As filed with the Securities and Exchange Commission on February 11, 2000
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ACCENT COLOR SCIENCES, INC.
(Exact Name of Registrant as Specified in its Charter)
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<TABLE>
<S> <C> <C>
(State or other Jurisdiction of (Address, including Zip Code, and Telephone (I.R.S. Employer
Incorporation or Organization) Number, including Area Code, of Registrant's Identification Number)
Principal Executive Offices)
CONNECTICUT 800 Connecticut Boulevard 06-1380314
East Hartford, Connecticut, 06108
(860) 610-4000
</TABLE>
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(Name, Address, including Zip Code, and Telephone Number,
including Area Code, of Agent for Service)
Charles E. Buchheit Copy to:
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President and Chief Executive Officer Willard F. Pinney, Jr.
Accent Color Sciences, Inc. Murtha, Cullina, Richter and Pinney, LLP
800 Connecticut Boulevard CityPlace I185 Asylum Street, 29th Floor
East Hartford, Connecticut 06108 Hartford, Connecticut 06103-3469
(860) 610-4000 (860) 240-6000
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Approximate date of the start of proposed sale to the public: From
time to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, check the following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
<PAGE>
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434 under
the Securities Act, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------- ----------------------- ------------------ --------------------- --------------------
Title of each class Amount to be Proposed maximum Proposed maximum Amount of
of securities to be registered offering price aggregate offering registration fee
registered per unit(1) price
- ----------------------- ----------------------- ------------------ --------------------- --------------------
<S> <C> <C> <C> <C>
common stock,
no par value per 12,418,750 $.8925 $11,083,734 $2,926.10
share shares (2)
- ----------------------- ----------------------- ------------------ --------------------- --------------------
</TABLE>
(1) Estimated in accordance with Rule 457(c) under the Securities Act of 1933,
solely for the purpose of calculating the registration fee based upon the
average of the high and low sale prices reported on the Over-the-Counter
Bulletin Board system on February 7, 2000.
(2) Pursuant to Rule 416 of the Securities Act, the number of shares of common
stock to be registered on this registration statement also includes an
indeterminate number of shares which may become issuable upon conversion of or
otherwise with respect to the Series C convertible preferred stock to prevent
dilution resulting from stock splits, stock dividends or similar transactions.
The registrant 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 which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on the date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell nor does it seek an offer to but these securities in any jurisdiction
where the offer or sale is not permitted.
PROSPECTUS
12,418,750 SHARES OF COMMON STOCK
ACCENT COLOR SCIENCES, INC.
---------------------------
This prospectus relates to the periodic sale of up to 12,418,750
shares of common stock of Accent Color Sciences, Inc. that are offered by
certain of our shareholders, that have been issued or may be issuable upon
conversion of some or all of the shares of our Series C Convertible Preferred
Stock and that are issuable upon the exercise of certain warrants that we have
granted. All proceeds from the sale of common stock under this prospectus will
go to the selling shareholders listed on page 15 of the prospectus.
Our common stock is traded on the Over-the-Counter Bulletin Board of
the National Association of Securities Dealers, Inc. under the symbol "ACLR". On
February 7, 2000, the last reported sale price of our common stock as reported
on the OTC was $.87 per share.
---------------------------
The shares of common stock offered hereby involve a high degree of
risk. You should purchase shares only if you can afford a complete loss. See
"Risk Factors" beginning on page 2 for a discussion of certain factors that you
should consider before you purchase any shares of our common stock.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this prospectus is __________________, 2000.
<PAGE>
TABLE OF CONTENTS
PAGE
About Accent Color Sciences, Inc..............................................2
Risk Factors..................................................................2
Forward Looking Statements...................................................13
Where You Can Find More Information..........................................13
Documents We Incorporate By Reference .......................................14
Selling Stockholders ........................................................15
Use of Proceeds..............................................................18
Plan of Distribution ........................................................19
Legal Matters ...............................................................20
Experts .....................................................................21
Index to Exhibits............................................................28
<PAGE>
ABOUT ACCENT COLOR SCIENCES, INC.
We design, manufacture and sell innovative, high-speed, highlight
color printing systems ("Truecolor Systems") for integration with digital,
high-speed, monochrome printers and also sell related consumables. Highlight
color printing involves the use of color to enhance traditional monochrome
documents by accenting critical information, such as a balance due on a billing
statement, or by printing graphics, like a company logo. Truecolor Systems are
designed to print highlight color in high-speed, high-volume applications at a
low incremental cost per page without diminishing the speed or performance of
the high-speed, monochrome host printer or affecting the end user's existing
operational methods. They are capable of printing up to 501 pages per minute,
simultaneously utilizing up to eight different colors, including custom colors,
to print or highlight fixed or variable data. Truecolor Systems combine our
proprietary paper handling technology with patented ink jet technology from
Spectra, Inc. Under the agreement with Spectra, we hold an exclusive right to
supply products, which include Spectra ink jet printheads to print color on the
monochrome output from specified high-speed printers from Xerox Corporation,
International Business Machines Corporation and certain other manufacturers,
through the year 2002. We are not, however, currently in compliance with certain
volume purchase requirements necessary to maintain such exclusivity. We also
hold a right to extend the agreement with Spectra for an additional seven years.
We also sell consumables including standard and custom color wax-based
inks, as well as spare parts used with Truecolor Systems. We expect that
consumables will generate recurring revenue that we believe will increase as the
installed base and usage of Truecolor Systems increase.
Accent Color was incorporated under the laws of Connecticut in May
1993. Our principal executive offices are located at 800 Connecticut Boulevard,
East Hartford, Connecticut, 06108. Our telephone number at that address is (860)
610-4000.
RISK FACTORS
An investment in Accent Color common stock involves a high degree of
risk. You should carefully consider the following risk factors and other
information in this prospectus and the documents we incorporate by reference in
evaluating our company before you purchase any shares of our common stock. The
risks we describe below are not the only ones we face. Additional risks and
uncertainties, including those we do not know about now or that we currently
deem immaterial, may also adversely affect our business. If any of the following
risks actually occur, our business, financial condition or results of operations
could be materially adversely affected. In this case, the trading price of the
common stock could decline and you may lose all or part of your investment.
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RISKS RELATED TO OUR BUSINESS
WE HAVE A LIMITED OPERATING HISTORY AND HAVE INCURRED LOSSES SINCE OUR
INCEPTION. IF WE CONTINUE TO LOSE MONEY, OUR OPERATIONS MAY NOT BE
FINANCIALLY VIABLE.
Accent Color was formed in May 1993 and has a limited operating
history. We have incurred losses in each year since our founding and incurred a
net loss of $9,769,853 (before imputed dividend on preferred stock) for the year
ended December 31, 1998 and a net loss of $3,973,854 (before imputed dividend on
preferred stock) for the first nine months of 1999. As a result of these losses,
as of September 30, 1999, we had an accumulated deficit of $51,588,818. Before
any imputed dividends or charges related to potentially beneficial conversion
features associated with the series C preferred stock, we expect to incur
quarterly net losses through at least the second quarter of 2000 and a net loss
for fiscal year 2000. We cannot assure you that thereafter we will be able to
achieve or sustain revenue growth, profitability or positive cash flow on either
a quarterly or annual basis or that profitability, if achieved, will be
sustained.
The anticipated increase in our operating expenses caused by any
expansion of our manufacturing and marketing operations could have a material
adverse effect on our operating results if revenue does not increase at an equal
or greater rate. Also, our expenses for these and other activities are based in
significant part on our expectations regarding future revenue and are fixed to a
large extent in the short term. We may not be able to adjust our spending in a
timely manner to compensate for any unexpected revenue shortfalls.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL IN THE FUTURE TO FUND OUR
OPERATING AND CAPITAL REQUIREMENTS.
Since our inception, we have raised additional funding from time to
time as we have increased our marketing, sales and service efforts, continued
our research and development activities for the enhancement of Truecolor Systems
and increased production of our Truecolor Systems. To date, we have financed our
operations through customer payments, borrowings and the sale of debt and equity
securities.
Although we experienced a slowdown in shipments of our products during
the latter half of 1999 which we believe to be due to year 2000 concerns, we
have received contractual orders and commitments for Truecolor Systems from our
original equipment manufacturer ("OEM") customers of approximately $10 million,
which are deliverable in the year 2000. These currently anticipated levels of
revenue and cash flow are subject to many uncertainties and cannot be assured.
Further, we may change our business plans, or unforeseen events may occur which
might require us to raise additional funds. The need for, and the amount of,
additional funds we may require will depend on many factors, including
o the extent and timing of sales of our Truecolor Systems,
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<PAGE>
o the cost associated with sales, marketing and customer technical
support efforts, and
o our operating results.
We cannot assure you that, if needed, additional financing will be
available, or available on acceptable terms. If we are unable to obtain needed
additional financing or generate sufficient cash from our operations, we may
have to reduce or eliminate expenditures for research and development,
production or marketing of our products, or otherwise curtail or discontinue our
operations. Any of these developments could have a material adverse effect on
our business, financial condition and results of operations.
WE ARE DEPENDENT ON A SINGLE PRODUCT LINE.
We do not have a variety of product lines. We anticipate that we will
derive substantially all of our revenue in the foreseeable future from sales of
Truecolor Systems, related consumables and spare parts to our principal OEM
customers. If we are unable to generate enough sales of Truecolor Systems,
wax-based ink and/or spare parts due to market conditions, manufacturing
difficulties or other reasons, we may be unable to continue our business. Since
we only have a single product line, we are particularly vulnerable to the
successful introduction of competitive products by existing or potential
competitors, including our OEM customers.
WE HAVE A LIMITED HISTORY OF PRODUCT MANUFACTURING.
We have a limited manufacturing history and cannot assure that we can
make a successful transition to high-volume production. So far, we have
manufactured only limited quantities of Truecolor Systems and manufacturing
costs have approximated the average selling price of a unit. To make a profit we
must manufacture our products in enough quantities and at acceptable costs.
Future production in enough quantities may pose technical and financial
challenges for us. Our failure to successfully transition and manufacture our
products at a cost adequately below their selling price could have a material
adverse effect on our business, financial condition and results of operations.
WE MAY NOT BE ABLE TO SUCCESSFULLY MARKET OUR PRODUCTS.
Our products are designed for the digital, high-speed production
printing and production publishing market segments that have traditionally
relied on monochrome print. We cannot assure that we will successfully develop
or market our existing or future products or, if any of these products achieve
market acceptance, that we can grow or even sustain market acceptance. Any
actual or perceived problems with our products, whether or not they are
significant, could have a material adverse effect on market acceptance of these
products. Our existing and potential customers may conclude that our products
suffer from real or perceived problems. Even in the absence of any real or
perceived problems, our products may fail to achieve market acceptance.
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A failure of our products to achieve market acceptance for any reason
could have a material adverse effect on our business, financial condition and
results of operations. In addition, the announcement by us or our OEM customers
or competitors of new products and technologies could cause customers to defer
purchases of our existing products, which could have a material adverse effect
on our business, financial condition and results of operations.
WE HAVE A CONCENTRATED CUSTOMER BASE, THEREFORE THE LOSS OF A SINGLE
CUSTOMER COULD NEGATIVELY AFFECT OUR REVENUES AND OPERATING RESULTS.
We anticipate that sales of our Truecolor Systems and consumables to a
limited number of customers will account for substantially all of our revenue.
We have existing contracts with two customers IBM and Xerox (as the successor to
Groupe SET) ("Xerox"). Generally, our customers provide estimates, but not
guarantees, of their future orders. We cannot assure you that these customers
will purchase a significant volume of our products. A substantial difference
between estimated orders and actual orders by any one of our customers, or the
failure of our customers to purchase a significant number of our products, could
have a material adverse effect on our business, financial condition and results
of operations. We cannot assure you that our OEM customers, including IBM and
Xerox, or other companies will not compete with us in the future.
WE RELY ON THIRD PARTY MARKETING, DISTRIBUTION AND SUPPORT.
A significant element of our marketing strategy is to form alliances
with third parties for the marketing and distribution of our products. We cannot
assure you that
o we can maintain our existing alliances or form and maintain
alliances with other parties;
o we can satisfy our contractual obligations with our OEM
customers; or
o our OEM customers will devote adequate resources to market and
distribute our products successfully.
Since our products are marketed and distributed via third parties we have:
o a limited ability to interact with the users of our products and
to observe their experience with our products;
o a lack of control of the marketing, distribution and support
efforts of our OEM customers that may make us less responsive in
recognizing and correcting any problems experienced by the OEM
customers or the end users;
o a lack of control as to the timing of the introduction of our
products; and
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o less information regarding the amount of inventory currently
available and this may reduce our ability to predict fluctuations
in revenue due to a surplus or a shortage of inventory.
The foregoing results of our reliance on third parties to market and
distribute our products could have a significant adverse effect on our business,
financial condition and results of operations. In addition, any disruption in
our relationships with IBM or Xerox, or any future customer, may have a material
adverse effect on our ability to successfully market our Truecolor Systems to
customers.
WE ARE DEPENDENT ON A SOLE SOURCE SUPPLIER FOR A KEY COMPONENT OF OUR
PRODUCTS.
We are dependent on Spectra, a wholly owned subsidiary of Markem,
Inc., as our sole source supplier of ink jet printheads and the hot melt,
wax-based inks used by Truecolor Systems. Spectra has agreed to supply us with
ink jet printheads and wax-based inks under a supply agreement, subject to a
number of conditions. We have an exclusive right, under an agreement with
Spectra, to supply products including Spectra's ink jet printheads in the
worldwide market for printing color on the output from specified high-speed,
monochrome printers marketed by Xerox, IBM and certain other parties through
December 31, 2002, however, we are currently not in compliance with certain
volume purchase requirements necessary to maintain such exclusivity. We also
have an option to renew this agreement for an additional seven year term. Our
reliance on Spectra involves the risks that we may
o be unable to obtain an adequate supply of required printheads or
inks from another supplier in the event that Spectra is unable or
unwilling to do so; and
o have a reduced level of control over the quality, pricing and
timing of delivery of these items.
As we increase the production of Truecolor Systems, we will become
more reliant upon Spectra's ability to manufacture and deliver ink jet
printheads under the supply agreement. Any interruption in our ability to obtain
Spectra printheads of an acceptable quality within the time frame required by us
at an affordable cost could result in delays and increased costs which would
have a material adverse effect on our business, financial condition and results
of operations.
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<PAGE>
WE DEPEND ON MAJOR SUBCONTRACTORS AND SUPPLIERS.
We rely on subcontractors and other parties to manufacture,
subassemble and perform certain testing of some modules and parts of Truecolor
Systems. Currently, our ink jet printheads are manufactured solely by Spectra.
We currently perform the final assembly and testing of various Truecolor System
components and of each complete Truecolor System. We plan to hire other parties
to manufacture major components and complete final assembly and testing of
Truecolor Systems in-house. If we do not develop relationships with, or lose,
these subcontractors or suppliers, or if the subcontractors or suppliers fail to
meet our price, quality, quantity and delivery requirements, then we may suffer
a material adverse effect on our business, financial condition and results of
operations.
WE ARE RESPONSIBLE FOR PRODUCT WARRANTIES AND HAVE AGREED TO REPAIR OR
REPLACE OUR PRODUCTS IF DEFECT RATES ARE EXCESSIVE.
We warrant that our Truecolor Systems are free of defects in
workmanship and materials. We have also agreed to repair or replace defective
products without charge when defect rates are excessive. We cannot assure that
we will not experience more warranty claims or product failure rates than we
expected when we originally priced our products and spare parts. Any excess
warranty claims or product failure rates could have a material adverse effect on
our business, financial condition and results of operations.
WE DEPEND ON KEY MANAGEMENT PERSONNEL FOR OUR SUCCESS.
