As filed with the Securities and Exchange Commission
on December 18, 1995.
Registration No. __________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Xscribe Corporation
----------------------------------------
(Exact name of registrant as specified in its charter)
California
--------------------
(State or other jurisdiction of
incorporation or organization)
95-3267788
--------------
(IRS Employer Identification No.)
6285 Nancy Ridge Drive
San Diego, California 92121
(619) 457-5091
(Address, Including Zip Code, and
Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Bruce C. Myers
Xscribe Corporation
6285 Nancy Ridge Drive
San Diego, California 92121
(619) 457-5091
(Name, Address, Including Zip Code, and
Telephone Number of Agent for Service of Process)
Copy to:
Barbara L. Borden, Esquire
Sheppard, Mullin, Richter & Hampton
501 West Broadway, 19th Floor
San Diego, California 92101
(619) 338-6500
Approximate date of commencement of proposed sale to public:
As soon as practicable after the effective date of this
Registration Statement.
Exhibit Index on Page 25
Page 1 of 85 <PAGE>
CALCULATION OF REGISTRATION FEE
______________________________________________________________
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price per Offering Registration
Registered Registered Share Price<F*> Fee
_______________________________________________________________
Common 76,667 $.938 $71,914 $100
Stock
_______________________________________________________________
[FN]
<F*> Estimated only for the purpose of calculating the
registration fee, and based on the closing bid price for
shares of Xscribe common stock on December 12, 1995, as
reported by the National Association of Securities Dealer
Quotation System Small Cap tier.
The Registrant hereby amends this registration statement
on such date or dates as may be necessary to delay its
effective date until the registrant shall file a further
amendment that specifically states that this registration
statement shall thereafter become effective in accordance with
Section 8(b) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as
the Commission, acting pursuant to Section 8(a), may determine.
Page 2 of 85 <PAGE>
XSCRIBE CORPORATION
Item No. and Heading
In Form S-3
Registration Statement Location in Prospectus
---------------------- ----------------------
1. Forepart of the Registration Forepart of Registration
Statement and outside front Statement and outside
cover page of Prospectus front cover page of
Prospectus
2. Inside front and outside Inside front and outside
back cover pages of back cover pages of
Prospectus Prospectus
3. Summary Information, Risk Risk Factors
Factors and Ratio of
Earnings to Fixed Charges
4. Use of Proceeds <F*>
5. Determination of Offering <F*>
Price
6. Dilution <F*>
7. Selling Security-Holder Selling Shareholder
8. Plan of Distribution Plan of Distribution
9. Description of Securities to Description of
be Registered Securities
10. Interest of Named Experts <F*>
and Counsel
11. Material Changes <F*>
12. Incorporation of Certain Incorporation of Certain
Information by Reference Documents by Reference
13. Disclosure of Commission Indemnification of
Position on Indemnification Directors and Officers
for Securities Act
Liabilities
[FN]
<F*> Not applicable
Page 3 of 85 <PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 18, 1995
Information contained herein is subject to completion or
amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission. These
securities may not be sold nor may offers to buy be accepted prior
to the time the registration statement becomes effective. This
prospectus shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities
laws of any such State.
PROSPECTUS
76,667 Shares
XSCRIBE CORPORATION
Common Stock
------------
A total of 76,667 shares of Common Stock of Xscribe
Corporation (the "Shares") may be sold by the Selling
Shareholder. Xscribe Corporation ("Xscribe" or the "Company")
will not receive any proceeds from the sale of Common Stock by
the Selling Shareholder. The Common Stock is quoted for
trading in the Nasdaq Small Cap tier under the symbol XSCR. It
is anticipated that the Selling Shareholder will offer such
shares of Common Stock from time to time in the over-the-
counter market at the then prevailing prices and terms or in
negotiated transactions or otherwise. See "Plan of
Distribution."
See "Risk Factors" beginning on page 3 for a discussion of
certain risks and other matters that should be considered by
prospective purchasers of Common Stock offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
_______________________________
This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy securities in any State or
other jurisdiction where, or to any person to whom, it is
unlawful to make such an offer of solicitation. No person has
been authorized to give any information or to make any
representations other than those contained herein in connection
-1-
Page 4 of 85 <PAGE>
with this offer, and if given or made, such information or
representations must not be relied upon as having been
authorized by Xscribe. Except where otherwise indicated
herein, the information contained in this Prospectus speaks as
of its date, neither delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create an
implication that there has been no change in the affairs of
Xscribe.
The date of this Prospectus is ______________, 19___.
AVAILABLE INFORMATION
Xscribe is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files regular reports, proxy
statements and other information with the Securities and
Exchange Commission. Any such reports, proxy statements or
other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the
Commission in Washington, D.C. and at the following regional
offices:
Los Angeles Regional Office
3600 Wilshire Boulevard, Suite 100-J
Los Angeles, California 90010
Chicago Regional Office
500 West Madison, Suite 1400
Chicago, Illinois 60661
New York Regional Office
7 World Trade Center, Suite 1300
New York, New York 10048
Copies may also be obtained from the public reference section
of the Securities and Exchange Commission, Washington, D.C.
20549, at the prescribed rates.
The Company has filed a Registration Statement with the
Commission, Washington, D.C., in accordance with the provisions
of the Securities Act of 1933, as amended (the "Act"). This
Prospectus does not contain all of the information set forth in
the Registration Statement, certain portions of which have been
omitted as permitted by the rules and regulations of the
Commission. For further information pertaining to the shares
of common stock offered hereby and the Company, reference is
made to the Registration Statement, including the reports
incorporated herein by reference and exhibits filed as a part
thereof. Statements herein contained concerning the provisions
-2-
Page 5 of 85 <PAGE>
of any document are not necessarily complete and, in each
instance, reference is made to the copy of such document filed
as an Exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference. The
Registration Statement may be obtained from the Commission upon
payment of the fees prescribed therefor and may be examined at
the principal office of the Commission in Washington, D.C.
Upon written or oral request to the Company, the Company
will provide to any person who has received a copy of the
Prospectus, at no charge, copies of any of the information that
is incorporated herein by reference (excluding any exhibits
that are not specifically incorporated herein by reference).
Written requests should be directed to Xscribe Corporation,
6285 Nancy Ridge Drive, San Diego, California 92121-2245,
Attention: Chief Financial Officer. Verbal requests should be
directed to the Chief Financial Officer, at (619) 457-5091,
Extension 319.
-3-
Page 6 of 85 <PAGE>
RISK FACTORS
Prospective investors should review carefully the
following investment risks in evaluating the Company and its
business:
Recent Operating Losses
-----------------------
The Company operated at a net loss of $133,000 ($.02 per
share) in its fiscal year ended March 31, 1995 and net losses
of $447,000 ($.08 per share) and $189,000 ($.03 per share),
respectively during its first and second quarters of fiscal
year 1996. The operating losses were attributable primarily to
(1) decreased revenues in both the Imaging Products segment and
the Information Management Solutions segment, resulting
primarily from declining sales of microfiche duplicators and
declining prices and sales of computer-aided transcription
("CAT") products, (2) decreases in gross margins in both
segments, and (3) increases in interest expense attributable to
increased use of the Company's line of credit. The Company's
return to profitability is dependent upon increasing sales of
Photomatrix document and aperture card scanners and on
increasing Lexia's sale of groupware products. Although
management expects a return to quarterly profitability in the
quarter ending December 31, 1995, there is no assurance that
sales will increase to generate profits.
Declining Revenues in Shrinking Markets
---------------------------------------
The CAT systems market, which is the Company's original
and core business, is highly competitive and is subject to a
risk of continued price erosion. The Company has generated
revenues primarily by selling writers and PC-based
XEC-2001 software primarily as a replacement for its older
writers and proprietary XEC systems (which Xscribe sold from
1978 to 1991). The XEC replacement market is expected to
decline significantly over the next one to two years. To help
compensate for this expected decline, Xscribe has expanded its
sales efforts to new court reporters. There is no assurance
that these sales efforts will successfully replace the expected
revenue losses.
Due to competitive conditions, Xscribe may be forced to
invest more funds into its CAT products than originally planned
in order to improve and/or maintain its market share, or be
forced to further forego market share. Any further reduction
in the cash generated from the CAT systems sales could have an
adverse effect on Xscribe's growth strategy, which is dependent
upon using internally generated profits as a source of
financing and liquidity.
During fiscal year 1995, Photomatrix's revenues from the
manufacture, sale and service of microfilm duplicators
-4-
Page 7 of 85 <PAGE>
(primarily to Eastman Kodak Company ("Kodak")) declined by
$3 million as these products lost market share to replacement
technologies, including electronic imaging systems.
Photomatrix expects to sell no microfilm duplicators in the
future and, as a result, Photomatrix expects its revenues to
decline an additional $2.8 million during fiscal year 1996 as
compared to fiscal year 1995. Photomatrix must replace this
revenue through sales of its aperture card scanner and document
scanner imaging products. There is no assurance that
Photomatrix will be able to replace the lost revenues or
generate revenue growth through the sale of its scanners.
Lexia's Dependence on International Computer Limited
("ICL") and its Products
----------------------------------------------------
To date, Lexia's revenues have been derived primarily from
the resale of UNIX hardware and ICL OfficePower software
primarily to existing OfficePower users who desire to upgrade
their systems to enable integration with Windows workstations.
Lexia's ability to resell OfficePower to customers who do not
currently use OfficePower is limited due to competing
technologies and limits on the demand for host-based
enterprise-wide computing technology. Therefore, Lexia's
growth is dependent upon its ability to resell TeamWARE, ICL's
client-server architected groupware. Although TeamWARE is a
leader in international market share, TeamWARE is not well-
known in the United States. To date, very few TeamWARE
products have been sold in the United States and ICL has not
succeeded in its efforts to create a distribution channel or
market recognition in the United States. Accordingly, Lexia's
success will depend upon its own efforts and the efforts of a
new Xscribe subsidiary (supported financially by ICL) to
establish distribution channels in niche U.S. commercial
markets for TeamWARE products. There is no assurance that
Xscribe will be able to establish adequate distribution
channels or that TeamWARE products will compete successfully in
the United States market against other products sold by well-
known United States vendors. See "Recent Developments."
Lexia does not control the engineering of OfficePower,
TeamWARE or any other ICL products. Although Lexia has the
right to suggest product enhancements and product interfaces,
there is no assurance that ICL will continue to enhance or
develop products that are competitive in the United States
market or release products or upgrades in cycles that are
consistent with United States demand.
Competition
-----------
Each of Xscribe's operations competes in highly
competitive markets. Lexia competes for sales of groupware
products sold by a number of large, well-known United States
software companies, including International Business
-5-
Page 8 of 85 <PAGE>
Machines/Lotus Development Corporation, Microsoft and
Novell/WordPerfect Corporation. These and other United States
software companies have substantially greater market
recognition and larger marketing budgets in the United States
than ICL's or Lexia's budget, and have large installed bases of
popular PC and Windows applications software and large
installed bases of operating systems. There is no assurance
that Lexia will compete successfully in this market.
Photomatrix's document scanners compete in the medium-to-
high speed paper scanner market with Kodak, Fujitsu, Bell and
Howell and BancTec Technologies. These competitors have
substantially greater resources than Photomatrix and may be
able to compete more effectively on technology, price and
product features. Accordingly, there is no assurance that
Photomatrix will compete successfully in this market.
Legal Systems operates in a highly competitive and mature
market in which Stenograph Corporation, a subsidiary of Quixote
Corporation, has about a 60% market share. Stenograph has
substantially greater resources than Legal Systems and may be
able to compete more effectively on price, which is the primary
basis on competition.
Key Personnel
-------------
The future success of the Company and its subsidiaries
will depend upon the efforts of the Company's management,
software engineers and sales representatives and the Company's
ability to attract and retain existing employees or
contractors. Certain of the engineers have specialized
expertise with respect to new and planned products and may be
difficult or expensive to replace. The Company's inability to
modify or enhance products in a timely cost-effective manner
could diminish the competitive advantages of a product.
Technology Risk
---------------
The Company's subsidiaries compete in industries which are
highly competitive and subject to evolving and changing
technologies. There is no assurance that the Company will be
successful in developing product enhancements and new
technologies necessary to respond to market demand and
competition in these industries or that the Company will
anticipate and release products in product cycles that enable
the Company to compete successfully.
Risks of Future Change in Control
---------------------------------
By agreement with ICL, if a change of control of Xscribe
occurs, ICL has the right to convert Lexia's exclusive
distribution rights into non-exclusive rights. For purposes of
these agreements, change in control is defined as any
-6-
Page 9 of 85 <PAGE>
transaction or event that results in any significant competitor
of ICL or its affiliates (other than the Wyly family of Dallas,
Texas, Xscribe's largest shareholder), alone or in a group,
beneficially owning more than 50% of the voting power of
Xscribe or any other transaction or event that results in a
significant competitor of ICL or its affiliates (other than the
Wyly family) replacing a majority of the Board of Directors of
Xscribe or Lexia. Xscribe has not adopted any defensive
tactics specifically designed to prevent a change in control
and cannot provide assurances that a change in control as
defined in these agreements will not occur. A loss of
exclusive rights could have an adverse effect on Lexia and
Xscribe.
Xscribe's articles of incorporation authorize the Board of
Directors to issue, without shareholder approval, "blank check"
preferred stock in one or more series, with such preferences,
limitations, and relative rights as are determined by the Board
of Directors, at the time of issue. The ability to issue
preferred stock can enhance the Board of Directors' bargaining
capability on behalf of the Company's shareholders in a
takeover situation. Under certain circumstances, however, the
power to issue preferred stock could also be used by the
incumbent Board of Directors to make a change in control of the
Company more difficult.
Illiquid Trading Market of Shares
---------------------------------
The Company's common stock is traded only in the NASDAQ
Small Cap issuers tier and in the over-the-counter market.
Because of the limited public market, the average daily trading
volume and the limited number of market makers for the Shares,
investors may have difficulty liquidating an investment in
Shares when desired. These factors may also adversely affect
the market price of the Shares or cause significant volatility
in the market price of Shares.
Dilution and Shares Eligible For Future Sale
--------------------------------------------
As of September 30, 1995, 5,742,000 shares of common stock
of Xscribe were issued and outstanding. The Company also has
outstanding options and warrants to acquire a total of
1,017,000 shares of common stock at an average exercise price
of $.94 per share, and the Company has an additional 48,000
shares reserved for issuance pursuant to options that may be
granted to employees and directors under stock option plans.
Actual sales or the prospect of future sales of shares acquired
upon the exercise of the outstanding options and warrants may
have a depressive effect upon the price of common stock and the
market therefor.
-7-
Page 10 of 85 <PAGE>
THE COMPANY
The executive offices and principal facility of Xscribe
Corporation ("Xscribe" or the "Company") are located at
6285 Nancy Ridge Drive, San Diego, California 92121-2245, and
its telephone number is (619) 457-5091.
THE FOLLOWING GENERAL SUMMARY OF XSCRIBE'S BUSINESS IS
QUALIFIED BY REFERENCE TO ITS ANNUAL AND QUARTERLY REPORTS,
INCLUDING THE CONSOLIDATED FINANCIAL STATEMENTS, AND THE NOTES
THERETO, THAT ARE INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS. EACH PROSPECTIVE PURCHASER IS URGED TO READ THIS
PROSPECTUS AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE
IN THEIR ENTIRETY.
During its fiscal year ended March 31, 1995 (fiscal year
1995), Xscribe was reorganized as a holding company. Xscribe
has three active operating subsidiaries: Photomatrix
Corporation, a Nevada corporation ("Photomatrix"), Lexia
Systems, Inc., a California corporation ("Lexia"), and Xscribe
Legal Systems, Inc., a California corporation ("Legal
Systems"). Xscribe discontinued operations of its electronic
imaging services bureau during fiscal year 1995.
Xscribe, through its subsidiaries, develops, manu-
facturers, sells and services high-technology products and
information management solutions. Xscribe's products are
generally organized into two industry segments: Imaging
Products and Information Management Solutions. Xscribe's
Imaging Products segment manufacturers, sells and services
high-speed document and aperture-card scanners for legal,
financial, government and commercial enterprises. Xscribe's
Information Management Solutions group provides groupware
systems and litigation support systems, including workgroup,
department and enterprise-wide communication, document
management, X.400 electronic mail, calendaring, workflow, CAT
and imaging software and systems, to the legal marketplace and
major U.S. corporations.
Imaging Products
----------------
In fiscal year 1995, Xscribe derived approximately 46% of
its consolidated revenues from its Imaging Products segment,
primarily through the sale and support of Photomatrix
electronic image capture products, such as Photomatrix
aperture-card scanners and Photomatrix document scanners.
Photomatrix aperture-card scanners are used to scan microfilm
images of engineering drawings for storage in a digital format.
Photomatrix document scanners serve as input devices for image
management systems used in litigation support and office
automation applications. Photomatrix sells aperture-card
scanners to Intergraph Corporation and to PRC, Inc. under
subcontracts to provide electronic imaging systems to the
-8-
Page 11 of 85 <PAGE>
Department of Defense, and also sells aperture-card scanners to
commercial customers (primarily service bureaus who scan
microfilmed engineering drawings for end users). Photomatrix
sells its document scanner products, including its Series 6000
line (its complete image capture system), Series 5000 line,
Vision QC software (an image-input processing application), and
Autobatch (a batch input utility) to service bureaus via its
direct sales force, and to end users through high-end
integrators, medium-end integrators, valued-added distributors,
and value-added resellers.
Information Management Solutions
--------------------------------
Xscribe derived approximately 54% of its consolidated
revenues in fiscal year 1995 from its Information Management
Solutions segment. Xscribe's Information Management Solutions
segment primarily consists of groupware systems distributed and
supported by Lexia, and CAT systems developed, manufactured,
distributed and supported by Legal Systems.
