Exhibit 10.1

 

 

Tangram Enterprise Solutions, Inc.

Summary of Proposed Terms for Revolving Line of Credit and Demand Loan

 

February 13, 2003

 

Revolving Line of Credit

 

Borrower:

  

Tangram Enterprise Solutions, Inc. (the “Company”)

Lender:

  

Safeguard Delaware, Inc. (“Safeguard”)

Principal Amount:

  

$1,350,000 revolver, to be borrowed, repaid and reborrowed by the Company at its
discretion until the Maturity Date

Type of Security:

  

Promissory Note in the form of Exhibit A attached hereto (the “Revolver”).

Interest:

  

prime rate plus 1% per annum (on the basis of a 360-day year)

Repayment Terms:

  

Principal payable on the earlier of one year from the date of the Revolver or a
change of control (“Maturity Date”). Lender shall notify Borrower at least 90
days prior to the one-year anniversary from the date of the Revolver as to
Lender’s intention to renew the Revolver. If Lender determines not to renew the
Revolver, Borrower must repay outstanding principal and any accrued and unpaid
interest within six months from the one-year anniversary.

    

In addition, upon the closing of a sale of debt or equity securities by the
Company, the Company shall apply the proceeds (net of underwriting discounts and
commissions) in excess of $2,500,000 first to the repayment of the then
outstanding obligations under the Revolver

    

Interest payable quarterly in arrears

    

Prepayment without penalty or premium

Events of Default:

  

Default in payment of principal or interest

    

An event of default by Company under any other obligation

    

Certain bankruptcy, insolvency and other similar events with respect to the
Company

    

Default rate – prime rate plus 3% per annum

 

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Demand Loan

 

Borrower:

  

Company

Lender(s):

  

Safeguard and TBBH Investments Europe AG (successor in interest to Axial
Technology Holding AG) (“Axial”).

Principal Amount:

  

$1,700,000, provided by Lenders as follows:

 

Safeguard                                           

  

$

650,000

Axial

  

$

1,200,000

    

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        Total                                         

  

$

1,850,000

 

Type of Security:

  

Promissory Notes in the form of Exhibit B attached hereto (the “Notes”)

Interest:

  

prime rate plus 1% per annum (on the basis of a 360-day year); provided however,
that the Axial Note shall only accrue interest on $500,000 of principal until
the first anniversary of the date of the Note and thereafter shall accrue
interest on the entire outstanding principal

Repayment Terms:

  

Principal payable on the earlier of six months after the date of demand, which
may be made anytime after one year from the date of the Notes or a change of
control (“Maturity Date”) In addition, upon the closing of a sale of debt or
equity securities by the Company, the Company shall apply the proceeds (net of
underwriting discounts and commissions) in excess of $2,500,000 first to the
repayment of the then outstanding obligations under the Revolver then the Notes

    

Interest payable quarterly in arrears

    

All payments on the Notes shall be allocated pro-rata to each of the Lenders
based upon the total outstanding principal and interest balance of the Note at
the time of the payment

    

Only if there are no amounts outstanding under the Revolver, prepayment without
penalty or premium

Events of Default:

  

Default in payment of principal or interest

    

An event of default by Company under any other obligation

    

Certain bankruptcy, insolvency and other similar events with respect to the
Company

    

Default rate – prime rate plus 3% per annum

 

 

 

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Other Provisions

 

Note Exchange:

  

The Revolver and Safeguard Note are being issued in replacement of that certain
Second Amended Revolving Note, dated September 11, 1997, as amended on February
20, 2001 made by the Company in favor of Safeguard Scientifics, Inc. The Axial
Note is being issued in replacement of that certain Promissory Note, dated
February 13, 2001 made by Borrower in favor of Axial.

Expenses:

  

The Company will bear the expenses of the Lenders and of the Company incurred in
connection with this transaction. The Lenders portion not to exceed $25,000.00.

Publicity:

  

Any press release or other public statement issued by any party relating to this
letter or the transactions contemplated shall be approved in advance by all
parties and shall contain appropriate references to each such party who desires
such references.

Target Closing:

  

On or before February 17, 2003. If this term sheet is not executed and closing
has not occurred by such date, this proposal will be deemed withdrawn.

Preferences:

  

In accordance with U.S. law, in the event of a liquidation of the Company, the
holders of the Revolving Note and the Demand Notes will be paid prior to any
payments made to holders of equity securities (preferred or common). The Demand
Note holders agree that any repayments shall first be applied to the repayment
of the Revolving Note and then pro rata as between the Demand Note holders. As
provided in the Company’s Statement of Designations, Preferences and Rights of
the Series F Preferred Stock, a change of control of the Company shall be deemed
a liquidation.

 

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This is neither an offer nor a binding commitment. A binding commitment will
only be made pursuant to the execution of definitive loan agreements mutually
acceptable to all parties and only upon satisfaction of the following
conditions:

 

Please do not hesitate to contact us if you have any questions or comments
regarding this letter.

 

SAFEGUARD DELAWARE, INC.

By:

 

/s/ Christopher J. Davis

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Name:

 

Christopher J. Davis

Title:

 

Managing Director and Chief Financial Officer

 

 

TBBH INVESTMENTS EUROPE AG

(successor in title to Axial Technology Holding AG)

By:

 

/s/ David P. Kennealy

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Name:

 

David P. Kennealy

Title:

 

Director

 

As of this 13th day of February, 2003, the undersigned hereby acknowledges that
this term sheet is acceptable as a basis for negotiating the Revolver and Notes
and agrees to be legally bound by those particular terms under the heading
“Publicity”.

 

TANGRAM ENTERPRISE SOLUTIONS, INC.

By:

 

/s/ Norman L. Phelps

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Name:

 

Norman L. Phelps

Title:

 

President and CEO

 

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