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.
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.
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: Xxxxxx X. Xxxx
------------------------------
Xxxxxx X. Xxxx
Its: Vice President
ALLIED CAPITAL CORPORATION
By: /s/
------------------------------
Xxxxx X. Xxxxxx
Its: Principal
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