Groupware Products
------------------
The majority of Xscribe's groupware systems revenues have
been derived from Lexia's resale, integration and support of
OfficePower , a groupware system developed by International
Computers Limited, Inc. ("ICL"). ICL is an international
leader in groupware and open-systems products and technologies,
and Lexia in 1993 acquired substantially all of the assets of
ICL's North American Sales Division. Lexia owns the exclusive
rights to distribute OfficePower and TeamOFFICE to the United
States legal marketplace and certain other commercial and
government customers for an initial period of five years,
expiring October 1998. Lexia acquired these rights in October
1993 in connection with the asset purchase. In November 1995,
Xscribe announced a new cooperative marketing arrangement with
ICL. See "Recent Developments."
OfficePower is a suite of host-based groupware products
for UNIX servers, which includes X.400 mail facilities, word
processing and programs that enable interworking between
OfficePower and PC's. The current release of OfficePower
(Version 7) gives users the ability to use client-server
technology by adding Windows-based clients (desktop PC's) to
the system to interface with the UNIX-based OfficePower server.
This enables Windows users, MacIntosh users, X Terminal and
character-based terminal users to communicate with each other
via OfficePower. Version 7 uses computer object integration to
enable the use of Windows-based applications with the groupware
systems. Version 7 also includes enhanced electronic mail
capabilities. Lexia believes that the primary market for
OfficePower is existing customers of OfficePower who upgrade to
Version 7.
-9-
Page 12 of 85 <PAGE>
Lexia also resells ICL's TeamWARE brand of groupware
products. TeamWARE is a modular integrated office information
system for OS/2, Windows NT, Novell Netware and UNIX servers
and Windows, MS-DOS, OS/2 and MacIntosh workstations. Although
Lexia has sold only a few TeamWARE installations to date, Lexia
believes that its future profitability is dependent upon its
ability to resell TeamWARE products. ICL has established a
TeamWARE group in the United States to develop distribution
channels for its TeamWARE products, but to date, this group has
not been successful in its efforts to market TeamWARE in the
United States. In October 1995, ICL agreed to a new
cooperative marketing arrangement with Xscribe through which
Xscribe will establish distribution channels for TeamWARE in
the United States. See "Recent Developments." There is no
assurance that these efforts will increase sales.
CAT Systems
-----------
Xscribe Legal Systems manufactures and sells hardware and
software CAT products to court reporters, court reporting and
transcription services firms, courts, and government agencies.
CAT systems computerize the process of taking dictation and
preparing transcripts of testimony given during a deposition or
courtroom proceeding and include two primary components: a
writer and a computer with application software. Legal Systems
manufactures and sells a leading-edge line of stenographic
writers, including the Vision 486, a combination stenographic
writer and portable PC, which incorporates the CAT system.
Legal Systems also offers StenoRam ULTRA, a stand-alone
electronic stenographic writer that communicates with an
external PC via cable or disk. Legal Systems sells XEC-2001, a
PC-based translating and editing software system.
RECENT DEVELOPMENTS
ICL and Xscribe have agreed on a business plan for a new
cooperative marketing arrangement in the United States for
TeamWARE groupware products. Effective November 1, 1995, ICL
will discontinue its existing U.S. TeamWARE reseller activities
and transfer certain of its employees to a new wholly owned
subsidiary of Xscribe, Team Open Systems, Inc., a Delaware
corporation ("Team Open Systems"). Team Open Systems will be
responsible, on a non-exclusive basis, for marketing TeamWARE
products and establishing distribution channels in the United
States through system integrators, distributors and value added
resellers. Lexia will continue as a reseller in the legal
marketplace and to certain commercial and government accounts.
ICL will fund 12 Team Open Systems employee positions and
a marketing budget that is subject to certain performance
milestones. ICL's total commitment is expected to be
approximately $800,000 during the second half of Xscribe's
-10-
Page 13 of 85 <PAGE>
fiscal year 1996, and approximately $1.9 million during fiscal
year 1997. Xscribe will reinvest Team Open Systems' sales
margins (subject to reasonable profits) into Team Open Systems'
sales and marketing budget.
Due to the limited operating budget, Team Open Systems
will target its initial marketing to resellers and end user
customers in the legal, insurance and health care markets in
the Northeast corridor (from Boston to Washington, D.C.),
Illinois and California. These markets were selected because
ICL and Lexia have established customer relationships in these
markets through which Team Open Systems will endeavor to build
reference accounts and initial distribution channels. Team
Open Systems' strategy is to differentiate TeamWARE products
from other groupware products based upon (i) its open systems
architecture, (ii) solutions tailored to the targeted markets,
(iii) enterprise-wide scalability, and (iv) superior reseller
and end user customer support.
There is no assurance that Team Open Systems will
successfully establish distribution channels for TeamWARE
products or that TeamWARE products will compete successfully
against competitive groupware products.
SELLING SHAREHOLDER
The following table sets forth the name and former
position of the Selling Shareholder and certain information
with respect to the beneficial ownership of the Company's
common stock by the Selling Shareholder both prior to and after
the offering by this Prospectus.
Number of
Shares Amount of
Beneficially Number of Beneficial
Owned On Shares Being Ownership
Name September 1, 1995 Registered After Offering
---- ----------------- ---------- --------------
David Hancock<F1> 76,667 76,667 0
[FN]
<F1> The address of David Hancock is 1838 Hermosa Avenue,
Hermosa Beach, California, 90254. His phone number is
(310) 379-1995. David Hancock was formerly the President
of Xscribe Imaging, Inc. Mr. Hancock's employment ended
in May 1995.
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Page 14 of 85 <PAGE>
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Shareholder
that he intends to sell Shares offered hereunder from time to
time in the over-the-counter market at prices and on terms
prevailing on the date of the sale or in negotiated
transactions or otherwise. The Selling Shareholder may pay
customary brokerage commissions on sales.
The Selling Shareholder and any brokers or dealers through
whom sales of the common stock are made may be deemed
"underwriters" within the meaning of the Securities Act of
1933, as amended (the "Act"), and any profits realized on the
sale may be deemed underwriting compensation.
The Company will pay all of the expenses incurred in
registering shares. The Selling Shareholder shall bear his own
distribution expenses.
DESCRIPTION OF SECURITIES
The Company is authorized to issue 30,000,000 shares of
its common stock and 3,173,275 shares of its preferred stock.
As of September 30, 1995, 5,742,000 shares of common stock were
issued and outstanding, 1,017,000 shares were subject to
outstanding options and warrants and 48,000 shares were
reserved for future options grants under the Company's 1994
Stock Plan for employees, and 1992 Stock Option Plan for
employees and directors.
Common Stock
------------
Each holder of common stock of Xscribe is entitled to one
vote for each share held of record and may cumulate votes for
the election of directors in accordance with applicable
provisions of California law. The shares of common stock are
not entitled to preemptive rights and are not subject to
redemption or assessment. Subject to the preferences which may
be granted to holders of preferred stock, each share of common
stock is entitled to share ratably in distributions to
shareholders and to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally
available therefor. Upon liquidation, dissolution or winding
up of the Company, subject to prior liquidation or other
preference rights of holders of preferred stock, if any, the
holders of common stock are entitled to receive pro rata the
assets of the Company which are legally available for
distribution to shareholders. The issued and outstanding
shares of common stock are validly issued, fully paid and
nonassessable.
-12-
Page 15 of 85 <PAGE>
Preferred Stock
---------------
The Company is authorized to issue up to 3,173,275 shares
of "blank check" preferred stock with such designations, rights
and preferences as may be determined from time to time by the
Board of Directors. This right empowers the Board of
Directors, without shareholder approval, to issue additional
preferred stock with dividend, liquidation, conversion, voting,
or other rights established by the Board of Directors in its
discretion. The ability to issue preferred stock can enhance
the Board of Directors' bargaining capability on behalf o the
Company's shareholders in a takeover situation. Under certain
circumstances, however, the power to issue preferred stock
could also be used by the incumbent Board of Directors to make
a change of control of the Company more difficult.
Transfer Agent and Registrar
----------------------------
The transfer agent and registrar for the common stock of
the Company is American Stock Transfer & Trust Company.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation of the Company eliminate the
personal liability of directors of the Company for monetary
damages in derivative actions for breach of a director's duty
to the Company to the fullest extent allowed under California
law. The Articles of Incorporation and Bylaws of the Company
also provide for indemnification of directors, officers and
other agents of the Company to the fullest extent allowed by
law. The Company also has entered into indemnification
agreements with directors, officers and certain key employees
that provide for indemnification to the maximum extent
permitted by law and provide for advances of defense costs and
expenses, subject to an undertaking to repay the advanced
amounts if the person ultimately is not entitled to
indemnification.
Directors, officers and other agents may be indemnified
for judgments, fines, settlements or other amounts paid in the
resolution of claims brought by a third party if the
indemnified person acted in good faith and in a manner that the
indemnified person reasonably believed to be in the best
interest of a corporation and its shareholders, and in the case
of a criminal proceeding, the indemnified person had no
reasonable cause to believe the conduct was unlawful. In
derivative actions and actions brought by the Company,
directors, officers and other agents may be entitled to
indemnification against expenses incurred for the defense or
settlement of such action if the indemnified person acted in
good faith in a manner that person believed to be in the best
interest of the corporation and its shareholders and with such
-13-
Page 16 of 85 <PAGE>
care, including reasonable inquiry, as an ordinarily prudent
person in like position would have used under similar
circumstances.
The Company currently maintains insurance policies in the
amount of $5,000,000.00 that cover directors' and officers'
liability. The Company has a separate executive risk policy
that insures against fiduciary liability, commercial crime,
kidnap/ransom and extortion.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or information have been filed
with the Securities and Exchange Commission ("Commission") and
are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1995; and
(b) The Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 1995; and
(c) The Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 1995; and
(d) All other reports filed by the Company pursuant
to Section 13(a) or 15(d) of the Exchange Act since the end of
the Company's fiscal year ended March 31, 1995; and
(e) The description of common stock set forth in the
Company's Form 8-A Registration Statement (No. 33-14172) filed
with the Commission on July 22, 1987.
All documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior
to the filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or which
de-registers all securities then remaining unsold, shall be
deemed to be incorporated by reference into this Registration
Statement and to be a part hereof from the date of filing of
such documents.
LEGAL MATTERS
The legality of the common stock offered hereby was passed
upon for the Company by Sheppard, Mullin, Richter & Hampton,
501 West Broadway, Nineteenth Floor, San Diego, California
92101.
-14-
Page 17 of 85 <PAGE>
EXPERTS
The consolidated financial statements and schedules of
Xscribe Corporation as of March 31, 1995 and 1994, and for each
of the three years in the three-year period ended March 31,
1995, incorporated herein by reference and in the Registration
Statement, have been incorporated herein by reference and in
the Registration Statement in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
_______________
Xscribe is a registered trademark of Xscribe Corporation.
OfficePower and TeamWARE are trademarks of International
Computers Limited.
Windows and Windows NT are trademarks of Microsoft Corporation.
OS/2 is a trademark of IBM.
Netware is a trademark of Novell Corp.
MacIntosh is a trademark of Apple Computer.
-15-
Page 18 of 85 <PAGE>
TABLE OF CONTENTS
-----------------
Page
----
PROSPECTUS . . . . . . . . . . . . . . . . . . . . . . . . 1
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . 2
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . 4
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . 8
RECENT DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . 10
SELLING SHAREHOLDER . . . . . . . . . . . . . . . . . . . . 11
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . 12
DESCRIPTION OF SECURITIES . . . . . . . . . . . . . . . . . 12
INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . 13
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . 14
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . 14
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-i-
Page 19 of 85 <PAGE>
PART II
Item 14 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
-------------------------------------------
Company
-------
Securities and Exchange Commission
registration fee $ 100
Accounting fees and expenses 1,500
Legal fees and expenses 5,000
Miscellaneous 500
-------
Total $ 7,100
=======
Item 15 INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
The Amended and Restated Articles of Incorporation of the
Company eliminate the personal liability of the Company's
directors to the fullest extent permissible under California
law, for monetary damages stemming from breach of fiduciary
duty of care owed by the directors to the Company and its
shareholders. The Amended and Restated Articles of
Incorporation also enable the Company to indemnify its
directors and officers beyond the indemnification
expressly permitted by Section 317 of the California
Corporations Code. As authorized by the shareholders, the
Company has entered into indemnification agreements with its
directors and officers. These indemnification agreements may
be sufficiently broad in its terms to indemnify officers and
directors under certain circumstances for liabilities
(including reimbursement for expenses incurred) arising under
the Securities Act of 1933.
The Company currently maintains insurance policies in the
total amount of $5,000,000 that covers directors' and officers'
liability. The Company has a separate executive risk policy
which insures events of fiduciary liability, commercial crime,
kidnap/ransom and extortion.
Item 16 EXHIBITS
--------
5.1 Opinion of Sheppard, Mullin, Richter & Hampton
regarding legality
10.1 Credit Agreement between Xscribe Corporation and
Imperial Bank executed August 25, 1995, and related
documents
II-1
Page 20 of 85 <PAGE>
10.2 ICL Letter Agreement<F*>
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Sheppard, Mullin, Richter & Hampton
(included in Exhibit 5.1)
24.1 Power of Attorney (included in signature page)
Item 17 UNDERTAKINGS
------------
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Act") may be permitted to
directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in
the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the small business
issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the small
business issuer will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
[FN]
To be filed by amendment.
II-2
Page 21 of 85 <PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of
San Diego, State of California, on December 14, 1995.
XSCRIBE CORPORATION
By /s/ Suren G. Dutia
-----------------------------
Suren G. Dutia, President and
Chief Operating Officer
By /s/ Bruce C. Myers
-----------------------------
Bruce C. Myers,
Chief Executive Officer and
Chief Financial Officer;
Secretary
II-3
Page 22 of 85 <PAGE>
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Suren G. Dutia
and Bruce C. Myers, jointly and severally, his attorneys-in-
fact, each with the power of substitution, for him in any and
all capacities, and sign any and all amendments (including
post-effective amendments) to this Registration Statement, and
to file the same, with the exhibits thereto, and any other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying
and confirming all that each of said attorneys-in-fact, or a
substitute or substitutes, may do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of
1933, this Registration statement has been signed below by the
following persons on behalf of the registrant and in the
capacities indicated.
SIGNATURE CAPACITY DATE
--------- -------- ----
/s/ Suren G. Dutia Chairman of the Board; 12/14/95
------------------------- President; Chief Executive
Suren G. Dutia Officer
/s/ Bruce C. Myers Chief Operating Officer; 12/14/95
------------------------- Chief Financial Officer;
Bruce C. Myers Secretary
/s/ Peter B. Harker Controller; Principal 12/14/95
------------------------- Accounting Officer
Peter B. Harker
/s/ Donald R. Miller, Jr. Director 12/14/95
-------------------------
Donald R. Miller, Jr.
/s/ Patrick W. Moore Director 12/14/95
-------------------------
Patrick W. Moore
SIGNATURES CONTINUED ON NEXT PAGE
II-4
Page 23 of 85 <PAGE>
SIGNATURE CAPACITY DATE
--------- -------- ----
/s/ Jukka V. Norokorpi Director 12/14/95
------------------------- --------
Jukka V. Norokorpi
/s/ Ira H. Sharp Director 12/14/95
------------------------- --------
Ira H. Sharp
/s/ John F. Staley Director 12/14/95
------------------------- --------
John F. Staley
/s/ Evan A. Wyly Director 12/14/95
------------------------- --------
Evan A. Wyly
II-5
Page 24 of 85 <PAGE>
EXHIBIT INDEX
No. Description Page
-------------------------------------------------------------------
5.1 Opinion of Sheppard, Mullin, Richter & Hampton
regarding legality 26
10.1 Credit Agreement between Xscribe Corporation
and Imperial Bank executed August 25, 1995,
and related documents 28
10.2 ICL Letter Agreement 83
23.1 Consent of KPMG Peat Marwick LLP 85
23.2 Consent of Sheppard, Mullin, Richter &
Hampton (included in Exhibit 5.1)
24.1 Power of Attorney (included in signature page)
Page 25 of 85 <PAGE>
EXHIBIT 5.1
SHEPPARD, MULLIN, RICHTER & HAMPTON
A Partnership Including Professional Corporations
Attorneys at Law
333 South Hope Street, Forty-Eighth Floor
Los Angeles, California 90071
Telephone (213) 620-1780
_____
Facsimile (213) 620-1398
November 30, 1995
Our File Number
YW7-53541
Xscribe Corporation
6285 Nancy Ridge Drive
San Diego, CA 92121
Re: Registration Statement on Form S-3
Dear Sirs:
Xscribe Corporation (the "Company") is filing with the
Securities and Exchange Commission a registration statement on
Form S-3 (the "Registration Statement") in connection with the
registration under the Securities Act of 1933, as amended, of
76,667 shares of common stock of the Company that may be offered
and sold by the Selling Shareholder named in the Registration
Statement (the "Shares"). You have requested our opinion as to
the legality of the Shares.
In connection with the furnishing of our opinion to you
concerning this matter, we have examined originals, certified
copies or photostatic copies of your Amended and Restated
Articles of Incorporation and Bylaws (as amended), the minutes
and written consents of your Board of Directors and shareholders,
a certificate of your corporate secretary and chief financial
officer as to certain facts, documents on file with and
certificates of the California Secretary of State, the Stock
Agreement dated February 23, 1995, between Xscribe Corporation
and David Hancock, the Registration Statement and such other
corporate records and other documents as we have deemed relevant
and necessary as the basis for the opinions set forth herein. In
such examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us
as certified or photostatic copies.
Page 26 of 85 <PAGE>
Xscribe Corporation
November 30, 1995
Page 2
On the basis of the foregoing and in reliance thereon and
after consideration of such matters and laws as we deem
applicable and relevant, we are of the opinion that the Shares
are legally and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement, and we further consent to the use of our
name under the caption "Legal Matters" in the Registration
Statement and in the Prospectus which is a part thereof.
