Summary of Proposed Terms



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

	  	   	
	

	          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


	  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


	  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


	  Name:
	  	  Norman L. Phelps

	  Title:
	  	  President and CEO


 

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