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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM 8-K
CURRENT REPORT
Pursuant to Section l3 or l5(d) of the
Securities Exchange Act of l934
Date of Report (Date of earliest event reported) MARCH 27, 1998
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VISUAL EDGE SYSTEMS INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-20995 13-3778895
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(State or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) Identification No.)
2424 NORTH FEDERAL HIGHWAY, SUITE 100, BOCA RATON, FL 33431
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(Address of principal executive offices) (Zip Code)
(561) 750-7559
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(Registrant's telephone number, including area code)
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Item 5. OTHER EVENTS
On March 27, 1998, the Company entered into a Purchase Agreement (the
"Marion Agreement") with Marion Interglobal, Ltd., an investment group
("Marion"). The Marion Agreement calls for the Company to receive up to
$11,000,000 from Marion in exchange for shares of the Company's common stock,
par value $.01 per share (the "Common Stock"), as explained herein. Pursuant to
the Marion Agreement, the purchase of Common Stock is to occur in three tranches
as follows: (i) on March 27, 1998 the Company sold to Marion 1,200,000 shares of
Common Stock for an aggregate consideration of $3,000,000; $1,500,000 of the
$3,000,000 has been funded, with the remaining $1,500,000 to be funded on the
business day after the Company's shelf registration statement with respect to
the shares sold to Marion has been declared effective by the Securities and
Exchange Commission; (ii) sixty days following the registration of all the
underlying shares of Common Stock under the Marion Agreement, the Company will
sell to Marion 800,000 shares of Common Stock for an aggregate consideration of
$2,000,000; and (iii) on or prior to September 30, 1998 the Company shall sell a
number of shares of Common Stock (to be determined by when the closing occurs,
which would range from 2,666,667 shares to 3,200,000 shares) for an aggregate
consideration of $6,000,000. The third tranche is contingent on Marion's
satisfaction that the Company has met or exceeded the financial targets expected
by Marion, in its sole discretion. The Company has agreed to use the $6,000,000
in proceeds from the third tranche to redeem the Company's outstanding
Convertible Notes (the "Notes") and Series A Preferred Stock ("Preferred Stock")
issued in the financing consummated by the Company in June 1997. The issuance
and sale of 1,400,000 shares of Common Stock in the first tranche and all of the
shares to be issued in the second tranche to Marion, is subject to approval by
the Company's stockholders. The Company will pay transaction fees to Marion
upon completion of each tranche as follows: (i) 1,200,000 shares of Common Stock
for the first $3,000,000 tranche; (ii) 800,000 shares of Common Stock for the
second $2,000,000 tranche; and (iii) no additional fee for the completion of the
third tranche.
Further, upon the consummation of the second tranche of the Marion
Agreement, Mr. Alan Lubell, Chairman of the Board of the Company, has agreed to
transfer to Marion 250,000 shares of Common Stock, which shares are required to
be registered under the Securities Act of 1933, as amended.
In addition, if the third tranche of the aforementioned financing is
completed, then until March 30, 2001, the Company is required to obtain the
prior written consent of Marion before the consummation of any additional
financing transaction except for any credit facilities or lines of credit with
lenders or equipment financing arrangements. Further, the Company may not
redeem the warrants issued in its initial public offering without the prior
written consent of Marion.
As a condition to the consummation of this equity financing, the Company
renegotiated the terms of its outstanding Notes and Preferred Stock with certain
investment funds (the "Funds") who hold all of the outstanding Notes and
Preferred Stock. Specifically, the Company entered into the Agreement and
Second Amendment to Bridge Securities Purchase Agreement
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and Related Documents (the "Second Amendment"), among the Company and the Funds.
Pursuant to the Second Amendment, the Funds agreed that they would not convert,
prior to December 31, 1998, any shares of Preferred Stock or any principal
amount of the Notes into shares of Common Stock, unless a "Material Transaction"
(defined as a change of control of the Company, a transfer of all or
substantially all of the Company's assets or a merger of the Company into
another entity) has occurred. Further, the Funds agreed that they would not,
prior to March 31, 1999, publicly sell any shares of Common Stock owned or
acquired by the Funds, unless a Material Transaction has occurred; the Funds are
permitted, after June 30, 1998 and subject to the Company's right of first
refusal, to privately sell any shares of Common Stock that they own or acquire,
provided the purchaser agrees in writing to be bound by the same resale
restrictions.
The Funds have granted to the Company an option to redeem the Preferred
Stock and the Notes owned by the Funds as follows: (i) up to $2,500,000 may be
redeemed on or before April 30, 1998; (ii) an additional $2,500,000 may be
redeemed on or before May 31, 1998; and (iii) an additional $2,500,000 may be
redeemed from and after June 1, 1998. If the date that the Company redeems such
Preferred Stock and Notes is on or before June 30, 1998, the redemption price
will be 80% of the principal amount outstanding of the Notes being redeemed or
80% of the liquidation preference of the Preferred Stock being redeemed, plus
accrued interest and dividends in the event that all of the Preferred Stock and
Notes owned by the Funds are not redeemed by June 30, 1998. If the redemption
of the Notes and Preferred Stock is after June 30, 1998 but on or before
December 31, 1998, the 80% referred to in the preceding sentence shall increase
by 2% per month, up to 90% in December 1998. If the redemption of the Notes and
Preferred Stock occurs after December 31, 1998, the redemption price shall be as
provided in the original agreement between the Company and the Funds. The
Company is required to redeem all of the Preferred Stock outstanding prior to
redemption of any of the Notes. In addition, the Funds have granted to the
Company and to Marion an option to acquire, on or before March 31, 1999, all of
the shares of Common Stock owned by the Funds.
In connection with the Second Amendment, the Funds received 100,000 shares
of Common Stock, as well as the right to receive 200,000 additional shares of
Common Stock in the event that all of the Preferred Stock and Notes owned by the
Funds have not been redeemed by the Company by June 30, 1998. Further, the
exercise price of 100,000 warrants (each to purchase one share of the Company's
Common Stock) owned by the Funds has been reduced from $10.675 per share to
$3.25 per share and the exercise price of 200,000 additional warrants (each to
purchase one share of the Company's Common Stock) owned by the Funds has been
reduced from $4.00 per share to $3.25 per share. The Company has agreed to
register all of such shares of Common Stock (including the shares underlying
warrants) under the Securities Act of 1933, as amended.
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(c) Exhibits
99.1 Purchase Agreement, dated as of March 27, 1998, among the Company and
Marion Interglobal, Ltd.
99.2 Registration Rights Agreement, dated as of March 27, 1998, among the
Company and Marion Interglobal, Ltd.
99.3 Second Amendment to Bridge Securities Purchase Agreement and Related
Documents, dated as of March 27, 1998, among the Company, Infinity
Investors Limited, Infinity Emerging Opportunities Limited, Summit
Capital Limited (as the transferee of Sandera Partners, L.P.) and
Glacier Capital Limited (as the transferee of Lion Capital Partners,
L.P.)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VISUAL EDGE SYSTEMS INC.
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(Registrant)
By: /s/ Earl Takefman
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Earl Takefman
Chief Executive Officer
Date: April 6, 1998
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EXHIBIT INDEX
NO.
99.1 Purchase Agreement, dated as of March 27, 1998, among the Company and
Marion Interglobal, Ltd.
99.2 Registration Rights Agreement, dated as of March 27, 1998, among the
Company and Marion Interglobal, Ltd.
99.3 Second Amendment to Bridge Securities Purchase Agreement and Related
Documents, dated as of March 27, 1998, among the Company, Infinity
Investors Limited, Infinity Emerging Opportunities Limited, Summit
Capital Limited (as the transferee of Sandera Partners, L.P.) and
Glacier Capital Limited (as the transferee of Lion Capital Partners,
L.P.)
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EXHIBIT 99.1
PURCHASE AGREEMENT
This PURCHASE AGREEMENT ("AGREEMENT") is entered into as of March 27, 1998
by and between VISUAL EDGE SYSTEMS INC., a Delaware corporation (the "COMPANY"),
with headquarters located at 2424 North Federal Highway, Suite 100, Boca Raton,
Florida 33431 and Marion Interglobal, Ltd. ("PURCHASER") and/or its assigns
(each, a "PURCHASER TRANSFEREE").
RECITALS
A. The Company and Purchaser are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by the
provisions of 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 "SECURITIES ACT").
B. Purchaser desires to purchase, upon the terms and conditions stated in
this Agreement, up to Eleven Million ($11,000,000) U.S. Dollars of shares of the
Company's common stock, par value $0.01 per share (the "COMMON STOCK").
Collectively, the shares of Common Stock to be issued to the Purchaser are
referred to herein as the "COMMON SHARES."
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
in the form attached hereto as Exhibit A (the "REGISTRATION RIGHTS AGREEMENT"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act, the rules and regulations promulgated thereunder and
applicable state securities laws.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Purchaser hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF COMMON SHARES
1.1 PURCHASE OF COMMON SHARES. Subject to the terms and conditions of this
Agreement, the issuance, sale and purchase of the Common Shares shall be
consummated in up to three tranches, which shall occur in up to three closings
(each, a "CLOSING") as follows:
(a) FIRST TRANCHE. Prior to March 31, 1998 (the "FIRST CLOSING DATE"),
and subject to Section 1.3 below and the satisfaction or waiver of the
applicable conditions set forth in Articles VI and VII herein, the Company
shall issue and sell to the Purchaser, and the Purchaser agrees to purchase
from the Company, 1,200,000 Common Shares for an
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aggregate consideration of $3,000,000, or $2.50 per Common Share. In
addition, the Purchaser shall receive an aggregate of 1,200,000 additional
Common Shares as a transaction fee. The events described in this Section
1(a) are referred to herein as the "FIRST TRANCHE."
(b) SECOND TRANCHE. On the sixtieth (60th) day after the Company has
provided notice to the Purchaser that all of the Common Shares described in
Sections 1.1(a)-1.1(c) (I.E. an aggregate of 7,200,000 shares of Common
Stock) have been registered (the "SECOND CLOSING DATE") under the
Securities Act on a registration statement that has been declared effective
by the SEC (the "REGISTRATION STATEMENT"), then, subject to Section 1.3
below and the satisfaction or waiver of the applicable conditions set forth
in Articles VI and VII herein, the Company shall issue and sell to the
Purchaser, and the Purchaser agrees to purchase from the Company, 800,000
Common Shares for an aggregate consideration of $2,000,000, or $2.50 per
Common Share. In addition, the Purchaser shall receive an aggregate of
800,000 additional Common Shares as a transaction fee. The events
described in this Section 1(b) are referred to herein as the "SECOND
TRANCHE."
