<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
VISUAL EDGE SYSTEMS INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
............................................................................
2) Aggregate number of securities to which transaction applies:
............................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11(set forth the amount on which the
filing fee is calculated and state how it was determined)
............................................................................
4) Proposed maximum aggregate value of transaction:
............................................................................
5) Total fee paid:
............................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
............................................................................
2) Form, Schedule or Registration Statement No.:
............................................................................
3) Filing Party:
............................................................................
4) Date Filed:
............................................................................
<PAGE>
Visual Edge Systems Inc.
2424 North Federal Highway
Suite 100
Boca Raton, Florida 33431
April 20, 1998
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
Visual Edge Systems Inc. (the "Company"), which will be held at the Company's
principal executive offices, 2424 North Federal Highway, Suite 100, Boca Raton,
Florida 33431, on Tuesday, May 12, 1998, commencing at 10:00 a.m. (local time).
At the meeting, you will be asked to: (1) consider and act upon a
proposal to issue and sell up to 6,200,000 shares of the Company's Common Stock
to Marion Interglobal, Ltd. ("Marion"); and (2) transact such other business as
may properly come before the meeting and any adjournment thereof. The Company
believes that this new financing, and its restructuring of its existing
financing with Infinity Investors Limited and related entities, is necessary to
execute its 1998 and 1999 business plan.
We hope you will find it convenient to attend the meeting in person.
Whether or not you expect to attend, to assure your representation at the
meeting and the presence of a quorum, please complete, date, sign and mail
promptly the enclosed proxy card (the "Proxy"), for which a return envelope is
provided. No postage need be affixed to the Proxy if it is mailed in the United
States. After returning your Proxy, you may, of course, vote in person on all
matters brought before the meeting.
The Company expects that its Annual Meeting of Stockholders will be held
in mid-June. Proxy materials for this meeting, along with the Company's Annual
Report for the fiscal year ending December 31, 1997, will be mailed to you in
May.
The Board of Directors has approved the Purchase Agreement between the
Company and Marion and strongly urges you to execute the Proxy for the approval
of the issuance of new shares of the Company's Common Stock to Marion.
Sincerely,
Earl T. Takefman
CHIEF EXECUTIVE OFFICER
<PAGE>
VISUAL EDGE SYSTEMS INC.
2424 NORTH FEDERAL HIGHWAY, SUITE 100
BOCA RATON, FLORIDA 33431
---------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Visual
Edge Systems Inc., a Delaware corporation (the "Company"), will be held at the
Company's principal executive office, 2424 North Federal Highway, Suite 100,
Boca Raton, Florida 33431, on Tuesday, May 12, 1998, at 10:00 a.m. (local time),
for the following purposes:
(1) to consider and act upon a proposal to issue and sell up to
6,200,000 shares of the Company's Common Stock to Marion
Interglobal, Ltd. ("Marion") pursuant to the terms of the
Purchase Agreement, dated as of March 27, 1998, between the
Company and Marion; and
(2) to transact such other business as may properly come before the
Special Meeting and any adjournment thereof.
The accompanying proxy is solicited by the Board of Directors of the
Company. A copy of the Proxy Statement and form of proxy are enclosed.
Only stockholders of record as of the close of business on March 30,
1998 are entitled to notice of, and to vote at, the Special Meeting and any
adjournment thereof. Such stockholders may vote in person or by proxy.
You are cordially invited to be present at the Special Meeting. It is
important to you and to the Company that your shares be voted at the Special
Meeting.
By Order of the Board of Directors
Earl T. Takefman
CHIEF EXECUTIVE OFFICER
April 20, 1998
<PAGE>
IMPORTANT NOTICE:
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, YOU ARE URGED
TO READ THE ATTACHED PROXY STATEMENT CAREFULLY AND THEN TO SIGN, DATE AND RETURN
THE ACCOMPANYING PROXY IN THE ENCLOSED STAMPED AND ADDRESSED ENVELOPE. AS SET
FORTH IN THE PROXY STATEMENT, THE GIVING OF THE PROXY WILL NOT AFFECT YOUR RIGHT
TO ATTEND AND TO VOTE AT THE SPECIAL MEETING.
<PAGE>
VISUAL EDGE SYSTEMS INC.
