NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT, dated as of the date of
acceptance set forth below, by and between INDENET, INC., a
Delaware corporation, with headquarters located at 0000 Xxxxx
Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (the "Company"), and
the undersigned (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in reliance upon the exemption from
securities registration afforded by Rule 506 under Regulation D
("Regulation D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "1933 Act");
WHEREAS, the Buyer wishes to purchase, upon the terms
and subject to the conditions of this Agreement, a convertible
note of the Company which will be convertible into shares of
Common Stock, $.001 par value (the "Common Stock"), of the
Company upon the terms and subject to the conditions of such
note, subject to acceptance of this Agreement by the Company; and
WHEREAS, contemporaneous with the execution and delivery
of this Agreement, the parties hereto are executing and
delivering a Subscription Agreement (the "Subscription
Agreement"), providing for the purchase and sale, upon the terms
and subject to the conditions provided therein, of shares of
Common Stock for an aggregate purchase price of $1,000,000.00;
NOW THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
(a) Purchase. The undersigned hereby agrees to
purchase from the Company a convertible promissory note of the
Company in the principal amount set forth on the signature page
of this Agreement having the terms and conditions and in the form
attached hereto as Annex I (the "Note") at the price set forth on
the signature page of this Agreement. The purchase price for the
Note shall be payable in United States Dollars.
(b) Form of Payment. The Buyer shall pay the purchase
price for the Note by delivering good funds in United States
Dollars to the escrow agent (the "Escrow Agent") identified in
the Joint Escrow Instructions attached hereto as Annex II (the
"Joint Escrow Instructions"). Such delivery of funds shall be
made against delivery by the Company of the Note duly executed on
behalf of the Company. Promptly following payment by the Buyer
to the Escrow Agent of the purchase price of the Note, the
Company shall deliver the Note, duly executed on behalf of the
Company, to the Escrow Agent. By signing this Agreement, the
Buyer and the Company each agrees to all of the terms and
conditions of, and
becomes a party to, the Joint Escrow Instructions, all of the
provisions of which are incorporated herein by this reference as
if set forth in full.
(c) Method of Payment. Payment of the purchase price
for the Note shall be made by wire transfer of funds to:
Citibank, N.A.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA#000000000
For Further Credit to A/C#37179446
for credit to the account of Xxxxx X. Xxxxx
Attorney
Escrow Account
Reference: GFL/IndeNet
Not later than the date which is three New York Stock Exchange
trading days after the Company shall have accepted this Agreement
and the Subscription Agreement and returned signed counterparts
of this Agreement and the Subscription Agreement to the Buyer,
the Buyer shall deposit with the Escrow Agent the aggregate
purchase price for the Note.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.;
ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and
agrees with, the Company as follows:
(a) The Buyer is purchasing the Note for its own
account for investment only and not with a view towards the
public sale or distribution thereof;
(b) The Buyer is an "accredited investor" as that term
is defined in Rule 501 of the General Rules and Regulations under
the 1933 Act by reason of Rule 501(a)(3);
(c) All subsequent offers and sales of the Note and
the shares of Common Stock issuable upon conversion of, or in
lieu of payment of interest on, the Note (the "Shares" and,
together with the Note, the "Securities") by the Buyer shall be
made pursuant to registration of the Shares under the 1933 Act or
pursuant to an exemption from registration;
(d) The Buyer understands that the Note is being
offered and sold, and the Shares are being offered, to it in
reliance on the exemption from the registration requirements of
the 1933 Act provided by Regulation D and exemptions from state
securities laws, including exemptions available by reason of
satisfying the requirements of Regulation D, and that the Company
is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein
in order to determine the availability of such exemptions and the
eligibility of the Buyer to acquire the Note and to receive an
offer of the Shares;
(e) The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer
and sale of the Note and the offer of the Shares which have been
requested by the Buyer. The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and
have received complete and satisfactory answers to any such
inquiries. Without limiting the generality of the foregoing, the
Buyer has had the opportunity to obtain and to review the
Company's (1) Annual Report on Form 10-K for the fiscal year
ended March 31, 1995, (2) Quarterly Reports on Form 10-Q for the
fiscal quarters ended June 30, 1995, September 30, 1995, and
December 31, 1995, (3) definitive Proxy Statement for its 1995
Annual Meeting of Stockholders and (4) Current Reports on Form
8-K, dated October 11, 1995, November 27, 1995 and February 7,
1996, in each case as filed with the SEC. The Buyer understands
that its investment in the Securities involves a high degree of
risk;
(f) The Buyer understands that no United States
federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of
the Securities; and
(g) This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is
a valid and binding agreement of the Buyer enforceable in
accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of
creditors' rights generally.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyer that:
(a) Concerning the Shares. The Shares have been duly
authorized and, when issued upon conversion of the Note, will be
duly and validly issued, fully paid and non-assessable and will
not subject the holder thereof to personal liability by reason of
being such holder. There are no preemptive rights of any
stockholder of the Company, as such, to acquire the Shares. The
Common Stock is listed for trading on the Nasdaq National Market
("Nasdaq") and (1) the Company and the Common Stock meet the
criteria for continued listing and trading on Nasdaq; (2) the
Company has not been notified since January 1, 1994 by the
National Association of Securities Dealers, Inc. of any failure
or potential failure to meet the criteria for continued listing and
trading on Nasdaq and (3) no suspension of trading in the Common
Stock is in effect.