We are substantially dependent on the capabilities and services of our
key technical and management personnel, some of whom have been instrumental in
developing our products and establishing and maintaining strategic relationships
with our key suppliers and major OEM customers. These personnel include Richard
J. Coburn, our co-founder and chairman of the board of directors, and Charles E.
Buchheit, our president and chief executive officer. Mr. Buchheit has an
employment agreement with us that expires on April 14, 2001. Mr. Buchheit may
terminate his employment relationships with us at any time with no penalty other
than the loss of future compensation.
The loss or interruption of the continued service of, and the failure
to promptly replace, either of these key personnel could significantly delay and
may prevent the achievement of our business objectives.
In addition, our future success also depends on our continuing ability
to identify, hire, train and retain other highly qualified technical and
managerial personnel. Competition for these employees is intense and increasing.
We may not be able to attract, assimilate or retain qualified technical and
managerial personnel in the future, and the failure of us to do so would have a
material adverse effect on our business, financial condition and results of
operations.
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<PAGE>
RISKS RELATED TO OUR INDUSTRY
OUR SUCCESS DEPENDS ON THE ABILITY TO KEEP PACE WITH RAPID
TECHNOLOGICAL ADVANCES IN THE HIGH-SPEED PRINTER INDUSTRY.
The high-speed printer industry is characterized by evolving
technology and changing market requirements. Our future success depends our
ability to continue to develop and manufacture new products and to enhance
existing products. Consequently, the enhancement of our products is a
development priority. However, in a new and evolving market, customer
preferences can change rapidly and new technology could render existing
technology and product inventory obsolete. Our failure in responding adequately
to changes in our target market, in developing or acquiring new technology or
successfully conforming to market preferences could depress sales of our
existing products and technologies. This may result in declining prices and
inventory obsolescence which would have a material adverse effect on our
business, financial condition and results of operations.
OUR FAILURE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS
COULD HARM OUR BUSINESS.
Because our business depends on technology, we believe the maintenance
of our patents, trademarks, service marks and other proprietary rights in our
unpatented know-how and common law trademarks and service marks are important
for our success and competitive position. We have secured three patents from the
U.S. Patent and Trademark office relative to the mechanical design of our paper
handling and color printing system, which form the core of the Truecolor
Systems. In addition, we have applied for additional U.S. and foreign patent
protection relative to our products.
Our efforts to detect misappropriation of these rights may be
inadequate to prevent others, including our OEM customers, from imitating our
products and infringing on our intellectual property rights. It is possible
that, if challenged, our intellectual property rights may be narrowed or held
invalid by a court of competent jurisdiction. The sale of our copied products by
others could depress sales of our products which could materially adversely
impact our business, financial condition and results of operations.
WE RELY ON THE EFFORTS OF A MAJOR SUPPLIER TO PROTECT ITS INTELLECTUAL
PROPERTY RIGHTS.
We have an exclusive right, under an agreement with Spectra, to supply
products including Spectra's ink jet printheads to our customers. To the extent
that wax-based inks and ink jet printheads purchased from Spectra are covered
under patents or licenses, we rely on Spectra's rights under its patents and
licenses and Spectra's willingness and ability to enforce them. We cannot assure
that Spectra will be willing or able to enforce its patents and maintain its
licenses against third parties. Any unwillingness or inability to do so by
Spectra could have a material adverse effect on our business, financial
condition and results of operations.
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CLAIMS MADE BY THIRD PARTIES THAT WE INFRINGE THEIR PROPRIETARY RIGHTS
COULD RESULT IN INCREASED COSTS.
We believe that our products and technology do not infringe any
existing proprietary rights of others. Third parties may, however, assert
infringement claims against us in the future. We may be unable to successfully
defend against these claims. For example, third party competitors, including our
OEM customers, could assert rights in our intellectual property rights or claim
that the products we offer have violated their proprietary rights. In addition,
our competitors may have filed for patent protection that is not as yet a matter
of public knowledge. Moreover, a court could interpret a third-party's patents
broadly so as to cover some of our products.
We could incur substantial costs and diversion of management resources
with respect to the defense of any claims relating to proprietary rights,
whether or not the assertion of the claim is valid, which could have a material
adverse effect on our business, financial condition and results of operations.
Furthermore, parties making these claims could secure a judgment awarding
substantial damages, as well as injunctive or other equitable relief, which
could effectively block our ability to make, use, sell, distribute or market its
products and services in the U.S. or abroad. Any unfavorable judgment could have
a material adverse effect on our business, financial condition and results of
operations.
In the event a claim relating to proprietary technology or information
is asserted against us, we may seek licenses of that intellectual property in
order to use technology we need to conduct our business. We cannot assure you
that we could obtain a license on commercially reasonable terms, if at all, or
that the terms of any offered licenses will be acceptable. The failure to obtain
the necessary licenses or other rights could preclude the sale, manufacture or
distribution of our products and, therefore, could have a material adverse
effect on our business, financial condition and results of operations.
We are required to indemnify any of our OEM customers against third
party infringement claims. As a result, our business, financial condition and
results of operations could be materially adversely affected if any such
infringement claims are asserted against our OEM customers.
COMPETITION COULD PREVENT OUR EFFORTS TO ESTABLISH MARKET ACCEPTANCE
FOR OUR PRODUCTS AND HARM OUR BUSINESS.
Our competitors may be able to develop products that are more
attractive to customers than our products. We compete, in significant part, on
the basis of advanced proprietary technology in the areas of paper handling, ink
jet color printing and interface software which allows our products to print
variable data, in multiple standard and custom colors at high speeds.
Competition to supply high-speed color printing is fragmented. Many of
our competitors and potential competitors have substantially greater financial
and technical
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resources, longer operating histories, greater name recognition and more
extensive customer bases that could be used to gain market share or product
acceptance. In addition to direct competition from other firms utilizing
high-speed color technologies, we face potential direct competition from firms
improving technologies used in low-speed to medium-speed color printers and
indirect competition from firms producing pre-printed forms.
Other companies may introduce products or product improvements based
on new technologies with little or no advance notice. Manufacturers of
high-speed, monochrome printers may also, in time, develop comparable or more
effective color capability within their own products which may render our
products obsolete. There can be no assurance that we will be able to compete
against future competitors successfully or that competitive pressures we face
will not have a material adverse effect upon the success of our business and
financial condition.
OUR OEM CUSTOMERS MARKET AND SELL OUR PRODUCTS INTERNATIONALLY.
As part of our business strategy, our OEM customers market and sell
our products to end users outside the United States. International sales are
subject to certain inherent risks, including:
o unexpected changes in regulatory requirements;
o export and import restrictions, tariffs and other trade barriers;
o government controls and potential political instability; and
o potentially adverse tax consequences.
Any of the above factors could have a material adverse effect on our
business, financial condition and results of operations.
RISKS RELATED TO THE OFFERING
WE HAVE A LIMITED MARKET FOR OUR COMMON STOCK AND OUR STOCK PRICE IS
VOLATILE.
Our common stock is currently quoted and traded in the
over-the-counter market on the "Electronic Bulletin Board" of the National
Association of Securities Dealers, Inc under the symbol "ACLR." Trading on the
NASD Over-The-Counter Bulletin Board is sporadic and can be highly volatile. The
market price of our common stock has fluctuated in the past and may continue to
be volatile in the future. As a result of these factors, an investor will likely
find it more difficult to sell our stock or to obtain accurate quotations as to
the price of our stock than if the stock were traded on a national securities
exchange or on the Nasdaq national market.
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OUR QUARTERLY OPERATING RESULTS MAY NOT BE A GOOD INDICATOR OF FUTURE
RESULTS AND MAY FLUCTUATE SIGNIFICANTLY, WHICH COULD RESULT IN LOWER
PRICES FOR OUR STOCK.
We expect our quarterly operating results to fluctuate significantly
in the future based upon a number of factors, some of which are outside our
control. As a result, it is possible that our operating results may be below the
expectations of investors in some future period. If this were to occur, the
trading price of our common stock would likely decline, perhaps significantly.
The factors which affect whether our operating results fluctuate
include:
o the volume, timing, delivery and acceptance of customer orders;
o the rate of customer and end-user acceptance of our products and
the volume or nature of warranty claims;
o the market acceptance of host printing systems offered by our OEM
customers;
o changes in our pricing policies or those of our OEM customers or
competitors;
o the relative proportion of printer and consumables sales;
o the timely availability of sufficient volume of sole source
components;
o fluctuations in our research and development expenditures;
o the availability of financing arrangements for certain of our
customers; and
o economic conditions specific to the high-speed printer industry
and general economic conditions.
Additionally, because the purchase of a printing system and
peripherals is expensive, it may take a significant amount of time from the
first sales negotiations for a customer to complete and pay for its purchase.
Historically, certain periods of the year are more profitable than others for
the sale of major equipment such as our Truecolor Systems. We expect
fluctuations in our revenue from quarter to quarter to apply to the purchase of
our systems. Since we sell few units at high average prices, a delay in either
the sale or the receipt of the purchase price for only a few units could have a
considerable adverse effect on the results of operations for a fiscal quarter.
A significant portion of our operating expenses is relatively fixed in
the short term, and planned expenditures are based on sales forecasts. Sales
forecasts by our customers are generally not binding. Revenue levels may fall
below expectations and disproportionately affect operating results since only a
small portion of our expenses vary
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with revenue in the short term, which could have a material adverse effect on
our business, financial condition and results of operations.
OUR DIVIDEND POLICY COULD DEPRESS OUR STOCK PRICE.
We have never declared or paid dividends on our common stock and do
not anticipate declaring or paying any dividends in the foreseeable future. We
plan to retain any future earnings to reduce our accumulated deficit and finance
growth. As a result, our dividend policy could depress the market price for our
common stock.
WE HAVE ANTI-TAKEOVER PROVISIONS IN PLACE THAT COULD DELAY OR PREVENT
A CHANGE IN CONTROL AND THEREFORE HURT OUR SHAREHOLDERS.
Our Restated Certificate of Incorporation contains provisions that
could discourage a proxy contest or make more difficult the acquisition of a
substantial block of our common stock. Our directors are elected on a rotating
basis each year. This makes a change in the composition of the board of
directors more difficult and could make it more difficult for a third party to
acquire control of the company, even if such change of control might benefit the
shareholders. In addition, the board of directors may issue shares of common
stock and preferred stock which, if issued, could dilute and adversely affect
various rights of the holders of shares of common stock. If the board of
directors decides to issue this stock it could discourage an unsolicited attempt
to acquire us.
We are subject to the Connecticut Business Corporation Act, some
provisions of which might prevent a change of control, even a change of control
that might benefit the company and its shareholders.
SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING COULD ADVERSELY
AFFECT OUR STOCK PRICE.
Future sales in the public market of substantial amounts of common
stock or the perception that such sales may occur could cause the market price
of our stock to drop significantly, even if our business is doing well. A
decline in our stock price could also impair our ability to raise capital
through the offering of additional debt or equity securities. Such future sales
of common stock includes shares:
o issuable upon the conversion of shares of series C preferred
stock;
o issuable upon the exercise of the warrants we have granted,
o registered and sold because of the exercise of outstanding
registration rights; and/or
o issuable upon the exercise of other outstanding options or
warrants.
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<PAGE>
As of February 8, 2000, we had 21,973,321 shares of common stock
issued and outstanding. If all the outstanding shares of series C and series B
preferred stock are
converted into shares of common stock and if all of the outstanding warrants and
options are exercised, we will have approximately 41,512,567 shares of common
stock issued and outstanding.
FORWARD-LOOKING STATEMENTS
In this prospectus and the documents that we incorporate by reference,
we make statements that relate to our future plans, objectives, expectations and
intentions that involve risks and uncertainties. We have based these statements
on our current expectations and projections about future events. These
statements may be identified by the use of words such as "expect," "anticipate,"
"intend," "plan," "believe" and "estimate" and similar expressions. Any
statements that refer to expectations, projections or other characterizations of
future events or circumstances are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, and are subject to the
safe harbor created by that Act.
Forward-looking statements necessarily involve risks and
uncertainties. Our actual results could differ materially from those discussed
in, or implied by, these forward-looking statements. Factors that could
contribute to such differences include, but are not limited to, those discussed
in the "Risk Factors" section at page 2 and elsewhere in this prospectus. The
factors set forth in the Risk Factors section and other cautionary statements
made in this prospectus should be read and understood as being applicable to all
related forward-looking statements wherever they appear in this prospectus.
All subsequent written and oral forward-looking statements
attributable to us are expressly qualified in their entirety by the cautionary
statements. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates. We undertake no
obligations to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
WHERE YOU CAN FIND MORE INFORMATION
We are a public company and file annual, quarterly and special reports
and other information with the SEC. You may read and copy and documents we file
at the SEC's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C.
20549. You may obtain further information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. You can obtain copies of
this material from the Public Reference Section of the SEC, Washington, D.C.
20549, at prescribed rates. Our reports, proxy and information statements and
other information are also available to the public at the SEC's web site. The
Internet address of that site is http://www.sec.gov.
This prospectus is only part of a registration statement on Form S-3
that we have filed with the SEC under the Securities Act and therefore omits
certain information
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<PAGE>
contained in the registration statement. We have also filed exhibits and
schedules with the registration statement that are excluded from this
prospectus, and you should refer to the applicable exhibit or schedule for a
complete description of any statement referring to any contract or other
document. You may inspect a copy of the registration statement, including the
exhibits and schedules, without charge at the SEC's public reference room or
through its web site.
DOCUMENTS WE INCORPORATE BY REFERENCE
The SEC allows us to "incorporate by reference" the information we
file with it, which means that we can disclose important information to you by
referring you to those documents. The information we incorporate by reference is
an important part of this prospectus, and later information that we file with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below, and any future filings we make with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 before the termination of the offering of the securities contemplated by
prospectus. The documents we incorporate by reference are:
o our annual report on Form 10-K/A for the year ended December 31,
1998;
o our quarterly reports on Form 10-Q/A for the quarters ended March
31, 1999, June 30, 1999 and on Form 10-Q for the quarter ended
September 30, 1999; and
o our current reports on Form 8-K filed with the SEC on July 15,
July 26 and December 17, 1999;
o The description of our common stock in our registration statement
on Form 8-A, which became effective December 23, 1996, including
any amendment or report filed to update this description.
You may request a copy of these filings (other than an exhibit to
those filings unless we have specifically incorporated that exhibit by reference
into the filing), at no cost, by writing or telephoning us at the following
address:
Accent Color Sciences, Inc.,
800 Connecticut Boulevard
East Hartford, Connecticut, 06108
Attention: Chief Financial Officer
Telephone: (860) 610-4000
Our internet web address is http://www.accentcolor.com. Information
contained on our web site or in our promotional literature is not incorporated
into this prospectus.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone (including any
broker or salesman) to provide you with information different from that
contained in this prospectus. If anyone provides you with different or
inconsistent information, you should not rely on it. The selling stockholders
are offering to sell and seeking offers to buy shares of our common stock only
in jurisdictions where offers and sales are permitted. You should assume that
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<PAGE>
the information contained in this prospectus is accurate only as of the date
hereof. You should not assume that this prospectus is accurate as of any other
date.
SELLING STOCKHOLDERS
The following table sets forth the name of each selling stockholder,
the number of shares of common stock beneficially owned by the selling
stockholder as of February 11, 2000, the number of shares being offered by each
selling stockholder and the number and (where appropriate, the percentage) of
shares held by the beneficial owner after completion of the offering assuming
that all shares offered by the selling stockholders are sold. All information is
taken from or based on ownership filings made by such persons with the
Securities and Exchange Commission or upon information provided to us by such
person or their agents. Unless otherwise indicated, the persons named in the
table below have sole voting and investment power with respect to all shares of
common stock shown as beneficially owned by them.
The shares being offered are being registered to permit public
secondary trading, and the selling stockholders may offer all or part of the
shares for resale from time to time. However, the selling stockholders are under
no obligation to sell all or any portion of the shares nor are the selling
stockholders obligated to sell any shares immediately under this prospectus.