--------------------
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 1998
This Proxy Statement and the accompanying form of proxy (the "Proxy")
are being furnished to the stockholders of Visual Edge Systems Inc., a Delaware
corporation (the "Company"), in connection with the solicitation of Proxies by
the Board of Directors of the Company for use at the Special Meeting of
Stockholders (the "Special Meeting") to be held at the Company's principal
executive office, 2424 North Federal Highway, Suite 100, Boca Raton, Florida, on
May 12, 1998, at 10:00 a.m. (local time), and at any adjournment thereof. Only
stockholders of record as of the close of business on March 30, 1998 (the
"Record Date") will be entitled to notice of, and to vote at, the Special
Meeting.
This Proxy Statement and the accompanying Proxy are being sent or given
to the stockholders commencing on or about April 20, 1998.
At the Special Meeting, the stockholders of the Company will be asked:
(i) to consider and act upon a proposal to issue and sell up to 6,200,000 shares
of the Company's Common Stock to Marion Interglobal, Ltd. ("Marion"); and (ii)
to transact any other business that may properly come before the meeting and any
adjournment thereof.
The Board of Directors has approved the Purchase Agreement, dated as of
March 27, 1998 (the "Purchase Agreement"), between the Company and Marion, and
strongly urges the stockholders to execute the Proxy for the approval of the
issuance and sale of new shares of the Company's Common Stock to Marion pursuant
to the Purchase Agreement.
The principal executive offices of the Company is located at 2424 North
Federal Highway, Suite 100, Boca Raton, Florida 33431 and the Company's
telephone number at that address is (561) 750-7559.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ACCOMPANYING
FORM OF PROXY AND RETURN IT PROMPTLY TO THE COMPANY IN THE ENCLOSED POSTAGE PAID
ENVELOPE.
SOLICITATION OF PROXIES
If the accompanying Proxy is properly executed and returned, the shares
represented thereby will be voted in accordance with the instructions specified
in the Proxy. In the absence of instructions to the contrary, such shares will
be voted in favor of the issuance and sale of up to 6,200,000 shares of the
Company's Common Stock to Marion. The Board of Directors does not intend to
bring any other matters before the Special Meeting and is not aware of any
matters that will come before the Special Meeting other than as described
herein. In the absence of instructions to the contrary, however, it is the
intention of each of the persons named in the accompanying Proxy to vote all
properly executed Proxies on behalf of the stockholders they represent in
accordance with their discretion with respect to any such other matters properly
coming before the Special Meeting. The expenses with respect to this
solicitation of Proxies will be paid by the Company.
<PAGE>
Any stockholder may revoke such stockholder's Proxy at any time prior to
the voting thereof on any matter (without, however, affecting any vote taken
prior to such revocation). A Proxy may be revoked by written notice of
revocation received prior to the Special Meeting, by attending the Special
Meeting and voting in person or by submitting a signed Proxy bearing a
subsequent date. A written notice revoking a previously executed Proxy should be
sent to the Company at 2424 North Federal Highway, Suite 100, Boca Raton,
Florida 33431, Attention: Secretary. Attendance at the Special Meeting will not
in and of itself constitute a revocation of a Proxy.
VOTING SECURITIES AND BENEFICIAL OWNERSHIP
Only holders of record of the common stock, par value $.01 per share, of
the Company (the "Common Stock") as of the close of business on the Record Date
will be entitled to vote at the Special Meeting. Each share of Common Stock
entitles the registered holder thereof to one vote on each matter to come before
the Special Meeting. As of the close of business on the Record Date, there were
5,463,696 shares of the Common Stock outstanding. The presence, in person or by
Proxy, of stockholders entitled to cast a majority of all votes entitled to be
cast at the Special Meeting will constitute a quorum. Votes that are withheld
will be counted for purposes of determining the presence or absence of a quorum
but will have no other effect. Broker non-votes, if any, will be counted for
purposes of determining the presence or absence of a quorum.