Very truly yours,
/s/ Sheppard, Mullin, Richter & Hampton
SHEPPARD, MULLIN, RICHTER & HAMPTON
Page 27 of 85 <PAGE>
EXHIBIT 10.1
IMPERIAL BANK
California's Business Bank TM
Member FDIC
IMPERIAL BANK August 10, 1995
701 B. Street
San Diego, California 92101
Subject: Credit Terms and Conditions
Gentlemen:
To induce you ("Bank") to make loans to Xscribe Corporation
("Borrower"), and in consideration of any loan or loans you, in your
sole discretion, may make to Borrower, Borrower warrants and agrees
as follows:
A. Borrower represents and warrants that:
1. EXISTENCE AND RIGHTS. Borrower is a corporation.
Borrower is duly organized and existing and in good standing under
the laws of the State of California, without limit as to the
duration of its existence and is authorized and in good standing to
do business in the State of California; Borrower has powers and
adequate authority, rights and franchises to own its property and to
carry on its business as now conducted, and is duly qualified and in
good standing in each State in which the character of the properties
owned by it therein or the conduct of its business makes such
qualification necessary; and Borrower has the power and adequate
authority to make and carry out this Agreement. Borrower has no
investment in any other business entity, except: Photomatrix
Corporation, Xscribe Legal Systems, Inc., Lexia Systems, Inc., U.S.
Transcan Technologies, Inc. and Xscribe Imaging, Inc.
2. AGREEMENT AUTHORIZED. The execution, delivery and
performance of this Agreement are duly authorized and do not require
the consent or approval of any governmental body or other regulatory
authority; are not in contravention of or in conflict with any law
or regulation or any term or provision of Borrower's articles of
incorporation, by-laws, or Articles of Association, as the case may
be, and this Agreement is the valid, binding and legally enforceable
obligation of Borrower in accordance with its terms.
3. NO CONFLICT. The execution, delivery and performance of
this Agreement are not in contravention of or in conflict with any
agreement, indenture or undertaking to which Borrower is a party or
by which it or any of its property may be bound or affected, and do
not cause any lien, charge or other encumbrance to be created or
imposed upon any such property by reason thereof.
-1-
Page 28 of 85 <PAGE>
4. LITIGATION. There is no litigation or other proceeding
pending or threatened against or affecting Borrower except as
previously disclosed to Bank, and Borrower is not in default with
respect to any order, writ, injunction, decree or demand of any
court or other governmental or regulatory authority. Borrower also
agrees to notify you in writing of any future litigation threatened
against or affecting borrower.
5. FINANCIAL CONDITION. The balance sheet of Borrower as of
3/31/95, and the related profit and loss statement for the year
ended on that date, a copy of which has heretofore been delivered to
you by Borrower, and all other statements and data submitted in
writing by Borrower to you in connection with this request for
credit are true and correct, and said balance sheet and profit and
loss statement truly present the financial condition of Borrower as
of the date thereof and the results of operations for the period
covered thereby, and has been prepared in accordance with generally
accepted accounting principles on a basis consistently maintained.
Since such date there have been no material adverse changes in the
ordinary course of business. Borrower has no knowledge or any
liabilities, contingent or otherwise, at such date not reflected in
said balance sheet, and Borrower has not entered into any special
commitments or substantial contracts which are not reflected in said
balance sheet, other than in the ordinary and normal course of its
business, which may have a materially adverse effect upon its
financial condition, operations or business as not conducted.
6. TITLE TO ASSETS. Borrower has good title to its assets,
and the same are not subject to any liens or encumbrances other than
those permitted by Section C.3 hereof.
7. TAX STATUS. Borrower has no liability for any delinquent
state, local or federal taxes, and, if Borrower has contracted with
any government agency, Borrower has no liability for renegotiation
of profits, except as previously disclosed to Bank.
8. TRADEMARKS, PATENTS. Borrower, as of the date hereof,
possesses all necessary trademarks, trade names, copyrights,
patents, patent rights, and licenses to conduct its business as now
operated, without any known conflict with the valid trademarks,
trade names, copyrights, patents and license rights of others,
except as previously disclosed to Bank.
9. REGULATION U. The proceeds of the notes have not been used
to purchase or carry margin stock (as defined within Regulation U of
the Board of Governors of the Federal Reserve system).
B. Borrower agrees that so long as it is indebted to you, under
borrowings, or other indebtedness, it will, unless you shall
otherwise consent in writing:
-2-
Page 29 of 85 <PAGE>
1. RIGHTS AND FACILITIES. Maintain and preserve all rights,
franchises and other authority adequate for the conduct of its
business; maintain its properties, equipment and facilities in good
order and repair; conduct its business in an orderly manner without
voluntary interruption and, if a corporation or partnership,
maintain and preserve its existence.
2. INSURANCE. Maintain public liability, property damage and
workers' compensation insurance and insurance on all its insurable
property against fire and other hazards with responsible insurance
carriers to the extent usually maintained by similar businesses
and/or in the exercise of good business judgment.
3. TAXES AND OTHER LIABILITIES. Pay and discharge, before
the same become delinquent and before penalties accrue thereon, all
taxes, assessments and governmental charges upon or against it or
any of its properties, and all its other liabilities at any time
existing, except to the extent and so long as:
(a) The same are being contested in good faith and by
appropriate proceedings in such manner as not to cause any
materially adverse effect upon its financial condition or the
loss of any right of redemption from any sale thereunder; and
(b) It shall have set aside on its books reserves
(segregated to the extent required by generally accepted
accounting practice) deemed by it adequate with respect
thereto.
4. NET WORTH AND WORKING CAPITAL. Maintain a minimum
tangible net worth (meaning the excess of all assets, excluding any
value for goodwill, trademarks, patents, copyrights, proprietary
rights, organization expense and other similar intangible items,
over its liabilities) of not less than $5,000,000 through March 30,
1996 and commencing March 31, 1996 and thereafter, $6,000,000.00 as
computed and determined in accordance with generally accepted
accounting principles on a basis consistently maintained by
Borrower.
5. DEBT TO WORTH. Maintain a ratio of total liabilities to
tangible net worth (as defined above) of no more than 1.0 to 1.0.
6. WORKING CAPITAL. Maintain minimum working capital,
(meaning the excess of current assets less current liabilities) of
not less than $3,000,000.00
7. CURRENT RATIO. Maintain a minimum current ratio (meaning
current assets divided by current liabilities) of not less than 1.5
to 1.0.
8.. EARNINGS RATIO. Commencing with the quarter ending
December 31, 1995, maintain a ratio of EBITA (defined as the most
recent two quarters of earnings before interest, taxes and
-3-
Page 30 of 85 <PAGE>
amortization of intangible assets) multiplied by two to current
portion of bank long term debt of 2.0 to 1.0.
9. RECORDS AND REPORTS. Maintain a standard and modern
system of accounting in accordance with generally accepted
accounting principles on a basis consistently maintained; permit
your representatives to have access to, and to examine its
properties, books and records at all reasonable times during normal
business hours; and furnish you:
(a) As soon as available, and in any event within 45 days
after the close of each quarter of each fiscal year of
Borrower, commencing with the quarter next ending, a
consolidating balance sheet, profit and loss statement and
reconciliation of Borrower's capital accounts as of the close
of such period and covering operations for the portion of
Borrower's fiscal year ending on the last day of such periods,
10Q and supporting schedules all in reasonable detail and
stating in comparative form the figures for the corresponding
date and period in the previous fiscal year, prepared in
accordance with generally accepted accounting principles on a
basis consistently maintained by Borrower and certified by an
appropriate officer of Borrower, subject, however, to year-end
audit adjustments;
(b) As soon as available, and in any event within 90 days
after the close of each fiscal year of Borrower, a report of
audit of Company as of the close of and for such fiscal year,
all in reasonable detail and stating in comparative form the
figures as of the close of and for the previous fiscal year,
with. the unqualified opinion of accountants satisfactory to
you and 10K reports.
(c) Within ninety (90) days after the end of each fiscal
year of Borrower, a certificate of chief financial officer of
Borrower, stating that Borrower has performed and observed each
and every covenant contained in this Letter to be performed by
it and that no event has occurred and no condition then exists
which constitutes an event of default hereunder or would
constitute such an event of default upon the lapse of time or
upon the giving of notice and the lapse of time specified
herein; or, if any such event has occurred or any such
condition exists, specifying the nature thereof;
(d) Promptly after the receipt thereof by Borrower,
copies of any detailed audit reports submitted to Borrower by
independent accountants in connection with each annual or
interim audit of the accounts of Borrower made by such
accountants;
(e) Promptly after the same are available, copies of all
such proxy statements, financial statements and reports as
Borrower shall send to its stockholders, if any, and copies of
all reports which Borrower may file with the Securities and
Exchange Commission or any governmental authority at any time
substituted therefor;
-4-
Page 31 of 85 <PAGE>
(f) 45 days of each quarter end, accounts receivable and
accounts payable agings in a format acceptable to Bank; and
(g) Such other information relating to the affairs of
Borrower as you reasonably may request from time to time.
10. NOTICE OF DEFAULT. Promptly notify the Bank in writing of
the occurrence of any event of default hereunder or an event which
would be an event of default upon the notice and lapse of time.
11. OUT OF DEBT PERIOD. Maintain a zero outstanding balance
under its $1,000,000 line for thirty (30) consecutive days prior to
expiration.
C. Borrower agrees that so long as it is indebted to you, it will
not, without your written consent:
1. TYPE OF BUSINESS; MANAGEMENT; Make any substantial change
in the character of its business; or make any change in its
executive management.
2. OUTSIDE INDEBTEDNESS. Create, incur, assume or permit to
exist any indebtedness for borrowed moneys other than loans from you
except obligations now existing as shown in the financial statement
dated _____________, excluding those being refinanced by your bank;
or sell or transfer, either with or without recourse, any accounts
or notes receivable or any moneys due to become due.
3. LIENS AND ENCUMBRANCES. Create, incur, or assume any
mortgage, pledge, encumbrance, lien or charge of any kind (including
the charge upon property at any time purchased or acquired under
conditional sale or other title retention agreement) upon any asset
now owned or hereafter acquired by it, other than liens for taxes
not delinquent and liens in your favor.
4. LOANS, INVESTMENTS, SECONDARY LIABILITIES. Make any loans
or advances to any person or other entity other than in the ordinary
course and normal course of its business as now conducted or make
any investment in the securities of any person or other entity other
than the United States Government; or guarantee or otherwise become
liable upon the obligation of any person or other entity, except by
endorsement of negotiable instruments for deposit or collection in
the ordinary and normal course of its business.
5. ACQUISITION OR SALE OF BUSINESS; MERGER OR CONSOLIDATION.
Purchase or otherwise acquire the assets or business of any person
or other entity; or liquidate, dissolve, merge or consolidate, or
commence any proceedings therefor; or sell any assets except in the
ordinary and normal course of its business as now conducted; or
sell, lease, assign, or transfer any substantial part of its
business or fixed assets, or any property or other assets necessary
for the continuance of its business as now conducted, including
without limitation the selling of any property or other asset
accompanied by the leasing back of the same.
-5-
Page 32 of 85 <PAGE>
D. The occurrence of any of the following events of default shall,
at your option, terminate your commitment to lend and make all sums
of principal and interest then remaining unpaid on all Borrower's
indebtedness to you immediately due and payable, all without demand,
presentment or notice, all of which are hereby expressly waived:
1. FAILURE TO PAY NOTE. Failure to pay any installment of
principal of or interest on any indebtedness of Borrower to you.
2. BREACH OF COVENANT. Failure of Borrower to perform any
other term or condition of this Letter binding upon Borrower.
3. BREACH OF WARRANTY. Any of Borrower's representations or
warranties made herein or any statement or certificate at any time
given in writing pursuant hereto or in connection herewith shall be
false or misleading in any material respect.
4. INSOLVENCY; RECEIVER OR TRUSTEE. Borrower shall become
insolvent; or admit its inability to pay its debts as they mature;
or make an assignment for the benefit of creditors; or apply for or
consent to the appointment of a receiver or trustee for it or for a
substantial part of its property or business.
5. JUDGMENTS, ATTACHMENTS. Any money judgment, writ or
warrant of attachment, or similar process shall be entered or filed
against Borrower or any of its assets and shall remain unvacated,
unbonded or unstayed for a period of 10 days or in any event later
than five days prior to the date of any proposed sale thereunder.
6. BANKRUPTCY. Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against Borrower and, if instituted against it,
shall be consented to.
E. Miscellaneous Provisions.
1. FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on
the part of Imperial Bank or any holder of Notes issued hereunder,
in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or privilege.
All rights and remedies existing under this agreement or any note
issued in connection with a loan that Imperial Bank may make
hereunder, are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
2. FEES. Borrower shall pay to Bank a non-utilization fee of
three quarters of one percent (0.75%) on the average daily unused
portion of the line collected quarterly in arrears, also, docu-
mentation fees of $150.00 per facility. The nonutilization fee
-6-
Page 33 of 85 <PAGE>
shall be calculated on the basis of a 360 day year and shall be
payable quarterly beginning with the quarter ending September 30,
1995. The fee will be due and payable within fifteen (15) days of
notice by the Bank of the amount due.
3. WARRANT. Borrower shall deliver to Bank a warrant in form
and substance acceptable to Bank for 75,000 shares, of its common
stock for $1 per share good for 5 years as a condition of extending
any credit to Borrower.
XSCRIBE CORPORATION
By: /s/ Suren G. Dutia
-----------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
Date: August 25, 1995
-----------------------------------------
-7-
Page 34 of 85 <PAGE>
IMPERIAL BANK
Member FDIC
NOTE
$1,000,000.00 San Diego, California August 10, 1995
------------ --------- ---------------
On August 15, 1996, and as hereinafter provided, for value
---------------
received, the undersigned promises to pay to IMPERIAL BANK
("Bank"), a California banking corporation, or order, at its
San Diego Regional office, the principal sum of $1,000,000.00
------------------ ------------
MAXIMUM or such sums up to the maximum if so stated, as the
-------
Bank may now or hereafter advance to or for the benefit of the
undersigned in accordance with the terms hereof, together with
interest from date of disbursement or N/A , whichever is
----------
later, on the unpaid principal balance [ ] at the rate of ____%
per year [X] at the rate of 1.250% per year in excess of the
------
rate of interest which Bank has announced as its prime lending
rate (the "Prime Rate"), which shall vary concurrently with any
change in such Prime Rate, or $250.00, whichever is greater.
------
Interest shall be computed at the above rate on the basis of
the actual number of days during which the principal balance is
outstanding, divided by 360, which shall, for interest
computation purposes, be considered one year.
Interest shall be payable [X] monthly [ ] quarterly
[ ] included with principal [ ] in addition to principal
[ ] __________________________, beginning September 15, 1995,
------------------
and if not so paid shall become a part of the principal. All
payments shall be applied first to interest, and the remainder,
if any, on principal. [ ] (if checked), Principal shall be
payable in installments of $_____________, or more, each
installment on the _______ day of each ___________________,
beginning ________________________. Advances not to exceed any
unpaid balance owing at any one time equal to the maximum
amount specified above, may be made at the option of Bank.
Any partial prepayment shall be applied to the
installments, if any, in inverse order of maturity. Should
default be made in the payment of principal or interest when
due, or in the performance or observance, when due, of any
item, covenant or condition of any deed of trust, security
agreement or other agreement (including amendments or
extensions thereof) securing or pertaining to this note, at the
option of the holder hereof and without notice or demand, the
Page 35 of 85 <PAGE>
entire balance of principal and accrued interest then remaining
unpaid shall (a) become immediately due and payable, and
(b) thereafter bear interest, until paid in full, at the
increased rate of 5% per year in excess of the rate provided
for above, as it may vary from time to time.
Defaults shall include, but not limited to, the failure of
the maker(s) to pay principal or interest when due; the filing
as to each person obligated hereon, whether as maker, co-maker,
endorser or guarantor (individually or collectively referred to
as the "Obligor") of a voluntary or involuntary petition under
the provisions of the Federal Bankruptcy Act; the issuance of
any attachment or execution against any asset of any Obligor,
the death of any Obligor, or any deterioration of the financial
condition of any Obligor which results in the holder hereof
considering itself, in good faith, insecure.
[ ] If any installment payment or principal balance payment due
hereunder is delinquent ten or more days, Obligor agrees to pay
a late charge in the amount of 5% of the payment so due and
unpaid, in addition to the payment, but nothing in this
paragraph is to be construed as any obligation on the part of
the holder of this note to accept payment of any installment
past due or less than the total principal balance after
maturity.
If this note is not paid when due, each Obligor promises
to pay all costs and expenses of collection and reasonable
attorney's fees incurred by the holder hereof on account of
such collection, plus interest at the rate applicable to
principal, whether or not suit is filed hereon. Each Obligor
shall be jointly and severally liable hereon and consents to
renewals, replacements and extensions of time for payment
hereof, before, at, or after maturity, consents to the
acceptance, release or substitution of security for this note;
and waives demand and protest and the right to assert any
statute of limitations. Any married person who signs this note
agrees that recourse may be had against separate property for
any obligations hereunder. The indebtedness evidenced hereby
shall be payable in lawful money of the United States. In any
action brought under or arising out of this note, each Obligor,
including successor(s) or assign(s) hereby consents to the
application of California law, to the jurisdiction of any
competent count within the State of California, and to service
of process by any means authorized by California law.
No single or partial exercise of any power hereunder, or
under any deed of trust, security agreement or other agreement
in connection herewith shall preclude other or further
exercises thereof or the exercise of any other such power. The
holder hereof shall at all times have the right to proceed
against any portion of the security for this note in such order
and in such manner as such holder may consider appropriate,
without waiving any rights with respect to any of the security.
Any delay or omission on the part of the holder hereof in
Page 36 of 85 <PAGE>
exercising any right hereunder, or under any deed of trust,
security agreement or other agreement, shall not operate as a
waiver of such right, or of any such right, under this note or
any deed of trust, security agreement or other agreement in
connection herewith.
INITIAL HERE SEE ADDENDUM ATTACHED
/s/ BCM
/s/ SD
_________________________ XSCRIBE CORPORATION
_________________________ BY /s/ Bruce C. Myers
-------------------------------
_________________________ /s/ Suren G. Dutia
-------------------------------
Page 37 of 85 <PAGE>
ADDENDUM NOTE
In connection with that certain revolving Note made available
to you by Imperial Bank ("Bank"), in the amount of
$1,000,000.00 dated 8/10/95 and expiring 8/15/96 ("Revolving
Note"), the undersigned ("Borrower") hereby warrants and agrees
to maintain zero ($0) outstanding balance on said Revolving
Note for a minimum period of thirty (30) consecutive days
during stated term of the Revolving Note.
