EXHIBIT 10.22
NOTE PURCHASE AGREEMENT
Dated as of August 3, 1994
among
Jetfax, Inc.
and
the Investors Listed
on Schedule A
JETFAX, INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
10% Senior Secured Convertible Notes due July 31, 1995
August 3, 1994
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A,
AS AMENDED PURSUANT TO SECTION 2
Ladies and Gentlemen:
Jetfax, Inc., a Delaware corporation (the "COMPANY"), agrees with you as
follows:
1. AUTHORIZATION OF NOTES. The Company will authorize the issuance and
sale of up to $1,500,000 aggregate principal amount of its 10% Senior Secured
Convertible Notes due July 31, 1995 (the "NOTES", such term to include any such
notes issued in substitution therefor pursuant to section 12) to be
substantially in the form of the Notes set out in Exhibit A, with such changes
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therefrom, if any, as may be approved by you and the Company. Certain
capitalized terms used in this Agreement are defined in section 13; references
to a "Schedule" or an "Exhibit" are unless otherwise specified, to a Schedule or
an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES. The Company will issue and sell to you
and, subject to the terms and conditions of this Agreement, you will purchase
from the Company, at one or more of the Closings provided for in section 3 as
specified in Schedule A, Notes in the principal amount specified opposite your
name in Schedule A for purchase by you at such Closing or Closings at the
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purchase price of 100% of the principal amount thereof. The Company may sell
Notes to other purchasers which are from time to time added to Schedule A at one
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or more Closings. All such sales shall be subject to the prior approval of the
Company, shall be made pursuant to the terms of this Agreement and shall occur
at the respective Closing or Closings specified on Schedule A. As a condition
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to such purchase all such other purchasers shall execute this Agreement and
shall for all purposes be deemed to be a party hereto.
3. CLOSINGS. The sales of the Notes to be purchased by you shall take
place at the offices of Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., San Francisco time, or
at such other time and place as you and the Company shall agree, (a) at a
closing on August 3, 1994, or on such other business day thereafter as may be
agreed upon by the Company and such of you as are to purchase Notes at such
closing (the "FIRST CLOSING") and (b) at closings that may take place on such
other business days thereafter as may be agreed upon by the Company and such of
you as are to purchase Notes at each such
closing (a "SUBSEQUENT CLOSING"; the First Closing and the Subsequent Closings
are called individually a "CLOSING" and collectively the "CLOSINGS"). At each
Closing at which you are to purchase Notes, the Company will deliver to you such
Notes in the form of a single Note (or such greater number of Notes in
denominations of at least $50,000 as you may request) dated the date of such
Closing and registered in your name (or in the name of your nominee acting on
your behalf), against delivery by you to the Company or its order of immediately
available funds in the amount of the purchase price therefor. If at any Closing
at which you are to purchase Notes the Company shall fail to tender such Notes
to you as provided above in this section 3, or any of the conditions specified
in section 4 shall not have been fulfilled to your satisfaction, you shall, at
your election, be relieved of all further obligations under this Agreement,
without thereby waiving any other rights you may have by reason of such failure
or such nonfulfillment.
4. YOUR CONDITIONS TO CLOSINGS. Your obligation to purchase and pay for
the Notes to be sold to you at any Closing is subject to the fulfillment to your
satisfaction, prior to or at such Closing, of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Agreement shall be correct when made
and at the time of such Closing, except as affected by the consummation of such
transactions.
4.2 PERFORMANCE; NO DEFAULT. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by it prior to or at such Closing and at the
time of such Closing no Event of Default shall have occurred and be continuing.
4.3 OPINIONS OF COUNSEL. You shall have received from General
Counsel Associates, counsel for the Company, a favorable opinion substantially
in the form set forth in Exhibit B, addressed to you and dated the date of the
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First Closing.
4.4. PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be satisfactory to
you and your special counsel, and you and your special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as you or they may reasonably request.
4.5 SALE OF OTHER NOTES. Contemporaneously with such Closing the
Company shall sell to each of you all of the Notes to be purchased at such
Closing as specified in Schedule A, and, in the case of the Subsequent Closings,
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the Company shall also have sold to you the Notes, if any, to have been
purchased by each of you at each prior Closing as specified in Schedule A.