The following table sets forth certain information, as of April 7, 1998,
relating to the beneficial ownership of shares of the Common Stock by: (i) each
person or entity who is known by the Company to own beneficially five percent or
more of the outstanding Common Stock; (ii) each of the Company's executive
officers and directors; and (iii) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
PERCENTAGE
BENEFICIAL BENEFICIAL
OWNERSHIP OF OWNERSHIP OF
BENEFICIAL HOLDER COMMON STOCK(1) COMMON STOCK (1)
- ----------------- --------------- ----------------
<S> <C> <C>
Marion Interglobal, Ltd. ....... 7,450,000(2) 57.3%(2)
Earl T. Takefman(3) ............ 1,396,960 10.7
Alan L. Lubell(4) .............. 847,431 6.5
Tom Peters(5) .................. 79,361 *
Richard Parker(6) .............. 136,000 *
Melissa Forzly(7) .............. 625 *
Eddie Einhorn(8) ............... 3,333 *
Mark Hershhorn(8) .............. 3,333 *
Beryl Artz(9) .................. 1,666 *
All directors and executive officers
as a group (eight persons) ..... 2,468,709 19.0%
</TABLE>
____________________________
*Less than 1%
2
<PAGE>
(1) Unless otherwise indicated, the Company believes that all persons named
in the table have sole voting and investment power with respect to all
shares of the Common Stock beneficially owned by them. A person is
deemed to be the beneficial owner of securities which may be acquired by
such person within 60 days from the date of this Proxy Statement upon
the exercise of options, warrants or convertible securities. Each
beneficial owner's percentage ownership is determined by assuming that
options that are held by such person (but not those held by any other
person) and which are exercisable within 60 days of the date of this
Proxy Statement, have been exercised.
(2) Includes shares of Common Stock issued to date to Marion in the first
tranche of the Marion Financing (as hereinafter defined), as well as the
maximum number of shares of Common Stock issuable upon the consummation
of the second half of the first tranche of the Marion Financing, as
well as the second and third tranches of the Marion Financing. Also
includes 250,000 shares of Common Stock to be transferred from Alan
Lubell, the Chairman of the Board of the Company, to Marion upon the
consummation of the second tranche of the Marion Financing.
(3) Includes (i) 1,159,482 shares owned by Status-One Investments Inc., a
Delaware corporation owned by Earl T. Takefman and certain family
members, and (ii) presently exercisable options to acquire 237,478
shares of Common Stock, but does not include (x) shares of Common Stock
underlying options held by Mr. Takefman and his spouse (as to which Mr.
Takefman disclaims beneficial ownership) to acquire an aggregate of
50,000 shares of Common Stock, none of which are exercisable within 60
days, or (y) 2,136 shares of Common Stock owned by Mr. Takefman's
spouse, as to which shares Mr. Takefman disclaims beneficial ownership.
(4) Does not include (x) 250,000 shares of Common Stock that Mr. Lubell has
agreed to transfer to Marion upon the consummation of the second tranche
of the Marion Agreement and (y) 21,827 shares of Common Stock that
Mr. Lubell has agreed to give to certain persons.
(5) Includes presently exercisable options to acquire 65,206 shares of
Common Stock, but excludes shares underlying options to acquire 75,205
shares of Common Stock, none of which are exercisable within 60 days.
(6) Includes presently exercisable options to acquire 134,000 shares of
Common Stock, but excludes shares underlying options to acquire 166,000
shares of Common Stock, none of which are exercisable within 60 days.
(7) Includes presently exercisable options to acquire 625 shares of Common
Stock, but excludes shares underlying options to acquire 1,875 shares of
Common Stock, none of which are exercisable within 60 days.
(8) Excludes shares underlying options to acquire 1,666 shares of Common
Stock, none of which are exercisable within 60 days.
(9) Excludes shares underlying options to acquire 3,334 shares of Common
Stock, none of which are exercisable within 60 days.
3
<PAGE>
PROPOSAL ONE
APPROVAL OF THE ISSUANCE AND SALE OF SHARES OF COMMON STOCK
EXCEEDING 20% OF THE OUTSTANDING COMMON STOCK
Rule 4460(i) of the National Association of Securities Dealers, Inc.
(the "NASD") requires the Company to obtain stockholder approval in connection
with a transaction other than a public offering involving the sale or issuance
by the Company of Common Stock (or securities convertible into an exercisable
for Common Stock) equal to 20 percent or more of the Common Stock or 20 percent
or more of the voting power outstanding before the issuance for less than the
greater of book value or market value of the Common Stock.
On March 27, 1998, the Company entered into a Purchase Agreement (the
"Marion Agreement") with Marion Interglobal, Ltd., an investment group, or
its permitted assigns ("Marion"). The Marion Agreement calls for the Company
to receive up to $11,000,000 from Marion in exchange for shares of Common
Stock. Pursuant to the Marion Agreement, the purchase of Common Stock is to
occur in three tranches as follows (referred to as the "Marion Financing"):
(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; 1,000,000 of such shares
have been issued to date, (ii) on or prior to June 14, 1998, 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 certain financial targets. In
addition, 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. A copy of the Marion Agreement is attached as Annex A to this
Proxy Statement.