Failure to meet this or any other term or condition of the
Revolving Note shall, at Bank's option, terminate Bank's
commitment to lend and make all sums of principal and interest
then remaining unpaid on all Borrower's indebtedness to Bank
immediately due and payable, all without demand, presentment or
notice, all of which are hereby expressly waived.
XSCRIBE CORPORATION
BY /s/ Suren G. Dutia
-----------------------------
/s/ Bruce C. Myers
-----------------------------
Page 38 of 85 <PAGE>
IMPERIAL BANK
Member FDIC
NOTE
$1,000,000.00 San Diego, California August 10, 1995
------------ --------- ---------------
On August 16, 1999, and as hereinafter provided, for value
---------------
received, the undersigned promises to pay to IMPERIAL BANK
("Bank"), a California banking corporation, or order, at its
San Diego Regional office, the principal sum of $1,000,000.00
------------------ ------------
or such sums up to the maximum if so stated, as the Bank may
now or hereafter advance to or for the benefit of the
undersigned in accordance with the terms hereof, together with
interest from date of disbursement or N/A , whichever is
-----------
later, on the unpaid principal balance [ ] at the rate of ____%
per year [X] at the rate of 1.500% per year in excess of the
-----
rate of interest which Bank has announced as its prime lending
rate (the "Prime Rate"), which shall vary concurrently with any
change in such Prime Rate, or $250.00, whichever is greater.
------
Interest shall be computed at the above rate on the basis of
the actual number of days during which the principal balance is
outstanding, divided by 360, which shall, for interest
computation purposes, be considered one year.
Interest shall be payable [X] monthly [ ] quarterly
[ ] included with principal [X] in addition to principal
[ ] ____________________________, beginning September 15, 1995,
------------------
and if not so paid shall become a part of the principal. All
payments shall be applied first to interest, and the remainder,
if any, on principal. [X] (if checked), Principal shall be
payable in installments of $20,833.33, or more, each
---------
installment on the 15th day of each month , beginning
---- ---------
September 15, 1995. Advances not to exceed any unpaid balances
------------------
owing at any one time equal to the maximum amount specified
above, may be made at the option of Bank.
Any partial prepayment shall be applied to the
installments, if any, in inverse order of maturity. Should
default be made in the payment of principal or interest when
due, or in the performance or observance, when due, of any
item, covenant or condition of any deed of trust, security
agreement or other agreement (including amendments or
Page 39 of 85 <PAGE>
extensions thereof) securing or pertaining to this note, at the
option of the holder hereof and without notice or demand, the
entire balance of principal and accrued interest then remaining
unpaid shall (a) become immediately due and payable, and (b)
thereafter bear interest, until paid in full, at the increased
rate of 5% per year in excess of the rate provided for above,
as it may vary from time to time.
Defaults shall include, but not limited to, the failure of
the maker(s) to pay principal or interest when due; the filing
as to each person obligated hereon, whether as maker, co-maker,
endorser or guarantor (individually or collectively referred to
as the "Obligor") of a voluntary or involuntary petition under
the provisions of the Federal Bankruptcy Act; the issuance of
any attachment or execution against any asset of any Obligor,
the death of any Obligor, or any deterioration of the financial
condition of any Obligor which results in the holder hereof
considering itself, in good faith, insecure.
[ ] If any installment payment or principal balance payment due
hereunder is delinquent ten or more days, Obligor agrees to pay
a late charge in the amount of 5% of the payment so due and
unpaid, in addition to the payment, but nothing in this
paragraph is to be construed as any obligation on the part of
the holder of this note to accept payment of any installment
past due or less than the total principal balance after
maturity.
If this note is not paid when due, each Obligor promises
to pay all costs and expenses of collection and reasonable
attorney's fees incurred by the holder hereof on account of
such collection, plus interest at the rate applicable to
principal, whether or not suit is filed hereon. Each Obligor
shall be jointly and severally liable hereon and consents to
renewals, replacements and extensions of time for payment
hereof, before, at, or after maturity, consents to the
acceptance, release or substitution of security for this note,
and waives demand and protest and the right to assert any
statute of limitations. Any married person who signs this note
agrees that recourse may be had against separate property for
any obligations hereunder. The indebtedness evidenced hereby
shall be payable in lawful money of the United States. In any
action brought under or arising out of this note, each Obligor,
including successor(s) or assign(s) hereby consents to the
application of California law, to the jurisdiction of any
competent count within the State of California, and to service
of process by any means authorized by California law.
No single or partial exercise of any power hereunder, or
under any deed of trust, security agreement or other agreement
in connection herewith shall preclude other or further
exercises thereof or the exercise of any other such power. The
holder hereof shall at all times have the right to proceed
against any portion of the security for this note in such order
and in such manner as such holder may consider appropriate,
Page 40 of 85 <PAGE>
without waiving any rights with respect to any of the security.
Any delay or omission on the part of the holder hereof in
exercising any right hereunder, or under any deed of trust,
security agreement or other agreement, shall not operate as a
waiver of such right, or of any other right, under this note or
any deed of trust, security agreement or other agreement in
connection herewith.
_________________________ XSCRIBE CORPORATION
_________________________ BY /s/ Suren G. Dutia
------------------------------
_________________________ /s/ Bruce C. Myers
------------------------------
Page 41 of 85 <PAGE>
IMPERIAL BANK
Member FDIC
AGREEMENT TO PROVIDE INSURANCE
(REAL OR PERSONAL PROPERTY)
TO: IMPERIAL BANK Date: August 10, 1995
----------------
701 "B" Street Borrower:
San Diego, California 92101 XSCRIBE CORPORATION
--------------------
INITIAL HERE loans totaling
/s/ BCM In consideration of xxxxxxxxxxxxxxxxx
/s/ SD $ 2,000,000.00 , secured by Accounts Receivable,
------------------ ----------------------
Inventory and Equipment as described on the attached "EXHIBIT A",
consisting of one page.
-----------------------------------------------------------------
I/We agree to obtain adequate insurance coverage to remain in
force during the term of the loan.
I/We also agree to advise the below named agent to add Imperial
Bank as loss payee on the new or existing insurance policy, and
to furnish Bank at above address with a copy of said policy/
endorsements and any subsequent renewal policies.
I/We understand that the policy must contain:
1. Fire and extended coverage in an amount sufficient to
cover:
a) The amount of the loan, OR
b) All existing encumbrances, whichever is greater,
But not in excess of the replacement value of the
improvements on the real property.
2. Lender's "Loss Payable" Endorsement Form 438 BFU in
favor of Imperial Bank, or any other form acceptable
to Bank.
INSURANCE INFORMATION
Insurance Co./Agent: Telephone No.:
Agent's Address:
XSCRIBE CORPORATION
Signature of Obligor: BY /s/ Suren G. Dutia
----------------------------
Signature of Obligor: /s/ Bruce C. Myers
----------------------------
================================================================
Page 42 of 85 <PAGE>
Attachment to Agreement
dtd. 8/10/95, consisting of one page
XSCRIBE CORPORATION
collateral description
EXHIBIT A
ALL PERSONAL PROPERTY, WHETHER PRESENTLY EXISTING OR HEREAFTER
CREATED OR ACQUIRED, INCLUDING BUT NOT LIMITED TO: ALL
ACCOUNTS, CHATTEL PAPER, DOCUMENTS, INSTRUMENTS, MONEY, DEPOSIT
ACCOUNTS AND GENERAL INTANGIBLES INCLUDING RETURNS,
REPOSSESSIONS, BOOKS AND RECORDS RELATING THERETO, AND
EQUIPMENT CONTAINING SAID BOOKS AND RECORDS. ALL GOODS
INCLUDING EQUIPMENT AND INVENTORY. ALL PROCEEDS INCLUDING,
WITHOUT LIMITATION, INSURANCE PROCEEDS. ALL GUARANTEES AND
OTHER SECURITY THEREFOR.
INITIAL HERE
/s/ BCM
/s/ SD
Page 43 of 85 <PAGE>
IMPERIAL BANK
Member FDIC
CORPORATE RESOLUTION REGARDING CREDIT
OFFICE: San Diego Regional ADDRESS: 701 "B" Street
--------------------- San Diego, California 92101
-----------------------------
RESOLVED, that XSCRIBE CORPORATION
-----------------------------------------------
borrow from IMPERIAL BANK, hereinafter referred to as "Bank", from
time to time, such sums of money as, in the judgement of the
officer or officers hereinafter authorized, this corporation may
require; provided that the aggregate amount of such borrowing,
pursuant to this resolution, shall not at any one time exceed
the principal sum of Two Million and No/100 DOLLARS
--------------------------------
($ 2,000,000.00 ), in addition to such amendments as may
----------------
be otherwise authorized;
RESOLVED FURTHER, that any 1 of the following named
------
(Specify Number)
officers
Suren Dutia CEO/Chairman
---------------------- the -----------------------
Bruce Meyers Sec/CFO/VP Operations
---------------------- the -----------------------
---------------------- the -----------------------
---------------------- the -----------------------
---------------------- the -----------------------
of this corporation (the officer or officers acting in
combination, authorized to act pursuant hereto being herein-
after designated as "Authorized Officers"), be and they are
hereby authorized, directed and empowered, for and on behalf
and in the name of this corporation (1) to execute and
deliver to the Bank such notes or other evidences of
indebtedness of this corporation for the monies so borrowed,
with interest thereon, as the Bank may require, and to
execute and deliver, from time to time, renewals or
extensions of such notes or other evidences of indebtedness;
(2) to grant a security interest in, transfer, or otherwise
hypothecate or deed in trust for Bank's benefit and deliver
by such instruments in writing or otherwise as may be
demanded by the Bank, any of the property of this corporation
as may be required by the Bank to secure the payment of any
notes or other indebtedness of this corporation or third
parties to Bank, whether arising pursuant to this resolution
or otherwise; and (3) to perform all acts and execute and
Page 44 of 85 <PAGE>
deliver all instruments which the Bank may deem necessary
to carry out the purposes of this resolution;
RESOLVED FURTHER, that said authorized officers be and
they are hereby authorized and empowered, and that any one
of said authorized officers be and he/she is hereby authorized
and empowered (1) to discount with or sell to the Bank
conditional sales contracts, notes, acceptances, drafts,
bailment agreements, leases, receivables and evidences of
indebtedness payable to this corporation, upon such terms
as may be agreed upon by them and the Bank, and to endorse
in the name of this corporation said notes, acceptances,
drafts, bailment agreements, leases, receivables and
evidences of indebtedness so discounted, and to guarantee
the payment of the same to the Bank, and (2) to apply for
and obtain from the Bank letters of credit and in connection
therewith to execute such agreement, applications, guarantees,
indemnities and other financial undertakings as Bank may
require;
RESOLVED FURTHER, that said authorized officers are
also authorized to direct the disposition of the proceeds of
any such obligation, and to accept or direct delivery from
the Bank of any property of this corporation at any time
held by the Bank;
RESOLVED FURTHER, that the authority given hereunder
shall be deemed retroactive and any and all acts authorized
hereunder performed prior to the passage of this resolution
are hereby ratified and affirmed;
RESOLVED FURTHER, that this resolution will continue
in full force and effect until the Bank shall receive
official notice in writing from this corporation of the
revocation thereof by a resolution duly adopted by the
Board of Directors of this corporation, and that the
certification of the Secretary of this corporation as to
the signatures of the above named persons shall be binding
on this corporation.
I, Bruce Meyers , Secretary of the above
---------------------------
named corporation, duly organized and existing under the laws
of the State of California , do hereby certify
----------------------
that the foregoing is a full, true and correct copy of a
resolution of the Board of Directors of said corporation,
duly and regularly passed and adopted by the Board of
Directors of said corporation.
I further certify that said resolution is still in full
force and effect and has not been amended or revoked, and that
the specimen signatures appearing below are the signatures of
Page 45 of 85 <PAGE>
the officers authorized to sign for this corporation by virtue
of said resolution.
EXECUTED ON
AUTHORIZED SIGNATURES:
Signature: /s/ Suren G. Dutia
-------------------------
Suren Dutia
Signature: /s/ Bruce C. Myers /s/ Bruce C. Myers
------------------------- ---------------------
Bruce Meyers (Secretary)
Bruce Meyers
Signature:
-------------------------
Signature:
-------------------------
Page 46 of 85 <PAGE>
IMPERIAL BANK
Member FDIC
CONTINUING GUARANTEE
ORIGINATING OFFICE:
Name of Office: San Diego Regional
---------------------
Street Address: 701 B. Street
---------------------
City, State, Zip Code: San Diego, Ca. 92101
---------------------
The undersigned (hereinafter referred to as "Guarantor")
hereby requests and authorizes IMPERIAL BANK (hereinafter
referred to as the "Bank") to extend credit to
XSCRIBE CORPORATION a Corporation
--------------------------------- --------------------
(Designate type of entity)
(hereinafter referred to as "Debtor"), and in consideration of
the granting of such credit by the Bank to Debtor, Guarantor
agrees as follows:
1. The words "indebtedness" and "credit" are used herein
in their most comprehensive sense and include any and all
advances, debts, obligations and liabilities, including
interest thereon, of Debtor heretofore, now or hereafter made,
incurred or created, with or without notice to Guarantor,
whether voluntary or involuntary and however arising, whether
due or not due, absolute or contingent, liquidated or unliqui-
dated, determined or undetermined, whether assumed by Debtor's
successors, heirs or assigns by operation of law or otherwise,
and whether Debtor is liable individually or jointly with
others, and whether recovery upon any such indebtedness or
credit is or hereafter becomes barred by any statute of
limitations or is or hereafter becomes otherwise unenforceable.
2. Credit may be granted from time to time at the
request of Debtor and without further authorization from or
notice to Guarantor, even though Debtor's financial condition
may have deteriorated since the date hereof. If Debtor is a
corporation or a partnership, the Bank need not inquire into
the power of Debtor or the authority of its officers, direc-
tors, partners or agents acting or purporting to act in its
behalf. Each credit heretofore or hereafter granted to Debtor
shall be considered to have been granted at the special
instance and request of Guarantor and in consideration of and
in reliance upon this guarantee.
3. Guarantor hereby unconditionally guarantees and
promises to pay the Bank or its order any and all indebtedness
of Debtor to the Bank and to perform any and all obligations of
Debtor under the terms of any agreement or instrument
Page 47 of 85 <PAGE>
evidencing, securing or executed in connection with any such
indebtedness ("Credit Documents"). The liability of Guarantor
shall not at any time exceed the sum of the amount set forth
below, plus the interest thereon in accordance with the Credit
Documents and the costs, attorneys' fees and other expenses
provided for in Paragraph 15 hereof. If no amount is set forth
below, the liability of the Guarantor hereunder shall be
unlimited. The Bank may permit Debtor's indebtedness to exceed
any maximum liability without impairing the obligations of
Guarantor hereunder. No payments made by or on behalf of
Guarantor to the Bank shall reduce any such maximum liability
unless written notice to that effect is received by the Bank at
or prior to the time such payment is made. If Guarantor has
executed more than one guarantee of the indebtedness of Debtor
to the Bank, the guarantees shall be cumulative.
4. Either before or after revocation hereof and in such
manner, upon such terms and at such times as it considers best
and with or without notice to Guarantor, the Bank may alter,
compromise, accelerate, extend or change the time or manner for
the payment of any indebtedness hereby guaranteed, increase or
reduce the rate of interest thereon, release or add any one or
more guarantors or endorsers, accept additional or substituted
security therefor, or release or subordinate any security
therefor. No exercise or nonexercise by the Bank of any right
hereby given it, no dealing by the Bank with Debtor or any
other person, and no change, impairment or suspension of any
right or remedy of the Bank shall in any way affect any of the
obligations of Guarantor hereunder or any security furnished by
Guarantor or given Guarantor any recourse against the Bank.
5. In addition to all liens upon and rights of offset
given to the Bank by law against any property of Debtor or of
Guarantor, Guarantor hereby grants a security interest in all
property of Guarantor now or hereafter in the possession of or
on deposit with the Bank, whether held in a general or special
account or for safekeeping or otherwise. Each such security
interest may be exercised without demand upon or notice to
Guarantor, shall continue in full force unless specifically
waived or released by the Bank in writing and shall not be
considered waived by any conduct of the Bank or by any failure
of the Bank to exercise any right of offset or to enforce any
such security interest or by any neglect or delay in so doing.
6. Guarantor waives and agrees not to assert or take
advantage of (a) any right to require the Bank to proceed
against the Debtor or any other person, firm or corporation or
to proceed against or exhaust any security held by it at any
time or to pursue any other remedy in its power; (b) the
defense of the statute of limitations in any action hereunder
or for the collection of any indebtedness or the performance of
any obligation guaranteed hereby; (c) any defense that may
arise by reason of the incapacity, lack of authority, death or
disability of, or revocation hereof by, any other or others or
the failure of the Bank to file or enforce a claim against the
Page 48 of 85 <PAGE>
estate (either in administration, bankruptcy, or other proceed-
ing) of any other or others; (d) demand, protest and notice of
any kind including, without limiting the generality of the
foregoing, notice of the existence, creation or incurring of
new or additional indebtedness or of any action or non-action
on the part of the Debtor, the Bank, any endorser, creditor of
Debtor or Guarantor under this or any other instrument, or any
other person whomsoever, in connection with any obligation or
evidence of indebtedness hereby guaranteed; (e) any defense
based upon an election of remedies by the Bank, including with-
out limitation, an election to proceed by nonjudicial rather
than judicial foreclosure, which election destroys or otherwise
impairs subrogation rights of Guarantor or the right of
Guarantor to proceed against Debtor for reimbursement, or both,
including, without limitation, the impairment of subrogation
rights arising by virtue of California Civil Code 580(b) and
580(d); (f) any defense or right based upon the fair value
deficiency protections and provisions of California Civil
Code 580(a) and California Civil Procedure Code 726; and
(g) any defense or right based upon the acceptance by the Bank
or an affiliate of the Bank of a deed in lieu of foreclosure,
without extinguishing the indebtedness, even if such acceptance
destroys, alters or otherwise impairs subrogation rights of
Guarantor or the right of Guarantor to proceed against Debtor
for reimbursement, or both.