Because the selling stockholders may sell all or part of their shares, we cannot
estimate the number of shares a selling stockholder will hold upon termination
of any offering made pursuant to this registration statement.
Pursuant to Rule 416 under the Securities Act, selling stockholders
may also offer and sell shares issued with respect to the series C preferred
stock and/or the warrants as a result of stock splits, stock dividends or
similar transactions. The chart below is not intended to constitute a prediction
as to the number of shares of common stock into which the series C preferred
stock will be converted and the warrants that will be exercised.
-15-
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Shares Beneficially Owned
Beneficially Owned Shares to be After the Offering (1)(2)
Prior to the Included
Name of Selling Stockholder Offering (1) in the Offering Number Percent
--------------------------- ------------------- --------------- ---------- -------
<S> <C> <C> <C>
Accrued Investments, Inc. .......... 100,000 62,000 38,000 *
Donald R. Allred(3) ................ 161,750 43,750 118,000 *
James S. Allsopp ................... 435,928 250,000 185,928 *
Banque Jenni & Cie, S.A ............ 100,000 70,000 30,000 *
Robert A. Bedingfield .............. 62,500 62,500 0 0
Bexley Enterprises Limited ......... 636,986 500,000 136,986 *
Joseph T. Brophy(4) ................ 330,649 250,000 80,649 *
William P. Brown ................... 50,000 45,000 5,000 *
Charles Buchheit(5) ................ 225,000 100,000 125,000 *
Frank J. Campbell III .............. 172,000 140,000 32,000 *
Deed of Trust of F. J. Campbell .... 70,526 60,000 10,526 *
Settlor Dtd 12/30/96, C. Crochiere,
K. Lynam & J. Meyers Co-TTEES(6)
Frank J. Campbell III and Richard A 75,000 75,000 0 0
Hansen TTEES Trust U/W Jane D ......
Campbell
Richard J. Coburn(7) ............... 484,303 25,000 459,303 1.3
Thomas D. Cunningham ............... 250,000 250,000 0 0
Robert G. Donovan .................. 75,698 62,500 13,698 *
Samuel Garre III ................... 70,000 40,000 30,000 *
Richard C. Goodwin ................. 150,000 150,000 0 0
E. Balkeley and Lila K. Griswold ... 77,619 62,500 15,119 *
PMG Eagle Fund ..................... 3,097,500 2,687,500 410,000 1.2
Richard Hodgson(8)(9) .............. 198,750 100,000 98,750 *
James J. Kim ....................... 120,000 120,000 0 0
Richard G. Larsen .................. 125,000 125,000 0 0
Brian Leung Hung Tak ............... 636,986 500,000 136,986 *
Robert A. Leverone ................. 73,349 62,500 10,849 *
Luzon Investments Ltd. ............. 1,687,972 1,000,000 687,972 2.0
Irving L. Mazer(10) ................ 65,215 50,000 15,215 *
Anthony T.S. Montagu ............... 100,000 76,000 24,000 *
Albert G. Nickel ................... 138,698 125,000 13,698 *
Pacific Alliance Limited, LLC ...... 70,000 70,000 0 0
David Parke ........................ 20,000 20,000 0 0
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Number of Shares Shares Beneficially Owned
Beneficially Owned Shares to be After the Offering (1)(2)
Prior to the Included
Name of Selling Stockholder Offering (1) in the Offering Number Percent
--------------------------- ------------------- --------------- ---------- -------
<S> <C> <C> <C>
Orbis Pension Trustees Limited ....... 2,687,500 2,437,500 250,000 *
David B. Payne ....................... 25,000 25,000 0 0
George L. Perry ...................... 250,000 250,000 0 0
Robert J. Petras and Christine M ..... 25,000 25,000 0 0
Petras
Willard F. Pinney Jr.(8)(11) ......... 144,799 25,000 119,799 *
Leonide C. Prince .................... 100,000 100,000 0 0
FH Reichel Jr. TTEE FBO Marion R ..... 255,000 100,000 155,000 *
Reichel U/A 2/25/66
Carol A. Sharp ....................... 250,000 250,000 0 0
SS Family Partnership ................ 15,000 15,000 0 0
Elizabeth Steele(12) ................. 219,118 1,500 217,618 *
Robert H. Steele(8)(13) .............. 219,118 112,500 106,618 *
Dr. Gershon Stern .................... 38,000 38,000 0 0
Sunapee Ltd. Partnership ............. 100,000 100,000 0 0
Kristine Szabo ....................... 277,396 250,000 27,396 *
Frederick C. Tecce ................... 30,000 30,000 0 0
Upgrade Inc. ......................... 100,000 100,000 0 0
Waterhouse Nominees LTD .............. 115,000 100,000 15,000 0
Deed of Trust of Holly E. Zug Settlor 25,000 25,000 0 0
DTD 8/5/97 Thomas V. Zug Trustee
Connecticut Innovations, Inc. ........ 1,250,000 1,250,000 0 0
TOTAL: 12,418,750
</TABLE>
* Represents beneficial ownership of less than 1% of the outstanding shares
of common stock.
(1) Beneficial ownership is determined in accordance with Rule 13d-3 of the
Securities Exchange Act of 1934, as amended. Shares of common stock subject
to options, warrants, rights or conversion privileges currently exercisable
or exercisable within 60 days of February 11, 2000 are deemed outstanding
for computing the percentage of the person holding such options, warrants,
rights or conversion privileges but are not deemed outstanding for
computing the percentage ownership of any other person.
(2) Assumes all shares offered are sold in the offering.
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<PAGE>
(3) Mr. Allred serves as the director of R&D and new business development of
Accent Color. Includes 180,000 shares of common stock subject to currently
exercisable options granted pursuant to the 1995 Stock Incentive Plan.
(4) Mr. Brophy serves as a director of Accent Color. Includes 40,000 shares of
common stock subject to currently exercisable options granted pursuant to
the 1995 Stock Incentive Plan.
(5) Mr. Buchheit serves as the President, CEO, CFO and as a director of Accent
Color. Includes 5,000 shares of common stock subject to currently
exercisable options granted pursuant to the 1995 Stock Incentive Plan and
100,000 shares of common stock subject to currently exercisable warrants.
(6) Includes 10,526 shares of common stock subject to currently exercisable
warrants.
(7) Mr. Coburn serves as the Chairman of the Board of Directors of Accent
Color. Includes 23,334 shares of common stock subject to currently
exercisable options granted pursuant to the 1995 Stock Incentive Plan.
(8) Includes 70,000 shares of common stock subject to currently exercisable
options granted pursuant to the 1995 Stock Incentive Plan.
(9) Mr. Hodgson serves as a director of Accent Color. Includes 3,750 shares of
common stock subject to currently exercisable warrants.
(10) Includes 10,215 shares of common stock subject to currently exercisable
warrants
(11) Mr. Pinney serves as the Secretary and as a director of Accent Color.
Includes 30,000 shares of common stock subject to currently exercisable
warrants granted to Murtha, Cullina, Richter & Pinney LLP, counsel to the
company, of which Mr. Pinney is a partner.
(12) Includes 1,500 shares of common stock subject to currently exercisable
warrants and 200,500 shares beneficially owned by Richard Steele, Mrs.
Steele's spouse, as to all of which Mrs. Steele disclaims beneficial
ownership.
(13) Mr. Steele serves as a director of Accent Color. Includes 17,118 shares of
common stock owned by Mr. Steele's spouse, Elizabeth Steele and 1,500
shares of common stock subject to currently exercisable warrants issued to
Elizabeth Steele, as to all of which Mr. Steele disclaims beneficial
ownership.
USE OF PROCEEDS
All the shares offered by this prospectus are being offered for the
account of the selling stockholders. Accordingly, all net proceeds from any
sales of common stock made hereunder will go to the selling stockholders. We
will receive the exercise price of any warrants exercised by the selling
stockholders. We will use any proceeds received from the exercise of warrants
for working capital and general corporate purposes.
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<PAGE>
PLAN OF DISTRIBUTION
We are registering the shares of common stock offered in this
prospectus on behalf of the selling stockholders. This offering is
self-underwritten; neither the selling shareholders nor we have employed an
underwriter for the sale of common stock by the selling shareholders. We have
agreed to pay the expenses of registering the shares under the Securities Act,
including registration and filing fees, blue sky expenses, printing expenses,
accounting fees, administrative expenses and our own counsel fees. We have also
agreed to indemnify the selling stockholders and each of their officers,
directors, members, employees, partners, agents and each person who controls any
of the selling stockholders against certain expenses, claims, losses, damages
and liabilities (or action, proceeding or inquiry by any regulatory or
self-regulatory organization in respect thereof).
The selling stockholders or any of the selling stockholders'
transferees or successors in interest may offer the shares for sale
periodically:
o in the over-the-counter market;
o on one or more exchanges on which the shares are then listed (if any);
o in privately negotiated transactions;
o in an underwritten offering;
o in a combination of the above methods; or
o by any other legally available means.
The sale of any the shares may be made at market prices prevailing at
the time of the sale, at prices related to the prevailing market prices, at
negotiated prices, or at fixed prices.
In addition, the selling stockholders may enter into hedging
transactions with broker-dealers who may engage in short sales of shares of
common stock in the course of hedging the positions they assume with the selling
stockholders. The selling stockholders may also enter into option or other
transactions with broker-dealers that require that delivery by the
broker-dealers of the shares, which shares may be resold thereafter pursuant to
this prospectus.
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<PAGE>
The selling shareholders may sell their shares directly to purchasers
or to or through broker-dealers, acting as agents or principals. You should be
aware that these broker-dealers may receive compensation for their services and
it is possible that a particular broker-dealer's compensation may exceed
customary commissions. The selling stockholders and/or any broker-dealers acting
in connection with the sale of the shares may be deemed to be underwriters under
Section 2(11) of the Securities Act. Therefore, any commissions or other
compensation received by them and any profits realized by them on the resale of
the shares as principals may be deemed underwriting compensation under the
securities laws. Neither we nor any selling stockholder can presently estimate
the amount of the compensation.
We have not been advised, as of the date of this prospectus, of any
existing arrangements between any selling stockholder and any other stockholder,
broker, dealer, underwriter or agent relating to the sale or distribution of the
shares.
Each selling stockholder and any other persons participating in a
distribution of securities will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M,
which may restrict certain activities of selling stockholders and other persons
participating in a distribution of securities and limit the timing of their
purchases and sales of securities. Furthermore, under Regulation M, persons
engaged in a distribution of securities are prohibited from simultaneously
engaging in market making and certain other activities with respect to the
securities for a specified period of time before the beginning of the
distributions subject to specified exceptions or exemptions. All of the
foregoing may affect the marketability of the securities offered pursuant to
this registration statement.
Any securities covered by this prospectus that qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that rule rather
than pursuant to this prospectus.
There can be no assurance that the selling stockholders will sell any
or all of the shares of common stock offered by them hereunder.
LEGAL MATTERS
Counsel for Accent Color, Murtha, Cullina, Richter and Pinney, LLP,
CityPlace I, 185 Asylum Street, Hartford, Connecticut 06103-3469, has rendered
an opinion to the effect that the common stock offered for resale pursuant to
this registration statement is duly and validly issued, fully paid and
non-assessable. Murtha, Cullina, Richter & Pinney LLP owns warrants to acquire
up to 30,000 shares of our common stock at an exercise price of $1.19 per share.
Willard F. Pinney, Jr., a partner in Murtha, Cullina, Richter & Pinney
LLP, is a stockholder of Accent Color. Mr. Pinney has served as our Corporate
Secretary since 1993 and has served as a director since 1996.
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<PAGE>
EXPERTS
The financial statements incorporated in this prospectus by reference
to Accent Color's Annual Report on Form 10-K/A for the year ended December 31,
1998 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
PricewaterhouseCoopers LLP as experts in auditing and accounting.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth our estimates of the expenses incurred
in connection with the sale of common stock being registered, all of which will
be paid by us.
SEC registration fee $2,926
Legal fees and expenses $10,000
Accounting fees and expenses $5,000
Miscellaneous fees and expenses $2,500
TOTAL: $20,426
The selling stockholder will pay all commissions, transfer taxes, and
the fees and expenses of counsel to the selling stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Accent Color is a Connecticut corporation. Sections 33-770 through
33-778 of the Connecticut Business Corporations Act provide that, unless limited
by its certificate of incorporation, a corporation shall indemnify any director
or officer of the corporation against reasonable expenses incurred by him in
connection with any action, suit or proceeding in which he is made or is
threatened to be made a party by reason of having been a director or officer of
the corporation if he was wholly successful in the action, on the merits or
otherwise.
In addition, these sections of the Connecticut Act permit a
corporation by action of its board of directors to indemnify an individual made
a party to a proceeding because he was a director or officer of the corporation
if:
o he or she conducted himself in good faith, and
o he or she reasonably believed (1) in the case of conduct in his official
capacity with the corporation, his conduct was in the best interests of the
corporation and (2) in all other cases, that his conduct was at least not
opposed to the best interests of the corporation and
o in the case of any criminal proceeding, he or she had no reasonable cause
to believe his or her conduct was unlawful.
Section 33-771 also provides that a corporation may not indemnify a
director or officer (1) in connection with a proceeding by or in the right of
the corporation in which
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<PAGE>
the director or officer was held liable to the corporation or (2) in connection
with any other proceeding charging improper personal benefit to the director or
officer in which he
was adjudged liable on the basis that personal benefit was improperly received
by him, whether or not the action involved was taken in his official capacity.
Our Restated Certificate of Incorporation limits the personal
liability of a director to the company or its shareholders for monetary damages
for breach of duty as a director, to an amount equal to the amount of
compensation received by the director for serving during the calendar year in
which the violation occurred. This limit on liability is subject to a number of
exceptions, including violations involving a knowing and culpable violation of
law, a breach of duty which enables a director or an associate to receive an
improper personal gain, conduct showing a lack of good faith and conscious
disregard of duty to the company, a sustained and unexcused pattern of
inattention, or the approval of an illegal distribution of assets of the company
to its shareholders.
For purposes of determining the receipt improper personal gains, an
"associate" is defined as (1) any corporation or organization of which an Accent
Color director is an officer or partner or is, directly or indirectly, the
beneficial owner of ten percent or more of any class of voting stock, (2) any
trust or other estate in which a director has at least ten percent beneficial
interest or as to which a director serves as trustee or in a similar fiduciary
capacity and (3) any relative or spouse of a director, or any relative of the
spouse who has the same name as the Accent Color director.
In addition, we also maintain a directors' and officers' insurance and
reimbursement policy.
Item 16. EXHIBITS
Exhibit Index
3(i) Restated Certificate of Incorporation of the Registrant, as
amended *
3(ii) Certificate of Amendment to Restated Certificate of
Incorporation**
3(iii) Bylaws of the Registrant, as amended December 29, 1996***
5 Opinion of Murtha, Cullina, Richter and Pinney, LLP
10(i) Form of Securities Purchase Agreement dated as of
November 30, 1999
10(ii) Certificate of Designations, Preferences and Rights of Series
C Convertible Preferred Stock
10(iii) Form of Warrant Agreement dated as of Nov. 30, 1999
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<PAGE>
10(iv) Form of Registration Rights Agreement dated as of
November 30, 1999
23(i) Consent of Murtha, Cullina, Richter and Pinney, LLP (included
in the opinion under Exhibit 5)
23(ii) Consent of PricewaterhouseCoopers LLP
24 Power of attorney pursuant to which this registration
statement is signed by certain directors
* incorporated by reference to Exhibit 3(ii) to Accent Color's Current Report on
Form 8-K dated January 9, 1998 and filed with the SEC.
** incorporated by reference to Exhibit 3(i) to Accent Color's Current Report on
Form 8-K dated January 9, 1998 and filed with the SEC.
*** incorporated by reference to Exhibit 3(ii) to Accent Color's registration
statement on Form S-3 and filed with the SEC on December 30, 1997, as amended
(file no. 333-43467).