(b) Note Purchase Agreement; Registration Rights
Agreement and Note.
This Agreement and the Registration Rights
Agreement, the form of which is attached to the Subscription
Agreement as Annex II (the "Registration Rights Agreement"), have
been duly and validly authorized by the Company, this Agreement
has been duly executed and delivered by the Company and this
Agreement is, and the Registration Rights Agreement, when
executed and delivered by the Company, will be, valid and binding
agreements of the Company enforceable in accordance with their
respective terms, subject as to enforceability to general
principles of equity and to bankruptcy, insolvency, moratorium
and other similar laws affecting the enforcement of creditors' rights
generally; and the Note has been duly and validly authorized and,
when executed and delivered on behalf of the Company in
accordance with this Agreement, will be a valid and binding
obligation of the Company in accordance with its terms, subject
to general principles of equity and to bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of
creditors rights generally.
(c) Non-contravention. The execution and delivery of
this Agreement and the Registration Rights Agreement by the
Company and the consummation by the Company of the issuance of
the Securities and the other transactions contemplated by this
Agreement, the Registration Rights Agreement and the Note do not
and will not conflict with or result in a breach by the Company
of any of the terms or provisions of, or constitute a default under,
the certificate of incorporation or by-laws of the Company, or
any indenture, mortgage, deed of trust or other material agreement or
instrument to which the Company is a party or by which it or any
of its properties or assets are bound, or any applicable law,
rule or regulation or any applicable decree, judgment or order of any
court, United States federal or state regulatory body,
administrative agency or other governmental body having
jurisdiction over the Company or any of its properties or assets.
(d) Approvals. No authorization, approval or consent
of, or filing with, any court, governmental body, regulatory
agency, self-regulatory organization, or stock exchange or market
or the stockholders of the Company is required to be obtained or
made by the Company for the issuance and sale of the Securities
as contemplated by this Agreement and the Note, other than (1) the
listing of the Shares on Nasdaq and (2) the requirements of any
applicable blue sky laws.
(e) Information Provided. The information provided by
or on behalf of the Company to the Buyer and referred to in
Section 2(e) of this Agreement does not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading.
(f) Absence of Certain Changes. Since March 31, 1995,
there has been no material adverse change and no material adverse
development in the business, properties, operations, financial
condition, results of operations or prospects of the Company,
except as disclosed in the documents referred to in Section 2(e)
hereof.
(g) Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court,
public board or body pending or, to the knowledge of the Company
or any of its subsidiaries, threatened against or affecting the
Company or any of its subsidiaries, wherein an unfavorable
decision, ruling or finding would have a material adverse effect
on the properties, business, condition (financial or other),
results of operations or prospects of the Company and its
subsidiaries taken as a whole or the transactions contemplated by
this Agreement or any of the documents contemplated hereby or
which would adversely affect the validity or enforceability of,
or the authority or ability of the Company to perform its
obligations under, this Agreement or any of such other documents.