7. Guarantor, by execution hereof, represents to the
Bank that the relationship between Guarantor and Debtor is such
that Guarantor has access to all relevant facts and information
concerning the indebtedness and Debtor and that the Bank can
rely upon Guarantor having such access. Guarantor waives and
agrees not to assert any duty on the part of the Bank to dis-
close to Guarantor any facts that the Bank may now or hereafter
know about Debtor, regardless of whether the Bank has reason to
believe that any such facts materially increase the risk beyond
that which Guarantor intends to assume, or has reason to
believe that such facts are unknown to Guarantor, or has a
reasonable opportunity to communicate such facts to Guarantor.
Guarantor is fully responsible for being and keeping informed
of the financial condition of Debtor and all circumstances
bearing on the risk of non-payment of the indebtedness
guaranteed hereby.
8. Until all indebtedness of Debtor to the Bank has been
paid in full, even though such indebtedness is in excess of the
liability of Guarantor, Guarantor shall have no right of subro-
gation and waives any right to enforce any remedy which the
Bank now has or may hereafter have against Debtor and any
benefit of and any right to participate in any security now or
hereafter held by the Bank.
9. Except as otherwise provided in this paragraph, all
existing or future indebtedness of Debtor to Guarantor and, if
Debtor is a partnership, any right to withdraw any capital of
Guarantor invested in Debtor, is hereby subordinated to all
Page 49 of 85 <PAGE>
indebtedness hereby guaranteed and, without the prior written
consent of the Bank, shall not be paid or withdrawn in whole or
in part nor will Guarantor accept any payment of or on account
of any such indebtedness or as a withdrawal of capital while
this guarantee is in effect. At the Bank's request, Debtor
shall pay to the Bank all or any part of subordinated indebt-
edness and any capital which Guarantor is entitled to withdraw.
Each payment by Debtor to Guarantor in violation of this para-
graph shall be received in trust for the Bank and shall be paid
to the Bank immediately on account of the indebtedness of
Debtor to the Bank. No such payment shall reduce or affect in
any manner Guarantor's liability under any of the provisions of
this guarantee. Guarantor reserves the right to receive from
Debtor payment of any salary for personal services at the same
monthly rate as that at which Guarantor has been paid during
the preceding twelve months, it being expressly understood that
such amount shall not be subordinated to the indebtedness
guaranteed hereby.
10. Guarantor will file all claims against Debtor in any
bankruptcy or other proceeding in which the filing of claims is
required by law upon any indebtedness of Debtor to Guarantor
and shall concurrently assign to the Bank all of the Guar-
antor's rights thereunder. If Guarantor does not file any such
claim, the Bank, as Guarantor's attorney-in-fact, is hereby
authorized to do so in Guarantor's name or, in the Bank's
discretion, to assign the claim and to cause proof of claim to
be filed in the name of the Bank's nominee. In all such cases,
whether in administration, bankruptcy or otherwise, the person
or persons authorized to pay such claims shall pay to the Bank
the full amount thereof and, to the full extent necessary for
the purpose, Guarantor hereby assigns to the Bank all of the
Guarantor's rights to any and all such payments or distribu-
tions to which Guarantor would otherwise be entitled. If the
amount so paid is greater than the guaranteed indebtedness then
outstanding, the Bank will pay the amount of the excess to the
person entitled thereto.
11. With or without notice to Guarantor, the Bank, in its
sole discretion and at any time and from time to time either
before or after delivery of any notice of revocation hereunder
and in such manner and upon such terms as it considers fit, may
(a) apply any or all payments or recoveries from Debtor, from
Guarantor or from any other guarantor under this or any other
instrument or realized from any security, in such manner and
order or priority as the Bank elects, to any indebtedness of
Debtor to the Bank, whether or not such indebtedness is
guaranteed hereby or is otherwise secured or is due at the time
of such application; and (b) refund to Debtor any payment
received by the Bank upon any indebtedness hereby guaranteed
and payment of the amount refunded shall be fully guaranteed
hereby. Any recovery realized from any other guarantor under
this or any other instrument shall be first credited upon that
portion of the indebtedness of Debtor to the Bank which exceeds
Guarantor's maximum liability, if any, hereunder.
Page 50 of 85 <PAGE>
12. The amount of Guarantor's liability and all rights,
powers and remedies of the Bank hereunder and under the Credit
Documents and any other agreement now or at any time hereafter
in force between the Bank and Guarantor shall be cumulative and
not alternative, and such rights, powers and remedies shall be
in addition to all rights, powers and remedies given to the
Bank by law.
13. Guarantor's obligations hereunder are independent of
the obligations of Debtor and, in the event of any default
hereunder, a separate action or actions may be brought and
prosecuted against Guarantor whether action is brought against
Debtor or whether Debtor is joined in any such action or
actions. The Bank may maintain successive actions for other
defaults. The Bank's rights hereunder shall not be exhausted
by its exercise of any of its rights or remedies or by any such
action or by any number of successive actions until and
unless all indebtedness and obligations hereby guaranteed have
been paid and fully performed.
14. This is a continuing guarantee and Guarantor agrees
that it shall remain in full force until and unless Guarantor
delivers to the Bank written notice that it has been revoked as
to credit granted subsequent to the effective time of
revocation as herein provided. Delivery of such notice shall
be effective by personal service upon an officer of the Bank at
the originating office of the Bank designated on the first page
hereby or by mailing such notice by certified or registered
mail, return receipt requested, postage prepaid and addressed
to the Bank at the originating office designated on the first
page hereof. Regardless of how notice of revocation is given,
it shall not be effective until twelve o'clock noon Pacific
Standard or Daylight Savings Time, as the case may be, on the
next succeeding Bank business day following the day such notice
is delivered, but delivery of such notice shall not affect any
of the obligations of any other guarantor for the credit
granted to Debtor hereunder. If the originating office of the
Bank designated above is not in existence at the time notice of
revocation is desired to be given, then such notice may be
given in the manner above provided by delivering the same to
IMPERIAL BANK OFFICE at 9920 South La Cienega Boulevard,
Inglewood, California, 90301.
15. Guarantor agrees to pay to the Bank without demand
reasonable attorneys' fees and all costs and other expenses
which the Bank expends or incurs in collecting or compromising
any indebtedness of the Debtor, in protecting the Bank's
security under the Credit Documents or in enforcing this
guarantee against Guarantor or any other guarantor of any
indebtedness hereby guaranteed whether or not suit is filed,
including, without limitation, attorney's fees, costs and other
such expenses incurred in any bankruptcy proceeding. Guarantor
warrants and represents that it is fully authorized by law to
execute this guarantee.
Page 51 of 85 <PAGE>
16. This guarantee shall benefit the Bank, its successors
and assigns, including the assignees of any indebtedness hereby
guaranteed, and binds Guarantor's successors and assigns. This
guarantee is assignable by the Bank with respect to all or any
portion of the indebtedness and obligations guaranteed here-
under, and, when so assigned, Guarantor shall be liable to the
assignees under this guarantee without in any manner affecting
Guarantor's liability hereunder with respect to any indebted-
ness or obligations retained by the Bank. No delegation or
assignment of this guarantee by any Guarantor shall be of any
force or effect or release Guarantor from any obligation
hereunder.
17. No provision of this guarantee or right of the Bank
hereunder can be waived, nor can any Guarantor be released from
his/her obligations hereunder, except by a writing duly exe-
cuted by an authorized officer of the Bank. Should any one or
more provisions of this guarantee be determined to be illegal
or unenforceable, all other provisions nevertheless shall be
governed by and construed in accordance with the laws of
California, and Guarantor agrees to submit to the jurisdiction
of the Courts of California.
18. If more than one guarantor signs this guarantee, the
obligation of all such guarantors shall be joint and several.
When the context and construction so require, all words used in
the singular shall be deemed to have been used in the plural
and the masculine shall include the feminine and neuter. Any
married person who signs this guarantee agrees that recourse
may be had against separate property for all obligations under
this guarantee.
19. Except as provided in any other written agreement now
or at any time hereafter in force between the Bank and
Guarantor, this guarantee shall constitute the entire agreement
of Guarantor with the Bank with respect to the subject matter
hereof and no representation, understanding, promise or condi-
tion concerning the subject matter hereof shall be binding upon
the Bank unless expressed herein. Any notice to Guarantor
shall be considered to have been duly given when delivered
personally or forty-eight hours after being mailed, postage
prepaid, to the address(es) set forth below or to such other
address(es) as Guarantor may from time to time designate by
giving notice in the same manner of notice to the Bank set
forth in Paragraph 14 hereof.
20. Each of the undersigned Guarantors hereby
acknowledges the receipt of a true copy of this guarantee.
21. [ ] This guarantee is secured by a deed of trust
dated _______________, 19___, to Imperial Bancorp, as Trustee.
Page 52 of 85 <PAGE>
INITIAL HERE
/s/ BCM
/s/ SD 22. Notwithstanding anything herein to the contrary
the maximum liability of the Guarantor shall not exceed its net
worth under generally accepted accounting principals from time
to time.
GUARANTEE AMOUNT $2,000,000.00
------------
Executed by or on behalf of Guarantor(s) on August 10, 1995.
--------- --
Signature of Guarantor(s) Address
LEXIA SYSTEMS, INC. 6825 Nancy Ridge Dr.,
---------------------------
BY /s/ Suren G. Dutia San Diego, CA 92121
------------------------- ---------------------------
/s/ Bruce C. Myers
------------------------- ---------------------------
---------------------------
Page 53 of 85 <PAGE>
(COMPLETE IF GUARANTOR IS A CORPORATION)
RESOLUTION AUTHORIZING CONTINUING GUARANTEE,
ENDORSEMENT AND GUARANTEE OF NOTE OR NOTES
AND HYPOTHECATION OF ASSETS
WHEREAS, XSCRIBE CORPORATION ,
------------------------------------------
hereinafter referred to as "Debtor", has requested IMPERIAL
BANK, hereinafter referred to as "Bank", to grant credit to
Debtor,
WHEREAS, the corporation hereinafter named expects to
derive benefit from such financial accommodation by Bank,
1. NOW, BE IT RESOLVED, that any 1 of the
----------
(Specify Number)
following named officers
Suren Dutia the CEO/Chairman
------------------------- -------------------------
Bruce Meyers the Sec/CFO/VP of Operations
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
for and on behalf of LEXIA SYSTEMS, INC.
---------------------------------------
(Name of Corporation)
be and they hereby are authorized and directed for and in the
name of this corporation and as its act and deed to do and
perform any one or more of the following:
A. Execute a continuing guarantee in favor of Bank
for any and all assets of this corporation.
B. Endorse and/or guarantee a note or notes in
favor of Bank whereunder Debtor is Maker and Bank is Payee
including renewals and extensions thereof.
C. Grant to Bank a security interest in and to any
and all assets of this corporation: (1) as security for any
obligation which this corporation may incur under subpara-
graphs A and/or B above; or (2) as security for indebtedness of
Debtor to Bank to the extent of the value of the security
interest so granted without personal liability on the part of
this corporation to Bank.
2. RESOLVED FURTHER, that Bank may rely on the authority
conferred herein until Bank receives notice in writing that the
authority contained in this resolution has been revoked or the
Page 54 of 85 <PAGE>
authority of the persons or officers named above has been
revoked.
3. RESOLVED FURTHER, that the liability of this
corporation to Bank hereunder shall not exceed the total sum of
Two Million and No/100 DOLLARS ($2,000,000.00).
-------------------------------------- ------------
4. RESOLVED FURTHER, that any guarantees or other docu-
ments in like amount and terms as those stated above heretofore
executed by said officers in the name of this corporation are
hereby ratified and approved, and the secretary or assistant
secretary is authorized and directed to attach copies of such
documents to the minutes of the corporation.
I, the undersigned Bruce Meyers , hereby certify
----------------------
that I am the duly elected, qualified and acting ______________
secretary of the above referenced corporation, duly organized
and existing under the laws of the State of Nevada ; that
------------
the Board of Directors of said corporation duly and regularly
adopted the resolution of which the foregoing is a full, true
and correct copy.
I further certify that said resolution is in full force
and effect, that it has not been revoked, suspended, or amended
in any way, and that the specimen signatures appearing below
are the signatures of the officers authorized to sign for this
corporation by virtue of said resolution.
I further certify that shareholder consent is
-----------
(is or is not)
required in the event of hypothecation of all or substantially
all of the assets of said corporation.
EXECUTED ON ___________________.
AUTHORIZED SIGNATURES: (SEAL)
Signature: /s/ Suren G. Dutia Confirmed By:
-----------------------
Suren Dutia /s/ Suren G. Dutia
-----------------------
/s/ Bruce C. Myers (President)
-----------------------
Bruce Meyers /s/ Bruce C. Myers
-----------------------
------------------------ (Secretary)
Bruce Meyers
------------------------
Page 55 of 85 <PAGE>
IMPERIAL BANK
Member FDIC
CONTINUING GUARANTEE
ORIGINATING OFFICE:
Name of Office: San Diego Regional
---------------------
Street Address: 701 B. Street
---------------------
City, State, Zip Code: San Diego, Ca. 92101
---------------------
The undersigned (hereinafter referred to as "Guarantor")
hereby requests and authorizes IMPERIAL BANK (hereinafter
referred to as the "Bank") to extend credit to
XSCRIBE CORPORATION a Corporation
--------------------------------- --------------------
(Designate type of entity)
(hereinafter referred to as "Debtor"), and in consideration of
the granting of such credit by the Bank to Debtor, Guarantor
agrees as follows:
1. The words "indebtedness" and "credit" are used herein
in their most comprehensive sense and include any and all
advances, debts, obligations and liabilities, including
interest thereon, of Debtor heretofore, now or hereafter made,
incurred or created, with or without notice to Guarantor,
whether voluntary or involuntary and however arising, whether
due or not due, absolute or contingent, liquidated or unliqui-
dated, determined or undetermined, whether assumed by Debtor's
successors, heirs or assigns by operation of law or otherwise,
and whether Debtor is liable individually or jointly with
others, and whether recovery upon any such indebtedness or
credit is or hereafter becomes barred by any statute of
limitations or is or hereafter becomes otherwise unenforceable.
2. Credit may be granted from time to time at the
request of Debtor and without further authorization from or
notice to Guarantor, even though Debtor's financial condition
may have deteriorated since the date hereof. If Debtor is a
corporation or a partnership, the Bank need not inquire into
the power of Debtor or the authority of its officers, direc-
tors, partners or agents acting or purporting to act in its
behalf. Each credit heretofore or hereafter granted to Debtor
shall be considered to have been granted at the special
instance and request of Guarantor and in consideration of and
in reliance upon this guarantee.
3. Guarantor hereby unconditionally guarantees and
promises to pay the Bank or its order any and all indebtedness
of Debtor to the Bank and to perform any and all obligations of
Debtor under the terms of any agreement or instrument
Page 56 of 85 <PAGE>
evidencing, securing or executed in connection with any such
indebtedness ("Credit Documents"). The liability of Guarantor
shall not at any time exceed the sum of the amount set forth
below, plus the interest thereon in accordance with the Credit
Documents and the costs, attorneys' fees and other expenses
provided for in Paragraph 15 hereof. If no amount is set forth
below, the liability of the Guarantor hereunder shall be
unlimited. The Bank may permit Debtor's indebtedness to exceed
any maximum liability without impairing the obligations of
Guarantor hereunder. No payments made by or on behalf of
Guarantor to the Bank shall reduce any such maximum liability
unless written notice to that effect is received by the Bank at
or prior to the time such payment is made. If Guarantor has
executed more than one guarantee of the indebtedness of Debtor
to the Bank, the guarantees shall be cumulative.
4. Either before or after revocation hereof and in such
manner, upon such terms and at such times as it considers best
and with or without notice to Guarantor, the Bank may alter,
compromise, accelerate, extend or change the time or manner for
the payment of any indebtedness hereby guaranteed, increase or
reduce the rate of interest thereon, release or add any one or
more guarantors or endorsers, accept additional or substituted
security therefor, or release or subordinate any security
therefor. No exercise or nonexercise by the Bank of any right
hereby given it, no dealing by the Bank with Debtor or any
other person, and no change, impairment or suspension of any
right or remedy of the Bank shall in any way affect any of the
obligations of Guarantor hereunder or any security furnished by
Guarantor or given Guarantor any recourse against the Bank.
5. In addition to all liens upon and rights of offset
given to the Bank by law against any property of Debtor or of
Guarantor, Guarantor hereby grants a security interest in all
property of Guarantor now or hereafter in the possession of or
on deposit with the Bank, whether held in a general or special
account or for safekeeping or otherwise. Each such security
interest may be exercised without demand upon or notice to
Guarantor, shall continue in full force unless specifically
waived or released by the Bank in writing and shall not be
considered waived by any conduct of the Bank or by any failure
of the Bank to exercise any right of offset or to enforce any
such security interest or by any neglect or delay in so doing.
6. Guarantor waives and agrees not to assert or take
advantage of (a) any right to require the Bank to proceed
against the Debtor or any other person, firm or corporation or
to proceed against or exhaust any security held by it at any
time or to pursue any other remedy in its power; (b) the
defense of the statute of limitations in any action hereunder
or for the collection of any indebtedness or the performance of
any obligation guaranteed hereby; (c) any defense that may
arise by reason of the incapacity, lack of authority, death or
disability of, or revocation hereof by, any other or others or
the failure of the Bank to file or enforce a claim against the
Page 57 of 85 <PAGE>
estate (either in administration, bankruptcy, or other proceed-
ing) of any other or others; (d) demand, protest and notice of
any kind including, without limiting the generality of the
foregoing, notice of the existence, creation or incurring of
new or additional indebtedness or of any action or non-action
on the part of the Debtor, the Bank, any endorser, creditor of
Debtor or Guarantor under this or any other instrument, or any
other person whomsoever, in connection with any obligation or
evidence of indebtedness hereby guaranteed; (e) any defense
based upon an election of remedies by the Bank, including with-
out limitation, an election to proceed by nonjudicial rather
than judicial foreclosure, which election destroys or otherwise
impairs subrogation rights of Guarantor or the right of
Guarantor to proceed against Debtor for reimbursement, or both,
including, without limitation, the impairment of subrogation
rights arising by virtue of California Civil Code 580(b) and
580(d); (f) any defense or right based upon the fair value
deficiency protections and provisions of California Civil
Code 580(a) and California Civil Procedure Code 726; and
(g) any defense or right based upon the acceptance by the Bank
or an affiliate of the Bank of a deed in lieu of foreclosure,
without extinguishing the indebtedness, even if such acceptance
destroys, alters or otherwise impairs subrogation rights of
Guarantor or the right of Guarantor to proceed against Debtor
for reimbursement, or both.