Item 17. UNDERTAKINGS
The undersigned registrant undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, to the extent that the information required to be
included in the post-effective amendment is not contained in periodic reports
filed by Accent Color with or furnished to the SEC pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 and incorporated by
reference herein;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information expressed in the registration
statement, to the extent that the information required to be included in the
post-effective amendment is not contained in periodic reports filed by Accent
Color with or furnished to the SEC pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 and incorporated by reference herein; and
(iii) To include any significant information with respect to the plan
of distribution not previously disclosed in the registration statement or any
significant change to the information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement
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<PAGE>
relating to the securities offered therein, and the offering of securities at
that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the termination of
the offering.
The undersigned registrant undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to the securities
offered in that registration statement, and the offering of securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission the indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. If a claim for indemnification
against these liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by a
director, officer or controlling person in connection with the securities being
registered, the registrant 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 indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of the issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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, who is duly authorized,
in the City of East Hartford, State of Connecticut on this 11th day of February
2000.
ACCENT COLOR SCIENCES, INC.
----------------------------------
By: Charles E. Buchheit
Title: President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Act of 1933, the
following persons have signed this registration statement in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
By:_______________________ President, Chief Executive February 11, 2000
Name: Charles E. Buchheit Officer and Chief Financial
Officer
By:_______________________* Vice Chairman and Chief February 11, 2000
Name: Norman L. Milliard Technology Officer
By:_______________________* Chairman of the Board of Directors February 11, 2000
Name: Richard J. Coburn
By:_______________________* Director February 11, 2000
Name: Joseph T. Brophy
By:_______________________* Director February 11, 2000
Name: Richard Hodgson
</TABLE>
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<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
By:_______________________* Secretary and Director February 11, 2000
Name: Willard F. Pinney, Jr.
By:_______________________* Director February 11, 2000
Name: Robert H. Steele
</TABLE>
* Signature by Charles E. Buchheit, attorney-in-fact
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Exhibit No. 5 - Opinion of Murtha, Cullina,
Richter & Pinney LLP
February __, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: Accent Color Sciences, Inc.
Ladies and Gentlemen:
We have acted as counsel for Accent Color Sciences, Inc., a Connecticut
corporation ("the Company"), in connection with the registration by the Company
of up to an aggregate of 12,418,750 shares of the Company's common stock,
without par value (the "Common Stock"), for the account of certain security
holders of the Company (the "Registration") as described in the Company's
Registration Statement on Form S-3 (the "Registration Statement") being filed
this date under the Securities Act of 1933, as amended.
In connection with the following opinion, we have reviewed the
Registration Statement and are familiar with the action taken by the Company to
date with respect to the approval and authorization of the Registration. We have
examined originals, or copies, certified or otherwise authenticated to our
satisfaction, of such corporate records of the Company, agreements and other
instruments, certificates of public officials, officers and representatives of
the Company and such other documents as we have deemed necessary as a basis for
the opinion hereinafter expressed. We are furnishing this opinion in connection
with the filing of the Registration Statement.
Based upon the foregoing, we are of the opinion that, upon the
effectiveness of the Registration Statement, the shares of Common Stock proposed
to be registered by the Company under the Registration Statement will be, when
sold, validly issued, fully paid and non-assessable.
<PAGE>
We hereby consent to the inclusion of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the prospectus constituting a part of the Registration Statement.
Very truly yours,
MURTHA, CULLINA, RICHTER AND PINNEY, LLP
By:______________________________________
Willard F. Pinney, Jr.
A Partner
Exhibit 10(i)
ACCENT COLOR SCIENCES, INC.
PREFERRED STOCK PURCHASE AGREEMENT
This Preferred Stock Purchase Agreement (the "Agreement") is made as of
the Closing Date (as hereinafter defined) by and between Accent Color Sciences,
Inc., a Connecticut corporation (the "Company"), with its principal office at
800 Connecticut Boulevard, East Hartford, Connecticut 06018, and each of the
purchasers who are signatories hereto and any other purchasers who are made a
party to this Agreement pursuant to Section 1 (individually, a "Purchaser" and
collectively, the "Purchasers").
RECITALS
The Company has engaged Pennsylvania Merchant Group (the "Placement
Agent") as exclusive agent of the Company in connection with the placement and
sale (the "Offering") of up to 40,000 shares of the Company's Series C
Convertible Preferred Stock, no par value per share (the "Series C Stock").
Shares of Series C Stock will be sold by the Company to Purchasers pursuant to
Regulation D under the Securities Act of 1933, as amended (the "Act"). The
purchase price of the shares to be offered in the Offering (the "Offering
Price") will be $100.00 per share. The Placement Agent has delivered to each
prospective purchaser a private placement memorandum, dated September 21, 1998
as supplemented by a first supplement to the private placement memorandum dated
November 1, 1999 (collectively the "Placement Memorandum"), describing the
Company's business, financial and operating condition, the Offering and
information regarding risks to be evaluated when contemplating an investment in
the Company through the Offering.
AGREEMENT
In consideration of the mutual promises, representations, warranties and
conditions set forth in the Agreement, the Company and each Purchaser (severally
and not jointly) agree as follows:
1. PURCHASE AND SALE OF SHARES.
1.1 Issue of Shares.
(a) The Company has authorized the issuance and sale of
up to 40,000 shares of its Series C Stock (the "Shares") pursuant to the
provisions of this Agreement.
<PAGE>
(b) In reliance upon the Purchaser's representations
and warranties contained in Section 4 hereof, and subject to the terms and
conditions set forth herein, the Company hereby agrees to sell to each Purchaser
the aggregate amount of Shares set forth below such Purchaser's signature on the
subscription page bearing such Purchaser's name, such Shares to be sold at the
Offering Price.
(c) In reliance upon the representations and warranties
of the Company contained herein, and subject to the terms and conditions set
forth herein, each Purchaser hereby agrees to purchase the amount of Shares as
determined on the subscription page bearing such Purchaser's name at the
Offering Price. Each Purchaser shall severally, and not jointly, be liable for
only the purchase of the amount of Shares that appears on the subscription page
hereof that relates to such Purchaser.
(d) The Company's agreement with each of the Purchasers
is a separate agreement and the sale of the Shares to each of the Purchasers is
a separate sale.
2. CLOSING DATE; DELIVERY.
2.1 Closing. The closing of the sale and purchase of the
Shares under this Agreement (the "Closing") shall consist of the sale and
purchase of the Shares and shall be held at the offices of the Placement Agent
at such time and date selected by the Placement Agent and the Company occurring
on or before December 1, 1999, or such later date to which the offering period
is extended by the Company and the Placement Agent (the "Closing Date").
2.2 Delivery. Within five (5) days following the Closing,
subject to the terms and conditions hereof, the Company shall deliver to each
Purchaser stock certificates, registered in the name of the Purchaser,
representing the shares to be purchased by the Purchaser from the Company, dated
as of the Closing, against payment of the purchase price therefor in immediately
available funds by wire transfer or previously cleared check, unless other means
of payment shall have been agreed upon by the Purchaser and the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Purchaser as of the
date hereof and as of the Closing Date as follows:
3.1 Organization. The Company is a corporation, duly
incorporated, validly and legally existing and under the laws of the
jurisdiction of its incorporation. The Company has all requisite power and
authority to own or lease its properties and to conduct its business as it is
now being conducted. The Company holds all licenses and permits required for the
conduct of its business as it is now being conducted other than those which, if
not obtained, would not have a material adverse effect on the business,
financial condition or results of operations of the Company. The Company is
qualified as a foreign or domestic corporation and is in good standing in all
<PAGE>
states where the conduct of its business or its ownership or leasing of property
requires such qualification, except where the failure to so qualify would not
have a material adverse effect on the business, financial condition or results
of operations of the Company. The Company has previously delivered a true and
complete copy of its Certificate of Incorporation ("Certificate") and Bylaws to
the Placement Agent. The Company does not own any equity securities of, or
equity interest in, any corporation, partnership, limited liability company or
other person.
3.2 Capitalization. The authorized, issued and outstanding
capital stock of the Company on September 21, 1999 is as set forth in the
Placement Memorandum under the heading "SUMMARY -- Capitalization." All of the
issued and outstanding shares of the Company's common stock have been duly
authorized, validly issued and are fully paid and nonassessable. Except as set
forth on Schedule 3.2 hereof, there are no existing subscriptions, options,
stock option plans, warrants, calls, commitments, agreements, conversion or
other rights of any character (contingent or otherwise) to purchase or otherwise
acquire from the Company at any time, or upon the happening of any stated event,
any shares of the capital stock of the Company.
3.3 Authority. The Company has all requisite power and
authority to enter into this Agreement, the Registration Rights Agreement (as
defined in Section 3.11 hereof) and the Placement Agent Warrant (as defined in
Section 6.6 hereof), and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement, the Registration Rights
Agreement and the Placement Agent Warrant, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action on the part of the Company or will be so duly
authorized by the Closing Date and, upon their execution and delivery by the
Company, such agreements will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws relating to or affecting creditors' rights and subject to general equity
principles.
3.4 Securities Filings.
(a) The Company has filed with the Securities and
Exchange Commission (the "SEC") the documents set forth as Exhibits A, B, C and
D of the Placement Memorandum (the "SEC Filings"). The SEC filings set forth as
Exhibits B, C and D are amendments to the Company's Annual Report on Form 10K
for 1998, the Company's Quarterly Report on Form 10Q for the quarter ended March
31, 1999 and the Company's Quarterly Report for the quarter ended June 30, 1999,
respectively, all as filed with the SEC in response to the position of the SEC
that the Company's Series B Convertible Preferred Stock should have been
presented in the "mezzanine" section of its balance sheet rather than in the
equity section of its balance sheet. The Company has filed with the SEC all
reports and all other filings required to be filed with the SEC under the rules
and regulations of the SEC.
(b) Except as disclosed in Section 3.4(a) hereof, the
SEC Filings conformed in all material respects to the requirements of the
Securities Exchange Act of
<PAGE>
1934, as amended (the "Exchange Act"), and the rules and regulations of the SEC
thereunder as of their respective filing dates and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
documents or portions thereof that were incorporated by reference in the SEC
Filings pursuant to the requirements of the Exchange Act, when such incorporated
documents or portions were first filed with the SEC, conformed in all material
respects with any applicable requirements of the Exchange Act and the rules and
regulations of the SEC thereunder.
(c) Except as disclosed in Section 3.4(a) hereof, the
consolidated financial statements of the Company included in the SEC Filings
fairly presented in all material respects the financial position and results of
operations of the Company at their respective dates and for the respective
periods to which they apply. Such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved except as stated therein.
3.5 Placement Memorandum. The Placement Agent has advised the
Company that it has delivered to each prospective purchaser the Placement
Memorandum, which describes the Company's business, financial and operating
condition, the Offering and information regarding risks to be evaluated when
contemplating an investment in the Company through the Offering.
(a) The Placement Memorandum does not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
(b) Except as disclosed in Section 3.4(a) hereof, the
financial statements of the Company included in the Placement Memorandum fairly
present in all material respects the financial position and results of
operations of the Company at their respective dates and for the respective
periods to which they apply. Such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved except as stated therein.
3.6 Issuance of the Shares. The Shares, when issued pursuant
to the terms of this Agreement, shall be duly and validly authorized and issued,
fully paid and nonassessable.
3.7 No Conflict with Law or Documents. The execution, delivery
and consummation of this Agreement, the Registration Rights Agreement, the
Placement Agent Warrant and the transactions contemplated hereby and thereby
will not (a) conflict with any provisions of the Certificate or Bylaws of the
Company or (b) result in any violation of or default or loss of a benefit under,
or permit the acceleration of any obligation under (in each case, upon the
giving of notice, the passage of time, or both), any mortgage, indenture, lease,
agreement or other instrument, permit, franchise, license, judgment, order,
decree, law, ordinance, rule or regulation applicable to the Company or any of
its properties.
<PAGE>
3.8 Consents, Approvals and Private Offering. Except for any
filings required under federal and applicable state securities laws, all of
which shall have been made as of the Closing Date to the extent required as of
such time, and the consent of each holder of the Company's Series B Preferred
Stock waiving its conversion rights with respect to all shares issued pursuant
to the terms of this Agreement, which have been obtained, no consent, approval,
order or authorization of, or registration, declaration or filing with, any
federal, state, local or foreign governmental authority or other person is
required to be made or obtained by the Company in connection with the execution
and delivery of this Agreement, the Registration Rights Agreement, the Placement
Agent Warrant and the consummation of the transactions contemplated hereby and
thereby.
3.9 Absence of Certain Developments. Since June 30, 1999, the
Company has not (a) incurred or become subject to any material liabilities
(absolute or contingent) except current liabilities incurred, and liabilities
under contracts entered into, in the ordinary course of business consistent with
past practices; (b) mortgaged, pledged or subjected to any lien, charge or other
encumbrance any of its assets, tangible or intangible (except for liens for
current taxes, assessments and governmental charges and levies which may be paid
without penalty, interest or other additional charge, or which are being
contested in good faith by appropriate proceedings and are not material in
amount or value in relation to the value of the associated property); (c) sold,
assigned or transferred any of its assets or canceled any debts or obligations
except in the ordinary course of business consistent with past practices; (d)
suffered any extraordinary losses, or waived any rights of substantial value;
(e) except for a bridge financing closed September 7, 1999 resulting in gross
proceeds to the Company of $1,100,000, entered into any material transaction
other than in the ordinary course of business, consistent with past practices;
or (f) otherwise had any change in its condition, financial or otherwise, except
as shown on or reflected in the consolidated balance sheet as of June 30, 1999,
except for changes in the ordinary course of business consistent with past
practices. Except as described in the SEC Filings, the Company has not entered
into any agreement since June 30, 1999 of the type that would be required under
the SEC's rules and regulations to be filed as an exhibit to a Report on Form
10-K.
3.10 Litigation. Except as described in the Placement
Memorandum, there are no actions, suits, proceedings or investigations pending
against or affecting the Company or any Subsidiary that in the aggregate could
reasonably be anticipated to result in a material adverse effect on the Company.
3.11 Registration Rights. Each of the Shares shall be entitled
to the registration rights provided by the Registration Rights Agreement in the
form annexed hereto as Exhibit A. If the Company (a) fails to file a
registration statement, as required by the Registration Rights Agreement (the
"Registration Statement") with the SEC within 90 days of the Closing Date or (b)
fails to cause the Registration Statement to be declared effective by the SEC
within 180 days of the Closing Date, then the Company will issue Purchaser for
no additional consideration additional shares of Series C Stock in an amount
equal to one share of Series C Stock for each twenty shares of Series C Stock
purchased hereunder rounded down to the nearest tenth of a share. Such
additional shares of Series C stock shall be issued within 15 days
<PAGE>
of the Company's failure to satisfy (a) or (b) above. For example, if Purchaser
purchased 100 shares of Series C Stock and the Company fails to (a) file the
Registration Statement with the SEC within 90 days of the Closing Date or (b)
fails to cause the Registration Statement to be declared effective by the SEC
within 180 days of the Closing Date, then it will issue the Purchaser 5
additional shares of Series C Stock in accordance with this paragraph.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS OF THE PURCHASER.
Each Purchaser hereby represents and warrants to, and
covenants with, the Company as follows:
4.1 Legal Power. Purchaser has the requisite corporate,
partnership, trust or fiduciary power, as appropriate, and is authorized, if
Purchaser is a corporation, partnership or trust, to enter into this Agreement,
to purchase the Shares hereunder, and to carry out and perform its obligations
under the terms of this Agreement and the Registration Rights Agreement.
4.2 Due Execution. Each of this Agreement and the Registration
Rights Agreement has been duly authorized, if Purchaser is a corporation,
partnership, trust or fiduciary, executed and delivered by Purchaser and, upon
due execution and delivery by the Company, this Agreement and the Registration
Rights Agreement will be valid and binding agreements of Purchaser, enforceable
against Purchaser in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to
or affecting creditors' rights and subject to general equity principles.