(c) THIRD TRANCHE. On or prior to September 30, 1998 (the "THIRD CLOSING
DATE" and, together with the First Closing Date and the Second Closing
Date, a "CLOSING DATE"), and subject to Section 1.3 below and the
satisfaction or waiver of the applicable conditions set forth in Articles
VI and VII herein, the Company shall issue and sell to the Purchaser, and
the Purchaser agree to purchase from the Company, the number of Common
Shares set forth in the following sentence for an aggregate consideration
of $6,000,000. The number of Common Shares to be issued and sold to the
Purchaser in this third tranche shall be as follows: (i) 3,200,000 Common
Shares if the Third Closing Date occurs on or before June 30, 1998; (ii)
3,000,000 Common Shares if the Third Closing Date occurs between July 1,
1998 and July 31, 1998; (iii) 2,823,529 Common Shares if the Third Closing
Date occurs between August 1, 1998 and August 31, 1998; and (iv) 2,666,667
Common Shares if the Third Closing Date occurs between September 1, 1998
and September 30, 1998. The events described in this Section 1(c) are
referred to herein as the "THIRD TRANCHE." The $6,000,000 raised by the
Company in the Third Tranche shall be used to repay and redeem, as
applicable, certain of the Company's outstanding convertible notes and
Series A Preferred Stock on the terms as set forth in the agreement (the
"INFINITY AGREEMENT") attached hereto as Exhibit B between the Company and
certain investment funds (the "INFINITY FUNDS") who hold certain of the
Company's outstanding securities.
1.2 FORM OF PAYMENT. On each Closing Date, the Purchaser shall pay the
purchase price payable for the Common Shares issued and sold on such date by
wire transfer to the account designated by the Company, upon satisfaction of the
applicable Closing conditions as of each Closing Date as set forth in Articles
VI and VII herein.
1.3 SHAREHOLDER APPROVAL. In no event shall the aggregate number of
shares to be issued and sold by the Company to the Purchaser (i) on any single
Closing Date or (ii) on one or more Closing Dates, exceed 20% of the number of
shares of Common Stock outstanding as of such date
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(the "MAXIMUM NUMBER OF SHARES") unless the Company has received Shareholder
Approval (as hereinafter defined) with respect to such issuances of Common
Shares that exceed the Maximum Number of Shares. "SHAREHOLDER APPROVAL" means
the approval of the Company's stockholders, in accordance with Nasdaq Rule
4460(i), to the issuance of a number of shares of Common Stock to the Purchaser
in excess of the Maximum Number of Shares. In the event that the aggregate
number of shares to be issued and sold by the Company to the Purchaser (i) on
any single Closing Date or (ii) on one or more Closing Dates, exceeds the
Maximum Number of Shares, the number of Common Shares that exceeds the Maximum
Number of Common Shares shall be placed into escrow in accordance with the terms
of the Escrow Agreement attached hereto as Exhibit C (the "ESCROW AGREEMENT").
The Escrow Agreement shall provide that, upon notice by the Company to the
Escrow Agent (as defined therein) that Shareholder Approval has occurred,
certificates evidencing the escrowed Common Shares shall be delivered to the
Purchaser. A form of the letter to be delivered by certain of the Company's
stockholders listed on Schedule 7.1(v), stating that they will vote in favor of
the issuance of a number of Common Shares to the Purchaser in excess of the
Maximum Number of Shares, is attached hereto as Exhibit D.
1.4 CLOSING. Each Closing will take place at the offices of Morgan, Lewis
&Bockius LLP, 101 Park Avenue, New York, New York 10178, or at such other place
as the Company and the Purchaser mutually agree, at 10:00 A.M. local time, on
such applicable Closing Date.
ARTICLE II
PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser represents and warrants to the Company as of the date hereof,
and as of the date of each Closing, solely with respect to itself and its
purchase hereunder, as set forth in this Article II: The Purchaser makes no
other representations or warranties, express or implied, to the Company in
connection with the transactions contemplated hereby and any and all prior
representations and warranties, if any, which may have been made by the
Purchaser to the Company in connection with the transactions contemplated hereby
shall be deemed to have been merged in this Agreement and any such prior
representations and warranties, if any, shall not survive the execution and
delivery of this Agreement.
2.1 INVESTMENT PURPOSE. Purchaser is purchasing the Common Shares for
Purchaser's own account for investment only and not with a view toward or in
connection with the public sale or distribution thereof in violation of the
applicable securities laws. Purchaser will not, directly or indirectly, offer,
sell, pledge or otherwise transfer the Common Shares or any interest therein
except pursuant to transactions that are exempt from the registration
requirements of the Securities Act and/or sales registered under the Securities
Act, the rules and regulations promulgated pursuant thereto and applicable state
securities laws. Purchaser understands that Purchaser must bear the economic
risk of this investment until the Common Shares are registered as contemplated
by the Registration Rights Agreement pursuant to the Securities Act and any
applicable state securities laws or an exemption from such registration is
available.
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2.2 ACCREDITED INVESTOR STATUS. Purchaser is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D and Purchaser has indicated
on a duly executed Investor Questionnaire and Representation Agreement in the
form attached hereto as Exhibit E and delivered to the Company in which capacity
that it so qualifies as an "accredited investor."
2.3 INFORMATION. Purchaser or its counsel have been furnished all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Common Shares which have been
specifically requested by Purchaser, including without limitation the Company's
Annual Reports on Form 10-KSB/A for the year ended December 31, 1996 and a form
of the Company's Annual Report on Form 10-KSB for the year ended December 31,
1997, substantially in the form in which it will be filed with the SEC on or
before March 31, 1997 (the "1997 FORM 10-KSB"); Quarterly Report on Form 10-QSB
for the period ended September 30, 1997; Quarterly Report on Form 10-QSB for the
period ended June 30, 1997; Quarterly Report on Form 10-QSB for the period ended
March 31, 1997; Current Reports on Form 8-K filed with the SEC on April 14,
1997, June 23, 1997, June 25, 1997, November 14, 1997, December 30, 1997 and
February 9, 1998, each as amended (if applicable); and Proxy Statement filed
with the Securities and Exchange Commission ("SEC") on April 7, 1997 (such
documents collectively, the "SEC DOCUMENTS"). Purchaser has been afforded the
opportunity to ask questions of the Company and has received what Purchaser
believes to be complete and satisfactory answers to any such inquiries.
Purchaser understands that Purchaser's investment in the Common Shares involves
a high degree of risk, including without limitation the risks and uncertainties
disclosed in the SEC Documents. Subject to the foregoing, Purchaser
acknowledges the disclosures presented under the caption "Risk Factors" in the
Company's Form 10-KSB/A for the year ended December 31, 1996, and the 1997 Form
10-KSB, and the incorporation of those disclosures by reference herein.
2.4 GOVERNMENTAL REVIEW. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Common Shares.
2.5 TRANSFER OR RESALE. Purchaser understands that (i) except as provided
in the Registration Rights Agreement, the Common Shares have not been and are
not being registered under the Securities Act or any state securities laws, and
may not be offered, sold, pledged or otherwise transferred unless subsequently
registered thereunder or an exemption from such registration is available (which
exemption the Company expressly agrees may be established as contemplated in
clauses (b) and (c) of Section 5.1 hereof); (ii) any sale of such Common Shares
made in reliance on Rule 144 under the Securities Act (or a successor rule)
("RULE 144") may be made only in accordance with the terms of Rule 144 and
further, if Rule 144 is not applicable, any resale of such Common Shares without
registration under the Securities Act under circumstances in which the seller
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the SEC thereunder; and (iii) neither the
Company nor any other person is under any obligation to register such Common
Shares under the Securities Act or any state securities laws or
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to comply with the terms and conditions of any exemption thereunder (in each
case, other than pursuant to this Agreement or the Registration Rights
Agreement).
2.6 LEGENDS. Purchaser understands that, subject to Article V hereof, the
certificates for the Common Shares, until such time as the Common Shares have
been registered under the Securities Act as contemplated by the Registration
Rights Agreement or otherwise may be sold by Purchaser pursuant to Rule 144
(subject to and in accordance with the procedures specified in Article V
hereof), will bear a restrictive legend (the "LEGEND") in substantially the
following form:
THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. THE SHARES OF COMMON STOCK
REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATING TO SUCH SHARES OF
COMMON STOCK UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS OR THE COMPANY IS FURNISHED WITH AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO IT THAT SUCH REGISTRATION IS
NOT REQUIRED.
2.7 ORGANIZATION AND QUALIFICATION. Purchaser is a corporation duly
organized and existing in good standing under the laws of its jurisdiction of
incorporation, and has the requisite corporate power to own its properties and
to carry on its business as now being conducted. Purchaser is duly qualified as
a foreign corporation to do business and is in good standing in every
jurisdiction where the failure so to qualify or be in good standing could have a
material adverse effect on the transactions contemplated hereby.
2.8 AUTHORIZATION: ENFORCEMENT. (a) Purchaser has the requisite
corporate power and authority to enter into and perform this Agreement and the
Registration Rights Agreement, and to perform its obligations hereunder in
accordance with the terms hereof; (b) the execution, delivery and performance of
this Agreement and the Registration Rights Agreement by the Purchaser and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action and no further consent or
authorization of the Company, its board of directors, or its stockholders or any
other person, body or agency, and no filing with any person, body or agency, is
required with respect to any of the transactions contemplated hereby or thereby;
(c) this Agreement and the Registration Rights Agreement have been duly executed
and delivered by the Purchaser; and (d) this Agreement and the Registration
Rights Agreement constitute legal, valid and binding obligations of the
Purchaser enforceable against it in accordance with their respective terms,
except (i) to the extent that such validity or enforceability may be subject to
or affected by any bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights or remedies of creditors
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generally, or by other equitable principles of general application, and (ii) as
rights to indemnity and contribution under the Registration Rights Agreement may
be limited by Federal or state securities laws.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as of the date hereof,
and as of the date of each Closing, as set forth in this Article III. The
Company makes no other representations or warranties, express or implied, to the
Purchaser in connection with the transactions contemplated hereby and any and
all prior representations and warranties, if any, which may have been made by
the Company to the Purchaser in connection with the transactions contemplated
hereby shall be deemed to have been merged in this Agreement and any such prior
representations and warranties, if any, shall not survive the execution and
delivery of this Agreement.
3.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized and existing in good standing under the laws of Delaware, and has the
requisite corporate power to own its properties and to carry on its business as
now being conducted. The Company is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction where the failure so
to qualify or be in good standing would have a Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" means any effect which is (or could reasonably be
expected to be) materially adverse to the business, operations, properties,
financial condition or operating results of the Company, taken as a whole, or on
the transactions contemplated hereby.
3.2 AUTHORIZATION: ENFORCEMENT. (a) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and the
Registration Rights Agreement, and to issue and sell the Common Shares in
accordance with the terms hereof; (b) the execution, delivery and performance of
this Agreement and the Registration Rights Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including without limitation the issuance of the Common Shares) have been duly
authorized by all necessary corporate action and, except as contemplated by
Section 1.3 herein or as set forth on Schedule 3.2 hereof, no further consent or
authorization of the Company, its board of directors, or its stockholders or any
other person, body or agency, and no filing with any person, body or agency, is
required with respect to any of the transactions contemplated hereby or thereby;
(c) this Agreement and the Registration Rights Agreement have been duly executed
and delivered by the Company; and (d) this Agreement and the Registration Rights
Agreement constitute legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except (i) to the extent that such validity or enforceability may be subject to
or affected by any bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights or remedies of creditors generally, or by other equitable
principles of general application, and (ii) as rights to indemnity and
contribution under the Registration Rights Agreement may be limited by Federal
or state securities laws.
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3.3 CAPITALIZATION. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued and
outstanding and the number of shares reserved for issuance pursuant to the
Company's stock option plans is set forth on Schedule 3.3. No shares of
capital stock of the Company (including the Common Shares) are, and no such
shares will be, subject to preemptive rights or any other similar rights of the
stockholders of the Company or of any other person or entity or any liens or
encumbrances. Except as disclosed in Schedule 3.3, as of the date of this
Agreement and as of each Closing Date, (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, or securities or rights convertible
into or exercisable or exchangeable for, any shares of capital stock of the
Company, or contracts, commitments, understandings or arrangements by which the
Company is or may become bound to issue additional shares of Common Stock, and
(ii) there are no agreements or arrangements under which the Company is
obligated to register the sale of any of its securities under the Securities Act
(except the Registration Rights Agreement). The Company has furnished to
Purchaser true and correct copies of the Company's Certificate of Incorporation
as in effect on the date hereof ("CERTIFICATE OF INCORPORATION"), and the
Company's By-laws as in effect on the date hereof (the ("BY-LAWS").
3.4 ISSUANCE OF SHARES. The Common Shares have been duly authorized and,
upon issuance and sale in accordance with the terms hereof, will be validly
issued, fully paid and non-assessable. The Common Shares shall be entitled to
be traded on the same markets as the other shares of Common Stock of the Company
are traded, and will not be subject to preemptive rights or other similar rights
of stockholders of the Company or of any other person or entity.
3.5 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Company, and the
consummation by the Company of the transactions contemplated hereby and thereby,
will not (a) result in a violation of the Certificate of Incorporation or
By-laws or (b) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company is a party, or result in
a material violation of any law, rule, regulation, order, judgment or decree
applicable to the Company or by which any property or asset of the Company is
bound or affected (except as contemplated by Section 1.3 herein or except for
such possible conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect or that are related to any inaccuracies or
omissions in any representation or warranty of the Purchaser set forth herein).
Except as set forth on Schedule 3.5, or except (A) such as may be required under
the Securities Act in connection with the performance of the Company's
obligations under the Registration Rights Agreement, (B) filing of a Form D with
the SEC, (C) filing of any required Nasdaq SmallCap listing applications and
(D) compliance with the state securities or Blue Sky laws of applicable
jurisdictions, the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or the
Registration Rights Agreement or to perform its obligations in accordance with
the terms hereof or thereof.
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3.6 SEC DOCUMENTS. Except as disclosed in Schedule 3.6, since December
31, 1996 the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"). The Company has made available to the Purchaser true and
complete copies of the SEC Documents, except for exhibits, schedules and
incorporated documents. The financial statements of the Company included in the
SEC Documents have been prepared in accordance with U.S. generally accepted
accounting principles, consistently applied, and the rules and regulations of
the SEC during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they do not include footnotes or are condensed
or summary statements) and, fairly present in all material respects the
financial position of the Company as of the dates thereof and the results of
its operations and cash flow for the periods then ended (subject, in the case of
unaudited statements, to normal, immaterial year-end audit adjustments).
3.7 ABSENCE OF CERTAIN CHANGES. Since December 31, 1997, there has been
no Material Adverse Effect on the Company, except as disclosed in Schedule 3.7
or as disclosed in the SEC Documents.
3.8 ABSENCE OF LITIGATION. Except as disclosed in Schedule 3.8 or in the
SEC Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, or self-regulatory
organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its directors or officers in their
capacities as such, which could reasonably be expected to result in an
unfavorable decision, ruling or finding which would have a Material Adverse
Effect or would adversely affect 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.
3.9 S-3 REGISTRATION. The Company is currently eligible to register the
resale of its Common Stock on a registration statement on Form S-3 under the
Securities Act.
3.10 NO GENERAL SOLICITATION. Neither the Company nor any distributor
participating on the Company's behalf in the transactions contemplated hereby
(if any) nor any person acting for the Company, or any such distributor, has
conducted any "general solicitation," as described in Rule 502(c) under
Regulation D, with respect to any of the Common Shares being offered hereby.
3.11 NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would either require registration of
any of the Common Shares under the Act or prevent the parties hereto from
consummating, or delay or interfere with the consummation of, the transactions
contemplated hereby pursuant to an
8
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exemption from the registration under the Securities Act pursuant to the
provisions of Regulation D.
3.12 NO BROKERS. The Company has taken no action, directly or indirectly,
which would give rise to any claim by any person for brokerage commissions,
finder's fees or similar payments by Purchaser relating to this Agreement or the
transactions contemplated hereby, except for dealings with Evan Bines the fees
of which shall be paid in full by the Company.
3.13 INTELLECTUAL PROPERTY. Except as disclosed in the SEC Documents, the
Company owns, is licensed to use, or possesses adequate and enforceable rights
to use all material patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, copyright applications,
licenses, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures) and
other similar rights and proprietary knowledge (collectively, "INTANGIBLES")
used or necessary for the conduct of its business as described in the 1997 Form
10-KSB.
3.14 CERTAIN TRANSACTIONS. Except as disclosed in the SEC Documents and
except for arm's length transactions pursuant to which the Company makes
payments in the ordinary course of business upon terms no less favorable than
the Company could obtain from third parties, none of the officers, directors, or
employees of the company is presently a party to any transaction with the
Company (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
ARTICLE IV
COVENANTS
4.1 BEST EFFORTS. The parties shall use their best efforts to timely
satisfy each of the conditions described in Articles VI and VII of this
Agreement.
4.2 SECURITIES LAWS. The Company agrees to timely file a Form D with
respect to the Common Shares with the SEC as required under Regulation D and to
provide a copy thereof to each Purchaser promptly after such filing.
4.3 REPORTING STATUS. So long as the Purchaser or a Purchaser Transferee
beneficially owns any of the Common Shares, (a) the Company shall timely file
all reports required to be filed with the SEC pursuant to the Exchange Act, and
the Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and
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regulations thereunder would permit such termination, and (b) the Company will
maintain its ability and eligibility to register the resale of its Common Shares
on Form S-3.
4.4 INFORMATION. Upon the request of the Purchaser or any Purchaser
Transferee, the Company agrees to send the following reports to the Purchaser or
Purchaser's Transferee until the Purchaser and Purchaser's Transferee transfers,
assigns or sells all of its Common Shares in transactions in which the
transferee is (unless such transferee is an affiliate) not subject to securities
law resale restrictions: (a) a copy of its Annual Report on Form 10-KSB, its
Quarterly Reports on Form 10-QSB, any proxy statements and any Current Reports
on Form 8-K; and (b) copies of all press releases issued by the Company. The
Company further agrees to promptly provide to the Purchaser and Purchaser's
Transferee any information with respect to the Company, its properties, or its
business or Purchaser's investment as the Purchaser and Purchaser's Transferee
may reasonably request; provided, however, that the Company shall not be
required to give the Purchaser any material nonpublic information.
4.5 PROSPECTUS DELIVERY REQUIREMENT. The Purchaser understands that the
Securities Act may require delivery of a prospectus relating to the Common
Shares in connection with any sale thereof pursuant to a registration statement
under the Securities Act covering the resale by the Purchaser of the Common
Shares being sold, and the Purchaser shall comply with the applicable prospectus
delivery requirements of the Securities Act in connection with any such sale.
4.6 CORPORATE EXISTENCE. So long as the Purchaser or any Purchaser
Transferee beneficially owns any Common Shares, the Company shall maintain its
corporate existence, except in the event of a merger, consolidation or sale of
all or substantially all of the Company's assets, as long as the surviving or
successor entity in such transaction (i) assumes the Company's obligations
hereunder and under the Registration Rights Agreement entered into in connection
herewith and (ii) is a publicly traded corporation whose common stock is listed
for trading on the Nasdaq SmallCap Market, the Nasdaq National Market, the New
York Stock Exchange or the AMEX.
4.7 USE OF PROCEEDS. The Company covenants that, in the event that the
Third Tranche is consummated, the entire $6,000,000 of proceeds raised by the
Company in the Third Tranche shall be used to repay and redeem, as applicable,
certain of the Company's outstanding convertible notes and Series A Preferred
Stock on the terms as set forth in the Infinity Agreement attached hereto as
Exhibit B between the Company and the Infinity Funds.
ARTICLE V
LEGEND REMOVAL, TRANSFER, CERTAIN SALES, ADDITIONAL SHARES
5.1 REMOVAL OF LEGEND. The Legend shall be removed and the Company shall
issue, or shall cause to be issued, a certificate without such Legend to the
holder of Common Shares upon which it is stamped, if, (a) the resale of such
Common Shares is registered under the Securities Act or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions and reasonably satisfactory
to the
10
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Company and its counsel (the reasonable cost of which shall be borne by the
Purchaser) to the effect that a public sale or transfer of such Common Shares
may be made without registration under the Securities Act pursuant to an
exemption from such registration requirements. The Purchaser agrees to sell all
registered Common Shares, including those represented by a certificate(s) from
which the Legend has been removed, or which were originally issued without the
Legend, pursuant to an effective registration statement, in accordance with the
manner of distribution described in such registration statement and to deliver a
prospectus in connection with such sale or in compliance with an exemption from
the registration requirements of the Securities Act. In the event the Legend is
removed from any certificate evidencing Common Shares or any certificate
evidencing Common Shares is issued without the Legend and such Common Shares are
to be disposed of other than pursuant to the registration statement or pursuant
to Rule 144, then prior to, and as a condition to, such disposition, the
certificate evidencing such Common Shares shall be relegended as provided herein
in connection with any disposition if the subsequent transfer thereof would be
restricted under the Securities Act. Also, in the event the Legend is removed
from any certificate evidencing Common Shares or any certificate evidencing
Common Shares is issued without the Legend and thereafter the effectiveness of a
registration statement covering the resale of such Common Shares is suspended or
the Company determines that a supplement or amendment thereto is required by
applicable securities laws, then upon reasonable advance notice to Purchaser
holding such Common Shares, the Company may require that the Legend be placed on
any such certificate evidencing Common Shares that cannot then be sold pursuant
to an effective registration statement or Rule 144 or with respect to which the
opinion referred to in clause (b) next above has not been rendered, which Legend
shall be removed when such Common Shares may be sold pursuant to an effective
registration statement or Rule 144 or such holder provides the opinion with
respect thereto described in clause (b) next above.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 The obligation of the Company hereunder to issue and sell the Common
Shares to the Purchaser at the Closing is subject to the satisfaction, AS OF
EACH CLOSING DATE, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
(i) The Purchaser shall have executed this Agreement and the Registration
Rights Agreement and delivered the same to the Company. The Purchaser shall
have completed and executed the Investor Questionnaire and delivered the same to
the Company.