7. Guarantor, by execution hereof, represents to the
Bank that the relationship between Guarantor and Debtor is such
that Guarantor has access to all relevant facts and information
concerning the indebtedness and Debtor and that the Bank can
rely upon Guarantor having such access. Guarantor waives and
agrees not to assert any duty on the part of the Bank to dis-
close to Guarantor any facts that the Bank may now or hereafter
know about Debtor, regardless of whether the Bank has reason to
believe that any such facts materially increase the risk beyond
that which Guarantor intends to assume, or has reason to
believe that such facts are unknown to Guarantor, or has a
reasonable opportunity to communicate such facts to Guarantor.
Guarantor is fully responsible for being and keeping informed
of the financial condition of Debtor and all circumstances
bearing on the risk of non-payment of the indebtedness
guaranteed hereby.
8. Until all indebtedness of Debtor to the Bank has been
paid in full, even though such indebtedness is in excess of the
liability of Guarantor, Guarantor shall have no right of subro-
gation and waives any right to enforce any remedy which the
Bank now has or may hereafter have against Debtor and any
benefit of and any right to participate in any security now or
hereafter held by the Bank.
9. Except as otherwise provided in this paragraph, all
existing or future indebtedness of Debtor to Guarantor and, if
Debtor is a partnership, any right to withdraw any capital of
Guarantor invested in Debtor, is hereby subordinated to all
Page 58 of 85 <PAGE>
indebtedness hereby guaranteed and, without the prior written
consent of the Bank, shall not be paid or withdrawn in whole or
in part nor will Guarantor accept any payment of or on account
of any such indebtedness or as a withdrawal of capital while
this guarantee is in effect. At the Bank's request, Debtor
shall pay to the Bank all or any part of subordinated indebt-
edness and any capital which Guarantor is entitled to withdraw.
Each payment by Debtor to Guarantor in violation of this para-
graph shall be received in trust for the Bank and shall be paid
to the Bank immediately on account of the indebtedness of
Debtor to the Bank. No such payment shall reduce or affect in
any manner Guarantor's liability under any of the provisions of
this guarantee. Guarantor reserves the right to receive from
Debtor payment of any salary for personal services at the same
monthly rate as that at which Guarantor has been paid during
the preceding twelve months, it being expressly understood that
such amount shall not be subordinated to the indebtedness
guaranteed hereby.
10. Guarantor will file all claims against Debtor in any
bankruptcy or other proceeding in which the filing of claims is
required by law upon any indebtedness of Debtor to Guarantor
and shall concurrently assign to the Bank all of the Guar-
antor's rights thereunder. If Guarantor does not file any such
claim, the Bank, as Guarantor's attorney-in-fact, is hereby
authorized to do so in Guarantor's name or, in the Bank's
discretion, to assign the claim and to cause proof of claim to
be filed in the name of the Bank's nominee. In all such cases,
whether in administration, bankruptcy or otherwise, the person
or persons authorized to pay such claims shall pay to the Bank
the full amount thereof and, to the full extent necessary for
the purpose, Guarantor hereby assigns to the Bank all of the
Guarantor's rights to any and all such payments or distribu-
tions to which Guarantor would otherwise be entitled. If the
amount so paid is greater than the guaranteed indebtedness then
outstanding, the Bank will pay the amount of the excess to the
person entitled thereto.
11. With or without notice to Guarantor, the Bank, in its
sole discretion and at any time and from time to time either
before or after delivery of any notice of revocation hereunder
and in such manner and upon such terms as it considers fit, may
(a) apply any or all payments or recoveries from Debtor, from
Guarantor or from any other guarantor under this or any other
instrument or realized from any security, in such manner and
order or priority as the Bank elects, to any indebtedness of
Debtor to the Bank, whether or not such indebtedness is
guaranteed hereby or is otherwise secured or is due at the time
of such application; and (b) refund to Debtor any payment
received by the Bank upon any indebtedness hereby guaranteed
and payment of the amount refunded shall be fully guaranteed
hereby. Any recovery realized from any other guarantor under
this or any other instrument shall be first credited upon that
portion of the indebtedness of Debtor to the Bank which exceeds
Guarantor's maximum liability, if any, hereunder.
Page 59 of 85 <PAGE>
12. The amount of Guarantor's liability and all rights,
powers and remedies of the Bank hereunder and under the Credit
Documents and any other agreement now or at any time hereafter
in force between the Bank and Guarantor shall be cumulative and
not alternative, and such rights, powers and remedies shall be
in addition to all rights, powers and remedies given to the
Bank by law.
13. Guarantor's obligations hereunder are independent of
the obligations of Debtor and, in the event of any default
hereunder, a separate action or actions may be brought and
prosecuted against Guarantor whether action is brought against
Debtor or whether Debtor is joined in any such action or
actions. The Bank may maintain successive actions for other
defaults. The Bank's rights hereunder shall not be exhausted
by its exercise of any of its rights or remedies or by any such
action or by any number of successive actions until and
unless all indebtedness and obligations hereby guaranteed have
been paid and fully performed.
14. This is a continuing guarantee and Guarantor agrees
that it shall remain in full force until and unless Guarantor
delivers to the Bank written notice that it has been revoked as
to credit granted subsequent to the effective time of
revocation as herein provided. Delivery of such notice shall
be effective by personal service upon an officer of the Bank at
the originating office of the Bank designated on the first page
hereby or by mailing such notice by certified or registered
mail, return receipt requested, postage prepaid and addressed
to the Bank at the originating office designated on the first
page hereof. Regardless of how notice of revocation is given,
it shall not be effective until twelve o'clock noon Pacific
Standard or Daylight Savings Time, as the case may be, on the
next succeeding Bank business day following the day such notice
is delivered, but delivery of such notice shall not affect any
of the obligations of any other guarantor for the credit
granted to Debtor hereunder. If the originating office of the
Bank designated above is not in existence at the time notice of
revocation is desired to be given, then such notice may be
given in the manner above provided by delivering the same to
IMPERIAL BANK OFFICE at 9920 South La Cienega Boulevard,
Inglewood, California, 90301.
15. Guarantor agrees to pay to the Bank without demand
reasonable attorneys' fees and all costs and other expenses
which the Bank expends or incurs in collecting or compromising
any indebtedness of the Debtor, in protecting the Bank's
security under the Credit Documents or in enforcing this
guarantee against Guarantor or any other guarantor of any
indebtedness hereby guaranteed whether or not suit is filed,
including, without limitation, attorney's fees, costs and other
such expenses incurred in any bankruptcy proceeding. Guarantor
warrants and represents that it is fully authorized by law to
execute this guarantee.
Page 60 of 85 <PAGE>
16. This guarantee shall benefit the Bank, its successors
and assigns, including the assignees of any indebtedness hereby
guaranteed, and binds Guarantor's successors and assigns. This
guarantee is assignable by the Bank with respect to all or any
portion of the indebtedness and obligations guaranteed here-
under, and, when so assigned, Guarantor shall be liable to the
assignees under this guarantee without in any manner affecting
Guarantor's liability hereunder with respect to any indebted-
ness or obligations retained by the Bank. No delegation or
assignment of this guarantee by any Guarantor shall be of any
force or effect or release Guarantor from any obligation
hereunder.
17. No provision of this guarantee or right of the Bank
hereunder can be waived, nor can any Guarantor be released from
his/her obligations hereunder, except by a writing duly exe-
cuted by an authorized officer of the Bank. Should any one or
more provisions of this guarantee be determined to be illegal
or unenforceable, all other provisions nevertheless shall be
governed by and construed in accordance with the laws of
California, and Guarantor agrees to submit to the jurisdiction
of the Courts of California.
18. If more than one guarantor signs this guarantee, the
obligation of all such guarantors shall be joint and several.
When the context and construction so require, all words used in
the singular shall be deemed to have been used in the plural
and the masculine shall include the feminine and neuter. Any
married person who signs this guarantee agrees that recourse
may be had against separate property for all obligations under
this guarantee.
19. Except as provided in any other written agreement now
or at any time hereafter in force between the Bank and
Guarantor, this guarantee shall constitute the entire agreement
of Guarantor with the Bank with respect to the subject matter
hereof and no representation, understanding, promise or condi-
tion concerning the subject matter hereof shall be binding upon
the Bank unless expressed herein. Any notice to Guarantor
shall be considered to have been duly given when delivered
personally or forty-eight hours after being mailed, postage
prepaid, to the address(es) set forth below or to such other
address(es) as Guarantor may from time to time designate by
giving notice in the same manner of notice to the Bank set
forth in Paragraph 14 hereof.
20. Each of the undersigned Guarantors hereby
acknowledges the receipt of a true copy of this guarantee.
21. [ ] This guarantee is secured by a deed of trust
dated _______________, 19___, to Imperial Bancorp, as Trustee.
Page 61 of 85 <PAGE>
INITIAL HERE
/s/ BCM
/s/ SD 22. Notwithstanding anything herein to the contrary
the maximum liability of the Guarantor shall not exceed its net
worth under generally accepted accounting principals from time
to time.
GUARANTEE AMOUNT $2,000,000.00
------------
Executed by or on behalf of Guarantor(s) on August 10, 1995.
--------- --
Signature of Guarantor(s) Address
PHOTOMATRIX CORPORATION 6825 Nancy Ridge Dr.,
---------------------------
BY /s/ Suren G. Dutia San Diego, CA 92121
------------------------- ---------------------------
/s/ Bruce C. Myers
------------------------- ---------------------------
---------------------------
Page 62 of 85 <PAGE>
(COMPLETE IF GUARANTOR IS A CORPORATION)
RESOLUTION AUTHORIZING CONTINUING GUARANTEE,
ENDORSEMENT AND GUARANTEE OF NOTE OR NOTES
AND HYPOTHECATION OF ASSETS
WHEREAS, XSCRIBE CORPORATION ,
------------------------------------------
hereinafter referred to as "Debtor", has requested IMPERIAL
BANK, hereinafter referred to as "Bank", to grant credit to
Debtor,
WHEREAS, the corporation hereinafter named expects to
derive benefit from such financial accommodation by Bank,
1. NOW, BE IT RESOLVED, that any 1 of the
----------
(Specify Number)
following named officers
Suren Dutia the CEO/Chairman
------------------------- -------------------------
Bruce Meyers the Sec/CFO/VP of Operations
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
for and on behalf of PHOTOMATRIX CORPORATION
---------------------------------------
(Name of Corporation)
be and they hereby are authorized and directed for and in the
name of this corporation and as its act and deed to do and
perform any one or more of the following:
A. Execute a continuing guarantee in favor of Bank
for any and all assets of this corporation.
B. Endorse and/or guarantee a note or notes in
favor of Bank whereunder Debtor is Maker and Bank is Payee
including renewals and extensions thereof.
C. Grant to Bank a security interest in and to any
and all assets of this corporation: (1) as security for any
obligation which this corporation may incur under subpara-
graphs A and/or B above; or (2) as security for indebtedness of
Debtor to Bank to the extent of the value of the security
interest so granted without personal liability on the part of
this corporation to Bank.
2. RESOLVED FURTHER, that Bank may rely on the authority
conferred herein until Bank receives notice in writing that the
authority contained in this resolution has been revoked or the
Page 63 of 85 <PAGE>
authority of the persons or officers named above has been
revoked.
3. RESOLVED FURTHER, that the liability of this
corporation to Bank hereunder shall not exceed the total sum of
Two Million and No/100 DOLLARS ($2,000,000.00).
-------------------------------------- ------------
4. RESOLVED FURTHER, that any guarantees or other docu-
ments in like amount and terms as those stated above heretofore
executed by said officers in the name of this corporation are
hereby ratified and approved, and the secretary or assistant
secretary is authorized and directed to attach copies of such
documents to the minutes of the corporation.
I, the undersigned Bruce Meyers , hereby certify
----------------------
that I am the duly elected, qualified and acting ______________
secretary of the above referenced corporation, duly organized
and existing under the laws of the State of Nevada ; that
------------
the Board of Directors of said corporation duly and regularly
adopted the resolution of which the foregoing is a full, true
and correct copy.
I further certify that said resolution is in full force
and effect, that it has not been revoked, suspended, or amended
in any way, and that the specimen signatures appearing below
are the signatures of the officers authorized to sign for this
corporation by virtue of said resolution.
I further certify that shareholder consent is
-----------
(is or is not)
required in the event of hypothecation of all or substantially
all of the assets of said corporation.
EXECUTED ON ___________________.
AUTHORIZED SIGNATURES: (SEAL)
Signature: /s/ Suren G. Dutia Confirmed By:
-----------------------
Suren Dutia /s/ Suren G. Dutia
-----------------------
/s/ Bruce C. Myers (President)
-----------------------
Bruce Meyers /s/ Bruce C. Myers
-----------------------
------------------------ (Secretary)
Bruce Meyers
------------------------
Page 64 of 85 <PAGE>
IMPERIAL BANK
Member FDIC
CONTINUING GUARANTEE
ORIGINATING OFFICE:
Name of Office: San Diego Regional
---------------------
Street Address: 701 B. Street
---------------------
City, State, Zip Code: San Diego, Ca. 92101
---------------------
The undersigned (hereinafter referred to as "Guarantor")
hereby requests and authorizes IMPERIAL BANK (hereinafter
referred to as the "Bank") to extend credit to
XSCRIBE CORPORATION a Corporation
--------------------------------- --------------------
(Designate type of entity)
(hereinafter referred to as "Debtor"), and in consideration of
the granting of such credit by the Bank to Debtor, Guarantor
agrees as follows:
1. The words "indebtedness" and "credit" are used herein
in their most comprehensive sense and include any and all
advances, debts, obligations and liabilities, including
interest thereon, of Debtor heretofore, now or hereafter made,
incurred or created, with or without notice to Guarantor,
whether voluntary or involuntary and however arising, whether
due or not due, absolute or contingent, liquidated or unliqui-
dated, determined or undetermined, whether assumed by Debtor's
successors, heirs or assigns by operation of law or otherwise,
and whether Debtor is liable individually or jointly with
others, and whether recovery upon any such indebtedness or
credit is or hereafter becomes barred by any statute of
limitations or is or hereafter becomes otherwise unenforceable.
2. Credit may be granted from time to time at the
request of Debtor and without further authorization from or
notice to Guarantor, even though Debtor's financial condition
may have deteriorated since the date hereof. If Debtor is a
corporation or a partnership, the Bank need not inquire into
the power of Debtor or the authority of its officers, direc-
tors, partners or agents acting or purporting to act in its
behalf. Each credit heretofore or hereafter granted to Debtor
shall be considered to have been granted at the special
instance and request of Guarantor and in consideration of and
in reliance upon this guarantee.
3. Guarantor hereby unconditionally guarantees and
promises to pay the Bank or its order any and all indebtedness
of Debtor to the Bank and to perform any and all obligations of
Debtor under the terms of any agreement or instrument
Page 65 of 85 <PAGE>
evidencing, securing or executed in connection with any such
indebtedness ("Credit Documents"). The liability of Guarantor
shall not at any time exceed the sum of the amount set forth
below, plus the interest thereon in accordance with the Credit
Documents and the costs, attorneys' fees and other expenses
provided for in Paragraph 15 hereof. If no amount is set forth
below, the liability of the Guarantor hereunder shall be
unlimited. The Bank may permit Debtor's indebtedness to exceed
any maximum liability without impairing the obligations of
Guarantor hereunder. No payments made by or on behalf of
Guarantor to the Bank shall reduce any such maximum liability
unless written notice to that effect is received by the Bank at
or prior to the time such payment is made. If Guarantor has
executed more than one guarantee of the indebtedness of Debtor
to the Bank, the guarantees shall be cumulative.
4. Either before or after revocation hereof and in such
manner, upon such terms and at such times as it considers best
and with or without notice to Guarantor, the Bank may alter,
compromise, accelerate, extend or change the time or manner for
the payment of any indebtedness hereby guaranteed, increase or
reduce the rate of interest thereon, release or add any one or
more guarantors or endorsers, accept additional or substituted
security therefor, or release or subordinate any security
therefor. No exercise or nonexercise by the Bank of any right
hereby given it, no dealing by the Bank with Debtor or any
other person, and no change, impairment or suspension of any
right or remedy of the Bank shall in any way affect any of the
obligations of Guarantor hereunder or any security furnished by
Guarantor or given Guarantor any recourse against the Bank.
5. In addition to all liens upon and rights of offset
given to the Bank by law against any property of Debtor or of
Guarantor, Guarantor hereby grants a security interest in all
property of Guarantor now or hereafter in the possession of or
on deposit with the Bank, whether held in a general or special
account or for safekeeping or otherwise. Each such security
interest may be exercised without demand upon or notice to
Guarantor, shall continue in full force unless specifically
waived or released by the Bank in writing and shall not be
considered waived by any conduct of the Bank or by any failure
of the Bank to exercise any right of offset or to enforce any
such security interest or by any neglect or delay in so doing.