4.3 Investment Representations.
4.3.1 Purchaser is acquiring the Shares for its own account,
not as nominee or agent, for investment and not with a view to or for resale in
connection with any distribution or public offering thereof within the meaning
of the Act, except pursuant to an effective registration statement under the
Act.
4.3.2 Purchaser understands that (i) the Shares have not been
registered under the Act by reason of a specific exemption therefrom, and may
not be transferred or resold except pursuant to an effective registration
statement or exemption from registration and (ii) each certificate representing
the Shares will be endorsed with legends in substantially the following form:
A) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES
<PAGE>
LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF
THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS;
B) Any legend required to be placed thereon by applicable
federal or state securities laws;
and (iii) the Company will instruct any transfer agent not to register the
transfer of any of the Shares unless the conditions specified in the foregoing
legend are satisfied.
4.3.3 Purchaser has received and reviewed the Placement
Memorandum. In addition, Purchaser has been furnished with such materials and
has been given access to such information relating to the Company as it or its
qualified representative has requested and has been afforded the opportunity to
ask questions regarding the Company and the Shares, all as Purchaser has found
necessary to make an informed investment decision.
4.3.4 Purchaser is an "accredited investor" as such term is
defined in Rule 501 under the Act and was not formed for the specific purpose of
acquiring the Shares.
4.3.5 Purchaser is a resident of, and all communications
regarding Purchaser's purchase of the Shares were sent to Purchaser in, the
state of Purchaser's residence shown on the subscription page attached hereto.
5. COVENANTS OF THE COMPANY.
5.1 Information.
So long as the Company is subject to the periodic reporting
requirements of the Exchange Act, the Company shall deliver to each holder of
Shares all annual, quarterly or other reports to the extent such reports are
furnished to the Company's public security holders. In the event that the
Company is not so subject, until the fifth anniversary of the Closing the
Company shall promptly furnish to each holder of Shares (i) as soon as
available, and in any event within 90 days after the end of each fiscal year of
the Company, a consolidated balance sheet of the Company and its consolidated
subsidiaries, if any, as of the end of such fiscal year and the related
consolidated statements of income, stockholders' equity and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all prepared in accordance with generally accepted
accounting principles and reported on by independent certified public
accountants of recognized national standing; and (ii) as soon as available, and
in any event within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Company, a consolidated balance sheet of the
Company and its consolidated subsidiaries, if any, as of the end of such quarter
and the related consolidated statements of income and stockholder's equity
(together with any other quarterly financial statements being prepared by the
Company at such time), setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of the
Company's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation and consistency by the chief
financial or accounting officer of the Company.
<PAGE>
5.2 Use of Proceeds. The Company will use the proceeds of the
Offering in a manner in accordance with the Placement Memorandum.
6. REPRESENTATIONS OF PLACEMENT AGENT; COMPENSATION OF PLACEMENT
AGENT. The Company has authorized the Placement Agent to conduct the Offering
under Regulation D of the Act, and the Placement Agent represents and agrees
with the Company as follows:
6.1 Sales to Accredited Investors. The Placement Agent has
made and will only make offers and sales of the Shares to Purchasers it
reasonably believes to be "accredited investors" as that term is defined in Rule
501(a) under the Act.
6.2 Regulation D Compliance. The Placement Agent has made and
will make offers and sales of Shares in compliance with Rule 506 and the other
applicable provisions of Regulation D, to the extent applicable to the Placement
Agent, and the Placement Agent has not and will not offer to sell the Shares by
any form of general solicitation or general advertising that is prohibited by
Rule 502(c) under the Act.
6.3 Compliance Generally. The Placement Agent has and will
observe all securities laws and regulations applicable to it in any jurisdiction
in which it has or may offer, sell or deliver Shares and it will not, directly
or indirectly, offer, sell or deliver Shares or distribute or publish any
prospectus, circular, advertisement or other offering material in relation to
the Shares in or from any state in the United States or country or jurisdiction
except under circumstances that will result in compliance with applicable laws
and regulations.
6.4 Sales Commissions. In consideration of the Placement
Agent's services hereunder, the Company shall pay the Placement Agent in cash on
the Closing Date a commission of seven percent (7.0%) of the Offering Price of
each Share sold at such Closing (the "Placement Fee").
6.5 Placement Agent Expenses. Upon the Closing, the Company
agrees to reimburse the Placement Agent for its reasonable, documented
out-of-pocket expenses incurred in connection with the Offering, including the
reasonable fees and expenses of the Placement Agent's counsel, up to a maximum
of $20,000.
6.6 Placement Agent Warrant. At the Closing, the Company shall
sell to the Placement Agent warrants to purchase 25,000 shares of the Company's
common stock for each $1,000,000 of gross proceeds to the Company from the
Offering, prorated for any amount less than $1,000,000 (the "Placement Agent
Warrant"), at a purchase price of $.001 per share of the Company's common stock
underlying the Placement Agent Warrant (the "Warrant Shares"). The Placement
Agent Warrant shall be exercisable at any time before the fifth anniversary of
the Closing at an exercise price per share of $.40. The Placement Agent Warrant
shall be in a form satisfactory to the Company and the Placement Agent.
6.7 Possible Participation by Affiliates of Placement Agent.
Affiliates of the Placement Agent may purchase Series C Stock in the Offering.
Purchases by such affiliates may be counted toward any applicable minimum
proceeds requirement, but no such individual Placement Agent affiliate purchase
shall consist of more than 10% of such
<PAGE>
minimum. If such minimum is exceeded, no individual Placement Agent affiliate
purchase beyond that minimum shall exceed 10% of the Series C Stock sold in the
Offering and all Placement Agent affiliate purchases beyond such minimum shall
not in the aggregate exceed 20% of the Series C Stock sold in the Offering.
7. CONDITIONS TO CLOSING.
7.1 Conditions to Obligations of the Purchaser. Each
Purchaser's obligation to purchase the Shares at the Closing is subject to the
fulfillment, at or prior to such Closing, of all of the following conditions:
(a) Representations and Warranties True; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects at the Closing with
the same force and effect as if they had been made on and as of said date.
Except as described in or contemplated by the Placement Memorandum, the
business, assets, financial condition and results of operations of the Company
shall not have been adversely affected in any material way prior to the Closing.
The Company shall have performed in all material respects all obligations herein
required to be performed by it on or prior to the Closing.
(b) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchaser.
(c) Qualifications, Legal Investment. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Shares pursuant to this Agreement shall have
been duly obtained and shall be effective on and as of the Closing Date. At the
time of the Closing, the sale and issuance of the Shares shall be legally
permitted by all laws and regulations to which the Purchaser and the Company are
subject.
(d) Registration Rights Agreement. The Company shall have
entered into the Registration Rights Agreement.
(e) Legal Opinion. Counsel to the Company shall have
provided a legal opinion to the Purchasers reasonably acceptable to the
Placement Agent.
7.2 Conditions to Obligations of the Company. The Company's
obligation to issue and sell the Shares at the Closing is subject to the
fulfillment to the Company's satisfaction, on or prior to the Closing, of the
following conditions:
(a) Representations and Warranties True. The representations
and warranties in Section 4 hereof made by each Purchaser shall be true and
correct at the Closing with the same force and effect as if they had been made
on and as of the Closing.
(b) Performance of Obligations. Each Purchaser shall have
performed and complied in all material respects with all agreements and
conditions herein
<PAGE>
required to be performed or complied with by them on or before the Closing Date,
and each Purchaser shall have delivered payment to the Company in respect of its
purchase of Shares.
(c) Qualifications, Legal Investment. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Shares pursuant to this Agreement shall have
been duly obtained and shall be effective on and as of the Closing Date. At the
time of the Closing, the sale and issuance of the Shares shall be legally
permitted by all laws and regulations to which each Purchaser and the Company
are subject.
8. MISCELLANEOUS.
8.1 Governing Law. This Agreement shall be governed by and
construed under the laws of Connecticut without regard to any otherwise
applicable principles of conflicts of laws.
8.2 Survival. The representations and warranties made by the
parties in this Agreement shall survive the consummation of the transactions
herein contemplated until the expiration of the statute of limitations with
respect to claims arising under Section 10(b) of the Securities Exchange Act of
1934, as amended, with respect to the purchase of Shares hereunder.
8.3 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
8.4 Entire Agreement. This Agreement and the Exhibits hereto
and thereto, and the other documents delivered pursuant hereto and thereto,
constitute the full and entire understanding and agreement among the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other party in any manner by any representations, warranties, covenants or
agreements except as specifically set forth herein or therein. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto and their respective successors and assigns, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided herein.
8.5 Severability. In the event that any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
practicable, be modified so as to make it valid, legal and enforceable and to
retain as nearly as practicable the intent of the parties, and the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby. To the extent permitted by law, the parties hereto
waive the benefit of any provision of law that renders any provision of this
Agreement invalid or unenforceable in any respect.
8.6 Joinder. By execution of this Agreement, the Placement
Agent joins this Agreement for purposes of (i) making the representations of the
Placement Agent set forth in Section 6 hereof and (ii) receiving the benefits of
the Company's covenants in such Section 6.
<PAGE>
8.7 Amendment and Waiver. Except as otherwise provided herein,
any term of this Agreement may be amended, and the observance of any term of
this Agreement may be waived (either generally or in a particular instance,
either retroactively or prospectively, and either for a specified period of time
or indefinitely), with the written consent of the Company and the Purchaser. Any
amendment or waiver effected in accordance with this section shall be binding
upon each future holder of any security purchased under this Agreement
(including securities into which such securities have been converted) and the
Company.
8.8 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery, on the first business day following mailing by overnight
courier, or on the fifth day following mailing by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company and the
Purchaser at the respective addresses included herein.
8.9 Fees and Expenses. Except as otherwise provided herein,
the Company and the Purchasers shall bear their own expenses and legal fees
incurred on its behalf with respect to this Agreement and the transactions
contemplated hereby. Purchasers acknowledge that the Placement Agent will
receive a commission equal to seven percent (7%) of the Offering Price of each
Share sold in the Offering and will be entitled to purchase for nominal
consideration the Placement Agent Warrant.
8.10 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one instrument.
8.12 No Waiver. No waiver by any party to this Agreement of
any one or more defaults by any other party or parties in the performance of any
of the provisions hereof shall operate or be construed as a waiver of any future
default or defaults, whether of a like or different nature. Except as expressly
provided herein, no failure or delay on the part of any party in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
ACCENT COLOR SCIENCES, INC.
PREFERRED STOCK PURCHASE AGREEMENT
AND REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
Please complete two copies of the Signature Page and return both copies to:
Pennsylvania Merchant Group, Four Falls Corporate Center, West Conshohocken, PA
19428-2961, Attention: Mary E. Bowler.
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Purchaser's Name - Please Print Nominee Name (if appropriate)
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Social Security Number/Tax I.D. Number Telephone Number
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Fax Number
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Address City, State and Zip Code
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Signature Date
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Number of Shares to be Purchased Price Per Share Aggregate Purchase Price
- ---------------------------------------- X = $--------------------
FUNDS SHOULD BE WIRED TO: SUMMIT BANK/Trust, Attention: Shernetta Harris,
Hackensack, NJ ABA #021202162 GL A/C 477-02. For credit to the Account of Accent
Color Sciences, Inc. Trust Account #2970056498.
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AGREED TO AND ACCEPTED:
PENNSYLVANIA MERCHANT GROUP
By:------------------------------------- Date:--------------------------
Mary E. Bowler
Vice President - Administration
ACCENT COLOR SCIENCES, INC.
By:-------------------------------
Date:--------------------------
Exhibit 10(ii)
RESOLVED: That Article Fourth of the Restated Certificate of
Incorporation of the corporation, as amended, be amended to include the
rights and designation of the Series C Convertible Preferred Stock by
adding to Article Fourth thereof a new subsection F as follows:
F. SERIES C PREFERRED STOCK
1. Designation. There is hereby created a series of the Preferred Stock
consisting of 50,000 shares having the designation, voting powers, preferences,
relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof as are set forth in this
Paragraph F. This series is designated "Series C Convertible Preferred Stock"
(hereinafter called "Series C Stock").
2. Cash Dividend.
(a) The record holders of the outstanding shares of Series C
Stock ("Series C Holders") shall be entitled to receive noncumulative cash
dividends when and as declared by the Board of Directors, provided that no such
dividend shall be declared unless an equivalent, ratable dividend is also
declared with respect to the outstanding shares of Series B Stock.
(b) In addition to any dividends declared in accordance with
the preceding subparagraph (a), the holders of Series C Stock shall be entitled
to receive dividends at the rate of 8% per annum of the initial purchase price
of $100 per share, cumulative from the issuance date, but not to exceed 47% in
the aggregate, provided that such dividends shall be payable only upon a
Liquidation Event (as defined herein), and provided further that any such
dividend payment shall be coupled with an equivalent, ratable dividend to the
holders of Series B Stock calculated upon the initial purchase price of the
Series B Stock of $1,000 per share. Payment of dividends pursuant to this
subparagraph (b) shall be made in full prior to the payment of dividends on
Common Stock.
(c) Upon the payment or setting apart for payment of any
dividends upon the outstanding shares of Series C Stock and Series B Stock, the
Board of Directors may declare and pay dividends upon the Common Stock up to an
amount with respect to each share of Common Stock equal to the amount paid or
set aside for payment with respect to each share of Series C Stock and Series B
Stock divided, in each case, by the number of shares of Common Stock into which
each such share of Series C Stock or Series B Stock shall then be convertible.
3. Redemption. The Series C Stock may not be redeemed, in whole or in
part
4. Liquidation.
(a) In the event of a Liquidation Event, any amount paid or
payable to the Series C Holders shall rank, in right of payment, pari passu with
<PAGE>
any and all amounts then payable by reason of such Liquidation Event to the
holders of Series B Stock and any declared but unpaid dividends on the Series B
Stock and senior to all other classes of stock.
(b) Subject to the preceding subparagraph (a), in the event of
any Liquidation Event, the Series C Holders shall be entitled to be paid an
amount equal to One Hundred Dollars ($100.00) per share plus all dividends
thereon accrued and remaining unpaid up to the date of such Liquidation Event
whether or not at such times the corporation shall have surplus available for
the payment of dividends.
(c) In the event of any Liquidation Event, the Series C
Holders shall not participate further in any liquidating distributions to
holders of Common Stock, but shall be given not less than 20 business days'
prior written notice of any Liquidation Event in order to decide whether to
convert their shares prior to the Liquidation Event.
(d) A merger, consolidation, dissolution, winding up or sale
of all or substantially all of the assets of the Corporation, whether voluntary
or involuntary, shall be deemed to be a liquidation event ("Liquidation Event")
unless (a) in the case of a merger, the Corporation is the surviving entity or
(b) the holders of at least 75% of the combined Series C Stock and Series B
Stock determine that such action should not be deemed a Liquidation Event.
5. Conversion.
(a) Right to Convert and Conversion Rate. At the option of
each holder of Series C Stock, such holder's holdings of Series C Stock shall be
convertible into shares of Common Stock at any time and from time to time and
cash in lieu of fractional shares upon the following terms and conditions:
(i) Each share of Series C Stock shall be convertible
from and after the date of its issuance at the office of any Transfer Agent for
the Series C Stock (or such other place as may be designated by the corporation)
into fully paid and non-assessable shares of Common Stock (as such Common Stock
shall then be constituted) into such whole number of fully paid and
nonassessable shares of Common Stock as equals $100 divided by the Conversion
Price (as last adjusted and then in effect). The "Conversion Price" shall
initially be equal to forty cents ($.40); provided however, that such Conversion
Price shall be subject to adjustment to the extent provided in subpart (b) of
this subparagraph 5.
(ii) In order to convert shares of Series C Stock into
Common Stock, the holder thereof shall surrender the certificate or certificates
for Series C Stock, duly endorsed to the corporation or in blank, at the office
of any Transfer Agent for the Series C Stock (or such other place as may be
designated by the corporation), and shall give written notice to the corporation
at said office that he elects to convert the same and shall state in writing
therein the name or names in which he wishes the certificate or certificates for
Common Stock to be issued. The corporation will, as soon as practicable
thereafter, deliver at said
<PAGE>
office to such holder of shares of the Series C Stock such holder's nominee or
nominees, a certificate or certificates for the number of full shares of Common
Stock to which such holder shall be entitled as aforesaid. Shares of the Series
C Stock shall be deemed to have been converted as of the date of the surrender
of such certificate or certificates for conversion as provided above, and the
person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock on such date.
(b) Conversion Adjustment Provisions. The conversion rate
provided in subpart (a) (i) above shall be subject to adjustment to the extent
provided below:
(i) Stock Dividends, Subdivisions and
Combinations. In the event the corporation shall
(x) pay a dividend of Common Stock, or of any
capital stock convertible into Common Stock, on its
outstanding Common Stock;
(y) subdivide its outstanding Common Stock into a
larger number of shares of Common Stock by reclassification
or otherwise; or
(z) combine its outstanding Common Stock into a
smaller number of shares of Common Stock by reclassification
or otherwise.
the conversion rate in effect immediately prior thereto
shall be proportionately adjusted so that the holder of any
Series C Stock thereafter surrendered for conversion shall
be entitled to receive the number of shares of Common Stock
(and, in the case of a dividend payable in capital stock
convertible into Common Stock, the number of shares of such
capital stock) which such holder would have owned or have
been entitled to receive after the happening of any of the
events described above had such Series C Stock been
converted immediately prior to the happening of such event.
Such adjustment shall be made whenever any of the events
described above shall occur. In the case of a dividend, any
such adjustment shall be made as of the record date thereof
and in the case of a subdivision or combination, any such
adjustment shall be made as of the effective date thereof.
(ii) Minimum Adjustment. Notwithstanding the
provisions of (i) of this subpart (b), no adjustment in the
conversion rate shall be required unless such adjustment
would require an increase or decrease of at least 2% of such
rate; provided, however, that any such adjustments which
<PAGE>
are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations required by any provision of this subpart (b)
shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
(iii) Notice of Adjustment of Conversion Price.
Whenever the Conversion Price shall be adjusted as provided
in this subsection (b), the corporation shall forthwith
file, at the office of the transfer agent for the Series C
Stock or at such other place as may be designated by the
corporation, a statement, signed by its independent
certified public accountants or its Chief Financial Officer,
showing in detail the facts requiring such adjustment and
the Conversion Price that shall be in effect after such
adjustment. The corporation shall also cause a copy of such
statement to be sent by first class, certified mail, return
receipt requested, postage prepaid, to each holder of shares
of Preferred Stock at such holder's address appearing on the
corporation's records.
(c) Fractional Shares. No fraction of a share of Common Stock
shall be issued upon any conversion of Series C Stock but, in lieu thereof,
there shall be paid an amount in cash equal to the same fraction of the market
value of a full share of Common Stock. For such purpose, the market value of a
share of Common Stock shall be the market value at the close of the most recent
trading day prior to the date as of which the determination is made; provided,
however, that if the Common Stock is not traded in such manner that such
valuation referred to herein is available, market value shall be determined in
good faith by the Board of Directors of the corporation.
(d) Reservation of Common Stock. The corporation shall at all
times reserve and keep available out of its authorized but unissued Common Stock
solely for the purposes of effecting the conversion of the shares of the Series
C Stock, the full number of shares of Common Stock then deliverable upon the
conversion of all shares of Series C Stock at the time outstanding.
6. Voting on Amendments to the Certificate of Incorporation as a
Class.
(a) The Series C Holders shall be entitled to vote as a
separate voting group on any proposed amendments to the corporation's
Certificate of Incorporation (including any applicable Certificates of
Designation), whether or not such voting rights are granted by Section 33-798 of
the Connecticut Business Corporation Act or a successor thereto, if the
amendment would:
(i) Increase or decrease the aggregate number of
authorized shares of the Series C Stock;
<PAGE>
(ii) Effect an exchange or reclassification of all
or part of the shares of the Series C Stock into shares of
another class;
(iii) Effect an exchange or reclassification, or
create the right of exchange, of all or part of the shares
of another class into shares of the Series C Stock;
(iv) Change the designation, rights, preferences
or limitations of all or part of the shares of the Series C
Stock;
(v) Change the shares of all or part of the Series
C Stock into a different number of shares of the same class;
(vi) Create a new class of shares having rights or
preferences with respect to distributions or to dissolution
that are prior, superior or substantially equal to the
shares of the Series C Stock;
(vii) Increase the rights, preferences or number
of authorized shares of any class that, after giving effect
to the amendment, have rights or preferences with respect to
distributions or to dissolution that are prior, superior or
substantially equal to the shares of the Series C Stock; or
(viii) Cancel or otherwise affect rights to
distributions or dividends that have accumulated but not yet
been declared on all or part of the shares of the Series C
Stock.
(b) If a proposed amendment that entitles the Series C Stock
and one or more other series of shares to vote as separate voting groups under
this section would affect the Series C Stock and such one or more series in the
same or a substantially similar way, the shares of all the series so affected
must vote together as a single voting group on the proposed amendment.
Exhibit 10(iii)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
ACCENT COLOR SCIENCES, INC.
Warrant for the Purchase of Shares of Common Stock
No. 1999-1 46,535 Shares
FOR VALUE RECEIVED, ACCENT COLOR SCIENCES, INC., a Connecticut
corporation (the "Company"), with its principal office at 800 Connecticut
Boulevard, East Hartford, Connecticut 06108, hereby certifies that Pennsylvania
Merchant Group (the "Holder") is entitled, subject to the provisions of this
Warrant, to purchase from the Company, at any time after the date hereof and
continuing for a period of five (5) years (the "Expiration Date"), up to the
number of fully paid and nonassessable shares of Common Stock of the Company set
forth above, subject to adjustment as hereinafter provided.
The Holder may purchase such number of shares of Common Stock at
a purchase price per share (as appropriately adjusted pursuant to Section 6
hereof) of $.40 (the "Exercise Price"). The term "Common Stock" shall mean the
aforementioned Common Stock of the Company, together with any other equity
securities that may be issued by the Company in addition thereto or in
substitution therefor as provided herein.
The number of shares of Common Stock to be received upon the
exercise or exchange of this Warrant and the price to be paid for a share of
Common Stock are subject to adjustment from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise or exchange, as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Shares."
Section 1. Exercise of Warrant; Cashless Exercise.
(a) This Warrant may be exercised in whole or in part on any
business day on or before the Expiration Date by presentation and surrender
hereof
<PAGE>
to the Company at its principal office at the address set forth in the initial
paragraph hereof (or at such other address as the Company may hereafter notify
the Holder in writing) with the Purchase Form annexed hereto duly executed and
accompanied by proper payment of the Exercise Price in lawful money of the
United States of America in the form of a check, subject to collection, for the
number of Warrant Shares specified in the Purchase Form. If this Warrant should
be exercised in part only, the Company shall, upon surrender of this Warrant,
execute and deliver a new Warrant evidencing the rights of the Holder thereof to
purchase the balance of the Warrant Shares purchasable hereunder. Upon receipt
by the Company of this Warrant and such Purchase Form, together with proper
payment of the Exercise Price, at such office, the Holder shall be deemed to be
the holder of record of the Warrant Shares, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such Warrant Shares shall not then be actually delivered to the
Holder. The Company shall pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of the Warrant
Shares.
(b) In addition to the rights of the Holder under paragraph (a)
above, the Holder shall have the right to exercise this Warrant, in whole or in
part, in lieu of paying the Exercise Price in cash, by instructing the Company
to issue that number of Warrant Shares determined by multiplying the number of
Warrant Shares in respect of which this Warrant is being exercised by a
fraction, the numerator of which shall be the difference between the Market
Price (as defined in Section 6(g) below) per share of Common Stock on the date
of exercise and the Exercise Price, and the denominator of which shall be such
Market Price per share of Common Stock.
Section 2. Reservation of Shares. The Company hereby agrees that
at all times there shall be reserved for issuance and delivery upon exercise or
exchange of this Warrant all shares of its Common Stock or other shares of
capital stock of the Company from time to time issuable upon exercise or
exchange of this Warrant. All such shares shall be duly authorized and, when
issued upon the exercise or exchange of the Warrant in accordance with the terms
hereof, shall be validly issued, fully paid and nonassessable, free and clear of
all liens, security interests, charges and other encumbrances or restrictions on
sale (other than any restrictions on sale pursuant to applicable federal and
state securities laws) and free and clear of all preemptive rights.
Section 3. Fractional Interest; Market Price.
(a) The Company will not issue a fractional share of Common Stock
upon exercise or exchange of this Warrant. Instead, the Company will deliver its
check for the current market value of the fractional share. The current market
value of a fraction of a share is determined as follows: multiply the Market
Price of a full share by the fraction of a share and round the result to the
nearest cent.
(b) For purposes of Section 3(a), the Market Price of a share of
Common Stock is, if the Common Stock is then publicly traded, the Quoted Price
(as defined in Section 6(g) below) of the Common Stock on the last trading day
<PAGE>
prior to the date of exercise or exchange, and otherwise shall be equal to the
Exercise Price.
Section 4. Assignment or Loss of Warrant.
(a) Except as provided in Section 9, the Holder of this Warrant
shall be entitled, without obtaining the consent of the Company, to assign its
interest in this Warrant, or any of the Warrant Shares, in whole or in part to
any bona fide officer, director or partner of Holder, provided, however, that
the transferee, prior to any such transfer, agrees in writing, in form and
substance satisfactory to the Company, to be bound by the terms of this
Agreement as if originally a party hereto and provides the Company with an
opinion of counsel in such form reasonably acceptable to the Company and its
counsel, that such transfer would not be in violation of the Act or any
applicable state securities or blue sky laws. Subject to the provisions hereof
and of Section 9, upon surrender of this Warrant to the Company or at the office
of its stock transfer agent or warrant agent, with the Assignment Form annexed
hereto duly executed and funds sufficient to pay any transfer or other tax
payable in respect thereof, the Company shall, without charge, execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees named
in such instrument of assignment and, if the Holder's entire interest is not
being assigned, in the name of the Holder, and this Warrant shall promptly be
canceled.
(b) Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of indemnification satisfactory to the Company, and
upon surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
Section 5. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Company, either at law
or equity, and the rights of the Holder are limited to those set forth in this
Warrant. Nothing contained in this Warrant shall be construed as conferring upon
the Holder hereof the right to vote or to consent or to receive notice as a
shareholder of the Company on any matters or with respect to any rights
whatsoever as a shareholder of the Company. No dividends or interest shall be
payable or accrued in respect of this Warrant or the interest represented hereby
or the Warrant Shares purchasable hereunder until, and only to the extent that,
this Warrant shall have been exercised or exchanged in accordance with its
terms.
Section 6. Adjustment of Exercise Price and Number of Shares. The
number and kind of securities purchasable upon the exercise or exchange of this
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the occurrence of certain events, as follows:
(a) Adjustment for Change in Capital Stock. If at any time after
December 7, 1999, the Company:
<PAGE>
(A) pays a dividend or makes a distribution on its Common
Stock, in either case in shares of its Common Stock;
(B) subdivides its outstanding shares of Common Stock into
a greater number of shares;
(C) combines its outstanding shares of Common Stock into a
smaller number of shares; or
(D) makes a distribution on its Common Stock in shares of
its capital stock other than Common Stock;
then the Exercise Price in effect immediately prior to such action shall be
adjusted so that the Holder may receive, upon exercise or exchange of this
Warrant and payment of the same aggregate consideration, the number of shares of
capital stock of the Company which the Holder would have owned immediately
following such action if the Holder had exercised or exchanged the Warrant
immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
(b) Adjustment for Other Distributions. If at any time after December
7, 1999, the Company distributes to all of its Common Stock any of its assets or
debt securities, the Exercise Price following the record date shall be adjusted
in accordance with the following formula:
E' = E x M-F
---
M
where: E' = the adjusted Exercise Price.
E = the Exercise Price immediately prior to the
adjustment.
M = the Market Price (as defined in (g) below)
per share of Common Stock on the record date
of the distribution.
F = the aggregate fair market value (as
conclusively determined by the Board of
Directors of the Company) on the record date
of the assets or debt securities to be
distributed divided by the number of
outstanding shares of Common Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of shareholders entitled to receive the distribution.
In the event
<PAGE>
that such distribution is not actually made, the Exercise Price shall again be
adjusted to the Exercise Price as determined without giving effect to the
calculation provided hereby. In no event shall the Exercise Price be adjusted to
an amount less than zero.
This subsection does not apply to cash dividends or cash distributions
paid out of consolidated current or retained earnings as shown on the books of
the Company and paid in the ordinary course of business.
(c) Adjustment for Common Stock Issue. If at any time after December
7, 1999, the Company issues shares of Common Stock for consideration per share
less than the Exercise Price per share on the date the Company fixes the
offering price of such additional shares, the Exercise Price shall be adjusted
in accordance with the following formula:
O + P
--
E' = E x E
---------
A
where: E' = the adjusted Exercise Price.
E = the Exercise Price immediately prior to the
adjustment.
O = the number of shares outstanding immediately
prior to the issuance of such additional
shares.
P = the aggregate consideration received for
the issuance of such additional shares.
A = the number of shares outstanding
immediately after the issuance of such
additional shares.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This subsection (c) does not apply to (i) any of the transactions
described in subsections (b) and (d), (ii) Common Stock issued pursuant to
options, warrants, convertible preferred stock and other rights to purchase
shares of Common Stock outstanding on December 7, 1999, (iii) Common Stock
issued to shareholders of any non-affiliated person which merges into or with
the Company, or any subsidiary of the Company, in proportion to their stock
holdings of such person immediately prior to such merger, upon such merger, or
(iv) Common Stock issued to directors or employees of, or consultants to, the
Company upon the exercise of warrants, rights or options which (A) are issued
pursuant to stock option plans, employee benefit plans, employment agreements or
consulting agreements, in each case approved by the Company's Board of Directors
or an appropriate committee of the Company's Board of Directors, and (B) have an
exercise price not less than 70% of the Market Price of the Company's Common
Stock at the time of issuance of such warrant, right or option.
<PAGE>
(d) Adjustment for Convertible Securities Issue. If at any time after
December 7, 1999, the Company issues for consideration any securities
convertible into or exchangeable or exercisable for Common Stock (other than
securities issued in transactions described in subsection 6(a) above) for
consideration per share of Common Stock initially deliverable upon conversion,
exchange or exercise of such securities less than the Exercise Price per share
on the date of issuance of such securities, the Exercise Price shall be adjusted
in accordance with the following formula:
O + P
--
E' = E x E
--------
O + D
where: E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately
prior to the issuance of such securities.
P = the aggregate consideration received for
the issuance of such securities.
D = the maximum number of shares deliverable
upon conversion, exchange or exercise of
such securities at the initial conversion,
exchange or exercise rate.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance. If all of
the Common Stock deliverable upon conversion, exchange or exercise of such
securities has not been issued when such securities are no longer outstanding,
then the Exercise Price shall promptly be readjusted to the Exercise Price which
would then be in effect had the adjustment upon the issuance of such securities
been made on the basis of the actual number of shares of Common Stock issued
upon conversion, exchange or exercise of such securities.
This subsection (d) does not apply to (i) any of the transactions
described in subsections (b) and (c) above, (ii) securities convertible into or
exchangeable or exercisable for Common Stock issued to shareholders of any
non-affiliated person which merges into or with the Company, or any subsidiary
of the Company, in proportion to their stock holdings of such person immediately
prior to such merger, upon such merger, or (iii) warrants, rights or options
which (A) are issued pursuant to stock option plans, employee benefit plans,
employment agreements or consulting agreements, in each case approved by the
Company's Board of Directors or an appropriate committee of the Company's Board
of Directors, and (B) have an exercise price of not less than 70% of the Market
Price of the Company's Common Stock at the time of issuance of such warrants,
right, warrant or option.
(e) Deferral of Issuance or Payment. In any case in which an event
covered by this Section 6 shall require that an adjustment in the Exercise Price
be made effective as of a record date, the Company may elect to defer until the
<PAGE>
actual occurrence of such event (i) issuing to the Holder, if this Warrant is
exercised after such record date, the shares of Common Stock and other capital
stock of the Company, if any, issuable upon such exercise over and above the
shares of Common Stock or other capital stock of the Company, if any, issuable
upon such exercise on the basis of the Exercise Price in effect prior to such
adjustment, and (ii) paying to the Holder by check any amount in lieu of the
issuance of fractional shares pursuant to Section 3.
(f) When No Adjustment Required. No adjustment need be made for a
change in the par value of the Common Stock.
(g) Market Price. The "Market Price" per share of Common Stock on any
date is the average of the Quoted Prices of the Common Stock for the 30
consecutive trading days commencing 45 trading days before the date in question.
The "Quoted Price" of the Common Stock is the last reported sales price of the
Common Stock as reported by Nasdaq, or the primary national securities exchange
on which the Common Stock is then quoted; provided, however, that if quotes for
the Common Stock are not reported by Nasdaq and the Common Stock is neither
traded on the Nasdaq National Market, on a national securities exchange, on the
Nasdaq Small Cap Market nor on the OTC Electronic Bulletin Board, the price
referred to above shall be the price reflected in the over-the-counter market as
reported by the National Quotation Bureau, Inc. or any organization performing a
similar function, and provided, further, that if the Common Stock is not then
publicly traded, the Market Price shall equal the Conversion Price.
(h) No Adjustment Upon Exercise of Warrants. No adjustments shall be
made under any Section herein in connection with the issuance of Warrant Shares
upon exercise or exchange of the Warrants.
(i) Common Stock Defined. Whenever reference is made in Section 6(a)
to the issue of shares of Common Stock, the term "Common Stock" shall include
any equity securities of any class of the Company hereinafter authorized which
shall not be limited to a fixed sum or percentage in respect of the right of the
holder thereof to participate in dividends or distributions of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the Company.
Subject to the provisions of Section 8 hereof, however, shares issuable upon
exercise or exchange hereof shall include only shares of the class designated as
Common Stock of the Company as of the date hereof or shares of any class or
classes resulting from any reclassification or reclassifications thereof or as a
result of any corporate reorganization as provided for in Section 8 hereof.
Section 7. Officers' Certificate. Whenever the Exercise Price shall be
adjusted as required by the provisions of Section 6, the Company shall forthwith
file in the custody of its secretary or an assistant secretary at its principal
office an officers' certificate showing the adjusted Exercise Price determined
as herein provided, setting forth in reasonable detail the facts requiring such
adjustment and the manner of computing such adjustment. Each such officers'
certificate shall be signed by the chairman, president or chief financial
officer of the Company and by the secretary or any assistant secretary of the
Company. Each such officers' certificate shall be made available at all
reasonable times for inspection by the
<PAGE>
Holder or any holder of a Warrant executed and delivered pursuant to Section 4
hereof.
Section 8. Reclassification, Reorganization, Consolidation or Merger.
In the event of any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the Company (other than a subdivision or
combination of the outstanding Common Stock and other than a change in the par
value of the Common Stock) or in the event of any consolidation or merger of the
Company with or into another corporation (other than a merger in which merger
the Company is the continuing corporation and that does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise or exchange of this Warrant)
or in the event of any sale, lease, transfer or conveyance to another
corporation of the property and assets of the Company as an entirety or
substantially as an entirety, the Company shall use its best efforts to cause
effective provisions to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and amount of
shares of stock and other securities and property (including cash) receivable
upon such reclassification, capital reorganization and other change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock that would have been received upon exercise or exchange of this
Warrant immediately prior to such reclassification, capital reorganization,
change, consolidation, merger, sale or conveyance. Any such provision shall
include provisions for adjustments in respect of such shares of stock and other
securities and property that shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Warrant. The foregoing provisions of
this Section 8 shall similarly apply to successive reclassifications, capital
reorganizations and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
Section 9. Transfer to Comply with the Securities Act of 1933;
Registration Rights.
9.1 No sale, transfer, assignment, hypothecation or other disposition
of this Warrant or of the Warrant Shares shall be made unless any such transfer,
assignment or other disposition will comply with the rules and statutes
administered by the Securities and Exchange Commission and (i) a Registration
Statement under the Act including such Shares is currently in effect, or (ii) in
the written opinion of counsel, which counsel and which opinion shall be
reasonably satisfactory to the Company, a current registration Statement is not
required for such disposition of the shares. Each stock certificate representing
Warrant Shares issued upon exercise or exchange of this Warrant shall bear a
legend in substantially the following form (unless, in the opinion of counsel,
which counsel and which opinion shall be reasonably satisfactory to the Company,
such legend is not required):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS
<PAGE>
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF
THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS."
9.2 The Company agrees that during the term of this Warrant, the
Holder shall have the right, pursuant to the terms of the Registration Rights
Agreement among the Company and certain purchasers of the Company's Common
Stock, to require the Company to register the Warrant Shares under the
circumstances and in the manner set forth in the Registration Rights Agreement.
Section 10. Modification and Waiver. Except as otherwise provided
herein, any term of this Warrant may be amended, and the observance of any term
of this Warrant may be waived (either generally or in a particular instance,
either retroactively or prospectively, and either for a specified period of time
or indefinitely), with the written consent of the Company and the Holder of this
Warrant. Any amendment or waiver effected in accordance with this section shall
be binding upon each future Holder of this Warrant and the Company.
Section 11. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery, on the first business day following mailing by overnight
courier, or on the fifth day following mailing by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at the
address indicated therefor in the first paragraph of this Warrant and the Holder
at its address as shown on the books of the Company; provided, however, that
presentation of a Purchase Form and payment of any Exercise Price shall be
effective only upon receipt by the Company.
Section 12. Descriptive Headings and Governing Law. The titles of the
paragraphs and subparagraphs of this Warrant are for convenience of reference
only and are not to be considered in construing this Warrant. This Warrant shall
be governed by and construed under the laws of the State of Connecticut without
regard to any otherwise applicable principles of conflicts of laws.
Section 13. Entire Agreement. This Warrant and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof and no party
shall be liable or bound to any other party in any manner by any
representations, warranties, covenants or agreements except as specifically set
forth herein or therein. Nothing in this Warrant, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Warrant, except as expressly provided
herein.
<PAGE>
Section 14. Severability. In the event that any provision of this
Warrant shall be invalid, illegal or unenforceable, it shall, to the extent
practicable, be modified so as to make it valid, legal and enforceable and to
retain as nearly as practicable the intent of the parties, and the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby. To the extent permitted by law, the parties hereto
waive the benefit of any provision of law that renders any provision of this
Warrant invalid or unenforceable in any respect.
Section 15. No Waiver. No waiver by any party to this Warrant of any
one or more defaults by any other party or parties in the performance of any of
the provisions hereof shall operate or be construed as a waiver of any future
default or defaults, whether of a like or different nature. Except as expressly
provided herein, no failure or delay on the part of any party in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy.
IN WITNESS WHEREOF, the Company has duly caused this Warrant to be
signed by its duly authorized officer and to be dated as of this ______ day of
________, 1999.
ACCENT COLOR SCIENCES, INC.
By: /s/
-------------------------------
Name:
Title:
PURCHASE FORM
Dated ,
------------------
The undersigned hereby irrevocably elects to exercise the within
Warrant to purchase ______ shares of Common Stock and hereby makes payment of
___________________ in payment of the exercise price thereof.
Signature
----------------------------
ASSIGNMENT FORM
Dated ,
--------------
<PAGE>
FOR VALUE RECEIVED, __________________ hereby sells, assigns and
transfers unto _____________________________(the "Assignee"), (please type or
print in block letters)
_______________________________________________________________________________
(insert address)
its right to purchase up to _____ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint
_______________________________ Attorney, to transfer the same on the books of
the Company, with full power of substitution in the premises.
Signature
--------------------------
Exhibit 10(iv)
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made this 30th day of
November, 1999, by ACCENT COLOR SCIENCES, INC., a Connecticut corporation (the
"Company"), for the benefit of each Purchaser (individually a "Purchaser" and
collectively the "Purchasers") entering into that certain Preferred Stock
Purchase Agreement (the "Purchase Agreement") with the Company.
BACKGROUND
Pursuant to the Purchase Agreement, the Company has offered for sale up to
40,000 shares of the Company's Series C Convertible Preferred Stock, no par
value per share (the "Series C Stock"). In order to induce the Purchasers to
purchase the Shares, the Company has agreed to provide the registration rights
set forth in this Agreement.
1. Securities Laws Representations and Covenants of Purchaser.
This Agreement is made for the benefit of the Purchasers in reliance upon each
Purchaser's representations to the Company, as the same are set forth in Section
4 of the Purchase Agreement.
2. Registration Rights.
2.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time
administering the Securities Act.
(b) "Common Stock" shall mean the Company's common stock, no par
value
(c) "Form S-1, Form SB-1, Form S-2, Form SB-2 and Form S-3"
shall mean Form S-1, Form SB-1, Form S-2, Form SB-2 or Form
S-3, respectively, promulgated by the Commission or any
substantially similar form then in effect.
(d) The terms "Register", "Registered" and "Registration" refer
to a registration effected by preparing and filing a
Registration Statement in compliance with the Securities
Act, and the declaration or ordering by the Commission of
the effectiveness of such Registration Statement.
(e) "Registrable Securities" shall mean the Shares and Warrant
Shares so long as such shares are ineligible for sale under
subparagraph (k) of Rule 144.
<PAGE>
(f) "Registration Expenses" shall mean all expenses incurred by
the Company in complying with Section 2, including, without
limitation, all federal and state registration,
qualification and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and
expenses and, the expense of any special audits incident to
or required by any such Registration.
(g) "Registration Statement" shall mean Form S-1, Form SB-1,
Form S-2, Form SB-2 or Form S-3, whichever is applicable,
unless otherwise specified herein.
(h) "Rule 144" shall mean Rule 144 promulgated by the Commission
pursuant to the Securities Act.
(i) "Purchasers" shall mean, collectively, the Purchasers, their
permitted assignees and transferees and, individually, a
Purchaser and any permitted assignee or transferee of such
Purchaser.
(j) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(k) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable
Securities pursuant to this Agreement.
(l) "Selling Shareholder" shall mean a holder of Registrable
Securities who requests Registration under Section 2.3
hereof or whose shares of Common Stock become Registered
pursuant to Section 2.2 hereof.
(m) "Shares" shall mean shares of the Common Stock issued upon
conversion of the Series C stock.
(n) "Warrant Shares" shall mean the shares of Common Stock
underlying the Placement Agent Warrant.
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Purchase Agreement.
<PAGE>
2.2 Required Registration
(a) Within ninety (90) days after the date hereof, the Company
shall file with the Commission a Registration Statement
Registering the Shares.
(b) The Company shall use its best efforts to maintain with the
Commission a Registration Statement that is effective and
causes the Shares to be Registered under the Securities Act
until the date on which the Shares are eligible for resale
or other disposition under Rule 144 without regard to the
volume limitations thereof.
2.3 Piggyback Registration
(a) Until the time set forth in Section 2.3(f) hereof, each time
that the Company proposes to Register a public offering of
its Common Stock, other than (i) pursuant to a Registration
Statement on Form S-4 or Form S-8 or similar or successor
forms or (ii) on a Registration Statement filed in
connection with an exchange offer or other offer of Common
Stock solely to the then-existing shareholders of the
Company, the Company shall promptly give written notice of
such proposed Registration to all holders of Shares and
Warrant Shares, which shall offer such holders the right to
request inclusion of any Registrable Securities in the
proposed Registration.
(b) Each holder of Shares or Warrant Shares shall have thirty
(30) days or such longer period as shall be set forth in the
notice from the receipt of such notice to deliver to the
Company a written request specifying the number of shares of
Registrable Securities such holder intends to sell and the
holder's intended plan of disposition.
(c) The Company shall have the exclusive right to select all
underwriters for any underwritten public offering of
securities of the Company, including all Shares and Warrant
Shares. In the event that the proposed Registration by the
Company is, in whole or in part, an underwritten public
offering of securities of the Company, any request under
Section 2.3(b) shall contain the holder's agreement that the
Registrable Securities will be included in the underwriting
on the same terms and conditions as the shares of Common
Stock, if any, otherwise being sold through underwriters
under such Registration.
(d) Upon receipt of a written request pursuant to Section
2.3(b), the Company shall promptly use its best efforts to
cause all such Registrable Securities to be Registered, to
the extent required to permit sale or disposition as set
forth in the written request.
<PAGE>
(e) Notwithstanding the foregoing, if the managing underwriter
of an underwritten public offering determines and advises in
writing that the inclusion of all Registrable Securities
proposed to be included in the underwritten public offering,
together with any shares proposed to be sold by the Company
for its own account and any other issued and outstanding
shares of Common Stock proposed to be included therein by
holders other than the holders of Registrable Securities
(such other holders' shares hereinafter collectively
referred to as the "Other Shares"), would interfere with the
successful marketing of the securities proposed to be
included in the underwritten public offering, including the
price at which such securities can be sold, then the number
of such shares of persons other than the Company that
otherwise would be included in such underwritten public
offering shall be excluded from such underwritten public
offering in a number deemed necessary by such managing
underwriter, first by excluding, to the extent necessary,
Other Shares held by persons who have not exercised
contractual rights to include such Shares in the offering
pursuant to the Prior Registration Rights Agreements (as
hereinafter defined), and then, to the extent necessary, by
excluding Registrable Securities participating in such
underwritten public offering, pro rata, based on the number
of shares of Registrable Securities each holder proposes to
include; and, then, excluding to the extent necessary, Other
Shares proposed to be included by the holders of Other
Shares who have exercised registration rights granted to
them under registration rights agreements of the Company in
effect on the date hereof or any other registration rights
in effect on the date hereof (collectively, the "Prior
Registration Rights Agreements").
(f) The registration rights provided by this Agreement shall not
be in force with respect to any Registrable Security if (i)
a Registration Statement that includes the Registrable
Security is effective; (ii) the Registrable Security is
eligible for resale under Rule 144 without regard to the
volume limitations thereof; and (iii) five years form the
date hereof have elapsed.
2.4 Preparation and Filing. If and whenever the Company is under an
obligation pursuant to the provisions of this Section 2 to use
its best efforts to effect, the Registration of any Registrable
Securities, the Company shall, as expeditiously as practicable:
(a) prepare and file with the Commission a Registration
Statement with respect to such Registrable Securities, using
such form of available Registration Statement as is
reasonably selected by the Company (unless otherwise
specified herein), and use its best efforts to cause such
Registration Statement to become and remain effective,
<PAGE>
keeping each Selling Shareholder advised as to the
initiation, progress and completion of the Registration;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statements and the
prospectus used in connection therewith as may be necessary
to keep such Registration Statement effective for, in the
case of a Required Registration under Section 2.2, the
period set forth in Section 2.2(b) and, in the case of a
Piggyback Registration under Section 2.3, six months, and to
comply with the provisions of the Securities Act with
respect to the sale or other disposition of all Registrable
Securities covered by such Registration Statement;
(c) furnish to each Selling Shareholder such number of copies of
any summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements
of the Securities Act, and such other documents as such
Selling Shareholder may reasonably request in order to
facilitate the public sale or other disposition of such
Registrable Securities; provided, however, that no such
prospectus need be furnished more than, in the case of a
Required Registration under Section 2.2, six months after
the conclusion of the period set forth in Section 2.2(b)
and, in the case of a Piggyback Registration under Section
2.3, six months after the effective date of the Registration
Statement related thereto;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such Registration Statement under the
securities or blue sky laws of such jurisdictions as each
Selling Shareholder shall reasonably request and do any and
all other acts or things which may be reasonably necessary
or advisable to enable such holder to consummate the public
sale or other disposition in such jurisdictions of such
Registrable Securities; provided, however, that the Company
shall not be required to consent to general service of
process, qualify to do business as a foreign corporation
where it would not be otherwise required to qualify or
submit to liability for state or local taxes where it is not
liable for such taxes; and
(e) at any time when a prospectus covered by such Registration
Statement is required to be delivered under the Securities
Act within the appropriate period mentioned in Section
2.2(b) or Section 2.3(b) hereof, as the case may be, notify
each Selling Shareholder of the happening of any event as a
result of which the prospectus included in such Registration
Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances then existing and, at the request of such
seller, prepare, file and furnish to such seller a
reasonable number of copies of a supplement to or an
amendment of
<PAGE>
such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus
shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein
or necessary to make the statement therein not misleading in
the light of the circumstances then existing. The Company
may delay amending or supplementing the prospectus for a
period not to exceed 45 days if the Company is then engaged
in negotiations regarding a material transaction that has
not otherwise been publicly disclosed, and the Selling
Shareholders shall suspend their sale of Shares until an
appropriate supplement or prospectus has been forwarded to
them or the proposed transaction is abandoned.