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 and third tranches to
Marion, totaling up to 6,200,000 shares of Common Stock, is subject to approval
by the Company's stockholders. All of these shares of Common Stock are currently
held in escrow and will only be released pursuant to the Marion Agreement after
the approval by the Company's stockholders is received. The Company has agreed
to use the $6,000,000 in proceeds from the third tranche to redeem certain of
the Company's outstanding convertible notes ("Notes") and Series A Preferred
Stock ("Preferred Stock") issued to Infinity Investors Limited, Infinity
Emerging Opportunities Limited, Summit Capital Limited and Glacier Capital
Limited (collectively, "Infinity") in June, 1997.
Further, upon the consummation of the second tranche of the Marion
Agreement, 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 Marion 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
4
<PAGE>
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 the Marion Financing, the Company renegotiated
the terms of its outstanding Notes and Preferred Stock with Infinity.
The following stockholders, collectively holding 3,007,583 shares of
the Common Stock, have already agreed to vote all shares held by them at the
Special Meeting in favor of the proposed issuance and sale of up to 6,200,000
shares of Common Stock to Marion: Greg Norman, Status-One Investments Inc.,
Alan Lubell and Infinity. Since these stockholders collectively own
approximately 55% of the outstanding shares of Common Stock, the approval of
this proposal by the Company's stockholders is, therefore, assured.
The Company has entered into the Marion Agreement in order to raise
additional financing which will be used to execute its business plan. The
potential issuance of up to 6,200,000 shares to Marion, however, will involve
substantial dilution to the Company's stockholders.
The Board of Directors has approved the Marion Agreement and believes
that it is desirable and in the best interest of the Company to issue and sell
up to 6,200,000 shares of the Company's Common Stock to Marion. The Board of
Directors strongly urges the stockholders to execute the Proxy for the approval
of this proposal.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the outstanding shares of the
Common Stock present in person or represented by Proxy at the Special Meeting
and entitled to vote is required to approve the approval of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
APPROVAL OF THIS PROPOSAL.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented for
consideration at the Special Meeting other than the matters described in the
Notice of Special Meeting, but if other matters are presented, it is the
intention of the persons named in the accompanying Proxy to vote on such matters
in accordance with their judgment.
5
<PAGE>
SOLICITATION OF PROXIES
The accompanying Proxy is solicited by the Board of Directors, and the
cost of such solicitation will be borne by the Company. Proxies may be solicited
by Directors, officers and employees of the Company, none of whom will receive
any additional compensation for his or her services. Solicitation of Proxies may
be made personally or by mail, telephone, telegraph, facsimile or messenger. The
Company will pay persons holding shares of the Common Stock in their names or in
the names of nominees, but not owning such shares beneficially, such as
brokerage houses, banks and other fiduciaries, for the reasonable expense of
forwarding soliciting materials to their principals.
By Order of the Board of Directors
Earl T. Takefman
CHIEF EXECUTIVE OFFICER
Boca Raton, Florida
April 20, 1998
6
<PAGE>
Annex A
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
<PAGE>
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
2
<PAGE>
(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.
3
<PAGE>
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
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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
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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
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VISUAL EDGE SYSTEMS INC.
SPECIAL MEETING OF STOCKHOLDERS - MAY 12, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Earl T. Takefman and Richard Parker, and
each of them, proxies, with full power of substitution, to appear on behalf of
the undersigned and to vote all shares of Common Stock, par value $.01 per
share, of Visual Edge Systems Inc. (the "Company") which the undersigned is
entitled to vote at the Special Meeting of Stockholders to be held at the
Company's principal executive office, 2424 North Federal Highway, Suite 100,
Boca Raton, Florida 33431 on Tuesday, May 12, 1998, commencing at 10:00 a.m.
(local time), and at any adjournment thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE APPROVAL OF THE
ISSUANCE AND SALE OF UP TO 6,200,000 SHARES OF THE COMPANY'S COMMON STOCK TO
MARION INTERGLOBAL, LTD.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
7
<PAGE>
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
1. Approval of the issuance and sale of up to 6,200,000 shares of the Company's
Common Stock to Marion Interglobal, Ltd. ("Marion") pursuant to the Purchase
Agreement dated as of March 27, 1998, between Marion and Visual Edge Systems,
Inc.
FOR AGAINST ABSTAIN
/ / / / / /
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
PLEASE CHECK HERE IF YOU PLAN TO / /
ATTEND THE SPECIAL MEETING / /
Signature_______________ Signature____________________ Dated: ________, 1998
NOTE: Please sign exactly as your name appears above. When signing as an
attorney, executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, each holder should sign.
8