6. Guarantor waives and agrees not to assert or take
advantage of (a) any right to require the Bank to proceed
against the Debtor or any other person, firm or corporation or
to proceed against or exhaust any security held by it at any
time or to pursue any other remedy in its power; (b) the
defense of the statute of limitations in any action hereunder
or for the collection of any indebtedness or the performance of
any obligation guaranteed hereby; (c) any defense that may
arise by reason of the incapacity, lack of authority, death or
disability of, or revocation hereof by, any other or others or
the failure of the Bank to file or enforce a claim against the
Page 66 of 85 <PAGE>
estate (either in administration, bankruptcy, or other proceed-
ing) of any other or others; (d) demand, protest and notice of
any kind including, without limiting the generality of the
foregoing, notice of the existence, creation or incurring of
new or additional indebtedness or of any action or non-action
on the part of the Debtor, the Bank, any endorser, creditor of
Debtor or Guarantor under this or any other instrument, or any
other person whomsoever, in connection with any obligation or
evidence of indebtedness hereby guaranteed; (e) any defense
based upon an election of remedies by the Bank, including with-
out limitation, an election to proceed by nonjudicial rather
than judicial foreclosure, which election destroys or otherwise
impairs subrogation rights of Guarantor or the right of
Guarantor to proceed against Debtor for reimbursement, or both,
including, without limitation, the impairment of subrogation
rights arising by virtue of California Civil Code 580(b) and
580(d); (f) any defense or right based upon the fair value
deficiency protections and provisions of California Civil
Code 580(a) and California Civil Procedure Code 726; and
(g) any defense or right based upon the acceptance by the Bank
or an affiliate of the Bank of a deed in lieu of foreclosure,
without extinguishing the indebtedness, even if such acceptance
destroys, alters or otherwise impairs subrogation rights of
Guarantor or the right of Guarantor to proceed against Debtor
for reimbursement, or both.
7. Guarantor, by execution hereof, represents to the
Bank that the relationship between Guarantor and Debtor is such
that Guarantor has access to all relevant facts and information
concerning the indebtedness and Debtor and that the Bank can
rely upon Guarantor having such access. Guarantor waives and
agrees not to assert any duty on the part of the Bank to dis-
close to Guarantor any facts that the Bank may now or hereafter
know about Debtor, regardless of whether the Bank has reason to
believe that any such facts materially increase the risk beyond
that which Guarantor intends to assume, or has reason to
believe that such facts are unknown to Guarantor, or has a
reasonable opportunity to communicate such facts to Guarantor.
Guarantor is fully responsible for being and keeping informed
of the financial condition of Debtor and all circumstances
bearing on the risk of non-payment of the indebtedness
guaranteed hereby.
8. Until all indebtedness of Debtor to the Bank has been
paid in full, even though such indebtedness is in excess of the
liability of Guarantor, Guarantor shall have no right of subro-
gation and waives any right to enforce any remedy which the
Bank now has or may hereafter have against Debtor and any
benefit of and any right to participate in any security now or
hereafter held by the Bank.
9. Except as otherwise provided in this paragraph, all
existing or future indebtedness of Debtor to Guarantor and, if
Debtor is a partnership, any right to withdraw any capital of
Guarantor invested in Debtor, is hereby subordinated to all
Page 67 of 85 <PAGE>
indebtedness hereby guaranteed and, without the prior written
consent of the Bank, shall not be paid or withdrawn in whole or
in part nor will Guarantor accept any payment of or on account
of any such indebtedness or as a withdrawal of capital while
this guarantee is in effect. At the Bank's request, Debtor
shall pay to the Bank all or any part of subordinated indebt-
edness and any capital which Guarantor is entitled to withdraw.
Each payment by Debtor to Guarantor in violation of this para-
graph shall be received in trust for the Bank and shall be paid
to the Bank immediately on account of the indebtedness of
Debtor to the Bank. No such payment shall reduce or affect in
any manner Guarantor's liability under any of the provisions of
this guarantee. Guarantor reserves the right to receive from
Debtor payment of any salary for personal services at the same
monthly rate as that at which Guarantor has been paid during
the preceding twelve months, it being expressly understood that
such amount shall not be subordinated to the indebtedness
guaranteed hereby.
10. Guarantor will file all claims against Debtor in any
bankruptcy or other proceeding in which the filing of claims is
required by law upon any indebtedness of Debtor to Guarantor
and shall concurrently assign to the Bank all of the Guar-
antor's rights thereunder. If Guarantor does not file any such
claim, the Bank, as Guarantor's attorney-in-fact, is hereby
authorized to do so in Guarantor's name or, in the Bank's
discretion, to assign the claim and to cause proof of claim to
be filed in the name of the Bank's nominee. In all such cases,
whether in administration, bankruptcy or otherwise, the person
or persons authorized to pay such claims shall pay to the Bank
the full amount thereof and, to the full extent necessary for
the purpose, Guarantor hereby assigns to the Bank all of the
Guarantor's rights to any and all such payments or distribu-
tions to which Guarantor would otherwise be entitled. If the
amount so paid is greater than the guaranteed indebtedness then
outstanding, the Bank will pay the amount of the excess to the
person entitled thereto.
11. With or without notice to Guarantor, the Bank, in its
sole discretion and at any time and from time to time either
before or after delivery of any notice of revocation hereunder
and in such manner and upon such terms as it considers fit, may
(a) apply any or all payments or recoveries from Debtor, from
Guarantor or from any other guarantor under this or any other
instrument or realized from any security, in such manner and
order or priority as the Bank elects, to any indebtedness of
Debtor to the Bank, whether or not such indebtedness is
guaranteed hereby or is otherwise secured or is due at the time
of such application; and (b) refund to Debtor any payment
received by the Bank upon any indebtedness hereby guaranteed
and payment of the amount refunded shall be fully guaranteed
hereby. Any recovery realized from any other guarantor under
this or any other instrument shall be first credited upon that
portion of the indebtedness of Debtor to the Bank which exceeds
Guarantor's maximum liability, if any, hereunder.
Page 68 of 85 <PAGE>
12. The amount of Guarantor's liability and all rights,
powers and remedies of the Bank hereunder and under the Credit
Documents and any other agreement now or at any time hereafter
in force between the Bank and Guarantor shall be cumulative and
not alternative, and such rights, powers and remedies shall be
in addition to all rights, powers and remedies given to the
Bank by law.
13. Guarantor's obligations hereunder are independent of
the obligations of Debtor and, in the event of any default
hereunder, a separate action or actions may be brought and
prosecuted against Guarantor whether action is brought against
Debtor or whether Debtor is joined in any such action or
actions. The Bank may maintain successive actions for other
defaults. The Bank's rights hereunder shall not be exhausted
by its exercise of any of its rights or remedies or by any such
action or by any number of successive actions until and
unless all indebtedness and obligations hereby guaranteed have
been paid and fully performed.
14. This is a continuing guarantee and Guarantor agrees
that it shall remain in full force until and unless Guarantor
delivers to the Bank written notice that it has been revoked as
to credit granted subsequent to the effective time of
revocation as herein provided. Delivery of such notice shall
be effective by personal service upon an officer of the Bank at
the originating office of the Bank designated on the first page
hereby or by mailing such notice by certified or registered
mail, return receipt requested, postage prepaid and addressed
to the Bank at the originating office designated on the first
page hereof. Regardless of how notice of revocation is given,
it shall not be effective until twelve o'clock noon Pacific
Standard or Daylight Savings Time, as the case may be, on the
next succeeding Bank business day following the day such notice
is delivered, but delivery of such notice shall not affect any
of the obligations of any other guarantor for the credit
granted to Debtor hereunder. If the originating office of the
Bank designated above is not in existence at the time notice of
revocation is desired to be given, then such notice may be
given in the manner above provided by delivering the same to
IMPERIAL BANK OFFICE at 9920 South La Cienega Boulevard,
Inglewood, California, 90301.
15. Guarantor agrees to pay to the Bank without demand
reasonable attorneys' fees and all costs and other expenses
which the Bank expends or incurs in collecting or compromising
any indebtedness of the Debtor, in protecting the Bank's
security under the Credit Documents or in enforcing this
guarantee against Guarantor or any other guarantor of any
indebtedness hereby guaranteed whether or not suit is filed,
including, without limitation, attorney's fees, costs and other
such expenses incurred in any bankruptcy proceeding. Guarantor
warrants and represents that it is fully authorized by law to
execute this guarantee.
Page 69 of 85 <PAGE>
16. This guarantee shall benefit the Bank, its successors
and assigns, including the assignees of any indebtedness hereby
guaranteed, and binds Guarantor's successors and assigns. This
guarantee is assignable by the Bank with respect to all or any
portion of the indebtedness and obligations guaranteed here-
under, and, when so assigned, Guarantor shall be liable to the
assignees under this guarantee without in any manner affecting
Guarantor's liability hereunder with respect to any indebted-
ness or obligations retained by the Bank. No delegation or
assignment of this guarantee by any Guarantor shall be of any
force or effect or release Guarantor from any obligation
hereunder.
17. No provision of this guarantee or right of the Bank
hereunder can be waived, nor can any Guarantor be released from
his/her obligations hereunder, except by a writing duly exe-
cuted by an authorized officer of the Bank. Should any one or
more provisions of this guarantee be determined to be illegal
or unenforceable, all other provisions nevertheless shall be
governed by and construed in accordance with the laws of
California, and Guarantor agrees to submit to the jurisdiction
of the Courts of California.
18. If more than one guarantor signs this guarantee, the
obligation of all such guarantors shall be joint and several.
When the context and construction so require, all words used in
the singular shall be deemed to have been used in the plural
and the masculine shall include the feminine and neuter. Any
married person who signs this guarantee agrees that recourse
may be had against separate property for all obligations under
this guarantee.
19. Except as provided in any other written agreement now
or at any time hereafter in force between the Bank and
Guarantor, this guarantee shall constitute the entire agreement
of Guarantor with the Bank with respect to the subject matter
hereof and no representation, understanding, promise or condi-
tion concerning the subject matter hereof shall be binding upon
the Bank unless expressed herein. Any notice to Guarantor
shall be considered to have been duly given when delivered
personally or forty-eight hours after being mailed, postage
prepaid, to the address(es) set forth below or to such other
address(es) as Guarantor may from time to time designate by
giving notice in the same manner of notice to the Bank set
forth in Paragraph 14 hereof.
20. Each of the undersigned Guarantors hereby
acknowledges the receipt of a true copy of this guarantee.
21. [ ] This guarantee is secured by a deed of trust
dated _______________, 19___, to Imperial Bancorp, as Trustee.
Page 70 of 85 <PAGE>
INITIAL HERE
/s/ BCM
/s/ SD 22. Notwithstanding anything herein to the contrary
the maximum liability of the Guarantor shall not exceed its net
worth under generally accepted accounting principals from time
to time.
GUARANTEE AMOUNT $2,000,000.00
------------
Executed by or on behalf of Guarantor(s) on August 10, 1995.
--------- --
Signature of Guarantor(s) Address
U.S. TRANSCAN TECHNOLOGIES, INC. 6825 Nancy Ridge Dr.,
---------------------------
BY /s/ Suren G. Dutia San Diego, CA 92121
------------------------- ---------------------------
/s/ Bruce C. Myers
------------------------- ---------------------------
---------------------------
Page 71 of 85 <PAGE>
(COMPLETE IF GUARANTOR IS A CORPORATION)
RESOLUTION AUTHORIZING CONTINUING GUARANTEE,
ENDORSEMENT AND GUARANTEE OF NOTE OR NOTES
AND HYPOTHECATION OF ASSETS
WHEREAS, XSCRIBE CORPORATION ,
------------------------------------------
hereinafter referred to as "Debtor", has requested IMPERIAL
BANK, hereinafter referred to as "Bank", to grant credit to
Debtor,
WHEREAS, the corporation hereinafter named expects to
derive benefit from such financial accommodation by Bank,
1. NOW, BE IT RESOLVED, that any 1 of the
----------
(Specify Number)
following named officers
Suren Dutia the CEO/Chairman
------------------------- -------------------------
Bruce Meyers the Sec/CFO/VP of Operations
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
for and on behalf of U.S. TRANSCAN TECHNOLOGIES, INC.
---------------------------------------
(Name of Corporation)
be and they hereby are authorized and directed for and in the
name of this corporation and as its act and deed to do and
perform any one or more of the following:
A. Execute a continuing guarantee in favor of Bank
for any and all assets of this corporation.
B. Endorse and/or guarantee a note or notes in
favor of Bank whereunder Debtor is Maker and Bank is Payee
including renewals and extensions thereof.
C. Grant to Bank a security interest in and to any
and all assets of this corporation: (1) as security for any
obligation which this corporation may incur under subpara-
graphs A and/or B above; or (2) as security for indebtedness of
Debtor to Bank to the extent of the value of the security
interest so granted without personal liability on the part of
this corporation to Bank.
2. RESOLVED FURTHER, that Bank may rely on the authority
conferred herein until Bank receives notice in writing that the
authority contained in this resolution has been revoked or the
Page 72 of 85 <PAGE>
authority of the persons or officers named above has been
revoked.
3. RESOLVED FURTHER, that the liability of this
corporation to Bank hereunder shall not exceed the total sum of
Two Million and No/100 DOLLARS ($2,000,000.00).
-------------------------------------- ------------
4. RESOLVED FURTHER, that any guarantees or other docu-
ments in like amount and terms as those stated above heretofore
executed by said officers in the name of this corporation are
hereby ratified and approved, and the secretary or assistant
secretary is authorized and directed to attach copies of such
documents to the minutes of the corporation.
I, the undersigned Bruce Meyers , hereby certify
----------------------
that I am the duly elected, qualified and acting ______________
secretary of the above referenced corporation, duly organized
and existing under the laws of the State of Nevada ; that
------------
the Board of Directors of said corporation duly and regularly
adopted the resolution of which the foregoing is a full, true
and correct copy.
I further certify that said resolution is in full force
and effect, that it has not been revoked, suspended, or amended
in any way, and that the specimen signatures appearing below
are the signatures of the officers authorized to sign for this
corporation by virtue of said resolution.
I further certify that shareholder consent is
-----------
(is or is not)
required in the event of hypothecation of all or substantially
all of the assets of said corporation.
EXECUTED ON ___________________.
AUTHORIZED SIGNATURES: (SEAL)
Signature: /s/ Suren G. Dutia Confirmed By:
-----------------------
Suren Dutia /s/ Suren G. Dutia
-----------------------
/s/ Bruce C. Myers (President)
-----------------------
Bruce Meyers /s/ Bruce C. Myers
-----------------------
------------------------ (Secretary)
Bruce Meyers
------------------------
Page 73 of 85 <PAGE>
IMPERIAL BANK
Member FDIC
CONTINUING GUARANTEE
ORIGINATING OFFICE:
Name of Office: San Diego Regional
---------------------
Street Address: 701 B. Street
---------------------
City, State, Zip Code: San Diego, Ca. 92101
---------------------
The undersigned (hereinafter referred to as "Guarantor")
hereby requests and authorizes IMPERIAL BANK (hereinafter
referred to as the "Bank") to extend credit to
XSCRIBE CORPORATION a Corporation
--------------------------------- --------------------
(Designate type of entity)
(hereinafter referred to as "Debtor"), and in consideration of
the granting of such credit by the Bank to Debtor, Guarantor
agrees as follows:
1. The words "indebtedness" and "credit" are used herein
in their most comprehensive sense and include any and all
advances, debts, obligations and liabilities, including
interest thereon, of Debtor heretofore, now or hereafter made,
incurred or created, with or without notice to Guarantor,
whether voluntary or involuntary and however arising, whether
due or not due, absolute or contingent, liquidated or unliqui-
dated, determined or undetermined, whether assumed by Debtor's
successors, heirs or assigns by operation of law or otherwise,
and whether Debtor is liable individually or jointly with
others, and whether recovery upon any such indebtedness or
credit is or hereafter becomes barred by any statute of
limitations or is or hereafter becomes otherwise unenforceable.
2. Credit may be granted from time to time at the
request of Debtor and without further authorization from or
notice to Guarantor, even though Debtor's financial condition
may have deteriorated since the date hereof. If Debtor is a
corporation or a partnership, the Bank need not inquire into
the power of Debtor or the authority of its officers, direc-
tors, partners or agents acting or purporting to act in its
behalf. Each credit heretofore or hereafter granted to Debtor
shall be considered to have been granted at the special
instance and request of Guarantor and in consideration of and
in reliance upon this guarantee.
3. Guarantor hereby unconditionally guarantees and
promises to pay the Bank or its order any and all indebtedness
of Debtor to the Bank and to perform any and all obligations of
Debtor under the terms of any agreement or instrument
Page 74 of 85 <PAGE>
evidencing, securing or executed in connection with any such
indebtedness ("Credit Documents"). The liability of Guarantor
shall not at any time exceed the sum of the amount set forth
below, plus the interest thereon in accordance with the Credit
Documents and the costs, attorneys' fees and other expenses
provided for in Paragraph 15 hereof. If no amount is set forth
below, the liability of the Guarantor hereunder shall be
unlimited. The Bank may permit Debtor's indebtedness to exceed
any maximum liability without impairing the obligations of
Guarantor hereunder. No payments made by or on behalf of
Guarantor to the Bank shall reduce any such maximum liability
unless written notice to that effect is received by the Bank at
or prior to the time such payment is made. If Guarantor has
executed more than one guarantee of the indebtedness of Debtor
to the Bank, the guarantees shall be cumulative.
4. Either before or after revocation hereof and in such
manner, upon such terms and at such times as it considers best
and with or without notice to Guarantor, the Bank may alter,
compromise, accelerate, extend or change the time or manner for
the payment of any indebtedness hereby guaranteed, increase or
reduce the rate of interest thereon, release or add any one or
more guarantors or endorsers, accept additional or substituted
security therefor, or release or subordinate any security
therefor. No exercise or nonexercise by the Bank of any right
hereby given it, no dealing by the Bank with Debtor or any
other person, and no change, impairment or suspension of any
right or remedy of the Bank shall in any way affect any of the
obligations of Guarantor hereunder or any security furnished by
Guarantor or given Guarantor any recourse against the Bank.
5. In addition to all liens upon and rights of offset
given to the Bank by law against any property of Debtor or of
Guarantor, Guarantor hereby grants a security interest in all
property of Guarantor now or hereafter in the possession of or
on deposit with the Bank, whether held in a general or special
account or for safekeeping or otherwise. Each such security
interest may be exercised without demand upon or notice to
Guarantor, shall continue in full force unless specifically
waived or released by the Bank in writing and shall not be
considered waived by any conduct of the Bank or by any failure
of the Bank to exercise any right of offset or to enforce any
such security interest or by any neglect or delay in so doing.