Notwithstanding the foregoing, with respect to the proposed
Registration of Registrable Securities pursuant to Section
2.3 hereof, the Company may withdraw or cease proceeding
with any proposed Registration of Registrable Securities if
it has withdrawn or ceased proceeding with the proposed
Registration of Common Stock of the Company with which the
Registration of such Registrable Securities was to be
included.
2.5 Expenses. The Company shall pay all Registration Expenses
incurred by the Company in complying with this Section 2.
2.6 Information Furnished by Purchaser. It shall be a condition
precedent to the Company's obligations under this Agreement as to
any Selling Shareholder that each Selling Shareholder furnish to
the Company in writing such information regarding such Selling
Shareholder and the distribution proposed by such Selling
Shareholder as the Company may reasonably request.
2.7 Indemnification.
2.7.1 Company's Indemnification of Purchasers. The Company
shall indemnify each Selling Shareholder, each of its
officers, directors and constituent partners, and each
person controlling (within the meaning of the Securities
Act) such Selling Shareholder, against all claims,
losses, damages or liabilities (or actions in respect
thereof) suffered or incurred by any of them, to the
extent such claims, losses, damages or liabilities arise
out of or are based upon any untrue statement (or
alleged untrue statement) of a material fact contained
in any prospectus or any related Registration Statement
incident to any such Registration, or any omission (or
alleged omission) to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, or any violation by
the Company of any rule or regulation promulgated under
the Securities Act applicable to the Company and
relating to actions or inaction required of the Company
in connection with any such Registration; and the
Company will reimburse each such Selling Shareholder,
each of its officers, directors and constituent partners
and each person who controls any such Selling
Shareholder, for any
<PAGE>
reasonable, documented legal and other expenses incurred
in connection with investigating or defending any such
claim, loss, damage, liability or action; provided,
however, that the indemnity contained in this Section
2.7.1 shall not apply to amounts paid in settlement of
any such claim, loss, damage, liability or action if
settlement is effected without the consent of the
Company (which consent shall not unreasonably be
withheld); and provided, further, that the Company will
not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises
out of or is based upon any untrue (or alleged untrue)
statement or omission based upon written information
furnished to the Company by such Selling Shareholder,
underwriter, controlling person or other indemnified
person and stated to be for use in connection with the
offering of securities of the Company.
2.7.2 Selling Shareholder's Indemnification of Company. Each
Selling Shareholder shall indemnify the Company, each of
its directors and officers, each underwriter, if any, of
the Company's securities covered by a Registration
Statement, each person who controls the Company or such
underwriter within the meaning of the Securities Act,
and each other Selling Shareholder, each of its
officers, directors and constituent partners and each
person controlling such other Selling Shareholder,
against all claims, losses, damages and liabilities (or
actions in respect thereof) suffered or incurred by any
of them and arising out of or based upon any untrue
statement (or alleged untrue statement) of a material
fact contained in such Registration Statement or related
prospectus, or any omission (or alleged omission) to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or any violation by such Selling Shareholder
of any rule or regulation promulgated under the
Securities Act applicable to such Selling Shareholder
and relating to actions or inaction required of such
Selling Shareholder in connection with the Registration
of the Registrable Securities pursuant to such
Registration Statement; and will reimburse the Company,
such other Selling Shareholders, such directors,
officers, partners, persons, underwriters and
controlling persons for any reasonable, documented legal
and other expenses incurred in connection with
investigating or defending any such claim, loss, damage,
liability or action; provided, however, that such
indemnification and reimbursement shall be to the
extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or
alleged omission) is made in such Registration Statement
or prospectus in reliance upon and in conformity with
written information furnished to the Company by such
Selling Shareholder and stated to be for use in
connection with the offering of Registrable Securities.
<PAGE>
2.7.3 Indemnification Procedure. Promptly after receipt by an
indemnified party under this Section 2.7 of notice of
the commencement of any action which may give rise to a
claim for indemnification hereunder, such indemnified
party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section 2.7,
notify the indemnifying party in writing of the
commencement thereof and generally summarize such
action. The indemnifying party shall have the right to
participate in and to assume the defense of such claim,
and shall be entitled to select counsel for the defense
of such claim with the approval of any parties entitled
to indemnification, which approval shall not be
unreasonably withheld. Notwithstanding the foregoing,
the parties entitled to indemnification shall have the
right to employ separate counsel (reasonably
satisfactory to the indemnifying party) to participate
in the defense thereof, but the fees and expenses of
such separate counsel shall be at the expense of such
indemnified parties unless the named parties to such
action or proceedings include both the indemnifying
party and the indemnified parties and the indemnifying
party or such indemnified parties shall have been
advised by counsel that there are one or more legal
defenses available to the indemnified parties which are
different from or additional to those available to the
indemnifying party (in which case, if the indemnified
parties notify the indemnifying party in writing that
they elect to employ separate counsel at the reasonable
expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of
such action or proceeding on behalf of the indemnified
parties, it being understood, however, that the
indemnifying party shall not, in connection with any
such action or proceeding or separate or substantially
similar or related action or proceeding in the same
jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable,
documented fees and expenses of more than one separate
counsel at any time for all indemnified parties, which
counsel shall be designated in writing by the Purchasers
of a majority of the Registrable Securities).
2.7.4 Contribution. If the indemnification provided for in
this Section 2.7 from an indemnifying party is
unavailable to an indemnified party hereunder in respect
to any losses, claims, damages, liabilities or expenses
referred to herein, then the indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute
to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and
indemnified party in connection with the statements or
omissions which result in such losses, claims, damages,
liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be
determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material
fact or the omission or
<PAGE>
alleged omission to state a material fact relates to
information supplied by such indemnifying party or
indemnified party and the parties' relative intent,
knowledge, access to information supplied by such
indemnifying party or indemnified party and opportunity
to correct or prevent such statement or omission. The
amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any
documented legal or other fees or expenses reasonably
incurred by such party in connection with investigating
or defending any action, suit, proceeding or claim, or
in collecting such indemnity or reimbursement from the
indemnifying party.
3. Covenants of the Company.
The Company agrees to:
(a) Notify the holders of Registrable Securities included in a
Registration Statement of (i) the issuance by the Commission of
any stop order suspending the effectiveness of such Registration
Statement and (ii) upon learning of the initiation of any
proceedings for the purpose of suspending such effectiveness, the
existence of such proceedings. The Company will make every
reasonable effort to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the
earliest possible time.
(b) If the Common Stock is then listed on a national securities
exchange, use its best efforts to cause the Registrable
Securities to be listed on such exchange. If the Common Stock is
not then listed on a national securities exchange, use its best
efforts to facilitate the reporting of the Registrable Securities
on NASDAQ.
(c) Take all other reasonable actions necessary to expedite and
facilitate disposition of the Registrable Securities by the
holders thereof pursuant to the Registration Statement.
(d) With a view to making available to the holders of Registrable
Securities the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the Commission
that may at any time permit the Purchasers to sell securities of
the Company to the public without registration, the Company
agrees to:
(i) make and keep adequate current public information with
respect to the Company available, as those terms are
understood and defined in Rule 144, at all times after 90
days after the effective date of the first Registration
Statement filed by the Company for the offering of its
securities to the general public;
(ii) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities
Act and the Securities Exchange Act of 1934 (the "1934
Act"); and
<PAGE>
(iii)furnish to each holder of Shares, so long as such holder of
Shares owns any Shares, forthwith upon written request (a) a
written statement by the Company as to whether it has
complied with the reporting requirements of Rule 144, the
Securities Act and the 1934 Act, (b) a copy of the most
recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company and (c)
such other information as may be reasonably requested and as
is publicly available in availing the holders of Shares of
any rule or regulation of the Commission which permits the
selling of any such securities without registration.
(e) Prior to the filing of a Registration Statement or any amendment
thereto (whether pre-effective or post-effective), and prior to
the filing of any prospectus or prospectus supplement related
thereto, the Company will provide each Selling Shareholder with
copies of all pages thereto, if any, which reference such Selling
Shareholder.
4. Miscellaneous.
(a) This Agreement shall be governed by and construed under the laws
of the State of Connecticut without regard to any otherwise
applicable principles of conflicts of laws.
(b) The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and
assigns of the Purchaser (including transferees of any shares of
the Series C Stock or any Common Stock of the Corporation issued
upon conversion thereof). Notwithstanding the foregoing, no
registration rights shall be exercisable with respect to any
share after such share has been sold pursuant to a Registration
Statement declared effective under the Securities Act. Nothing in
this Agreement, express or implied, is intended to confer upon
any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(c) This Agreement and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement among
the parties with regard to the subjects hereof and no party shall
be liable or bound to any other party in any manner by any
representations, warranties, covenants or agreements except as
specifically set forth herein or therein. Nothing in this
Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto and their respective
successors and permitted assigns, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement,
except as expressly provided herein.
(d) In the event that any provision of this Agreement shall be
invalid, illegal or unenforceable, it shall, to the extent
practicable, be modified so as to make it valid, legal and
enforceable and to retain as nearly as practicable the intent of
the parties, and the validity legality, and enforceability of the
<PAGE>
remaining provisions shall not in any way be affected or impaired
thereby. To the extent permitted by law, the parties waive the
benefit of any provision of law that renders any provision of the
Agreement invalid or unenforceable in any respect.
(e) Except as otherwise provided herein, any term of this Agreement
may be amended, and the observance of any term of this Agreement
may be waived (either generally or in a particular instance,
either retroactively or prospectively, and either for a specified
period of time or indefinitely), with the written consent of the
Company and the Purchaser.
(f) All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed effectively
given upon personal delivery, on the first business day following
mailing by overnight courier, or on the fifth day following
mailing by registered or certified mail, return receipt
requested, postage prepaid, addressed to the Company at its
address as set forth in the Purchase Agreement and to the
Purchaser at its address as shown on the books of the Company.
(g) The titles of the paragraphs and subparagraphs of this Agreement
are for convenience of reference only and are not to be
considered in construing this Agreement.
(h) This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one instrument.
(i) No waiver by any party to this Agreement of any one or more
defaults by any other party or parties in the performance of any
of the provisions hereof shall operate or be construed as a
waiver of any future default or defaults, whether of a like or
different nature. Except as expressly provided herein, no failure
or delay on the part of any party in exercising any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of
any other right, power or remedy.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
ACCENT COLOR SCIENCES, INC.
PREFERRED STOCK PURCHASE AGREEMENT
AND REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
Please complete two copies of the Signature Page and return both copies to:
Pennsylvania Merchant Group, Four Falls Corporate Center, West Conshohocken, PA
19428-2961, Attention: Mary E. Bowler.
- --------------------------------- -----------------------------------
Purchaser's Name - Please Print Nominee Name (if appropriate)
- -------------------------------- -----------------------------------
Social Security Number/Tax I.D. Number Telephone Number
-----------------------------------
Fax Number
- -------------------------------- -----------------------------------
Address City, State and Zip Code
- -------------------------------- -----------------------------------
Signature Date
================================================================================
Number of Shares to be Purchased Price Per Share Aggregate Purchase Price
_____________________________ X = $____________________
FUNDS SHOULD BE WIRED TO: SUMMIT BANK/Trust, Attention: Shernetta Harris,
Hackensack, NJ ABA #021202162 GL A/C 477-02. For credit to the Account of Accent
Color Sciences, Inc. Trust Account #2970056498.
================================================================================
================================================================================
================================================================================
AGREED TO AND ACCEPTED:
PENNSYLVANIA MERCHANT GROUP
By:__________________________________ Date:___________________________
Mary E. Bowler
Vice President - Administration
ACCENT COLOR SCIENCES, INC.
By:________________________________ Date:___________________________
Exhibit 23(ii)
CONSENT OF PRICEWATERHOUSECOOPERS LLP
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of our report dated March 9, 1999, except as
to Note 7, which is as of September 14, 1999, relating to the financial
statements, which appears in Accent Color Sciences, Inc.'s Annual Report on Form
10-K/A for the year ended December 31, 1998.
We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
/s/
- ---------------------------------
PricewaterhouseCoopers LLP
Hartford, CT
February __, 2000
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned does
hereby appoint and constitute Richard J. Coburn and Charles E. Buchheit and each
of as his agent and attorney-in-fact to execute in his name, place and stead
(whether on behalf of the undersigned individually or as an officer or director
of Accent Color Sciences, Inc. or otherwise) the Registration Statement on Form
S-3 of Accent Color Sciences, Inc. respecting any common stock issued or
issuable as a result or in connection with its offering of up to 40,000 shares
of Series C Convertible Preferred Stock and warrants issued to Pennsylvania
Merchant Group, Ltd. and Connecticut Innovations, Incorporated, respectively,
and any and all amendments thereto and to file such Form S-3 and any such
amendment thereto with the Securities and Exchange Commission. Each of the said
attorneys shall have the power to act hereunder with or without the other.
IN WITNESS WHEREOF, the undersigned have executed this instrument this
29th day of November, 1999.
By: By:
--------------------------------- ------------------------------
Name: Norman L. Milliard Name: Robert H. Steele
By: By:
--------------------------------- ------------------------------
Name: Willard F. Pinney, Jr. Name: Joseph T. Brophy
By: By:
--------------------------------- ------------------------------
Name: Richard Hodgson Name: Richard J. Coburn
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page Number
3(i) Restated Certificate of Incorporation of the
Registrant, as amended *
3(ii) Certificate of Amendment to Restated Certificate of
Incorporation**
3(iii) Bylaws of the Registrant, as amended December 29,
1996***
5 Opinion of Murtha, Cullina, Richter and Pinney, LLP
10(i) Form of Securities Purchase Agreement dated as of Nov.
30, 1999
10(ii) Certificate of Designations, Preferences and Rights of
Series C Convertible Preferred Stock
10(iii) Form of Warrant Agreement dated as of Nov. 30, 1999
10(iv) Form of Registration Rights Agreement dated as of Nov.
30, 1999
23(i) Consent of Murtha, Cullina, Richter & Pinney, LLP
(included in the opinion under Exhibit 5)
23(ii) Consent of PricewaterhouseCoopers LLP
24 Power of attorney pursuant to which certain Directors
signed this registration statement
* incorporated by reference to Exhibit 3(ii) to Accent Color's Current Report on
Form 8-K dated January 9, 1998 and filed with the SEC.
** incorporated by reference to Exhibit 3(i) to Accent Color's Current Report on
Form 8-K dated January 9, 1998 and filed with the SEC.
<PAGE>
*** incorporated by reference to Exhibit 3(ii) to Accent Color's registration
statement on Form S-3 and filed with the SEC on December 30, 1997, as amended
(file no. 333-43467).
