasonable public or private sale or otherwise, at such price as it may deem
best, for cash, credit, or otherwise, and, in case of any deficiency, collect
such deficiency from Grantor;
(c) Exercise any other right or remedy which may be available to it
under this Agreement, the Loan Documents or applicable law; or proceed by
appropriate court action to enforce the terms hereof or to recover damages for
the breach hereof;
(d) Take or release other security for the obligations of Grantor
under the Loan Documents; release any party primarily or secondarily liable for
any such obligations; grant extensions, renewals or indulgences with respect to
such obligations; and apply any other security therefor held by Lender to the
satisfaction of such obligations, all without prejudice to any rights hereunder.
8. Additional Remedies of Lender . Grantor hereby irrevocably appoints
such Lender as Grantor's attorney-in-fact, with power of substitution, to do,
after a Default hereunder and during the continuance of such Default, in the
name of Grantor or in the
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<PAGE> 6
name of Lender or otherwise, for the use and benefit of Lender, but at the cost
and expense of Grantor, and without notice to Grantor each of the following:
(a) notify the account debtors obligated on any Accounts to make
payments thereon directly to Lender, and to take control of the cash and
non-cash proceeds of any Collateral;
(b) compromise, release, exchange, surrender, make substitutions for,
extend, or renew any or all of the Collateral, or otherwise deal with the same
as Lender may deem advisable;
(c) remove from any of Grantor's places of business any or all
Records;
(d) make such use of Grantor's place or places of business as may be
reasonably necessary to administer, control, collect or otherwise dispose of the
Collateral;
(e) repair, alter or supply goods, if any, necessary to fulfill in
whole or in part the purchase order of any account debtor;
(f) demand, collect, receipt for and give renewals, extensions,
discharges and releases of any of the Collateral;
(g) institute and prosecute legal and equitable proceedings to enforce
collection of, or realize upon, any of the Collateral;
(h) settle, renew, extend, compromise, compound, exchange or adjust
claims with respect to any of the Collateral or any legal proceedings brought
with respect thereto;
(1) endorse the name of Grantor upon any instruments or items of
payment relating to the Collateral, or upon any proof of claim in bankruptcy
against an account debtor;
(j) institute and prosecute legal and equitable proceedings to reclaim
any of the goods sold to any account debtor obligated on an Account at a time
when such account debtor was insolvent; and
(k) receive and open all mail addressed to Grantor, and notify the
postal authorities to change the address for the delivery of mail to Grantor to
such address as Lender may designate.
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<PAGE> 7
9. Collection of Accounts After Default. Upon the request of Lender
at any time after a Default, Grantor shall deposit, or cause to be deposited,
all checks, drafts, cash and other remittances in payment of, or on account of
payment of, any and all Accounts (all of the foregoing herein collectively
referred to as "items of payment") to an account (the "Collateral Account")
designated by Lender at a bank or other financial institution designated by
Lender. Lender shall not be responsible for the solvency of any such bank or
other financial institution, or the management and administration of the
Collateral Account. Lender alone shall have the power to access and make
withdrawals from the Collateral Account. Grantor shall deposit such items of
payment for credit to the Collateral Account within one (1) banking day of the
receipt thereof and in precisely the form received, except for the endorsement
of Grantor where necessary to permit the collection of such items of payment,
which endorsement Grantor hereby agrees to make. Pending such deposit, Grantor
will not commingle any such items of payment with any of its other funds or
property, but will hold them separate and apart. Lender shall be entitled to
apply the funds in the Collateral Account against the obligations secured hereby
from time to time in Lender's discretion.
10. No Marshalling. Notwithstanding the existence of any other
collateral security for the obligations secured hereby, Lender shall have the
right to determine the order in which any or all of the Collateral shall be
subjected to the remedies provided herein. Lender shall have the right to
determine the order in which any or all portions of the obligations secured
hereby are satisfied from the proceeds realized upon exercise of the remedies
provided herein. Grantor, any party who becomes liable for Grantor's obligations
and covenants under the Loan Documents, and any party who now or hereafter
acquires a security interest in the Collateral, or any portion thereof, hereby
waives any and all right to require any marshalling of assets in connection with
the exercise of any remedy provided herein, in any of the Loan Documents or by
applicable law.
11. Notices. All notices hereunder shall be given in accordance with
the notice provisions in the Loan Documents. Grantor agrees that five (5) days
prior notice of the time and place of any public sale of the Collateral, or of
the time after which a private sale of the Collateral will be made, is
commercially reasonable notice.
12. Costs and Fees. Grantor shall be liable for all legal fees and
other costs and expenses incurred by reason of any Default, or in the exercise
of Lender's remedies with respect thereto.
13. No Exclusive Remedies. No remedy referred to in this Agreement is
intended to be exclusive, but each shall be cumulative, and shall be in addition
to any other remedy referred to herein or otherwise available under the Loan
Documents, at law or in equity.
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<PAGE> 8
14. Non-Waiver. The failure of Lender to exercise, or delay in the
exercise of, the rights granted hereunder, either before or after Default shall
not constitute a waiver of any such right.
15. Choice of Law Venue and Jurisdiction Service of Process. This
Agreement shall be interpreted, and the rights and liabilities of the parties
hereto determined, in accordance with the laws and decisions of the District of
Columbia, without regard to its principles of conflicts of law. Venue for any
adjudication hereof shall be only in the courts of the District of Columbia or
the Federal courts in the District of Columbia, to the jurisdiction of which
courts all parties hereby consent, as the agreement of the parties, as not
inconvenient and as not subject to review by any court other than such courts in
the District. Grantor intends that the courts of the jurisdictions in which
Grantor is incorporated and conducts business shall afford full faith and credit
to any judgment rendered by a court of the District of Columbia or the Federal
courts in the District of Columbia, against Grantor hereunder, and hold that
such District courts have in personam jurisdiction to enter a valid judgment
against Grantor. Service of any summons and/or complaint hereunder, and any
other process which may be served on a Grantor in any action in respect hereto,
may be made by mailing via registered mail or delivering a copy of such process,
to the address last provided by Grantor to Lender. Grantor agrees that this
submission to jurisdiction and consent to service of process are reasonable and
made for the express benefit of Lender.
16. WAIVER OF JURY TRIAL. GRANTOR WAIVES ALL RIGHT TO TRIAL BY JURY OF
ALL CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND ARISING FROM OR
RELATING TO THIS AGREEMENT OR THE DEALINGS OF THE PARTIES IN RESPECT HERETO.
GRANTOR ACKNOWLEDGES AND AGREES THAT THIS PROVISION IS A MATERIAL TERM OF THIS
AGREEMENT AND THAT LENDER WOULD NOT EXTEND ANY FUNDS UNDER THE LOAN DOCUMENTS IF
THIS WAIVER OF JURY TRIAL WERE NOT A PART HEREOF. GRANTOR ACKNOWLEDGES THAT THIS
IS A WAIVER OF A LEGAL RIGHT AND THAT IT MAKES THIS WAIVER VOLUNTARILY AND
KNOWINGLY AFTER CONSULTATION WITH, OR THE OPPORTUNITY TO CONSULT WITH, COUNSEL
OF ITS CHOICE. GRANTOR AGREES THAT ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS AND
SUITS SHALL BE TRIED BEFORE A JUDGE OF A COURT OF COMPETENT JURISDICTION,
WITHOUT A JURY.
17. Successors and Assigns. This Agreement shall inure to the benefit
of Lender, its successors and assigns, and shall be binding upon Grantor, its
successors and assigns.
18. Miscellaneous. This Agreement shall not be amended or altered
except by a document in writing signed by the party against enforcement of the
change is
8
<PAGE> 9
sought. Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability, without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
9
<PAGE> 10
IN WITNESS WHEREOF, and intending to be legally bound hereby, Grantor
executes this Agreement as of the date first set forth above.
[Seal] SOFTWARE ACQUISITION CORP.
By: Robert A. Blay
------------------------------
Name: Robert A. Blay
Title: President
10
<PAGE> 11
CORPORATE ACKNOWLEDGMENT
STATE OF MICHIGAN )
) SS:
COUNTY OF WAYNE )
On this the 28 day of August, 1998, before me, a notary public in and
for the jurisdiction set out above, personally appeared Robert A. Blay, who
acknowledged himself to be the President Of Software Acquisition, Corporation a
corporation, and that he, as such President, being authorized so to do, executed
the foregoing document for the purposes therein contained, by signing the name
of the corporation by himself as PRESIDENT.
WITNESS my hand and official seal this 28th, day August, 1998.