6. Guarantor waives and agrees not to assert or take
advantage of (a) any right to require the Bank to proceed
against the Debtor or any other person, firm or corporation or
to proceed against or exhaust any security held by it at any
time or to pursue any other remedy in its power; (b) the
defense of the statute of limitations in any action hereunder
or for the collection of any indebtedness or the performance of
any obligation guaranteed hereby; (c) any defense that may
arise by reason of the incapacity, lack of authority, death or
disability of, or revocation hereof by, any other or others or
the failure of the Bank to file or enforce a claim against the
Page 75 of 85 <PAGE>
estate (either in administration, bankruptcy, or other proceed-
ing) of any other or others; (d) demand, protest and notice of
any kind including, without limiting the generality of the
foregoing, notice of the existence, creation or incurring of
new or additional indebtedness or of any action or non-action
on the part of the Debtor, the Bank, any endorser, creditor of
Debtor or Guarantor under this or any other instrument, or any
other person whomsoever, in connection with any obligation or
evidence of indebtedness hereby guaranteed; (e) any defense
based upon an election of remedies by the Bank, including with-
out limitation, an election to proceed by nonjudicial rather
than judicial foreclosure, which election destroys or otherwise
impairs subrogation rights of Guarantor or the right of
Guarantor to proceed against Debtor for reimbursement, or both,
including, without limitation, the impairment of subrogation
rights arising by virtue of California Civil Code 580(b) and
580(d); (f) any defense or right based upon the fair value
deficiency protections and provisions of California Civil
Code 580(a) and California Civil Procedure Code 726; and
(g) any defense or right based upon the acceptance by the Bank
or an affiliate of the Bank of a deed in lieu of foreclosure,
without extinguishing the indebtedness, even if such acceptance
destroys, alters or otherwise impairs subrogation rights of
Guarantor or the right of Guarantor to proceed against Debtor
for reimbursement, or both.
7. Guarantor, by execution hereof, represents to the
Bank that the relationship between Guarantor and Debtor is such
that Guarantor has access to all relevant facts and information
concerning the indebtedness and Debtor and that the Bank can
rely upon Guarantor having such access. Guarantor waives and
agrees not to assert any duty on the part of the Bank to dis-
close to Guarantor any facts that the Bank may now or hereafter
know about Debtor, regardless of whether the Bank has reason to
believe that any such facts materially increase the risk beyond
that which Guarantor intends to assume, or has reason to
believe that such facts are unknown to Guarantor, or has a
reasonable opportunity to communicate such facts to Guarantor.
Guarantor is fully responsible for being and keeping informed
of the financial condition of Debtor and all circumstances
bearing on the risk of non-payment of the indebtedness
guaranteed hereby.
8. Until all indebtedness of Debtor to the Bank has been
paid in full, even though such indebtedness is in excess of the
liability of Guarantor, Guarantor shall have no right of subro-
gation and waives any right to enforce any remedy which the
Bank now has or may hereafter have against Debtor and any
benefit of and any right to participate in any security now or
hereafter held by the Bank.
9. Except as otherwise provided in this paragraph, all
existing or future indebtedness of Debtor to Guarantor and, if
Debtor is a partnership, any right to withdraw any capital of
Guarantor invested in Debtor, is hereby subordinated to all
Page 76 of 85 <PAGE>
indebtedness hereby guaranteed and, without the prior written
consent of the Bank, shall not be paid or withdrawn in whole or
in part nor will Guarantor accept any payment of or on account
of any such indebtedness or as a withdrawal of capital while
this guarantee is in effect. At the Bank's request, Debtor
shall pay to the Bank all or any part of subordinated indebt-
edness and any capital which Guarantor is entitled to withdraw.
Each payment by Debtor to Guarantor in violation of this para-
graph shall be received in trust for the Bank and shall be paid
to the Bank immediately on account of the indebtedness of
Debtor to the Bank. No such payment shall reduce or affect in
any manner Guarantor's liability under any of the provisions of
this guarantee. Guarantor reserves the right to receive from
Debtor payment of any salary for personal services at the same
monthly rate as that at which Guarantor has been paid during
the preceding twelve months, it being expressly understood that
such amount shall not be subordinated to the indebtedness
guaranteed hereby.
10. Guarantor will file all claims against Debtor in any
bankruptcy or other proceeding in which the filing of claims is
required by law upon any indebtedness of Debtor to Guarantor
and shall concurrently assign to the Bank all of the Guar-
antor's rights thereunder. If Guarantor does not file any such
claim, the Bank, as Guarantor's attorney-in-fact, is hereby
authorized to do so in Guarantor's name or, in the Bank's
discretion, to assign the claim and to cause proof of claim to
be filed in the name of the Bank's nominee. In all such cases,
whether in administration, bankruptcy or otherwise, the person
or persons authorized to pay such claims shall pay to the Bank
the full amount thereof and, to the full extent necessary for
the purpose, Guarantor hereby assigns to the Bank all of the
Guarantor's rights to any and all such payments or distribu-
tions to which Guarantor would otherwise be entitled. If the
amount so paid is greater than the guaranteed indebtedness then
outstanding, the Bank will pay the amount of the excess to the
person entitled thereto.
11. With or without notice to Guarantor, the Bank, in its
sole discretion and at any time and from time to time either
before or after delivery of any notice of revocation hereunder
and in such manner and upon such terms as it considers fit, may
(a) apply any or all payments or recoveries from Debtor, from
Guarantor or from any other guarantor under this or any other
instrument or realized from any security, in such manner and
order or priority as the Bank elects, to any indebtedness of
Debtor to the Bank, whether or not such indebtedness is
guaranteed hereby or is otherwise secured or is due at the time
of such application; and (b) refund to Debtor any payment
received by the Bank upon any indebtedness hereby guaranteed
and payment of the amount refunded shall be fully guaranteed
hereby. Any recovery realized from any other guarantor under
this or any other instrument shall be first credited upon that
portion of the indebtedness of Debtor to the Bank which exceeds
Guarantor's maximum liability, if any, hereunder.
Page 77 of 85 <PAGE>
12. The amount of Guarantor's liability and all rights,
powers and remedies of the Bank hereunder and under the Credit
Documents and any other agreement now or at any time hereafter
in force between the Bank and Guarantor shall be cumulative and
not alternative, and such rights, powers and remedies shall be
in addition to all rights, powers and remedies given to the
Bank by law.
13. Guarantor's obligations hereunder are independent of
the obligations of Debtor and, in the event of any default
hereunder, a separate action or actions may be brought and
prosecuted against Guarantor whether action is brought against
Debtor or whether Debtor is joined in any such action or
actions. The Bank may maintain successive actions for other
defaults. The Bank's rights hereunder shall not be exhausted
by its exercise of any of its rights or remedies or by any such
action or by any number of successive actions until and
unless all indebtedness and obligations hereby guaranteed have
been paid and fully performed.
14. This is a continuing guarantee and Guarantor agrees
that it shall remain in full force until and unless Guarantor
delivers to the Bank written notice that it has been revoked as
to credit granted subsequent to the effective time of
revocation as herein provided. Delivery of such notice shall
be effective by personal service upon an officer of the Bank at
the originating office of the Bank designated on the first page
hereby or by mailing such notice by certified or registered
mail, return receipt requested, postage prepaid and addressed
to the Bank at the originating office designated on the first
page hereof. Regardless of how notice of revocation is given,
it shall not be effective until twelve o'clock noon Pacific
Standard or Daylight Savings Time, as the case may be, on the
next succeeding Bank business day following the day such notice
is delivered, but delivery of such notice shall not affect any
of the obligations of any other guarantor for the credit
granted to Debtor hereunder. If the originating office of the
Bank designated above is not in existence at the time notice of
revocation is desired to be given, then such notice may be
given in the manner above provided by delivering the same to
IMPERIAL BANK OFFICE at 9920 South La Cienega Boulevard,
Inglewood, California, 90301.
15. Guarantor agrees to pay to the Bank without demand
reasonable attorneys' fees and all costs and other expenses
which the Bank expends or incurs in collecting or compromising
any indebtedness of the Debtor, in protecting the Bank's
security under the Credit Documents or in enforcing this
guarantee against Guarantor or any other guarantor of any
indebtedness hereby guaranteed whether or not suit is filed,
including, without limitation, attorney's fees, costs and other
such expenses incurred in any bankruptcy proceeding. Guarantor
warrants and represents that it is fully authorized by law to
execute this guarantee.
Page 78 of 85 <PAGE>
16. This guarantee shall benefit the Bank, its successors
and assigns, including the assignees of any indebtedness hereby
guaranteed, and binds Guarantor's successors and assigns. This
guarantee is assignable by the Bank with respect to all or any
portion of the indebtedness and obligations guaranteed here-
under, and, when so assigned, Guarantor shall be liable to the
assignees under this guarantee without in any manner affecting
Guarantor's liability hereunder with respect to any indebted-
ness or obligations retained by the Bank. No delegation or
assignment of this guarantee by any Guarantor shall be of any
force or effect or release Guarantor from any obligation
hereunder.
17. No provision of this guarantee or right of the Bank
hereunder can be waived, nor can any Guarantor be released from
his/her obligations hereunder, except by a writing duly exe-
cuted by an authorized officer of the Bank. Should any one or
more provisions of this guarantee be determined to be illegal
or unenforceable, all other provisions nevertheless shall be
governed by and construed in accordance with the laws of
California, and Guarantor agrees to submit to the jurisdiction
of the Courts of California.
18. If more than one guarantor signs this guarantee, the
obligation of all such guarantors shall be joint and several.
When the context and construction so require, all words used in
the singular shall be deemed to have been used in the plural
and the masculine shall include the feminine and neuter. Any
married person who signs this guarantee agrees that recourse
may be had against separate property for all obligations under
this guarantee.
19. Except as provided in any other written agreement now
or at any time hereafter in force between the Bank and
Guarantor, this guarantee shall constitute the entire agreement
of Guarantor with the Bank with respect to the subject matter
hereof and no representation, understanding, promise or condi-
tion concerning the subject matter hereof shall be binding upon
the Bank unless expressed herein. Any notice to Guarantor
shall be considered to have been duly given when delivered
personally or forty-eight hours after being mailed, postage
prepaid, to the address(es) set forth below or to such other
address(es) as Guarantor may from time to time designate by
giving notice in the same manner of notice to the Bank set
forth in Paragraph 14 hereof.
20. Each of the undersigned Guarantors hereby
acknowledges the receipt of a true copy of this guarantee.
21. [ ] This guarantee is secured by a deed of trust
dated _______________, 19___, to Imperial Bancorp, as Trustee.
Page 79 of 85 <PAGE>
INITIAL HERE
/s/ BCM
/s/ SD 22. Notwithstanding anything herein to the contrary
the maximum liability of the Guarantor shall not exceed its net
worth under generally accepted accounting principals from time
to time.
GUARANTEE AMOUNT $2,000,000.00
------------
Executed by or on behalf of Guarantor(s) on August 10, 1995.
--------- --
Signature of Guarantor(s) Address
XSCRIBE IMAGING, INC. 6825 Nancy Ridge Dr.,
---------------------------
BY /s/ Suren G. Dutia San Diego, CA 92121
------------------------- ---------------------------
/s/ Bruce C. Myers
------------------------- ---------------------------
---------------------------
Page 80 of 85 <PAGE>
(COMPLETE IF GUARANTOR IS A CORPORATION)
RESOLUTION AUTHORIZING CONTINUING GUARANTEE,
ENDORSEMENT AND GUARANTEE OF NOTE OR NOTES
AND HYPOTHECATION OF ASSETS
WHEREAS, XSCRIBE CORPORATION ,
------------------------------------------
hereinafter referred to as "Debtor", has requested IMPERIAL
BANK, hereinafter referred to as "Bank", to grant credit to
Debtor,
WHEREAS, the corporation hereinafter named expects to
derive benefit from such financial accommodation by Bank,
1. NOW, BE IT RESOLVED, that any 1 of the
----------
(Specify Number)
following named officers
Suren Dutia the CEO/Chairman
------------------------- -------------------------
Bruce Meyers the Sec/CFO/VP of Operations
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
for and on behalf of XSCRIBE IMAGING, INC.
---------------------------------------
(Name of Corporation)
be and they hereby are authorized and directed for and in the
name of this corporation and as its act and deed to do and
perform any one or more of the following:
A. Execute a continuing guarantee in favor of Bank
for any and all assets of this corporation.
B. Endorse and/or guarantee a note or notes in
favor of Bank whereunder Debtor is Maker and Bank is Payee
including renewals and extensions thereof.
C. Grant to Bank a security interest in and to any
and all assets of this corporation: (1) as security for any
obligation which this corporation may incur under subpara-
graphs A and/or B above; or (2) as security for indebtedness of
Debtor to Bank to the extent of the value of the security
interest so granted without personal liability on the part of
this corporation to Bank.
2. RESOLVED FURTHER, that Bank may rely on the authority
conferred herein until Bank receives notice in writing that the
authority contained in this resolution has been revoked or the
Page 81 of 85 <PAGE>
authority of the persons or officers named above has been
revoked.
3. RESOLVED FURTHER, that the liability of this
corporation to Bank hereunder shall not exceed the total sum of
Two Million and No/100 DOLLARS ($2,000,000.00).
-------------------------------------- ------------
4. RESOLVED FURTHER, that any guarantees or other docu-
ments in like amount and terms as those stated above heretofore
executed by said officers in the name of this corporation are
hereby ratified and approved, and the secretary or assistant
secretary is authorized and directed to attach copies of such
documents to the minutes of the corporation.
I, the undersigned Bruce Meyers , hereby certify
----------------------
that I am the duly elected, qualified and acting ______________
secretary of the above referenced corporation, duly organized
and existing under the laws of the State of Nevada ; that
------------
the Board of Directors of said corporation duly and regularly
adopted the resolution of which the foregoing is a full, true
and correct copy.
I further certify that said resolution is in full force
and effect, that it has not been revoked, suspended, or amended
in any way, and that the specimen signatures appearing below
are the signatures of the officers authorized to sign for this
corporation by virtue of said resolution.
I further certify that shareholder consent is
-----------
(is or is not)
required in the event of hypothecation of all or substantially
all of the assets of said corporation.
EXECUTED ON ___________________.
AUTHORIZED SIGNATURES: (SEAL)
Signature: /s/ Suren G. Dutia Confirmed By:
-----------------------
Suren Dutia /s/ Suren G. Dutia
-----------------------
/s/ Bruce C. Myers (President)
-----------------------
Bruce Meyers /s/ Bruce C. Myers
-----------------------
------------------------ (Secretary)
Bruce Meyers
------------------------
Page 82 of 85 <PAGE>
EXHIBIT 10.2
November 30, 1995
Jukka V. Norokorpi
International Computers Limited
Lovelace Road
Bracknell, Berkshire
RG12 8SN United Kingdom
RE: TEAMWARE/LEXIA COOPERATIVE ARRANGEMENT
Dear Jukka:
This letter agreement confirms our understanding of the new
cooperative arrangement between International Computers Limited
("ICL") and Xscribe Corporation ("Xscribe") for the distribution
in North America of the ICL TeamWARE suite of groupware
solutions ("GroupWare").
1. Xscribe will form and own a new Delaware corporation
("Co-op") which will market GroupWare and establish
distribution channels in North America as agreed by ICL and
Xscribe.
2. ICL and Co-op will work together for the purposes set forth
in Paragraph 1 above.
3. Effective November 1, 1995, ICL will discontinue its
existing TeamWARE USA reseller efforts.
4. ICL will pay for a combination of twelve employees who will
either be ICL employees assigned to Co-op or who will be
Co-op employees hired by Co-op. With respect to the ICL
employees assigned to Co-op, ICL shall pay directly the
salary, benefits, facilities and travel and entertainment
expenses. With respect to the employees hired by Co-op
whose number will not exceed the difference between twelve
and the number of ICL employees assigned to Co-op, ICL
shall fund the employees at an annual rate of $85,000 each
if they are housed at an ICL facility and $90,000 each if
they are housed at a non-ICL facility. The parties shall
determine where the employees will be housed. The annual
rates will be reevaluated by the parties in June 1996. The
number of employees to be funded by ICL may increase to
fourteen in July 1996. ICL's obligation to assign or fund
employees will end on April 30, 1997.
Page 83 of 85 <PAGE>
5. As soon as possible, Xscribe will add and fund two
additional employees to Lexia/Co-op's staff. Xscribe shall
also provide corporate service to Co-op at cost, match
marketing funds provided by ICL in Q4, Q5 and Q6 of the
eighteen month period ending April 30, 1997, and reinvest
all excess profits (considering reasonable profit
expectations) into increased Co-op sales and marketing
efforts.
6. Effective November 1, 1995, ICL will provide marketing
funding for Co-op. The total of the marketing fund will be
$1,120,000 for the eighteen-month period ending April 30,
1997 if Co-op achieves certain marketing levels as agreed
by the parties.
7. Beginning mid-March 1996, ICL and Co-op will review on a
quarterly basis Co-op's progress against agreed milestones.
Effective April 1, 1996, and quarterly thereafter, ICL's
obligation to provide funding will be contingent upon
Co-op's performance against agreed milestones
notwithstanding anything to the contrary herein.
8. Lexia will continue to be a distributor of GroupWare and
other products in accordance with the October 25, 1993
Distribution and License Agreement ("Agreement"). ICL will
sell GroupWare to Lexia or Co-op at the transfer prices set
forth in the Agreement.
9. Co-op will own the relationships with value-added
distributors, resellers, and system integrators established
through its efforts and Lexia will own the relationships
with its customers.
If you agree that this letter sets forth our understanding of
this cooperative business arrangement, please acknowledge your
agreement by signing a copy of this letter and returning it to
me.
Sincerely,
Bruce C. Myers
Chief Financial Officer
ACKNOWLEDGED AND AGREED TO:
_______________________________
Jukka V. Norokorpi
Dated: December ____, 1995
2
Page 84 of 85 <PAGE>
EXHIBIT 23.1
KPMG Peat Marwick LLP
The Board of Directors
Xscribe Corporation:
We consent to the use of our reports incorporated herein by
reference and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
San Diego, California
December 12, 1995
Page 85 of 85 <PAGE>