(h) Absence of Events of Default. No Event of
Default, as defined in the Note, and no event which, with the
giving of notice or the passage of time or both, would become an
Event of Default (as so defined), has occurred and is continuing.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
(a) Transfer Restrictions. The Buyer acknowledges
that (1) the Note has not been and is not being registered under the
provisions of the 1933 Act and, except as provided in the
Registration Rights Agreement, the Shares have not been and are
not being registered under the 1933 Act, and may not be
transferred unless (A) subsequently registered thereunder for
resale or (B) the Buyer shall have delivered to the Company an
opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Securities to be
sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Securities
made in reliance on Rule 144 promulgated under the 1933 Act may
be made only in accordance with the terms of said Rule and further,
if said Rule is not applicable, any resale of such Securities
under circumstances in which the seller, or the person through
whom the sale is made, may be deemed to be an underwriter, as
that term is used in the 1933 Act, may require compliance with some
other exemption under the 1933 Act or the rules and regulations
of the SEC thereunder; and (3) neither the Company nor any other
person is under any obligation to register the Securities (other
than pursuant to the Registration Rights Agreement) under the
1933 Act or to comply with the terms and conditions of any exemption
thereunder.
(b) Restrictive Legend. The Buyer acknowledges and
agrees that the Note, and, until such time as the Shares have
been registered under the 1933 Act as contemplated by the Registration
Rights Agreement, the certificates for the Shares, may bear a
restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the
certificates for the Shares):
The securities represented by this certificate have not
been registered under the Securities Act of 1933, as
amended. The securities have been acquired for
investment and may not be sold, transferred or assigned
in the absence of an effective registration statement
for the securities under the Securities Act of 1933, as
amended, or an opinion of counsel that registration is
not required under said Act.
(c) Registration Rights Agreement. The parties hereto
agree to enter into the Registration Rights Agreement, in the
form attached to the Subscription Agreement as Annex II, on or before
the Closing Date.
(d) Form D. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to
provide a copy thereof to the Buyer promptly after such filing.
(e) Nasdaq Listing; Reporting Status. On or before
the Closing Date, the Company shall file with Nasdaq an application
or other document required by Nasdaq for the listing of the Shares
and shall provide evidence of such filing to the Buyer promptly
after such filing. So long as the Buyer beneficially owns any of
the Securities, the Company shall file all reports required to be
filed with the SEC pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the Company shall not, prior to the date which is three years
after the Closing Date, terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would permit such termination.
(f) Use of Proceeds. The Company will use the
proceeds from the sale of the Note for the Company's internal working
capital purposes and shall not, directly or indirectly, use such
proceeds for any loan to or investment in any other corporation,
partnership enterprise or other person (other than transfers to
majority-owned subsidiaries of the Company or for the acquisition
of a majority interest in companies in a business complimentary
to the Company's business).
(g) Blue Sky Laws. On or before the Closing Date, the
Company shall take such action as shall be necessary to qualify,
or to obtain an exemption for, the Securities for sale to the
Buyer pursuant to this Agreement and on conversion of the Note
under such of the securities or "blue sky" laws of jurisdictions
in the United States as shall be applicable to the sale of the
Securities to the Buyer pursuant to this Agreement and on
conversion of the Note. The Company shall furnish copies of all
filings, applications, orders and grants or confirmations of
exemptions relating to such securities or "blue sky" laws on or
before the Closing Date.
5. TRANSFER AGENT INSTRUCTIONS.
Prior to the Closing Date, the Company will irrevocably
instruct its transfer agent to issue certificates for the Shares
from time to time upon conversion of the Note in such amounts as
specified from time to time by the Company to the transfer agent,
bearing the restrictive legend specified in Section 4(b) of this
Agreement prior to registration of the Shares under the 1933 Act,
registered in the name of the Buyer as set forth on the signature
page of this Agreement or its nominee and in such denominations
to be specified by the Buyer in connection with each conversion of
the Note. The Company warrants that no instruction other than
such instructions referred to in this Section 5 and stop transfer
instructions to give effect to Section 4(a) hereof prior to
registration of the Shares under the 1933 Act will be given by
the Company to the transfer agent and that the Shares shall otherwise
be freely transferable on the books and records of the Company as
and to the extent provided in this Agreement and the Registration
Rights Agreement. Nothing in this Section shall affect in any
way the Buyer's obligations and agreement to comply with all
applicable securities laws upon resale of the Securities. If the
Buyer provides the Company with an opinion of counsel reasonably
satisfactory to the Company that registration of a resale by the
Buyer of any of the Securities in accordance with clause (1)(B)
of Section 4(a) of this Agreement is not required under the 1933
Act, the Company shall permit the transfer of the Securities and, in
the case of the Shares, promptly instruct the Company's transfer
agent to issue one or more share certificates in such name and in
such denominations as specified by the Buyer.