---- -------
/s/ Holly A. Steffes
-----------------------------------
Notary Public
[Notarial Seal]
My Commission Expires:
-----------
11
<PAGE> 1
EXHIBIT 10(l)
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made as of the
26th day of March, 1998 by and among (i) ENTERPRISE SYSTEMS GROUP LIMITED, a
company registered in the United Kingdom with principal offices at Thameside
Computer Centre, Ferry Works, Summer Road, Thames Ditton, Surrey KT7 OQJ,
England (the "Company"); (ii) ALLIED CAPITAL CORPORATION, a Maryland corporation
with offices at 1666 K Street N.W., Suite 901, Washington, D.C. 20006
(collectively with successors and assigns, "Lenders and (iii) INDENET, INC., a
Delaware corporation with principal offices at 38705 Seven Mile Road, Livonia,
MI (collectively with successors and assigns, the "Pledgor").
RECITALS
A. The Company proposes to issue Lenders certain Subordinated Debentures in
aggregate principal amount up to Fifteen Million Dollars ($15,000,000)
(collectively with all modifications, renewals, extensions and replacements
thereof and therefor, the " Debentures") pursuant to a certain Investment and
Loan Agreement dated the date hereof, and other related loan documents
(collectively with all modifications, renewals, extensions and replacements
thereof and therefor, the " Loan Agreements").
B. Pledgor is the sole owner of all of the issued and outstanding capital
stock of the Company as set forth in Exhibit 5.09 of the above-referenced
Investment and Loan Agreement.
C. The parties hereto propose that sixty-five percent (65%) of the capital
stock of the Company (collectively with all replacements, divisions and
sub-divisions thereof and therefor, the "Shares") serve as collateral to assure
repayment of the Debentures and the other obligations under the Loan Agreements.
PROVISIONS
In consideration of the premises and the covenants herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as set forth below.
1. Grant and Delivery. The Pledgor hereby grant Lenders a security interest in
the Shares to secure the Debentures and all other obligations under the Loan
Agreements the under the terms herein. Pledgor will promptly deliver to Lenders
all certificates now or hereafter evidencing the Shares. Any distribution rights
in respect to the Shares, and any additional
<PAGE> 2
interest of any kind or nature in any stock of the Company acquired by Pledgor
shall automatically become subject to the pledge and security interest herein at
the time the Pledgor obtain such interest, without any further action by any
person; nevertheless, each Pledgor shall deliver all documents evidencing such
rights and interests to Lenders promptly upon receipt by such Pledgor.
Regardless of any failure by any party to deliver any document to Lenders as
required hereby, the Shares shall at all times be subject to the security
interest herein.
2. Clear Title; No New Shares. Except for the security interest granted to the
holders of certain Senior Debt (as defined in the Loan Agreement) according to
the terms of the Loan Agreement, the Company and the Pledgor represent and
warrant that the Pledgor owns the Shares free from any adverse lien, security
interest, or encumbrance and will defend the Shares against all claims and
demands of all persons claiming any interest therein.
3. Payover of Dividends. If, prior to any Default (as defined below), any cash
dividends or other cash distributions shall be paid upon the Shares lawfully,
and without violation of any existing agreements to which the Company is
subject, such amount may properly be paid to the Pledgor; provided, however,
that from and after any Default all dividends and distributions shall be paid
over to the Lenders.
4. After Default. If Pledgor or the Company breaches this Agreement or an Event
of Default occurs, as defined in the Loan Agreements (a "Default"), then the
Pledgor shall have no rights with respect to the Shares from and after such
declaration, and the Lenders may at their option exercise all rights and
privileges arising under the Shares.
5. Specific Authority. For example only, and not by limitation, the authority of
the Lenders under the Shares from and after a Default shall include the
following: (a) the rights to call a special meeting or annual meeting of
shareholders; (b) the right to vote the Shares for directors, cumulatively or
otherwise; (c) the right to amend the Company's Certificate of Incorporation or
Bylaws (or similar documents) to increase or decrease the number of members of
the Company's Board of Directors; (d) the right to vote the Shares to recall
existing directors or officers; (e) the right to seek judicial remedies through
legal process in furtherance hereof; (f) the right to retain counsel in respect
to legal proceedings hereunder; (g) the right to enact shareholder measures by
written consent in lieu of a meeting; (h) the right to waive notice of meetings;
and (i) the right to cause the directors or officers of the Company to petition
on the Company's behalf for relief under bankruptcy laws or state court
receivership laws, or to withdraw or discharge such petitions.
6. Foreclosure by Lenders. The security interest granted hereunder shall entitle
the Lenders to all the rights and remedies provided a secured party under the
Uniform Commercial Code or any other applicable law. In the event of a Default,
the Lenders may
2
<PAGE> 3
take such actions, at their option, as provided in such Code as regards the
Shares. Lenders' rights and remedies shall include, without limitation, the
right to sell or to cause to be sold any or all of the Shares at public auction
or private sale upon ten (10) days' notice to Pledgor.
7. Lenders Held Harmless. From and after a Default, the Company and Pledgor
shall be jointly and severally obliged to reimburse the Lenders for any
expenses, losses or liabilities they may incur under this Agreement. The
Lenders shall not be liable to any party for any breach hereof or any fault
in performance hereunder, through negligent or reckless acts or omission,
but only through intentional misconduct.
8. Compliance with Securities Laws.
a) It is understood that Lenders must, in exercising their rights to
foreclose upon and sell the Shares, comply with the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended,
and state securities laws (collectively, the "Securities Laws").
Accordingly, Lenders may have difficulty, by reason of restrictions
and limitations imposed by the Securities Laws, in selling the Shares
at a price which approximates the fair market value of the Shares,
were it not for such restrictions. The Company and Pledgor
acknowledge and agree that (i) Lenders may seek to dispose of the
Shares without registration or qualification under the Securities
Laws, and in any such transaction may require the purchaser or
purchasers thereof to represent and warrant their intent not to
distribute the Shares in violation of the Securities Laws, and (ii)
any disposition so effected shall not thereby be deemed "commercially
unreasonable". Lenders need not approach such number and quality of
possible buyers so as to be in violation of the Securities Laws, and
Lenders need not approach the maximum number of possible buyers
permitted by the Securities Laws.
b) Lenders may disclose any information they have obtained concerning
the Company, even if obtained in confidence, if Lenders consider such
disclosure to potential purchasers at the foreclosure sale to be
useful or necessary to comply with Federal and applicable state
securities laws.
c) By way of example and not restriction, the form of advertising in a
foreclosure sale hereunder may include provisions as follows:
NOTICE OF SECURED PARTY'S
RESTRICTED PUBLIC AUCTION OF COLLATERAL
Notice is hereby given that the shares of stock listed below (the
"Shares") will be sold at public auction, with reserve, on ,
3
<PAGE> 4
19___ at _____________ a.m. at the offices of ______________________ ,
located at ________________________________________________________ . The
Shares represent shares of common stock of a corporation that is owned
(directly or indirectly) by ________________________________________ . All
interested and qualified prospective purchasers are invited to attend
and bid at the auction.
Lot No. Issuer Number of Shares Total Number of
Shares Issued &
Outstanding
[If applicable describe Issuer]
1) This information was provided to the Secured Party orally by
_______________________ and the Secured Party does not warrant and
does not indemnify for inaccuracies in, the truth of these
representations as of the date of this Notice or of the auction.
2) The Shares have not been registered, qualified, approved or
disapproved under the Securities Act of 1933, as amended (the
"Act") or under any other federal or state securities laws. The
Shares may be resold, transferred or otherwise disposed of by a
purchaser only if such Shares have been registered under the Act
and, where required, under state securities laws, or if the
proposed sale, transfer or disposition is exempt from such
registration. This notice does not constitute an offer or
solicitation to anyone in any jurisdiction in which such offer or
solicitation is not authorized by applicable law.
3) The Shares will be sold as an entirety and will not be divided into
parcels. The Shares will be offered and sold without recourse
against the Secured Party and without any representations,
warranties or covenants, express or implied, being made by the
Secured Party with respect to the Shares (including, without
limitation, warranties of title) or with respect to the business
prospects, financial condition or result of operations of (Issuer),
the issuer of the Shares.
4) The Secured Party reserves the right to reject any bid which it
deems to have been made by a bidder which is unable to satisfy the
requirements imposed by the Secured Party upon prospective
purchasers in connection with the auction or to whom in the
Secured Party's sole Judgment a sale may not lawfully be made.
5) The Secured Party reserves the right to bid and to become the
purchaser of the Shares and to credit against the purchase price
thereof any and all indebtedness due to the Secured Party under the
Agreement.
4
<PAGE> 5
6) (i) An investment letter from the purchaser of the Shares (in form
and substance satisfactory to the Secured Party and its counsel)
will be required, which letter shall include representation that
the Shares are being acquired for the account of the purchaser and
not with a view of resale or distribution, and that the purchaser
may not resell the same without compliance with the registration
requirements of the Act and applicable state securities laws or
pursuant to valid exemptions therefrom.
(ii) Certificates evidencing the Shares will be appropriately
legended, and stock transfer orders may be entered on any stock
transfer books of the issuer of the Shares.
(iii) The Secured Party may require the purchaser of the Shares to
establish that such purchaser has sufficient knowledge and
experience in business and financial matters to properly evaluate
the merits and risks of investment in the Shares, to satisfactorily
establish that such purchaser is able to bear the economic risks
involved in investment in the Shares, and to give a written
acknowledgment to the Secured Party that such purchaser has bad
such access to information concerning the Shares and the issuer
thereof as such purchaser deems necessary to make an informed
investment decision.
(iv) The Secured Party may require the purchaser of the Shares to
satisfactorily establish that the sale of the Shares does not
violate the Act or the securities laws of any jurisdiction, and to
indemnify the Secured Party against any liability arising out of
any violation of the Act or such laws in connection with the sale
of the Shares or any resale thereof by such purchaser.
9. Waiver. No delay on Lenders' part in exercising any power of sale, lien,
option or other right hereunder, and no notice or demand which may be given to
or made upon Pledgor by Lenders with respect to any power of sale, lien, option
or other right hereunder, shall constitute a waiver thereof, or limit or impair
Lenders' right to take any action or to exercise any power, remedy or any other
right hereunder without notice or demand, or prejudice Lenders' rights as
against Pledgor in any respect. In addition, no action taken by Lenders
hereunder shall in any way impair or limit Lenders' right to exercise any or all
rights or remedies Lenders may otherwise have against Pledgor with respect to
any sums payable under the Debentures or the Loan Agreements. This is an
absolute, unconditional and continuing pledge and will remain in full force and
effect until the sums payable under the Debentures and the Loan Agreements have
been fully paid to the Lenders. This Agreement will not be affected by any
surrender, exchange, acceptance or release by the Lenders of any other pledge or
any collateral held for the Debentures. Notice of acceptance of this pledge and
conveyance, notice of extensions of credit to the Company from time to time,
notice of default, diligence, presentment, protest, demand for payment, notice
of demand or protest, and any defense based upon a failure of Lenders to comply
5
<PAGE> 6
with the requirements of the applicable version of Uniform Commercial Code
Section 9-504 are hereby waived. Lenders, at any time and from time to time,
without the consent of Pledgor, may change the manner, place or terms of
payment of or interest rates on, or change or extend the time of payment of, or
renew or alter, any of the Debentures without impairing or releasing the
liabilities of any party hereunder. Lenders in their sole discretion may
determine the reasonableness of the period which may elapse prior to the making
of demand for any payment upon the Company or any guarantor and it need not
pursue any of their remedies against any other party before having recourse
against Pledgor under this Agreement.
10. Reconveyance Upon Satisfaction. If the Debentures are repaid in full prior
to any Default, Lenders will reconvey the Shares to the Pledgor, this Agreement
shall terminate and Lenders will redeliver the certificates to the Pledgor.
11. Miscellaneous. The Lenders may exercise their rights under the Shares in
person, through attorneys, nominees, proxies or in any other legal manner. The
captions herein are for convenience only and are not part of the text of this
Agreement. This Agreement may be signed in counterparts. None of the terms or
provisions of this Agreement may be waived, altered, modified or amended except
in writing duly signed for and on behalf of the Lenders and the Pledgor. If any
portion hereof shall be unenforceable by law it shall be severed herefrom and
the balance of this Agreement shall be enforced according to its terms.
12. Choice of Law; Venue and Jurisdiction. This Agreement shall be interpreted,
and the rights and liabilities of the parties hereto determined, in accordance
with the laws of the District of Columbia, without regard to its principles of
conflicts of law. Venue for any adjudication hereof shall be only in the courts
of the District of Columbia or the Federal courts in such District, to the
jurisdiction of which courts all undersigned parties hereby submit as the
agreement of such parties, as not inconvenient, and as not subject to review by
any court other than such courts in the District of Columbia. All parties
intend and agree that the courts of jurisdictions in which the Company or
Pledgor is resident shall afford full faith and credit to any judgment rendered
by a court of the District of Columbia against the Company or other parties
hereto, and that such District of Columbia and federal courts shall have in
personam jurisdiction to enter a valid judgment against the Company and such
other parties. Service of any summons and/or complaint and any other process
which may be served on the Company in any action in respect hereto, may be made
by mailing via registered mail, or delivering a copy of such process to the
Company at its address specified in the Loan Agreement. The parties hereto agree
that this submission to jurisdiction and consent to service of process are
reasonable and made for the express benefit of Lender.
13. WAIVER OF TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT WAIVES ALL RIGHT TO
TRIAL BY JURY OF ALL CLAIMS, DEFENSES COUNTERCLAIMS
6
<PAGE> 7
AND SUITS OF ANY KIND DIRECTLY OR INDIRECTLY ARISING FROM OR RELATING TO THIS
AGREEMENT OR THE LOAN AGREEMENTS OR THE DEALINGS OF THE PARTIES IN RESPECT
THERETO. THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT THIS SECTION IS A
MATERIAL TERM OF THIS AGREEMENT AND THAT THE LENDER WOULD NOT EXTEND ANY FUNDS
UNDER THE LOAN AGREEMENTS IF THIS WAIVER OF JURY TRIAL WERE NOT A PART HEREOF.
EACH PARTY HERETO ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT
IT MAKES THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH, OR THE
OPPORTUNITY TO CONSULT WITH, COUNSEL OF ITS CHOICE. EACH PARTY HERETO AGREES
THAT ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS SHALL BE TRIED BEFORE A
JUDGE OF COMPETENT JURISDICTION, WITHOUT A JURY.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
7
<PAGE> 8
IN WITNESS WHEREOF, this Agreement has been duly executed as of
the date first above written.
PLEDGOR INDENET, INC.
[Seal]
Attest: /s/ Scott S. Binder By: /s/ Robert Blay
------------------- --------------------------------------
Scott S. Binder Name: Robert Blay
------------------------------------
Title: Vice-President & Asst. Secretary
-----------------------------------
LENDER. ALLIED CAPITAL CORPORATION
[Seal]
By: /s/ Scott S. Binder
---------------------------------
Scott S. Binder, Principal
COMPANY: ENTERPRISE SYSTEMS GROUP LIMITED
-------------------
[Seal]
Attest: By: /s/ Robert Blay
-------------------- ------------------------------------
Name: Name: Robert Blay
---------------------- ----------------------------------
Title: Title: Secretary
--------------------- ---------------------------------
8
<PAGE> 1
EXHIBIT 10(m)
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made as of September 1,
1998 by and among (i) SOFTWARE ACQUISITION CORP., a Delaware corporation with
principal offices at 230 East Main Street, Suite 200, Carnegie, Pennsylvania
15106 (the "Company"); (ii) ALLIED CAPITAL CORPORATION, a Maryland corporation
with offices at 1666 K Street N.W., Suite 901, Washington, D.C. 20006
(collectively with successors and assigns, "Lenders"); and (iii) ENTERPRISE
SOFTWARE, INC., a Delaware corporation formerly named INDENET, INC. with
principal offices at 38705 Seven Mile Road, Livonia, MI (collectively with
successors and assigns, the "Pledgor").
RECITALS
A. The Company has issued Lenders two (2) Subordinated Debentures in
aggregate principal amount of Fifteen Million Dollars ($15,000,000)
(collectively with all modifications, renewals, extensions and replacements
thereof and therefor, the "Debentures") pursuant to a certain Investment and
Loan Agreement dated March 26, 1998, and other related loan documents
(collectively with all modifications, renewals, extensions and replacements
thereof and therefor, the "Loan Agreements " ).
B. Pledgor is the sole owner of all of the issued and outstanding capital
stock of the Company.
C. The parties hereto propose that the capital stock of the Company
(collectively with all replacements, divisions and sub-divisions thereof and
therefor, the "Shares") serve as collateral to assure repayment of the
Debentures and the other obligations under the Loan Agreements.
PROVISIONS
In consideration of the premises and the covenants herein, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as set forth below.
1. Grant and Delivery. The Pledgor hereby grant Lenders a security interest in
the Shares to secure the Debentures and all other obligations under the Loan
Agreements the under the terms herein. Pledgor will promptly deliver to Lenders
all certificates now or hereafter evidencing the Shares. Any distribution rights
in respect to the Shares, and any additional interest of any kind or nature in
any stock of the Company acquired by Pledgor shall automatically become subject
to the pledge and security interest herein at the time the
<PAGE> 2
Pledgor obtain such interest, without any further action by any person;
nevertheless, each Pledgor shall deliver all documents evidencing such rights
and interests to Lenders promptly upon receipt by such Pledgor. Regardless of
any failure by any party to deliver any document to Lenders as required hereby,
the Shares shall at all times be subject to the security interest herein.
2. Clear Title; No New Shares. Except for the security interest granted to the
holders of certain Senior Debt (as defined in the Loan Agreement) according to
the terms of the Loan Agreement, the Company and the Pledgor represent and
warrant that the Pledgor owns the Shares free from any adverse lien, security
interest, or encumbrance and will defend the Shares against all claims and
demands of all persons claiming any interest therein.
3. Payover of Dividends. If, prior to any Default (as defined below), any cash
dividends or other cash distributions shall be paid upon the Shares lawfully,
and without violation of any existing agreements to which the Company is
subject, such amount may properly be paid to the Pledgor; provided, however,
that from and after any Default all dividends and distributions shall be paid
over to the Lenders.