(ii) The Purchaser shall have wired the purchase price for the Common
Shares being purchased on such Closing Date to the account of the Company.
(iii) The representations and warranties of the Purchaser shall be true and
correct in all material respects as of the date when made and as of each Closing
Date as though made at that time
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(except for representations and warranties that speak as of a specific date,
which representations and warranties shall be true and correct as of such date),
and the Purchaser shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Purchaser at or
prior to the Closing.
(iv) The Escrow Agreement shall have been validly executed and delivered
by the Purchaser and the Escrow Agent.
(v) The Infinity Agreement attached hereto as Exhibit B shall have been
validly executed and delivered by the Purchaser and the Infinity Funds.
ARTICLE VII
CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE
7.1 The obligation of the Purchaser hereunder to purchase the Common
Shares to be purchased by it on the date of the Closing is subject to the
satisfaction AS OF EACH DATE OF CLOSING, of each of the following conditions,
provided that these conditions are for the Purchaser's sole benefit and may be
waived by the Purchaser at any time in the Purchaser's sole discretion:
(i) The Company shall have executed this Agreement and the Registration
Rights Agreement and delivered the same to Purchaser.
(ii) The Company shall have delivered to the Purchaser duly issued Common
Shares being so purchased at the Closing, in such number and denominations as
are reasonably requested by Purchaser.
(iii) The representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of each Closing
Date as though made at that time and the Company shall have performed, satisfied
and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the applicable Closing Date. Purchaser shall
have received a certificate, executed by the Chief Executive Officer or Chief
Financial Officer of the Company, dated as of the applicable Closing Date to the
foregoing effect.
(iv) The Escrow Agreement shall have been validly executed and delivered
by the Company and the Escrow Agent.
(v) Purchaser shall have received, from each person or entity listed on
Schedule 7.1(v), a letter stating that such person or entity, as the case may
be, will vote their shares so that Shareholder Approval is received, and the
Company may issue a number of Common Shares to the Purchaser that exceeds the
Maximum Number of Shares.
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(vi) The Infinity Agreement attached hereto as Exhibit B shall have been
validly executed and delivered by the Company and the Infinity Funds.
7.2 The obligation of the Purchaser hereunder to purchase the Common
Shares to be purchased by it on the Second Closing Date and the Third Closing
Date is subject to the satisfaction AS OF EACH SUCH CLOSING DATE, of each of the
following conditions, provided that these conditions are for the Purchaser's
sole benefit and may be waived by the Purchaser at any time in the Purchaser's
sole discretion:
(i) The conditions set forth in Section 7.1 above shall continue to be
satisfied.
(ii) The Company shall have delivered to the Purchaser a notice that
Shareholder Approval had occurred with respect to the issuance of a number of
Common Shares to the Purchaser in excess of the Maximum Number of Shares.
(iii) The Company shall have delivered to the Purchaser notice that the
Registration Statement had been declared effective by the SEC.
7.3 The obligation of the Purchaser hereunder to purchase the Common
Shares to be purchased by it on the Third Closing Date is subject to the
satisfaction of each of the following conditions, provided that these conditions
are for the Purchaser's sole benefit and may be waived by the Purchaser at any
time in the Purchaser's sole discretion:
(i) The conditions set forth in Sections 7.1 and 7.2 above shall continue
to be satisfied.
(ii) The Purchaser, in its sole discretion, shall be satisfied that the
Company has met or exceeded the financial targets expected by the Purchaser, and
has delivered a letter to the Company setting forth its satisfaction with the
Company's performance under this Section 7.3(ii).
ARTICLE VIII
GOVERNING LAW; MISCELLANEOUS
8.1 GOVERNING LAW: JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York. The parties
hereto irrevocably consent to the jurisdiction of the United States federal
courts and state courts located in the State of New York in any suit or
proceeding based on or arising under this Agreement or the transactions
contemplated hereby and irrevocably agree that all claims in respect of such
suit or proceeding may be determined in such courts.
8.2 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all of
which counterparts shall be
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considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.
8.3 HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
8.4 SEVERABILITY. 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.
8.5 ENTIRE AGREEMENT: AMENDMENTS. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Purchaser makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be waived other than by an instrument in
writing signed by the party to be charged with enforcement and no provision of
this Agreement may be amended other than by an instrument in writing signed by
the Company and the Purchaser.
8.6 NOTICE. Any notice herein required or permitted to be given shall be
in writing and may be personally served or delivered by nationally-recognized
overnight courier or by facsimile machine confirmed telecopy, and shall be
deemed delivered at the time and date of receipt (which shall include telephone
line facsimile transmission). The addresses for such communications shall be:
IF TO THE COMPANY:
Visual Edge Systems Inc.
Attn: Mr. Earl T. Takefman, CEO
2424 North Federal Highway, Suite 100
Boca Raton, Florida 33431
Telephone: (561) 750-7559
Telecopy: (561) 750-7299
with a copy to:
Morgan, Lewis & Bockius LLP
Attn: David W. Pollak, Esq.
101 Park Avenue, 45th Floor
New York, NY 10178-0060
Telephone: (212) 309-6058
Telecopy: (212) 309-6273
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IF TO PURCHASER:
Marion Interglobal, Ltd.
12803 Water Point Blvd.
Windermere, Florida 34786
Attn: Mr. Ron Seales
Telephone: (407) 876-5550
Telecopy: (407) 876-5117
Each party shall provide notice to the other party of any change in address.
8.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor the Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, the Purchaser may assign all or part of its
rights and obligations hereunder to any of its "affiliates," as that term is
defined under the Securities Act, without the consent of the Company so long as
such affiliate is an accredited investor (within the meaning of Regulation D
under the Securities Act) and agrees in writing to be bound by this Agreement.
This provision shall not limit the Purchaser's right to transfer the Common
Shares pursuant to the terms of this Agreement or to assign the Purchaser's
rights hereunder to any such transferee pursuant to the terms of this Agreement.
8.8 THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
8.9 SURVIVAL. The representations and warranties of the Company and the
Purchaser and the agreements and covenants set forth herein shall survive for
one (1) year after the Closing hereunder.
8.10 FURTHER ASSURANCES. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
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IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused
this Agreement to be duly executed as of the date first above written.
PURCHASER:
MARINE INTERGLOBAL, LTD.
By: /s/ Ronald Seale
--------------------------------------
Name: Ronald Seale
Title: Senior Managing Director
VISUAL EDGE SYSTEMS INC.
By: /s/ Earl Takefman
--------------------------------------
Name: Earl Takefman
Title: Chief Executive Officer
16
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EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT B
INFINITY AGREEMENT
<PAGE>
EXHIBIT C
ESCROW AGREEMENT
<PAGE>
EXHIBIT D
Letter from Certain Stockholders of the Company
<PAGE>
Exhibit E
FORM OF INVESTOR QUESTIONNAIRE
<PAGE>
EXHIBIT 99.2
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT, dated as of March 27, 1998 (the
"Agreement"), is made by and between VISUAL EDGE SYSTEMS INC., a Delaware
corporation (the "Company"), and MARION INTERGLOBAL, LTD. (the "Investor").
WITNESSETH:
WHEREAS, in connection with the Purchase Agreement dated as of the date
hereof between the Investor and the Company (the "Purchase Agreement"), the
Company has agreed, upon the terms and subject to the conditions of the Purchase
Agreement, to issue and sell to the Investor Eleven Million ($11,000,000) U.S.
Dollars of shares of the Company's Common Stock, par value $0.01 per share (the
"Common Stock"). Collectively, the shares of common stock to be issued to the
Purchaser are collectively referred to herein as the "Common Shares." In
connection with the sale of the Common Shares to the Investor, the Investor will
be entitled to registration rights as set forth in this Agreement;
WHEREAS, to induce the Investor to execute and deliver the Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws with respect to the Common Shares;
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 Company and the Investor
hereby agree as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Purchase Agreement.
As used in this Agreement, the following terms shall have the following
meanings:
(a) "HOLDERS" are stockholders of the Company who, by virtue of
agreements with the Company, are entitled to include their securities in certain
Registration Statements filed by the Company.
(b) "INVESTOR" refers to the investor who purchased Common Shares
from the Company pursuant to the Purchase Agreement and includes any transferee
or assignee of the Investor who agrees to become bound by the provisions of this
Agreement in accordance with Section 8 hereof.
(c) "REGISTRABLE SECURITIES" means the Common Shares, together with
any shares of Common Stock which may be issued as a dividend or other
distribution and any
<PAGE>
additional shares of Common Stock which are required to be included in a
Registration Statement pursuant to Section 2(a) below.
(d) "REGISTRATION PERIOD" means the period between the date of this
Agreement and the earlier of (i) the date on which all of the Registrable
Securities have been sold, or (ii) the date on which the Registrable Securities
(in the opinion of the Company's counsel) may be sold without registration.
(e) "REGISTRATION STATEMENT" means a registration statement filed
with the Securities and Exchange Commission (the "SEC") under the 1933 Act.
(f) The terms "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement in
compliance with the 1933 Act and applicable rules and regulations thereunder,
and the declaration or ordering of effectiveness of such Registration Statement
by the SEC.
2. REGISTRATION.
(a) MANDATORY REGISTRATION. The Company will file a Registration
Statement with the SEC registering the Registrable Securities for resale within
twenty (20) business days of the First Closing Date of the purchase of the
Common Shares (the "Closing Date"). The Company shall use its best efforts to
cause such Registration Statement to be declared effective by the SEC as soon as
practicable after filing. Such best efforts shall include, but not be limited
to, promptly responding to all comments received from the staff of the SEC.
(b) PIGGYBACK REGISTRATIONS. If, at any time prior to the expiration
of the Registration Period, the Company decides to register any of its
securities for its own account or for the account of others (excluding
registrations relating to equity securities to be issued in connection with an
acquisition of any entity or business or in connection with stock option or
other employee benefit plans), the Company will promptly give the Investor
written notice thereof, and will use its best efforts to include in such
registration all or any part of the Registrable Securities so requested by the
Investor (excluding any Registrable Securities previously included in a
Registration Statement). The Investor's request for registration must be given
to the Company in writing within ten (10) days after receipt of the notice from
the Company. If the registration for which the Company gives notice is a public
offering involving an underwriting, the Company will so advise the Investor as
part of the above-described written notice. In such event, if the managing
underwriter(s) of the public offering impose a limitation on the number of
shares of Common Stock which may be included in the Registration Statement, then
the Company will be obligated to include only such limited portion, if any, of
the Registrable Securities with respect to which the Investor has requested
inclusion hereunder. Any exclusion of Registrable Securities shall be made
pro-rata among all Holders of the Company's securities seeking to include shares
of Common Stock in proportion to the number of shares of Common Stock sought to
be included by such Holders. No right to registration of Registrable
-2-
<PAGE>
Securities under this Section 2(b) shall be construed to limit in any way the
registration required under Section 2(a) above. The obligations of the Company
under this Section 2(b) will expire upon the earlier of: (i) the effectiveness
of the Registration Statement filed pursuant to Section 2(a) above; (ii) after
the Company has afforded the opportunity for the Investor to exercise
registration rights under this Section 2(b) for two registrations; or (iii) when
all of the Registrable Securities held by the Investor may be sold by the
Investor under Rule 144 under the 1933 Act without being subject to any volume
restrictions.
(c) LATE REGISTRATION PAYMENTS. If the Registration Statement
required pursuant to Section 2(a) above has not been declared effective by June
30, 1998 (the "Required Effective Date"), the Company will make a cash payment
to the Investor in the amount of $3 million as compensation for such delay.
Such payment will be made the business day following the Required Effective
Date.
3. ADDITIONAL OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall have the following
additional obligations:
(a) The Company shall keep the Registration Statement effective
pursuant to Rule 415 under the 1933 Act at all times during the Registration
Period as defined in Section l(d) above.
(b) The Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) filed by the Company
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading.
The Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during such period, shall comply with the provisions
of the 1933 Act with respect to the disposition of all Registrable Securities of
the Company covered by the Registration Statement until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the sellers thereof as set forth in the Registration
Statement.
(c) Upon the request of the Investor, the Company shall furnish to
the Investor (i) promptly after the same is prepared and publicly distributed,
filed with the SEC or received by the Company, one copy of the Registration
Statement and any amendment thereto; each preliminary prospectus and final
prospectus and each amendment or supplement thereto; and (ii) such number of
copies of a prospectus, including a preliminary prospectus, and all amendments
and supplements thereto, and such other documents as the Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by the Investor.
-3-
<PAGE>
(d) The Company shall use its best efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement under
such other securities or blue sky laws of such jurisdictions as the Investor
reasonably requests, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions.
Notwithstanding the foregoing provision, the Company shall not be required in
connection therewith or as a condition thereto to (i) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (ii) subject itself to general taxation in any such
jurisdiction, (iii) file a general consent to service of process in any such
jurisdiction, (iv) provide any undertakings that cause more than nominal expense
or burden to the Company or (v) make any change in its charter or bylaws.
(e) In the event the Investor requests underwriters for such
offering, such underwriters shall be selected by the Company and will be
reasonably acceptable to the Investor and the Company shall enter into and
perform its obligations under an underwriting agreement in usual and customary
form including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering. The Investor shall
be responsible for payment of the attorney fees and costs incurred in connection
with such underwritten offering in accordance with Section 5.
(f) The Company shall notify the Investor of the happening of any
event of which the Company has knowledge as a result of which the prospectus
included in the Registration Statement as then in effect includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (a "Suspension Event").
The Company shall make such notification as promptly as practicable after the
Company becomes aware of such Suspension Event, shall promptly use its best
efforts to prepare a supplement or amendment to the Registration Statement to
correct such untrue statement or omission, and shall deliver a number of copies
of such supplement or amendment to each Investor as such Investor may reasonably
request. Notwithstanding the foregoing provision, the Company shall not be
required to maintain the effectiveness of the Registration Statement or to amend
or supplement the Registration Statement for a period (a "Delay Period")
expiring upon the earlier to occur of (i) the date on which such material
information is disclosed to the public or ceases to be material or (ii) the
date on which the Company is able to comply with its disclosure obligations and
SEC requirements related thereto.
(g) The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement
and, if such an order is issued, shall use its best efforts to obtain the
withdrawal of such order at the earliest possible
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<PAGE>
time and to notify the Investor (or, in the event of an underwritten offering,
the managing underwriters) of the issuance of such order and the resolution
thereof.
(h) The Company shall permit a single firm of counsel designated by
the Investor (or Investors) who hold a majority in interest of the Registrable
Securities being sold pursuant to such registration to review the Registration
Statement and all amendments and supplements thereto (as well as all requests
for acceleration or effectiveness thereof) a reasonable period of time prior to
their filing with the SEC.
(i) The Company shall make generally available to its security
holders as soon as practical, but not later than ninety (90) days after the
close of the period covered thereby, an earning statement (in a form complying
with the provisions of Rule 158 under the 1933 Act) covering a twelve-month
period beginning not later than the first day of the Company's fiscal quarter
following the date of the Registration Statement.
(j) At the request of the Investor the Company shall furnish on the
date that Registrable Securities are delivered to an underwriter for sale in
connection with the Registration Statement (i) a letter, dated such date, from
the Company's independent certified public accountants in form and substance as
is customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters; and (ii) an
opinion, dated such date, from counsel representing the Company for purposes of
such Registration Statement, in form and substance as is customarily given in an
underwritten public offering, addressed to the underwriters and the Investor.
(k) The Company shall make available for inspection by the Investor,
any underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by any such
Investor or underwriter (collectively, the "Inspectors"), all pertinent
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably necessary to
enable each Inspector to exercise its due diligence responsibility, and cause
the Company's officers, directors and employees to supply all information which
any Inspector may reasonably request for purposes of such due diligence;
provided, however, that each Inspector shall hold in confidence and shall not
make any disclosure (except to an Investor) of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court or government body of competent
jurisdiction, or (iii) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company shall not be required to disclose any confidential
information in such Records to any Inspector until and unless such Inspector
shall have entered into confidentiality agreements (in form and substance
satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3(k). The Investor agrees that it
shall, upon
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<PAGE>
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at the Company's expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential. Nothing herein shall be deemed to
limit the Investor's ability to sell Registrable Securities in a manner which is
otherwise consistent with applicable laws and regulations.
(l) The Company shall use its best efforts either to (i) cause all
the Registrable Securities covered by the Registration Statement to be listed on
a national securities exchange and on each additional national securities
exchange on which similar securities issued by the Company are then listed, if
any, if the listing of such Registrable Securities is then permitted under the
rules of such exchange, or (ii) secure designation of all the Registrable
Securities covered by the Registration Statement as a National Association of
Securities Dealers Automated Quotations System ("Nasdaq") "national market
system security" within the meaning of Rule llAa2-1 of the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
quotation of the Registrable Securities on the Nasdaq National Market System or,
if, despite the Company's best efforts to satisfy the preceding clause (i) or
(ii), the Company is unsuccessful in satisfying the preceding clause (i) or
(ii), to secure listing on a national securities exchange or Nasdaq
authorization and quotation for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities.
(m) The Company shall cooperate with the Investor and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be sold pursuant to the denominations or amounts as
the case may be, and registered in such names as the managing underwriter or
underwriters, if any, or the Investor may reasonably request; and, within five
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel selected by the Company to deliver, to the transfer agent
for the Registrable Securities (with copies to the Investor whose Registrable
Securities are included in such Registration Statement) instructions to the
transfer agent to issue new stock certificates without a legend and an opinion
of such counsel that the Common Shares have been registered.
4. OBLIGATIONS OF THE INVESTOR. In connection with the registration of
the Registrable Securities, the Investor shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to the
Investor that the Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents
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<PAGE>
in connection with such registration as the Company may reasonably request. At
least five (5) business days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify the Investor of the information
the Company requires from such Investor (the "Requested Information") if such
Investor elects to have any of such Investor's Registrable Securities included
in the Registration Statement. If within two (2) business days prior to the
filing date the Company has not received the Requested Information from the
Investor (a "Non-Responsive Investor"), then the Company may file the
Registration Statement without including Registrable Securities of such
Non-Responsive Investor.
(b) The Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless the Investor has notified the Company in writing of
the Investor's election to exclude all of the Investor's Registrable Securities
from the Registration Statement.
(c) In the event the Investor determines to engage the services of an
underwriter as provided in Section 3(e), the Investor agrees to enter into and
perform the Investor's obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Securities, unless the Investor
has notified the Company in writing of the Investor's election to exclude all of
the Investor's Registrable Securities from the Registration Statement.
(d) The Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f) or
3(g), the Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until the Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or 3(g) and, if so directed by
the Company, the Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in the Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
(e) The Investor may not participate in any underwritten registration
hereunder unless the Investor (i) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements, and (ii)
agrees to pay its pro rata share of all underwriting discounts and commissions
and other fees and expenses of investment bankers and any manager or managers of
such underwriting and legal expenses of the underwriter applicable with respect
to its Registrable Securities.
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<PAGE>
(f) Subject to such other reasonable requirements as may be imposed
by the underwriter as a condition of inclusion of a holder's Registrable
Securities in the registration statement, each holder of Registrable Securities
agrees by acquisition of such Registrable Securities, if so required by the
managing underwriter, not to sell, make any short sale of, loan, grant any
option for the purchase of, effect any public sale or distribution of or
otherwise dispose of, except as part of such underwritten registration, any
equity securities of the Company, during such reasonable period of time
requested by the underwriter.
5. EXPENSES OF REGISTRATION. All reasonable expenses, including
underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company, shall be borne by the Investor. The Investor shall bear the fees
and disbursements of its counsel.
6. INDEMNIFICATION. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless the Investor, the directors, if any, of such Investor, the
officers, if any, of such Investor, each person, if any, who controls the
Investor within the meaning of the 1933 Act or the Exchange Act, any underwriter
(as defined in the 1933 Act) for the Investor, the directors, if any, of such
underwriter and the officers, if any, of such underwriter, and each person, if
any, who controls any such underwriter within the meaning of the 1933 Act or the
Exchange Act (each, an "Indemnified Person"), against any losses, claims,
damages, expenses or liabilities (joint or several) (collectively "Claims") to
which any of them become subject under the 1933 Act insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations in the Registration Statement, or any post-effective amendment
thereof, or any prospectus included therein: (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, or any state securities law or any
rule or regulation (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(a):
(A) shall not apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with
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<PAGE>
information furnished to the Company by any Indemnified Person or underwriter
for such Indemnified Person expressly for use in connection with the preparation
of the Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company pursuant to
Section 3(c) hereof; (B) with respect to any preliminary prospectus shall not
inure to the benefit of any such person from whom the person asserting any such
Claim purchased the Registrable Securities that are the subject thereof (or to
the benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if a prospectus was timely
made available by the Company pursuant to Section 3(c) hereof; and (C) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
the Indemnified Persons and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 8.
(b) In connection with any Registration Statement in which the
Investor is participating, the Investor agrees to indemnify and hold harmless,
to the same extent and in the same manner set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
the 1933 Act or the Exchange Act, any underwriter and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder or underwriter
within the meaning of the 1933 Act or the Exchange Act (collectively and
together with an Indemnified Person, an "Indemnified Party"), against any Claim
to which any of them may become subject, under the 1933 Act, insofar as such
Claim arises out of or is based upon any Violation, in each case to the extent
(and only to the extent) that such Violation occurs in reliance upon and in
conformity with information furnished to the Company by the Investor for use in
connection with such Registration Statement, and the Investor will promptly
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of the Investor, which consent shall not be unreasonably
withheld. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investor pursuant to
Section 8. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
(c) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be
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<PAGE>
made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof and this
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying parties. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.
7. CONTRIBUTION. To the extent any indemnification provided for herein
is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6, (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any seller of Registrable Securities
who was not guilty of such fraudulent misrepresentation, and (iii) contribution
by any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.
8. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investor to transferees or assignees of all or any
portion of such securities only if (i) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within three (3) business days after such assignment,
(ii) the Company is, within three (3) business days after such transfer or
assignment, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignee is restricted under the 1933 Act and applicable state
securities laws, (iv) at or before the time the Company received the written
notice contemplated by clause (ii) of this sentence, the transferee or assignee
agrees in writing with the Company to be bound by all of the provisions
contained herein, (v) such transfer shall have been made in accordance with the
applicable requirements of the Purchase Agreement, and (vi) such transferee
shall be an "accredited investor" as that term is defined in Rule 501 of
Regulation D promulgated under the 1933 Act.
9. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Investor. Any amendment or waiver
effected in accordance with this Section 9 shall be binding upon the Investor
and the Company.
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<PAGE>
10. MISCELLANEOUS.
(a) CONFLICTING INSTRUCTIONS. A person or entity is deemed to be a
holder of Registrable Securities whenever such person or entity owns of record
such Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(b) NOTICES. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (with
return receipt requested) or delivered personally or by courier (including a
nationally recognized overnight delivery service) or by facsimile transmission.
Any notice so given shall be deemed effective three days after being deposited
in the U.S. Mail, or upon receipt if delivered personally or by courier or
facsimile transmission, in each case addressed to a party at the following
address or such other address as each such party furnishes to the other in
accordance with this Section 10(b):
IF TO THE COMPANY:
Visual Edge Systems Inc.
Attn: Mr. Earl T. Takefman, CEO
2424 North Federal Highway, Suite 100
Boca Raton, Florida 33431
Telephone: (561) 750-7559
Telecopy: (561) 750-7299
with a copy to:
Morgan, Lewis & Bockius LLP
Attn: David W. Pollak, Esq.
101 Park Avenue, 45th Floor
New York, NY 10178-0060
Telephone: (212) 309-6058
Telecopy: (212) 309-6273
IF TO THE INVESTOR:
Marion Interglobal, Ltd.
12803 Water Point Blvd.
Telephone: (407) 876-5550
Telecopy: (407) 876-5117
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<PAGE>
(c) WAIVER. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
(d) GOVERNING LAW. This Agreement shall be enforced, governed by and
construed in accordance with the laws of the State of New York applicable to the
agreements made and to be performed entirely within such state, without giving
effect to rules governing the conflict of laws, and any disputes arising
hereunder will be adjudicated in federal or state court situated therein. Each
party hereto consents to such venue in New York and to the personal and subject
matter jurisdiction of said courts and, to the extent permitted by applicable
law, agrees to waive any objection as to such jurisdiction or venue, and agrees
not to assert any defense based on lack of jurisdiction or venue.
(e) SEVERABILITY. In the event that any provision of this Agreement
is invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision
hereof.
(f) ENTIRE AGREEMENT. This Agreement and the Purchase Agreement
(including all schedules and exhibits thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein or therein. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof.
(g) SUCCESSORS AND ASSIGNS. Subject to the requirements of Section 8
hereof, this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
(h) USE OF PRONOUNS. All pronouns and any variations thereof refer
to the masculine, feminine or neuter, singular or plural, as the context may
require.
(i) HEADINGS. The headings and subheadings in the Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a
party, may be delivered to the other party hereto by facsimile transmission, and
facsimile signatures shall be binding on the parties hereto.
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<PAGE>
(k) FURTHER ACTS. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(l) CONSENTS. All consents and other determinations to be made by
the Investors pursuant to this Agreement shall be made by Investors holding a
majority of the Registrable Securities.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPANY:
VISUAL EDGE SYSTEMS INC.
By: /s/ Earl Takefman
-----------------------------------
Name: Earl Takefman
Title: Chief Executive Officer
INVESTOR:
MARION INTERGLOBAL, LTD.
By: /s/ Ron Seale
-----------------------------------
Name: Ron Seale
Title: Senior Managing Director
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EXHIBIT 99.3
AGREEMENT AND SECOND AMENDMENT TO BRIDGE
SECURITIES PURCHASE AGREEMENT AND RELATED DOCUMENTS
THIS AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT
AND RELATED DOCUMENTS (the "Amendment") dated as of March __, 1998 among VISUAL
EDGE SYSTEMS INC., a Delaware corporation (the "Company"), INFINITY INVESTORS
LIMITED, INFINITY EMERGING OPPORTUNITIES LIMITED, SUMMIT CAPITAL LIMITED (as the
transferee from SANDERA PARTNERS, L.P.) and GLACIER CAPITAL LIMITED (as the
transferee from LION CAPITAL PARTNERS, L.P.) (collectively, the "Purchasers").
R E C I T A L S:
A. The Company and the Purchasers have entered into that certain Bridge
Securities Purchase Agreement dated as of June 13, 1997 (the "Initial Purchase
Agreement"), as amended by that certain First Amendment to Bridge Securities
Purchase Agreement and Related Documents (the "First Amendment") dated as of
December 31, 1997.
B. The Company and the Purchasers have entered into that certain
Agreement dated as of March 13, 1998 pursuant to which, among other items, the
Company issued to the Purchasers 1,550 additional shares of Preferred Stock (the
"Letter Agreement") (the Initial Purchase Agreement, as amended by the First
Amendment, the Letter Agreement and this Amendment being referred to herein as
the "Purchase Agreement").
C. The Company and the Purchasers now desire to amend the Purchase
Agreement, and certain of the related Financing Documents (as defined in the
Purchase Agreement) executed and delivered in connection therewith in order to
(i) provide for the issuance of additional shares of Common Stock to the
Purchasers, (ii) make certain amendments to the Financing Documents and (iii)
confirm the continued legality, validity and binding effect of the Financing
Documents, as amended by this Amendment.
D. Contemporaneous herewith, the Company and Marion Interglobal, Ltd.
("Marion") have entered into and consummated the transactions contemplated by
that certain Purchase Agreement in the form annexed hereto as Exhibit A (the
"Marion Agreement"), pursuant to which, among other things, Marion has agreed to
invest up to $11,000,000 in the Company, including $3,000,000 of gross cash
proceeds in a first tranche (the "Initial Marion Investment").
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AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 1
(Visual Edge Systems Inc.)
<PAGE>
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as in the
Purchase Agreement.
ARTICLE II
AGREEMENTS
The Company and the Purchasers hereby agree as follows:
SECTION 2.1 CONVERSION TO COMMON STOCK.
(a) The Purchasers shall not, during the period commencing on the date
hereof and ending on December 31, 1998, unless a Material Transaction has
occurred, convert any shares of Preferred Stock or the principal amount of any
of the Convertible Notes into shares of Common Stock (the "Principal
Moratorium").
(b) A Material Transaction shall mean (i) the occurrence of a Change of
Control of the Company, (ii) a transfer of all or substantially all of the
assets of the Company to any Person in a single transaction or series of related
transactions, or (iii) a consolidation or merger of the Company with or in to
another Person (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of the outstanding shares
of Common Stock or in which the Company is the surviving entity, or which is
effected solely to change the jurisdiction of incorporation of the Company). A
Change of Control shall mean after the date of this Amendment and after giving
effect to the consummation of all transactions contemplated under the Marion
Agreement, any Person or group of Persons (within the meaning of Sections 13 and
14 of the Exchange Act and the rules and regulations of the Commission relating
to such sections) shall have acquired beneficial ownership (within the meaning
of Rules 13d-3 and 13d-5 promulgated by the Commission pursuant to the Exchange
Act) of 50.1% or more of the outstanding shares of Common Stock of the Company.
(c) The Principal Moratorium shall not apply and the Purchasers shall be
entitled, at their option, to convert all or any shares of Preferred Stock or
the principal amount of all or any of the Convertible Notes into shares of
Common Stock contemporaneous with or immediately preceding any Material
Transaction.
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AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 2
(Visual Edge Systems Inc.)
<PAGE>
(d) The Principal Moratorium shall be subject to and conditioned upon
consummation of the Initial Marion Investment on the terms set forth in the
Marion Agreement, with the Company supplying to the Purchasers evidence thereof
reasonably satisfactory to the Purchasers (which may include, at the request of
the Purchasers, a written certification from Marion to that effect).
SECTION 2.2 ADDITIONAL COMMON STOCK; REGISTRATIONS.
(a) Contemporaneous herewith, the Company shall issue 100,000 shares of
Common Stock (the "New Shares") to the Purchasers, allocated among the
Purchasers as set forth on SCHEDULE 1 hereto. In addition, if the Company has
not exercised its voluntary redemption right set forth in Section 3.4 of the
Purchase Agreement and redeemed on or before the First Call Date all of the
Preferred Shares and repaid the entire sum due and owing on all of the
Convertible Notes in accordance with the terms thereof (the "Complete Redemption
Event"), then on July 1, 1998 the Company shall issue 200,000 shares of Common
Stock (the "Additional New Shares") to the Purchasers, allocated among the
Purchasers in the same ratios as the New Shares are allocated among the
Purchasers as set forth on SCHEDULE 1 hereto.
(b) The Company hereby covenants and agrees to include within the resale
registration statement to be filed by the Company on Form S-3 with the
Commission contemplated by the Marion Agreement (the "Marion Registration
Statement") all shares of Common Stock (i) owned by the Purchasers as of the
date of this Amendment (including the New Shares and, to the extent legally
permissible, the Additional New Shares), (ii) issuable upon exercise of all
Warrants owned by the Purchasers as of the date of this Amendment, and (iii)
issued as dividends or interest on or before March 31, 1998 with respect to the
Preferred Shares and the Convertible Notes, in each case which have not
previously been registered for resale with the Commission pursuant to
Registration No. 333-40415 as declared effective by the Commission on November
21, 1997 (the "Existing Registration Statement"). The shares of Common Stock
owned by or issuable to the Purchasers which the parties expect to be included
in the Marion Registration Statement are summarized on SCHEDULE 2 attached
hereto.
(c) On or before July 31, 1998 (the "Required Filing Date"), the Company
shall file an additional resale registration statement on Form S-3 with the
Commission (the "Additional Registration Statement") covering (i) any Additional
New Shares (if not included in the Marion Registration Statement) and (ii) any
shares of Common Stock issuable (x) upon conversion of the Preferred Shares and
Convertible Notes or (y) as dividends or interest thereon, not included in the
Existing Registration Statement or the Marion Registration Statement. The
Required Filing Date, shall be extended until August 15, 1998 if, on or about
the Required Filing Date the Company provides written notice to the Purchasers
that the Company reasonably expects (based upon an executed letter of intent,
term sheet or similar document) to secure Qualified Equity Financing in an
amount sufficient to effect a Complete Redemption Event on or before August 15,
1998.
(d) The Company shall use its best lawful efforts to cause the Marion
Registration Statement and the Additional Registration Statement to be declared
effective by the Commission as
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AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 3
(Visual Edge Systems Inc.)
<PAGE>
soon as possible. The Company further covenants and agrees to maintain the
effectiveness of the Existing Registration Statement, the Marion Registration
Statement and the Additional Registration Statement for the periods contemplated
by the Registration Rights Agreement.
(e) The Company covenants and agrees to promptly file a post effective
amendment to the Existing Registration Statement (and to include in the Marion
Registration Statement and the Additional Registration Statement) a change from
Sandera Partners L.P. to Summit Capital Limited, and from Lion Capital Partners,
L.P. to Glacier Capital Limited, as the selling shareholders thereunder.
SECTION 2.3 PURCHASERS SALE RESTRICTIONS.
(a) The Purchasers hereby agree that they shall not sell or otherwise
transfer (including any direct or indirect short sale) in any public resale
under the Existing Registration Statement, Marion Registration Statement or
Additional Registration Statement or pursuant to Rule 144 (the "Resale
Limitation") any shares of Common Stock of the Company owned by them or acquired
by them under the terms of any of the Financing Documents prior to the earlier
to occur of (i) the consummation of a Material Transaction or (ii) March 31,
1999. The parties acknowledge that the number of issued and outstanding shares
of Common Stock owned by the Purchasers as of the date hereof is as summarized
on Schedule 2 hereto.
(b) The Purchasers may, at any time from and after June 30, 1998, resell
in a private transaction exempt from the registration requirements of the
Securities Act any shares of Common Stock owned by the Purchasers or acquired by
them under the terms of any of the Financing Documents without the consent of
the Company, Marion or any other party (the "Private Sale Right"); PROVIDED,
HOWEVER, the transferee thereof must agree in writing to be bound by the Resale
Limitation and the Option Right (as hereafter defined). The Purchasers hereby
authorize the Company to add a legend to all shares of Common Stock owned by the
Purchasers referring to the Resale Limitation, the Option Right and the Right of
First Refusal (as hereafter defined) (including a reference that the Resale
Limitation, Option Right and Right of First Refusal are binding upon any
transferee thereof).
(c) The Purchasers hereby grant to the Company an option (the "Option
Right"), exercisable by the Company or by Marion (as the assignee thereof from
the Company) by written notice to the Purchasers (the "Option Notice") on or
before March 31, 1999 to acquire all, but not less than all, of the shares of
Common Stock of the Company then owned by the Purchasers for a purchase price
equal to (x) if such exercise occurs on or before the First Call Date, $4.50 per
share of Common Stock and (y) if such exercise occurs after the First Call Date,
the greater of (i) $4.50 per share of Common Stock or (ii) the product of 90%
multiplied by the weighted average trading price as reported by Bloomberg, L.P.
for the Common Stock for the twenty (20) Trading Days ending on the date
immediately preceding the delivery of the Option Notice (the "Option Price").
Within three (3) Business Days following the delivery of the Option Notice, (x)
the Company or Marion, as applicable, shall deliver to the Purchasers the
applicable
- --------------------------------------------------------------------------------
AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 4
(Visual Edge Systems Inc.)
<PAGE>
Option Price, and (y) the Purchasers shall deliver to the Company or Marion, as
applicable, the certificates representing the shares of Common Stock acquired
pursuant to the Option Notice.
SECTION 2.4 RIGHT OF FIRST REFUSAL.
(a) If prior to March 31, 1999 the Purchasers receive an offer from a
third party (a "Private Offer") to purchase any or all of the shares of Common
Stock then owned by the Purchasers, less any shares previously sold or
transferred by the Purchasers in compliance with the terms of this Amendment
(the "Remaining Shares"), and the Purchasers desire to accept such Private
Offer, the Purchasers shall promptly send via facsimile a Notice of Offer (as
hereafter defined) to the Company, offering to sell such Remaining Shares to the
Company in accordance with Section 2.4(b) below. Such Notice of Offer shall be
irrevocable for a period of 24 hours from the receipt via facsimile of the
Notice of Offer by the Company. The term "Notice of Offer" shall mean a
document setting forth the price and any other material terms and conditions of
the Private Offer, as well as the name and address of the third party offeror.
(b) Whenever a Private Offer to purchase the Remaining Shares has been
received by the Purchasers which the Purchasers desire to accept, and a Notice
of Offer thereof has been sent to the Company, the parties shall comply with the
following procedures. For a period of 24 hours from its receipt of such Notice
of Offer via facsimile, the Company shall have the right, in its discretion,
without obligation, to purchase all (but not less than all) of the Remaining
Shares so offered (the "Right of First Refusal") at a price equal to and on the
terms specified in the Notice of Offer. If the Company elects to purchase all
of the Remaining Shares so offered, it must send written notice thereof to the
Purchasers within such 24 hour period. Upon exercise by the Company of such
election, the Company shall purchase the Remaining Shares so offered effective
as of the date of delivery of the written notice to the Purchasers, with the
closing thereof occurring within three (3) Business Days thereafter. If the
Company does not elect to purchase the Remaining Shares so offered within this
prescribed time period, the Purchasers shall have the right to sell (the "Sale
Option") the Remaining Shares subject to such Private Offer within three (3)
Business Days after the delivery of the Notice of Offer to the Company, with the
transferee taking such Remaining Shares subject to the terms of the Resale
Limitation and the Option Right. Upon exercise of the Sale Option, the
Purchasers shall be required to consummate such sale at the same price set forth
in the Notice of Offer. In the event such Sale Option is not fully consummated
within three (3) Business Days after the delivery of the Notice of Offer, the
provisions of this Section 2.4 must again be complied with by the Purchasers
prior to any disposition of the Remaining Shares prior to March 31, 1999.
(c) The Company may, at its option, assign the Right of First Refusal to
Marion.
SECTION 2.5 INTEREST AND DIVIDEND PAYMENTS. The Company shall on March
31, 1998, pay to the Purchasers in shares of Common Stock all accrued and unpaid
dividends through March 31, 1998 on the Preferred Stock and all accrued and
unpaid interest on the Convertible Notes through March 31, 1998. Upon the
occurrence of a Complete Redemption Event on or prior to the
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AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 5
(Visual Edge Systems Inc.)
<PAGE>
First Call Date, the Purchasers hereby agree to waive and forgive the obligation
of the Company to pay accrued dividends on the Preferred Shares and accrued
interest on the Convertible Note for the period April 1, 1998 through June 30,
1998.
SECTION 2.6 WARRANTS.
(a) The New Warrants (as such term is defined in the Purchase Agreement)
are hereby amended by changing the exercise price set forth therein from $4.00
per share to $3.25 per share.
(b) The Existing Warrants (as such term is defined in the First Amendment)
(including the 30,000 Existing Warrants previously transferred to Alpine Capital
Partners) are hereby amended by changing the exercise price set forth therein
from $10.675 per share to $3.25 per share. The Buyers acknowledge and agree
that no further amendment to the exercise price of the Existing Warrants (or
issuance of additional common stock purchase warrants), pursuant to the
Black-Scholes model or otherwise, is required in accordance with the exercise
price reset provisions contained in Schedule 1 to the Existing Warrants.
SECTION 2.7 DEFINITION IN PURCHASE AGREEMENT.
(a) Effective as of the date hereof, the definitions of "Equity Financing"
and "Qualified Equity Financing" in Section 1.1 of the Purchase Agreement are
amended to read in their entirety as follows:
"Equity Financing" means a financing resulting in the receipt solely
of cash proceeds by the Company consummated through the issuance of equity
securities (or securities convertible into or exchangeable for equity
securities) of the Company."
"Qualified Equity Financing" means an Equity Financing (x) with Marion
resulting in the receipt of $5,000,000 or less of gross cash proceeds by
the Company consummated in accordance with the terms of the Marion
Agreement (the "Retained Equity Proceeds") and (y) with Marion , 100% of
the Net Cash Proceeds of which in excess of the Retained Equity Proceeds
are used to repay the Convertible Notes and redeem the shares of Preferred
Stock pursuant to Section 3.4 below."
(b) As specified in the First Amendment, the Retained Equity Proceeds may
be retained by the Company and not utilized to redeem a portion of the Preferred
Stock without causing a decrease in the Conversion Price to 50% of the lowest
Closing Bid Price during the 30 Trading Days immediately preceding the
consummation thereof, as contemplated therein.
SECTION 2.8 VOLUNTARY PREPAYMENTS.
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AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 6
(Visual Edge Systems Inc.)
<PAGE>
(a) Effective as of the date hereof, Section 3.4 of the Purchase Agreement
is amended to read in its entirety as follows:
"SECTION 3.4. VOLUNTARY PREPAYMENTS.
(a) Subject to the terms of this Section 3.4, the Company may, at its
option, following three (3) days prior written notice to the Purchasers
(the expiration of such three (3) day period being referred to as the
"Prepayment Date"; PROVIDED, HOWEVER, if such date is not a Business Day,
the Prepayment Date shall be the next Business Day thereafter) prepay all
or any portion of the Convertible Instruments remaining unconverted on the
Prepayment Date, specifying the amount of the prepayment pursuant to the
terms of this Article III. Partial prepayments shall be in an aggregate
principal amount of $500,000 or increments of $10,000 in excess thereof.
The Company's voluntary redemption right specified in this Section 3.4 may
only be exercisable for $2,500,000 aggregate principal amount of the
Convertible Instruments on or before April 30, 1998, an additional
$2,500,000 aggregate principal amount of the Convertible Instruments on or
before May 31, 1998, and an additional $2,500,000 aggregate principal
amount of the Convertible Instruments from and after June 1, 1998.
(b) If the Prepayment Date is on or before June 30, 1998 (the "First
Call Date"), the price to be paid by the Company to prepay or redeem the
Convertible Instruments shall be the Stated Redemption Price. The Stated
Redemption Price shall mean the sum of (x) the product of the aggregate
principal amount of the Convertible Notes or liquidation preference of the
Preferred Shares, as applicable, being redeemed multiplied by 80%, plus (y)
any accrued and unpaid interest on the Convertible Notes or dividends on
the Preferred Shares, as applicable, being redeemed, through the applicable
date of consummation of the prepayment (as specified in Section 3.6 below),
unless, with respect to clause (y), the redemption results in a Complete
Redemption Event, in which event no such accrued and unpaid dividends or
interest shall be owed thereon.
(c) If the Prepayment Date is after June 30, 1998 but on or before
December 31, 1998 (the "Second Call Date"), the price to be paid by the
Company to prepay the Convertible Instruments shall be the Interim
Redemption Price. The Interim Redemption Price shall mean the aggregate
principal amount of the Convertible Notes or liquidation preference of the
Preferred Shares, as applicable, being redeemed multiplied by the following
applicable percentage based upon the Prepayment Date, plus any accrued and
unpaid interest on the Convertible Notes or dividends on the Preferred
Shares, as applicable, being
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AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 7
(Visual Edge Systems Inc.)
<PAGE>
redeemed, through the applicable date of consummation of the prepayment
redemption:
Prepayment Date Applicable Percentage
--------------- ---------------------
July 1 through July 31 82%
August 1 through August 31 84%
September 1 through September 30 86%
October 1 through October 31 88%
November 1 through December 31 90%
(d) If the Prepayment Date is after the Second Call Date, the price
to be paid by the Company to prepay the Convertible Instruments shall be
the Formula Price. The "Formula Price" shall mean the greater of (I) the
aggregate principal amount of the applicable Convertible Notes or the
liquidation preference of the Preferred Shares, as applicable, being repaid
through the date of consummation of the prepayment (as specified in Section
3.6 below) and (II) the sum of (x) the product of (i) the number of shares
of Common Stock into which the Convertible Instruments being redeemed are
then convertible at the then current Conversion Price and (ii) the average
Closing Bid Price for the five (5) Trading Days ending two (2) Business
Days immediately preceding the applicable date of consummation of the
redemption as specified in Section 3.6 below, and (y) the applicable amount
of accrued but unpaid interest on the Convertible Notes or dividends on the
Preferred Shares, as applicable, being repaid through the date of
consummation of the prepayment (as specified in Section 3.6 below)."
(b) As specified in Section 3.6(c) of the Purchase Agreement, the Company
shall be required to redeem all of the Preferred Shares issued and outstanding
prior to the redemption of any of the Convertible Notes.
SECTION 2.9 DELETION OF LIMITATION ON CONVERSION. Effective as of the
date hereof, Section 10.5 of the Purchase Agreement (setting forth the
Limitation on Conversion described therein) is hereby deleted in its entirety,
and all references to the Limitation on Conversion contained in any Financing
Document are hereby deleted in their entirety.
SECTION 2.10 AMENDMENT TO CERTIFICATE OF DESIGNATION. Promptly after the
execution and delivery of this Amendment, the Purchasers and the Company hereby
agree to amend the Amended Certificate of Designation consistent with the terms
of this Amendment.
SECTION 2.11 REIMBURSEMENT FEE. Contemporaneous herewith, the Company
shall pay to the Purchasers an aggregate of $20,000 in readily available funds,
representing (i) the remainder of the Reimbursement Fee provided for in Section
2.18 of the First Amendment and (ii) an agreed
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AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 8
(Visual Edge Systems Inc.)
<PAGE>
upon reimbursement of estimated fees and expenses incurred by the Purchasers in
connection with the First Amendment and this Amendment.
SECTION 2.12 COMPLIANCE WITH LAWS.
(a) Each Purchaser covenants and agrees that in the exercise of the
Private Sale Right it shall comply with all applicable securities laws.
(b) The Company covenants agrees that in the exercise of either the Option
Right or the Right of First Refusal it shall comply with all applicable
securities laws.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1 CONDITIONS PRECEDENT. The obligation of the Purchasers to
enter into this Amendment is subject to the conditions precedent that on or
before the date hereof the Purchasers shall have received all of the following
in form and substance acceptable to it and its counsel: (a) this Amendment
dated as of the date hereof duly executed by the Company; (b) a certificate of
the secretary of the Company setting forth resolutions of its board of directors
with respect to the authorization, execution, delivery and performance of this
Amendment, the issuance of the New Shares and the other transactions
contemplated hereby (collectively, the "Amendment Agreements"), as the case may
be, the officers of the Company authorized to sign such agreements and
instruments, and specimen signatures of the officers so authorized; (c) evidence
that the Company shall have issued the New Shares to the Purchasers; and (d)
payment to the Purchasers of the amount set forth in Section 2.11 above; and (e)
verification of the consummation of the Initial Marion Investment (as described
in Section 2.1(d) above).
ARTICLE IV
RATIFICATIONS: REPRESENTATIONS AND WARRANTIES
SECTION 4.1 RATIFICATIONS. The terms and provisions of the Financing
Documents, as modified by this Amendment, are ratified and confirmed and shall
continue in full force and effect. The Company acknowledges and agrees that
each of the Financing Documents, as amended hereby, is and shall remain in full
force and effect and is and shall continue to be the legal, valid and binding
obligation of the Company, enforceable against it in accordance with their
respective terms.
SECTION 4.2 REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants to the Purchasers that (a) the Company does not own any
equity interest in any Person and does not have any Subsidiaries; (b) the
execution, delivery and performance of each of the Amendment Agreements and all
other documents executed and/or delivered in connection herewith and all
transactions and documents contemplated hereby and thereby have been authorized
- --------------------------------------------------------------------------------
AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 9
(Visual Edge Systems Inc.)
<PAGE>
by all requisite corporate action on the part of the Company; (c) each of the
Amendment Agreements and all other documents executed and/or delivered in
connection herewith constitute legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with its terms, subject
to or limited by liquidation, bankruptcy, conservatorship, insolvency,
reorganization, rearrangement, moratorium, or other similar laws relating to or
affecting the rights of creditors generally and general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); (d) there is no provision of law, in the charter or bylaws of
the Company, and no provision of any existing mortgage, contract, lease,
indenture or agreement binding on any of them, which would be contravened by the
making or delivery of any of the Amendment Agreements or any other document
executed and/or delivered in connection herewith, or by the performance or
observance of any of the terms hereof or thereof; (e) the execution, delivery
and performance of the Amendment Agreements and the transactions contemplated
hereby and thereby do not require any approval or consent of, or filing or
registration with, any governmental or any other agency or authority, of
stockholders, or of any other party or, if such approval or consent is required,
the same has been obtained; (f) except as set forth on Schedule 4.2 hereto, each
of the representations and warranties of the Company contained in ARTICLE V of
the Purchase Agreement, as amended hereby, are true and correct on and as of the
date hereof as though made on such date except for those limited by their terms
to the date given or another specific date; (g) except as set forth on Schedule
4.2 hereto, as of the date hereof, no Event of Default has occurred and is
continuing.; and (h) the Marion Agreement attached hereto as Exhibit A is a true
and correct copy of all agreements between the Company and Marion , and there
exist no other oral or written agreements between Marion and the Company other
than the agreements embodied in the Marion Agreement.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations, warranties and covenants made in this Amendment or any other
document furnished in connection with this Amendment shall survive the execution
and delivery of this Amendment, and no investigation by the Purchasers or any
closing shall affect the representations, warranties and covenants or the right
of the Purchasers to rely upon them.
SECTION 5.2 REFERENCES TO FINANCING DOCUMENTS. The Financing Documents
and any and all other agreements, documents or instruments now or hereafter
executed and delivered pursuant to the terms hereof or pursuant to the terms of
the Financing Documents, as amended hereby, are hereby amended so that any
reference therein to the Financing Documents shall mean a reference to the
Financing Documents as amended hereby.
SECTION 5.3 FURTHER ASSURANCES. The Company agrees that at any time and
from time to time, upon the written request of the Purchasers, it will execute
and deliver such further documents and do such further acts and things as the
Purchasers may reasonably request in order to
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AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 10
(Visual Edge Systems Inc.)
<PAGE>
fully effect the purposes of this Amendment and to provide for the continued
perfection and priority of the security interests granted to the Purchasers in
the Financing Documents.
SECTION 5.4 SEVERABILITY. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
SECTION 5.5 APPLICABLE LAW. This Amendment and all other documents
executed pursuant hereto shall be governed by and construed in accordance with
the laws of the State of New York.
SECTION 5.6 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and
shall inure to the benefit of the Purchasers and the Company, and their
respective successors and assigns, except the Company may not assign or transfer
any of its rights or obligations hereunder without the prior written consent of
the Purchasers.
SECTION 5.7 EFFECT OF WAIVER. No consent or waiver, express or implied,
by the Purchasers to or for any breach of or deviation from any covenant,
condition or duty by the Company shall be deemed a consent or waiver to or of
any other breach of the same or any other covenant, condition or duty.
SECTION 5.8 ENTIRE AGREEMENT. THE PURCHASE AGREEMENT AS AMENDED HEREBY,
THE OTHER FINANCING DOCUMENTS AND ALL AGREEMENTS EXECUTED IN CONNECTION WITH
THIS AMENDMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO
THE SUBJECT MATTER THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 5.9 HEADINGS. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
[SIGNATURE PAGE FOLLOWS]
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AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 11
(Visual Edge Systems Inc.)
<PAGE>
EXECUTED as of the date first written above.
VISUAL EDGE SYSTEMS INC.
By: /s/ Earl Takefman
----------------------------------
Name: Earl Takefman
--------------------------------
Title: Chief Executive Officer
-------------------------------
INFINITY INVESTORS LIMITED
By: /s/ J.A. Loughran
----------------------------------
Name: J.A. Loughran
--------------------------------
Title: Director
-------------------------------
INFINITY EMERGING OPPORTUNITIES
LIMITED
By: /s/ J.A. Loughran
----------------------------------
Name: J.A. Loughran
--------------------------------
Title: Director
-------------------------------
SUMMIT CAPITAL LIMITED
By: /s/ James E. Martin
----------------------------------
Name: James E. Martin
--------------------------------
Title: President
-------------------------------
GLACIER CAPITAL LIMITED
By: /s/ James E. Martin
----------------------------------
Name: James E. Martin
--------------------------------
Title: President
-------------------------------
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AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 12
(Visual Edge Systems Inc.)
<PAGE>
SCHEDULE 1
TO
AGREEMENT AND SECOND AMENDMENT
Name Number of Shares
Infinity Investors Limited 60,000
Infinity Emerging Opportunities Limited 13,334
Glacier Capital Limited 13,333
Summit Capital Limited 13,333
-------
Total 100,000
-------
-------
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AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 13
(Visual Edge Systems Inc.)
<PAGE>
SCHEDULE 2
TO
AGREEMENT AND SECOND AMENDMENT
Shares to Be Included in Marion Registration Statement
- ------------------------------------------------------
1. Additional Grant Shares 73,973
2. Interest Shares for interest paid on
and 12/31/97 65,671
3. Interest Shares (assumed number to be registered
that will cover actual interest payable on March 31, 52,000
4. Shares underlying New Warrants 200,000
5. New Shares (of which 100,000 will be
issued at Closing) 300,000
-------
Total 691,644
-------
-------
Issued and Outstanding Shares Owned as of Date Hereof by Purchasers
- -------------------------------------------------------------------
1. Original Grant Shares 93,677
2. Additional Grant Shares 180,296
3. Interest Shares for interest paid through 12/31/97 65,671
4. Interest Shares (assumed/estimated number)
for interest payable 3/31/98 52,000
5. New Shares as of 3/27/98 100,000
6. Less Estimated Number of Shares previously sold
by Purchasers ( 27,500)
-------
-------
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AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES
PURCHASE AGREEMENT - PAGE 14
(Visual Edge Systems Inc.)