6. NOTE DELIVERY INSTRUCTIONS.
The Note shall be delivered by the Company to the Escrow
Agent pursuant to Section 1(b) hereof on a delivery against
payment basis at the closing.
7. CLOSING DATE.
The date and time of the issuance and sale of the Note
(the "Closing Date") shall be 12:00 noon, New York City time, on
the date which is three New York Stock Exchange trading days
after the date on which the Buyer shall have deposited the purchase
price for the Note with the Escrow Agent in accordance with
Section 1(c) hereof, or such other mutually agreed to time. The
closing shall occur on the Closing Date at the offices of the
Escrow Agent.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to
sell the Note to the Buyer pursuant to this Agreement is
conditioned upon:
(a) The receipt and acceptance by the Company of this
Agreement as evidenced by execution of this Agreement by the
Company and the return of an executed copy hereof to the Buyer
and its legal counsel;
(b) Delivery by the Buyer to the Escrow Agent of good
funds as payment in full of an amount equal to the purchase price
for the Note in accordance with Section 1(c) hereof; and
(c) The accuracy on the Closing Date of the
representations and warranties of the Buyer contained in this
Agreement as if made on the Closing Date and the performance by
the Buyer on or before the Closing Date of all covenants and
agreements of the Buyer required to be performed on or before the
Closing Date.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to
purchase the Note is conditioned upon:
(a) Delivery by the Company to the Escrow Agent of the
Note in accordance with this Agreement;
(b) The accuracy on the Closing Date of the
representations and warranties of the Company contained in this
Agreement as if made on the Closing Date and the performance by
the Company on or before the Closing Date of all covenants and
agreements of the Company required to be performed on or before
the Closing Date;
(c) On the Closing Date, the Buyer having received an
opinion of counsel for the Company, dated the Closing Date, in
form, scope and substance reasonably satisfactory to the Buyer,
substantially in the form of Annex III attached to the
Subscription Agreement; and
(d) The closing under the Subscription Agreement shall
have occurred.
10. GOVERNING LAW; MISCELLANEOUS.
This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California. A facsimile
transmission of this signed
Agreement shall be legal and binding on all parties hereto. The
headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this
Agreement. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This
Agreement may be amended only by an instrument in writing signed
by the party to be charged with enforcement. Any notices
required or permitted to be given under the terms of this Agreement shall
be sent by mail or delivered personally or by courier and shall
be effective five days after being placed in the mail, if mailed, or
upon receipt, if delivered personally or by courier, in each case
addressed to a party at such party's address shown in the
introductory paragraph or on the signature page of this Agreement
or such other address as a party shall have provided by notice to
the other party in accordance with this provision. The Buyer
shall have the right to assign its rights and obligations under
this Agreement with respect to the purchase of all or any portion
of the principal amount of the Note either with the prior written
consent of the Company, which consent shall not be unreasonably
withheld or delayed, or to one or more funds advised by Genesee
Advisers, in which case no consent is required; provided, in
either case, such assignee, by written instrument duly executed
by such assignee, assumes all obligations of the Buyer hereunder
with respect to the purchase of the portion of the principal amount of
the Note so assigned and makes the same representations and
warranties with respect thereto as the Buyer makes in this
Agreement, whereupon the Buyer shall be relieved of any further
obligations, responsibilities and liabilities with respect to the
purchase of all or the portion of the principal amount of the
Note the obligation for the purchase of which has been so assigned.
In the case of any such assignment, the Company shall agree in
writing with such assignee to make available to such assignee the
benefits of the Registration Rights Agreement with respect to the
Shares issuable on conversion of the Note or the portion of the
principal amount thereof with respect to which the purchase under
this Agreement has been so assigned.
IN WITNESS WHEREOF, this Agreement has been duly
executed by the Buyer or one of its officers thereunto duly
authorized as of the date set forth below.
PRINCIPAL AMOUNT OF NOTE: $3,000,000
PURCHASE PRICE: $3,000,000
NAME OF BUYER: GFL PERFORMANCE FUND LIMITED
SIGNATURE
Title:
Date:
Address: x/x XXXXX
Xxxx Xxxxxxxxx 0
Xxxxxxx, Xxxxxxxxxxx Antilles
This Agreement has been accepted as of the date set
forth below.
INDENET, INC.
By:
Title:
Date:
