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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
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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
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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
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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 Xx. Xxxxx
Xxxx, 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: Xxxxxx X. Xxxx
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Name: Xxxxxx Xxxx
Title: Vice-President
ALLIED CAPITAL CORPORATION
[Seal]
By: Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Principal
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