4. After Default. If Pledgor or the Company breaches this Agreement or an Event
of Default occurs, as defined in the Loan Agreements (a "Default"), then the
Pledgor shall have no rights with respect to the Shares from and after such
declaration, and the Lenders may at their option exercise all rights and
privileges arising under the Shares.
5. Specific Authority. For example only, and not by limitation, the authority of
the Lenders under the Shares from and after a Default shall include the
following: (a) the rights to call a special meeting or annual meeting of
shareholders; (b) the right to vote the Shares for directors, cumulatively or
otherwise; (c) the right to amend the Company's Certificate of Incorporation or
Bylaws (or similar documents) to increase or decrease the number of members of
the Company's Board of Directors; (d) the right to vote the Shares to recall
existing directors or officers; (e) the right to seek judicial remedies through
legal process in furtherance hereof; (f) the right to retain counsel in respect
to legal proceedings hereunder; (g) the right to enact shareholder measures by
written consent in lieu of a meeting; (h) the right to waive notice of meetings;
and (i) the right to cause the directors or officers of the Company to petition
on the Company's behalf for relief under bankruptcy laws or state court
receivership laws, or to withdraw or discharge such petitions.
6. Foreclosure by Lenders. The security interest granted hereunder shall entitle
the Lenders to all the rights and remedies provided a secured party under the
Uniform Commercial Code or any other applicable law. In the event of a Default,
the Lenders may take such actions, at their option, as provided in such Code as
regards the Shares. Lenders' rights and remedies shall include, without
limitation, the right to sell or to cause to be sold
2
<PAGE> 3
any or all of the Shares at public auction or private sale upon ten (10) days'
notice to Pledgor.
7. Lenders Held Harmless. From and after a Default, the Company and Pledgor
shall be jointly and severally obliged to reimburse the Lenders for any
expenses, losses or liabilities they may incur under this Agreement. The Lenders
shall not be liable to any party for any breach hereof or any fault in
performance hereunder, through negligent or reckless acts or omission, but only
through intentional misconduct.
8. Compliance with Securities Laws.
a) It is understood that Lenders must, in exercising their rights to
foreclose upon and sell the Shares, comply with the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, and
state securities laws (collectively, the "Securities Laws").
Accordingly, Lenders may have difficulty, by reason of restrictions and
limitations imposed by the Securities Laws, in selling the Shares at a
price which approximates the fair market value of the Shares, were it
not for such restrictions. The Company and Pledgor acknowledge and agree
that (i) Lenders may seek to dispose of the Shares without registration
or qualification under the Securities Laws, and in any such transaction
may require the purchaser or purchasers thereof to represent and warrant
their intent not to distribute the Shares in violation of the Securities
Laws, and (ii) any disposition so effected shall not thereby be deemed
"commercially unreasonable". Lenders need not approach such number and
quality of possible buyers so as to be in violation of the Securities
Laws, and Lenders need not approach the maximum number of possible
buyers permitted by the Securities Laws.
b) Lenders may disclose any information they have obtained concerning the
Company, even if obtained in confidence, if Lenders consider such
disclosure to potential purchasers at the foreclosure sale to be useful
or necessary to comply with Federal and applicable state securities
laws.
c) By way of example and not restriction, the form of advertising in a
foreclosure sale hereunder may include provisions as follows:
Notice of Secured Party's
Restricted Public Auction of Collatcral
Notice is hereby given that the shares of stock listed below
(the "Shares") will be sold at public auction, with reserve,
on ______________________, 19__ at __________ a.m. at the offices
of _____________________, located at ______________. The
3
<PAGE> 4
Shares represent shares of common stock of a corporation that is owned (directly
or indirectly) by_____________________________ . All interested and qualified
prospective purchasers are invited to attend and bid at the auction.
Lot No. Issuer Number of Shares Total Number of
Shares Issued &
Outstanding
[If applicable describe Issuer]
1) This information was provided to the Secured Party orally by
__________________ and the Secured Party does not warrant and does not
indemnify for inaccuracies in, the truth of these representations as of
the date of this Notice or of the auction.
2) The Shares have not been registered, qualified, approved or disapproved
under the Securities Act of 1933, as amended (the "Act") or under any
other federal or state securities laws. The Shares may be resold,
transferred or otherwise disposed of by a purchaser only if such Shares
have been registered under the Act and, where required, under state
securities laws, or if the proposed sale, transfer or disposition is
exempt from such registration. This notice does not constitute an offer
or solicitation to anyone in any jurisdiction in which such offer or
solicitation is not authorized by applicable law.
3) The Shares will be sold as an entirety and will not be divided into
parcels. The Shares will be offered and sold without recourse against the
Secured Party and without any representations, warranties or covenants,
express or implied, being made by the Secured Party with respect to the
Shares (including, without limitation, warranties of title) or with
respect to the business prospects, financial condition or result of
operations of (Issuer), the issuer of the Shares.
4) The Secured Party reserves the right to reject any bid which it deems to
have been made by a bidder which is unable to satisfy the requirements
imposed by the Secured Party upon prospective purchasers in connection
with the auction or to whom in the Secured Party's sole Judgment a sale
may not lawfully be made.
5) The Secured Party reserves the right to bid and to become the purchaser
of the Shares and to credit against the purchase price thereof any and
all indebtedness due to the Secured Party under the Agreement.
4
<PAGE> 5
6) (i) An investment letter from the purchaser of the Shares (in form and
substance satisfactory to the Secured Party and its counsel) will be
required, which letter shall include representation that the Shares are
being acquired for the account of the purchaser and not with a view of
resale or distribution, and that the purchaser may not resell the same
without compliance with the registration requirements of the Act and
applicable state securities laws or pursuant to valid exemptions
therefrom.
(ii) Certificates evidencing the Shares will be appropriately legended,
and stock transfer orders may be entered on any stock transfer books of
the issuer of the Shares.
(iii) The Secured Party may require the purchaser of the Shares to
establish that such purchaser has sufficient knowledge and experience in
business and financial matters to properly evaluate the merits and risks
of investment in the Shares, to satisfactorily establish that such
purchaser is able to bear the economic risks involved in investment in
the Shares, and to give a written acknowledgment to the Secured Party
that such purchaser has had such access to information concerning the
Shares and the issuer thereof as such purchaser deems necessary to make
an informed investment decision.
(iv) The Secured Party may require the purchaser of the Shares to
satisfactorily establish that the sale of the Shares does not violate the
Act or the securities laws of any jurisdiction and to indemnify the
Secured Party against any liability arising out of any violation of the
Act or such laws in connection with the sale of the Shares or any resale
thereof by such purchaser.
9. Waiver. No delay on Lenders' part in exercising any power of sale, lien,
option or other right hereunder, and no notice or demand which may be given to
or made upon Pledgor by Lenders with respect to any power of sale, lien, option
or other right hereunder, shall constitute a waiver thereof, or limit or impair
Lenders' right to take any action or to exercise any power, remedy or any other
right hereunder without notice or demand, or prejudice Lenders' rights as
against Pledgor in any respect. In addition, no action taken by Lenders
hereunder shall in any way impair or limit Lenders' right to exercise any or all
rights or remedies Lenders may otherwise have against Pledgor with respect to
any sums payable under the Debentures or the Loan Agreements. This is an
absolute, unconditional and continuing pledge and will remain in full force and
effect until the sums payable under the Debentures and the Loan Agreements have
been fully paid to the Lenders. This Agreement will not be affected by any
surrender, exchange, acceptance or release by the Lenders of any other pledge or
any collateral held for the Debentures. Notice of acceptance of this pledge and
conveyance, notice of extensions of credit to the Company from time to time,
notice of default, diligence, presentment, protest, demand for payment, notice
of demand or protest, and any defense based upon a failure of Lenders to comply
5
<PAGE> 6
with the requirements of the applicable version of Uniform Commercial Code
Section 9-504 are hereby waived. Lenders, at any time and from time to time,
without the consent of Pledgor, may change the manner, place or terms of payment
of or interest rates on, or change or extend the time of payment of, or renew or
alter, any of the Debentures without impairing or releasing the liabilities of
any party hereunder. Lenders in their sole discretion may determine the
reasonableness of the period which may elapse prior to the making of demand for
any payment upon the Company or any guarantor and it need not pursue any of
their remedies against any other party before having recourse against Pledgor
under this Agreement.
10. Reconveyance Upon Satisfaction. If the Debentures are repaid in full prior
to any Default, Lenders will reconvey the Shares to the Pledgor, this Agreement
shall terminate and Lenders will redeliver the certificates to the Pledgor.
11. Miscellaneous. The Lenders may exercise their rights under the Shares in
person, through attorneys, nominees, proxies or in any other legal manner. The
captions herein are for convenience only and are not part of the text of this
Agreement. This Agreement may be signed in counterparts. None of the terms or
provisions of this Agreement may be waived, altered, modified or amended except
in writing duly signed for and on behalf of the Lenders and the Pledgor. If any
portion hereof shall be unenforceable by law it shall be severed herefrom and
the balance of this Agreement shall be enforced according to its terms.
12. Choice of Law; Venue and Jurisdiction. This Agreement shall be interpreted,
and the rights and liabilities of the parties hereto determined, in accordance
with the laws of the District of Columbia, without regard to its principles of
conflicts of law. Venue for any adjudication hereof shall be only in the courts
of the District of Columbia or the Federal courts in such District, to the
Jurisdiction of which courts all undersigned parties hereby submit as the
agreement of such parties, as not inconvenient, and as not subject to review by
any court other than such courts in the District of Columbia. All parties intend
and agree that the courts of jurisdictions in which the Company or Pledgor is
resident shall afford full faith and credit to any judgment rendered by a court
of the District of Columbia against the Company or other parties hereto, and
that such District of Columbia and federal courts shall have in personam
jurisdiction to enter a valid judgment against the Company and such other
parties. Service of any summons and/or complaint and any other process which may
be served on the Company in any action in respect hereto, may be made by mailing
via registered mail, or delivering a copy of such process to the Company at its
address specified in the Loan Agreement. The parties hereto agree that this
submission to jurisdiction and consent to service of process are reasonable and
made for the express benefit of Lender.
13. WAIVER OF TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT WAIVES ALL RIGHT TO
TRIAL BY JURY OF ALL CLAIMS, DEFENSES COUNTERCLAIMS
6
<PAGE> 7
AND SUITS OF ANY KIND DIRECTLY OR INDIRECTLY ARISING FROM OR RELATING TO THIS
AGREEMENT OR THE LOAN AGREEMENTS OR THE DEALINGS OF THE PARTIES IN RESPECT
THERETO. THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT THIS SECTION IS A
MATERIAL TERM OF THIS AGREEMENT AND THAT THE LENDER WOULD NOT EXTEND ANY FUNDS
UNDER THE LOAN AGREEMENTS IF THIS WAIVER OF JURY TRIAL WERE NOT A PART HEREOF.
EACH PARTY HERETO ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT
IT MAKES THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH, OR THE
OPPORTUNITY TO CONSULT WITH, COUNSEL OF ITS CHOICE. EACH PARTY HERETO AGREES
THAT ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS SHALL BE TRIED BEFORE A
JUDGE OF COMPETENT JURISDICTION, WITHOUT A JURY.
Remainder of page intentionally left blank
7
<PAGE> 8
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written.
PLEDGOR. Enterprise Software, Inc., formerly named
IndeNet, Inc.
By: /s/ Robert A. Blay
---------------------------------------
Name: Robert A. Blay
-------------------------------------
Title: Vice President
------------------------------------
[Seal]
LENDER. Allied Capital Corporation
[Seal]
By: /s/ Scott S. Binder
---------------------------------
Scott S. Binder, Principal
COMPANY: Software Acquisition Corp.
[Seal]
By: /s/ Robert A. Blay
---------------------------------------
Name: Robert A. Blay
-------------------------------------
Title: President
------------------------------------
8
<PAGE> 1
EXHIBIT 10(n)
COLLATERAL ASSIGNMENT OF LEASE
THIS COLLATERAL ASSIGNMENT OF LEASE (this "Assignment") is made
as of September 1, 1998, by and among (i) SOFTWARE ACQUISITION CORPORATION, a
Delaware corporation (collectively with successors and assigns, "Assignor") and
(ii) ALLIED CAPITAL CORPORATION, a Maryland corporation (collectively with
successors and assigns, "Assignee").
RECITALS
A. Under a certain Commercial Lease dated the October 21, 1997 (collectively
with all extensions, renewals, replacements and modifications thereof and
therefor, the "Lease") J.W. Partnership as lessor demised and let to Assignor
the second floor of lessor's building being a part of the premises situated at
230 East Main Street, Carnegie, Allegheny County, Pennsylvania;
B. Assignee has made and proposes to make certain loans to Assignor's affiliate
Enterprise Software, Inc., a Delaware corporation formerly named IndeNet, Inc.
Such loans, will have an aggregate principal amount of Fifteen Million Dollars
($15,000,000), will be evidenced by two (2) subordinated debentures
(collectively with all modifications, extensions, renewals and replacements
thereof and therefor, the "Debentures"), and are being made pursuant to an
Investment and Loan Agreement between Enterprise Software, Inc. and Assignee
dated March 26, 1998, (collectively with all modifications, extensions, renewals
and replacements thereof and therefor, the "Agreement"). One of the conditions
of such Agreement is that Assignor assign the Lease to Assignee, with the right
to reassign, as security for the obligations owed to Assignee.
PROVISIONS
1. In consideration of the premises and for the consideration
recited therein, the Assignor hereby assigns, transfers and sets over unto
Assignee with the right to reassign, all of its right, title and interest in and
under the Lease and in and to the subject premises, as collateral security for
payment of the Debentures, all obligations of Assignor under the Agreement, and
all other debts of Assignor to Assignee including, without limitation, all loans
and extensions of credit Assignee may, in its discretion, extend to Assignor in
the future; it being nevertheless expressly agreed that this assignment is made
and is consented to by the Landlord upon the terms and conditions set out below.
2. The Assignor shall retain right to possession of the premises
in accordance with the terms and conditions in the Lease until a default occurs
under the Debentures, the Agreement or under the Lease;
1
<PAGE> 2
3. If a default occurs under the Debenture, the Agreement or the
Lease, Assignee may, at its option, by written notice to Landlord and Assignor,
assume the Lease and enjoy the specified use of the subject premises. Upon
exercise of such option, Assignee shall be deemed to be substituted as the
tenant under the Lease in the place and stead of Assignor, shall be deemed to
have assumed expressly all of the terms, covenants and obligations of the Lease
theretofore applicable to Assignor and shall likewise be entitled to enjoy all
rights and privileges granted to Assignor under the Lease, according to its
terms;
4. If a default occurs under the Debenture, the Agreement or the
Lease, Assignee shall have the right to reassign, by public or private sale
conducted according to the terms of the Uniform Commercial Code in force in the
relevant jurisdiction, all its rights herein to the Lease and to enjoy the
specified use of the subject premises. Upon any such reassignment, the new
tenant shall promptly cure any breaches of the Lease by Assignor to the extent
such cure can be effected by payment of money, and shall expressly assume all
terms, covenants and obligations of the Lease theretofore applicable to
Assignor; whereupon such new tenant shall be entitled to enjoy all rights and
privileges granted to Assignor under the Lease, according to its terms; and
5. Assignor shall be liable to Assignee for all payments by
Assignee for rent and other Lease obligations to cure defaults of Assignor in
respect thereto; and Assignor's liability for such sums shall be secured by all
security interests securing the Debenture and shall bear interest at the
interest rate provided in the Debenture. The parties acknowledge that such
payments are reasonable expenses of foreclosure; and
6. ASSIGNOR WAIVES ALL RIGHT TO TRIAL BY JURY OF ALL CLAIMS,
DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND ARISING FROM OR RELATING TO THIS
ASSIGNMENT OR THE DEALINGS OF THE PARTIES IN RESPECT HERETO. ASSIGNOR
ACKNOWLEDGES AND AGREES THAT THIS PROVISION IS A MATERIAL TERM OF THIS
ASSIGNMENT AND THAT ASSIGNEE WOULD NOT EXTEND ANY FUNDS UNDER THE AGREEMENT IF
THIS WAIVER OF JURY TRIAL WERE NOT A PART HEREOF. ASSIGNOR ACKNOWLEDGES THAT
THIS IS A WAIVER OF A LEGAL RIGHT AND THAT IT MAKES THIS WAIVER VOLUNTARILY AND
KNOWINGLY AFTER CONSULTATION WITH, OR THE OPPORTUNITY TO CONSULT WITH, COUNSEL
OF ITS CHOICE. ASSIGNOR AGREES THAT ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS AND
SUITS SHALL BE TRIED BEFORE A JUDGE OF A COURT OF COMPETENT JURISDICTION,
WITHOUT A JURY.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment as of the date first above written.
Assignor:
[Seal] SOFTWARE ACQUISITION CORPORATION
By: Robert A. Blay
-----------------------------
Name: Robert A. Blay
---------------------------
Title: President
--------------------------
Assignee:
[Seal] ALLIED CAPITAL CORPORATION
By: Scott S. Binder
-----------------------------
Scott S. Binder, Principal
<PAGE> 4
STATE OF ___________)
) TO WIT:
COUNTY OF __________)
I hereby certify that on this day, before me, an officer duly
authorized in the State and County aforesaid to take acknowledgments, personally
appeared _______________ and _________________, well known to me as the
________________ and __________________, respectively, of the corporation named
as Assignor in the foregoing document, and that they severally acknowledged
executing the same, in the presence of each other and freely and voluntarily
under authority duly vested in them by said corporation and that the seal
affixed thereto is the true and corporate seal of said corporation.
WITNESS my hand and seal this 28th day of August, 1998.
Seal:
My commission expires: Holly A. Steffes
---------------- -----------------------------
Notary Public
HOLLY A. STEFFES
Notary Public, Wayne Co., MI
My Comm. Expires Nov. 30, 2001
<PAGE> 5
DISTRICT )
OF ) TO WIT:
COLUMBIA )
Personally appeared before me, a Notary Public in and for the
jurisdiction aforesaid, Scott S. Binder, known to me as the Principal of
Assignee Allied Capital Corporation, who acknowledged the foregoing as the true
act and deed of Assignee this 28th day of August, 1998.
[Seal] Holly A. Steffes
-----------------------------
Notary Public
My commission expires:
----------------------
HOLLY A. STEFFES
Notary Public, Wayne Co., MI
My Comm. Expires Nov. 30, 2001
5
<PAGE> 6
Lessor's Consent to Collateral Assignment of Lease
The undersigned party, as lessor under the Lease described in the
foregoing document, hereby agrees as set out below. Capitalized terms not
otherwise defined herein shall have the definitions provided in foregoing
document.
1. Lessor consents to the assignment of the Lease to Assignee
under the terms of the foregoing document. So long as Assignee shall not have
occupied the subject premises under the foregoing provisions, Assignee shall not
be liable for rent or any other obligations under the Lease; in any case,
Assignor shall remain liable for such rent and obligations. Exercise by Assignee
of its right to occupy the subject premises shall not release any claim by
Lessor against Assignor for rent or other Lease payments for periods prior to
such exercise.
2. Lessor will give Assignee notice of and the right cure any
default under the Lease, in the same manner and at the same time provided in the
Lease to Assignor. Otherwise, nothing in this Consent shall impair or delay
Lessor's right to terminate the Lease upon default by any lessee.
3. Lessor affirms that a) it is the lessor under the Lease,
and b) to the knowledge of Lessor, Assignor is not in breach of the Lease.
IN WITNESS WHEREOF, the undersigned executes this Consent as the date
set out below.
J.W. PARTNERSHIP, a general partnership
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date: , 1998
-------------------- -----
6
<PAGE> 7
STATE OF )
) TO WIT:
COUNTY OF )
I hereby certify that on this day, before me, an officer duly
authorized in the State and County aforesaid to take acknowledgments, personally
appeared ___________________________, made known to me as the __________________
of the partnership named as Lessor in the foregoing document, and that he/she
acknowledged executing the same freely and voluntarily under authority duly
vested in him by said company, and that the seal affixed thereto is the true and
corporate seal of said partnership.
WITNESS my hand and seal this ___ day of ________________, 1998.
Seal:
My commission expires:_________ _______________________
Notary Public
7
<PAGE> 1
EXHIBIT 10(o)
COLLATERAL ASSIGNMENT OF LEASE
THIS COLLATERAL ASSIGNMENT OF LEASE (this "Assignment") is made
as of September 1, 1998, by and among (i) SOFTWARE ACQUISITION CORPORATION, a
Delaware corporation (collectively with successors and assigns, "Assignor") and
(ii) ALLIED CAPITAL CORPORATION, a Maryland corporation (collectively with
successors and assigns, "Assignee ").
RECITALS
A. Under a certain Office Lease dated December 18, 1997 (collectively with all
extensions, renewals, replacements and modifications thereof and therefore, the
"Lease") 3000 Coliseum Investors L.L.C. as lessor demised and let to Assignor a
portion of lessor's building being a part of the premises situated at 2990 East
Coliseum Boulevard, Ft. Wayne, Allen County, Indiana;
B. Assignee has made and proposes to make certain loans to Assignor's affiliate
Enterprise Software, Inc., a Delaware corporation formerly named IndeNet, Inc.
Such loans, will have an aggregate principal amount of Fifteen Million Dollars
($15,000,000), will be evidenced by two (2) subordinated debentures
(collectively with all modifications, extensions, renewals and replacements
thereof and therefor, the "Debentures"), and are being made pursuant to an
Investment and Loan Agreement between Enterprise Software, Inc. and Assignee
dated March 26, 1998, (collectively with all modifications, extensions,
renewals and replacements thereof and therefor, the "Agreement"). One of the
conditions of such Agreement is that Assignor assign the Lease to Assignee, with
the right to reassign, as security for the obligations owed to Assignee.
PROVISIONS
1. In consideration of the premises and for the consideration
recited therein, the Assignor hereby assigns, transfers and sets over unto
Assignee with the right to reassign, all of its right, title and interest in and
under the Lease and in and to the subject premises, as collateral security for
payment of the Debentures, all obligations of Assignor under the Agreement, and
all other debts of Assignor to Assignee including, without limitation, all loans
and extensions of credit Assignee may, in its discretion, extend to Assignor in
the future; it being nevertheless expressly agreed that this assignment is made
and is consented to by the Landlord upon the terms and conditions set out below.
2. The Assignor shall retain right to possession of the
premises in accordance with the terms and conditions in the Lease until a
default occurs under the Debentures, the Agreement or under the Lease;
<PAGE> 2
3. If a default occurs under the Debenture, the Agreement or the
Lease, Assignee may, at its option, by written notice to Landlord, and Assignor,
assume the Lease and enjoy the specified use of the subject premises. Upon
exercise of such option, Assignee shall be deemed to be substituted as the
tenant under the Lease in the place and stead of Assignor, shall be deemed to
have assumed expressly all of the terms, covenants and obligations of the Lease
theretofore applicable to Assignor and shall likewise be entitled to enjoy all
rights and privileges granted to Assignor under the Lease, according to its
terms;
4. If a default occurs under the Debenture, the Agreement or the
Lease, Assignee shall have the right to reassign, by public or private sale
conducted according to the terms of the Uniform Commercial Code in force in the
relevant jurisdiction, all its rights herein to the Lease and to enjoy the
specified use of the subject premises. Upon any such reassignment, the new
tenant shall promptly cure any breaches of the Lease by Assignor to the extent
such cure can be effected by payment of money, and shall expressly assume all
terms, covenants and obligations of the Lease theretofore applicable to
Assignor; whereupon such new tenant shall be entitled to enjoy all rights and
privileges granted to Assignor under the Lease, according to its terms; and
5. Assignor shall be liable to Assignee for all payments by
Assignee for rent and other Lease obligations to cure defaults of Assignor in
respect thereto; and Assignor's liability for such sums shall be secured by all
security interests securing the Debenture and shall bear interest at the
interest rate provided in the Debenture. The parties acknowledge that such
payments are reasonable expenses of foreclosure; and
6. ASSIGNOR WAIVES ALL RIGHT TO TRIAL BY JURY OF ALL CLAIMS
DEFENSES, COUNTERCLAIMS AND SUITS OF ANY KIND ARISING FROM OR RELATING TO THIS
ASSIGNMENT OR THE DEALINGS OF THE PARTIES IN RESPECT HERETO. ASSIGNOR
ACKNOWLEDGES AND AGREES THAT THIS PROVISION IS A MATERIAL TERM OF THIS
ASSIGNMENT AND THAT ASSIGNEE WOULD NOT EXTEND ANY FUNDS UNDER THE AGREEMENT IF
THIS WAIVER OF JURY TRIAL WERE NOT A PART HEREOF. ASSIGNOR ACKNOWLEDGES THAT
THIS IS A WAIVER OF A LEGAL RIGHT AND THAT IT MAKES THIS WAIVER VOLUNTARILY AND
KNOWINGLY AFTER CONSULTATION WITH, OR THE OPPORTUNITY TO CONSULT WITH, COUNSEL
OF ITS CHOICE. ASSIGNOR AGREES THAT ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS
AND SUITS SHALL BE TRIED BEFORE A JUDGE OF A COURT OF COMPETENT JURISDICTION,
WITHOUT A JURY.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment as of the date first above written.
Assignor:
[Seal] SOFTWARE ACQUISITION CORPORATION
By: Robert A: Blay
--------------------------
Name: Robert A: Blay
Title: President
Assignee:
[Seal] ALLIED CAPITAL CORPORATION
By: /s/ Scott S. Binder
--------------------------
Scott S. Binder, Principal
3
<PAGE> 4
STATE OF MICHIGAN )
) TO WIT:
COUNTY OF WAYNE )
I hereby certify that on this day, before me, an officer duly
authorized in the State and County aforesaid to take acknowledgments, personally
appeared Robert A. Blay, well known to me as the President of the corporation
named as Assignor in the foregoing document, and that he acknowledged executing
the same freely and voluntarily under authority duly vested in him by said
corporation and that the seal affixed thereto is the true and corporate seal of
said corporation.
WITNESS my hand and seal this 28 day of August, 1998.
Seal:
My commission expires:____________ /s/ Holly A. Steffes
-----------------------------------
Notary Public
HOLLY A. STEFFES
Notary Public, Wayne Co., MI
My Comm. Expires Nov. 30, 2001
4
<PAGE> 5
DISTRICT )
OF ) TO WIT:
COLUMBIA )
Personally appeared before me, a Notary Public in and for the
jurisdiction aforesaid, Scott S. Binder, known to me as the Principal of
Assignee Allied Capital Corporation, who acknowledged the foregoing as the true
act and deed of Assignee this 31 day of August, 1998.
[Seal] Amelia Mitchem
---------------------
Notary Pubic
My commission expires: 10/31/02
5
<PAGE> 6
Lessor's Consent to Collateral Assignment of Lease
The undersigned party, as lessor under the Lease described in the
foregoing document, hereby agrees as set out below. Capitalized terms not
otherwise defined herein shall have the definitions provided in foregoing
document.
1. Lessor consents to the assignment of the Lease to Assignee
under the terms of the foregoing document. So long as Assignee shall not have
occupied the subject premises under the foregoing provisions, Assignee shall not
be liable for rent or any other obligations under the Lease; in any case,
Assignor shall remain liable for such rent and obligations. Exercise by Assignee
of its right to occupy the subject premises shall not release any claim by
Lessor against Assignor for rent or other Lease payments for periods prior to
such exercise.
2. Lessor will give Assignee notice of and the right cure any
default under the Lease, in the same manner and at the same time provided in
the Lease to Assignor. Otherwise, nothing in this Consent shall impair or delay
Lessor's right to terminate the Lease upon default by any lessee.
3. Lessor affirms that a) it is the lessor under the Lease,
and b) to the knowledge of Lessor, Assignor is not in breach of the Lease.
IN WITNESS WHEREOF, the undersigned executes this Consent as
the date set out below.
3000 COLISEUM INVESTORS L.L.C.
By: ______________________________
Name: ____________________________
Title: ___________________________
Date: _____________ _____ , 1998
6
<PAGE> 7
STATE OF )
) TO WIT:
COUNTY OF )
I hereby certify that on this day, before me, an officer duly
authorized in the State and County aforesaid to take acknowledgments, personally
appeared ________________________, made known to me as the ____________________
of the company named as Lessor in the foregoing document, and that he/she
acknowledged executing the same freely and voluntarily under authority duly
vested in him by said company, and that the seal affixed thereto is the true
and corporate seal of said company.
WITNESS my hand and seal this ______ day of _______________, 1998.
Seal:
My commission expires:________________ __________________________
Notary Public
7
<PAGE> 1
EXHIBIT 10(p)
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement") is made as of the
26th day of MARCH, 1998 by and among IndeNet, Inc., a Delaware corporation (the
"Borrower"), and Allied Capital Corporation, a Maryland corporation
(collectively with its successors and assigns, the "Holder").
RECITALS
A. Under terms of an Investment and Loan Agreement dated this
date, by and among the Holder, and the Borrower (the "Investment Agreement"),
the Borrower is issuing to the Holder one or more subordinated debentures (the
"Debentures") and certain warrants to purchase shares of the Borrower's common
stock, in consideration for certain loans. Capitalized terms not otherwise
defined herein shall have the meanings set out in such Investment Agreement.
B. To induce the Holder to enter into the Investment Agreement
and fund the loans thereunder, the Borrower proposes to make certain convenants
with respect to the above-referenced warrants and to the shares of stock issued
or issuable thereunder.
PROVISIONS
In consideration of the premises and the covenants herein, the
Holder and the Borrower agree as set forth below.
1. Piggy-Back Rights. If the Borrower shall at any time prepare
and file a registration statement under the Securities Act of 1933 with respect
to the public offering of any class of equity or debt security of the Borrower,
the Borrower shall give thirty (30) days prior written notice thereof to the
Holder and shall, upon the written request of the Holder, include in the
registration statement such number of the Holder's Shares as the Holder may
request. The Borrower will keep such registration statement effective and
current under the Securities Act permitting the sale of the Holder's Shares
included therein for the same period that the registration is maintained
effective in respect of Shares of other persons (including the Borrower). In any
underwritten offering the Holder's Shares to be included will be sold at the
same time and the same per-share price as the other Shares. In the event the
Borrower fails to receive a written inclusion request from the Holder within
thirty (30) days after the mailing of its written notice, then the Borrower
shall have no obligation to include any of the Holder's Shares in the offering.
In connection with any registration statement or subsequent amendment or similar
document filed and is subject hereto, the Borrower shall take all reasonable
steps to make the Holder's securities covered thereby eligible for public
offering and sale under the securities or blue sky laws of such
<PAGE> 2
jurisdictions as may be specified by the Holder by the effective date of such
registration statement; provided that in no event shall the Borrower be
obligated to qualify to do business in any jurisdiction where it is not so
qualified at the time of filing such documents, or to take any action which
would subject it to unlimited service of process in any jurisdiction where it is
not so subject at such time. The borrower shall keep such blue-sky filings
current for the length of time it must keep any registration statement,
post-effective amendment, prospectus or offering circular effective pursuant
hereto.
2. Demand Registration. At the written request of the Holder, the
Borrower shall:
(a) file a registration statement and related documents with the
Securities and Exchange Commission, and all other applicable securities agencies
or exchanges, for the public offering and sale of all or a portion of the
Holder's Shares;
(b) use its best efforts to cause such registration statements to
be declared effective; and
(c) offer publicly all such Shares in accordance with the terms
and procedures of paragraph 1 above.
Holder may exercise its right under this paragraph 2 on one
occasion only, unless a portion of the Shares specified by the Holder for
inclusion in the offering under this paragraph shall not have successfully been
sold therein, in which case Holder may exercise its rights hereunder one or more
additional times until all the Shares initially specified have successfully been
sold.
3. Expenses; Consent. In connection with any registration
statement or other filing described herein, and in connection with making and
keeping such filings effective as provided herein, the Borrower shall bear all
the expenses and professional fees of the Borrower and the Holder (except for
the Holder's pro rata share of any underwriters discount) and shall also provide
the Holder with a reasonable number of printed copies of any prospectus,
offering circulars and/or supplemental or amended prospectuses in final and
preliminary form. The Borrower consents to the use of each such prospectus or
offering circular in connection with the sale of the Holder's Shares.
4. Unlocking.
(a) If the Borrower receives a bona fide offer to consummate a
transaction that would constitute a "Company Sale" (as defined below) which is
not contingent on financing, then the Borrower upon receiving such offer shall
submit a copy of the offer, together with such information pertinent thereto as
the Borrower may have, to the Holder
2
<PAGE> 3
within three (3) days of receipt of said offer. Within ten (10) days of receipt
of said copy the Holder will indicate in writing to the Borrower whether it
approves or disapproves of the offer. If the Holder approves the offer, then the
Borrower shall within twenty (20) days thereafter (or such shorter time if
provided in the offer) accept or reject the offer. If the Borrower accepts the
offer after approval by the Holder, then the Holder shall have the right to
participate in such sale proportionately based on the terms of the offer and the
Holder's interest in the Borrower, that is, the Holder shall receive a part of
the net proceeds of the sale corresponding to the Holder's Equity Percentage (as
defined below). If the Borrower rejects the offer after approval of the offer by
the Holder, then simultaneously with such rejection the Borrower shall be bound
to purchase the Holder's Warrants or resulting Shares on the same terms and
conditions that the Holder would have received under the offer. If the Holder
fails to communicate its approval or disapproval within the above ten (10)-day
period, the Borrower may construe such failure as either approval or
disapproval, at its sole option.
(b) As used in this paragraph, "Company Sale" means a single
transaction or series of related transactions wherein one or more persons who
possess the financial means to consummate the transactions in question and,
prior to the transaction in question, did not own more than five percent (5%) of
any class of the capital stock of the Borrower ("Independent Third Parties"),
directly or indirectly either:
(i) acquire (by merger, consolidation, transfer or issuance
of capital stock or otherwise) capital stock of the Borrower (or any surviving
or resulting corporation or entity), which in the aggregate equals fifty percent
(50%) or more of the capital stock of the Borrower, possessing the voting power
to elect a majority of the Board of Directors of the Borrower (or such surviving
or resulting corporation or entity); or
(ii) acquire assets constituting fifty percent (50%) or more
of the assets of the Companies.
(c) "Equity Percentage" means the Holder's percentage of actual
or potential equity ownership of the Borrower's capital stock (as the case may
be), which percentage shall be calculated on a fully diluted basis, expressed as
a decimal fraction calculated to (5) decimal places, and shall reflect the
number of Shares owned by the Holder, and the number of Shares deliverable upon
full exercise of any unexercised Warrants owned by the Holder.
5. "Put" Right.
(a) Condition Precedent; Price. If, at any time following the
earlier of (i) the sixth anniversary of the Closing or (ii) the full and
indefeasible repayment of the Loans, the Borrower's common stock does not
achieve, during each calendar year, an average daily
3
<PAGE> 4
trading volume on a national securities exchange of 100,000 shares (as adjusted
for splits and reverse splits) of common stock over a three month period, the
Holder by written notice may require the Borrower to re-purchase its Warrants or
the shares issued thereunder at the highest of the following prices, determined
as of the time of the exercise of this right:
(i) the price agreed to by the Holder and the Borrower; or
(ii) the product of the Appraised Value of the Borrower
determined pursuant to paragraph 3.3(c) below, and the Holder's Equity
Percentage.
(b) Deduction of Exercise Price. When a Holder's Equity
Percentage arises from unexercised Warrants, the exercise price of such Warrants
shall be deducted from the prices provided above in calculating the Put price in
this paragraph.
(c) Appraised Value. The Appraised Value of the Borrower shall be
its value determined by a panel composed of three recognized appraisers of
software and media service businesses, one of whom shall be chosen by the
Borrower, one of whom shall be chosen by the Holder, and one of whom shall be
chosen by the two appraisers previously designated. The costs and fees of such
appraisers shall be borne one-half by the Borrower and one-half by the Holder.
(d) Time for Exercise. The Holder may exercise its rights under
this paragraph 5 only by giving the notice of exercise called for above during
the sixty (60) day period following the end of each calendar year wherein the
condition stated in sub-paragraph (a), above, was met.
6. Personal Gain Upon Sale. In the event of a Company Sale, any
emoluments or profits relating to such Company Sale and flowing to Mr. Andre
Blay, any officers, directors or principal shareholders of the Companies
otherwise than through direct payment for their equity ownership in the Borrower
or through dividends or return of capital paid in respect thereof, shall be
added to the direct consideration for such sale in calculating the total sale
price for purposes of determining any part thereof which the Holder may be
entitled to receive in respect to any equity ownership in the Borrower. Such
emoluments or profits shall include (without limitation) points or fees paid to
induce such Company Sale, or any salaries or consulting fees payable in
connection with the Borrower's operations after such Company Sale, to the extent
such salaries or fees exceed the higher of (a) the subject person's compensation
from the Borrower prior to such sale, or (b) the compensation customarily paid
by the acquirer of the Borrower to officers and employees holding similar
offices or positions within its organization. Where such emoluments or profits
are payable in kind they will be valued at the higher of cost or fair market
value for purposes of this paragraph.
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7. Access to Records. The Borrower agrees to permit from
time-to-time any authorized agent of the Holder and, when any Put rights have
been exercised under terms of Section 5 hereof, any appraisers engaged under
terms of such Section, to obtain credit and other background information on the
Borrower, and to inspect, examine and make copies and abstracts of the books of
account and records of the Borrower at reasonable times during normal business
hours allow the Holder's agents and such appraisers to interview the Borrower's
outside accountants who are by this covenant irrevocably instructed to respond
to such inquiries as fully as if the inquiries were made by the Borrower itself.
8. Expiration. The Holders rights under paragraphs 4
("Unlocking") and 6 ("Personal Gain on Sale") hereof shall expire when all
Debentures have been fully and indefeasibly repaid; PROVIDED, HOWEVER, that such
rights under paragraph 4 ("Unlocking") shall continue in effect after such
repayment with respect to any offer constituting a Company Sale if the
Debentures are repaid as a result of such offer, and such rights under paragraph
6 ("Personal Gain on Sale") shall continue in effect after such repayment with
respect to any transaction constituting a Company Sale wherein the Debentures
are repaid in connection with the transaction. The Holders rights under
paragraph 5 hereof ("Put") shall expire ten (10) years after the date hereof. In
other respects this Agreement shall expire ten (10) years after the Loans are
fully and indefeasibly repaid.
9. No Implied Waver. No course of dealing between the Holder and
any other party hereto, or any failure or delay on the part of the Holder in
exercising any rights or remedies hereunder, shall operate as a waiver of any
rights or remedies of the Holder under this or any other applicable agreement.
No single or partial exercise of any rights or remedies hereunder shall operate
as a waiver or preclude the exercise of any other rights or remedies hereunder.
10. Parties. This Agreement will bind and accrue to the benefit
of Borrower the Holder, any holders of the Warrants or the Debentures, and their
successors and assigns. Any purchaser, assignee, transferee or pledgee of the
Warrants or Debentures, or any document arising in connection with the
transaction subject to this Agreement (or any of them), sold, assigned,
transferred, pledged or repledged by a Holder shall forthwith become vested with
and entitled to exercise all rights and remedies provided herein to the Holder,
as if said purchaser, assignee, transferee or pledgee were originally named in
this Agreement in place of the Holder.
11. Notice. All notices or communications under this Agreement
shall be provided in accordance with the notice provisions in the Investment
Agreement, which are hereby incorporated in full by this reference.
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12. Controlling Law; Venue and Jurisdiction; Service of Process.
This Agreement shall be interpreted, and the rights and liabilities of the
parties hereto determined, in accordance with the laws of the District of
Columbia, without regard to its principles of conflicts of law. Venue for any
adjudication hereof shall be only in the courts of the District of Columbia or
the Federal courts in such District, to the jurisdiction of which courts all
undersigned parties hereby submit as the agreement of such parties, as not
inconvenient, and as not subject to review by any court other than such courts
in the District of Columbia. All parties intend and agree that the courts of
jurisdictions in which the Borrower is incorporated and conducts its business
shall afford full faith and credit to any judgment rendered by a court of the
District of Columbia against the Borrower or other obligees hereunder, and that
such District of Columbia and federal courts shall have in personam jurisdiction
to enter a valid judgment against the Borrower or other obligees hereunder.
Service of any summons and/or complaint and any other process which may be
served on the Borrower in any action in respect hereto, may be made by mailing
via registered mail, or delivering a copy of such process to the Borrower at its
address specified above. The parties hereto agree that this submission to
jurisdiction and consent to service of process are reasonable and made for the
express benefit of the Holder.
13. WAIVER OF TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT WAIVES
ALL RIGHT TO TRIAL BY JURY OF ALL CLAIMS, DEFENSES COUNTERCLAIMS AND SUITS OF
ANY KIND DIRECTLY OR INDIRECTLY ARISING FROM OR RELATING TO THIS AGREEMENT OR
THE DEALINGS OF THE PARTIES IN RESPECT THERETO. THE PARTIES HERETO ACKNOWLEDGE
AND AGREE THAT THIS PARAGRAPH IS A MATERIAL TERM OF THIS AGREEMENT AND THAT THE
HOLDER WOULD NOT EXTEND ANY FUNDS UNDER THE INVESTMENT AGREEMENT IF THIS WAIVER
OF JURY TRIAL WERE NOT A PART OF THIS AGREEMENT. EACH PARTY HERETO ACKNOWLEDGES
THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT IT MAKES THIS WAIVER VOLUNTARILY
AND KNOWINGLY AFTER CONSULTATION WITH, OR THE OPPORTUNITY TO CONSULT WITH,
COUNSEL OF ITS CHOICE. EACH PARTY HERETO AGREES THAT ALL SUCH CLAIMS, DEFENSES,
COUNTERCLAIMS AND SUITS SHALL BE TRIED BEFORE A JUDGE OF COMPETENT JURISDICTION,
WITHOUT A JURY.
14. Captions; Severance. The captions in this Agreement are
inserted for reference only and shall be construed neither to limit nor amplify
the meaning of the other text of such documents. To the extent any provision
herein violates any applicable law, such provision shall be void and the balance
of this Agreement shall remain unchanged.
15. Counterparts; Entire Agreement . This Agreement may be
executed in as many counterpart copies and with as many counterpart signature
pages as may be convenient. It shall not be necessary that the signature of, or
on behalf of, each party appear on each counterpart, but it shall be sufficient
that the signature of, or on behalf of,
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each party appear on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be necessary in any
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties. This Agreement, the Warrants, the Investment Agreement, the
exhibits hereto and the other documents mentioned herein set forth the entire
agreements and understandings of the parties hereto in respect to the subject
matter hereof. Any verbal agreements in respect of this transaction are hereby
terminated. The terms herein may not be changed verbally but only by a writing
signed by the party against which enforcement of the change is sought.
16. Rules of Construction. The rule of ejusdem generis shall not
be applicable herein to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned. Unless the context otherwise requires:
(a) A term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) Provisions apply to successive events and transactions;
(d) "Herein", "Hereof", "Hereto", "Hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
paragraph or other subdivision unless otherwise so provided;
(e) The word "person" shall mean any natural person, partnership,
corporation, nation, state, government, union, association, agency, tribunal,
board, bureau and any other form of business or legal entity;
(f) All words or terms used in this Agreement, regardless of the
number or gender in which they are used, shall be deemed to include any other
number and any other gender; and
(g) All financial terms used herein and not capitalized shall
have the meaning accorded them under GAAP.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
INDENET, INC.
[Seal]
By: Robert A. Blay
------------------------------
Name: Robert Blay
Title: Vice-President
ALLIED CAPITAL CORPORATION
[Seal]
By: Scott S. Binder
------------------------------
Scott S. Binder, Principal
8