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4.6 AILICEC. The Company and Ailicec International Enterprises
Limited, a Hong Kong corporation ("AILICEC"), shall have entered into the
Purchase and Debt Restructuring
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Agreement, dated as of August 3, 1994, relating to the shipment of units of the
8000-D model of plain paper facsimile machine, the repayment of $667,700 to
Ailicec and the restructuring of all other amounts owed by the Company to
Ailicec (the "Ailicec Agreement").
4.7 INTERCREDITOR AGREEMENT. The Company, Ailicec and each of you
shall have entered into an Intercreditor Agreement in the form set forth in
Exhibit C (the "INTERCREDITOR AGREEMENT").
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4.8 SECURITY AGREEMENT. The Company, Endeavor and each of you shall
have entered into a Security Agreement in the form set forth in Exhibit D (the
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"SECURITY AGREEMENT"). In connection therewith, the Company shall have delivered
to you such financing statements as are necessary for you to perfect your
security interest as set forth in the Security Agreement.
4.9 WARRANTS. The Company shall have issued and delivered to you a
Warrant in the form set forth in Exhibit E (collectively, the "WARRANTS") for
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an amount of shares of Common Stock of the Company equal to (a) if such Closing
occurs on or before November 18, 1994, 40% of the principal amount of Notes
purchased by you divided by $2.15, or (b) if such Closing occurs after November
18, 1994, 20% of the principal amount of Notes purchased by you divided by
$2.15.
5. THE COMPANY'S CONDITIONS TO CLOSINGS. The Company's obligation to
deliver the Notes and the Warrants at each Closing is subject to the fulfillment
to its satisfaction, prior to or at such Closing, of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. Your representations and
warranties contained in this Agreement shall be correct when made and at the
time of such Closing.
5.2 SECURITY AND INTERCREDITOR AGREEMENTS. You shall have entered
into the Security Agreement and Intercreditor Agreement.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants as of the date hereof and as of the date of each Closing
that:
6.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own and
operate its properties and assets, to carry on its business as now and
heretofore conducted, to issue and sell the Notes and to execute, deliver and
carry out the terms of the Related Documents. The Company is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction in which the ownership of its properties or the nature of its
business make such qualification necessary and where a failure to be so
qualified would have a material adverse effect on the business, operations,
prospects or condition, financial or otherwise, of the Company (the
"CONDITION").
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6.2 CAPITALIZATION.
(a) Schedule 6.2 lists each class of capital stock of the Company
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and the number of shares outstanding and authorized for each class as of the
date of this Agreement. All such shares were validly issued, are fully paid and
nonassessable and have been issued in accordance with the registration or
qualification provisions of the 1933 Act and any relevant state securities laws
or pursuant to valid exemptions therefrom.
(b) Except as set forth in Schedule 6.2 and pursuant to the
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transactions contemplated by this Agreement, there are not on the date hereof
authorized, outstanding or contemplated any subscriptions, options, conversion
rights, warrants or other agreements, securities or commitments obligating the
Company to issue, deliver or sell, or cause to be issued, delivered or sold, any
shares of capital stock of the Company, or any securities convertible into or
exchangeable for shares of capital stock of the Company or obligating the
Company to grant, extend or enter into any such agreement or commitment.
6.3 SUBSIDIARIES. The Company does not directly or indirectly own
any interest in any other corporation, partnership, joint venture or other
business association or entity.
6.4 EXECUTION AND BINDING EFFECT. The execution and delivery of the
Related Documents and the consummation of the transactions contemplated hereby
or thereby have been duly authorized by all necessary corporate action on the
part of the Company. The Related Documents (except for the Related Documents
that will be issued in the Subsequent Closings (the "SUBSEQUENT DOCUMENTS") have
been duly executed and delivered by the Company and the Related Documents (other
than such Subsequent Documents) constitute and the Subsequent Documents, upon
due execution and delivery by the Company will constitute, legal, valid and
binding agreements of the Company enforceable against the Company in accordance
with their respective terms. The Notes will be free of restrictions on transfer
other than under applicable federal and state securities laws and as provided
herein.
6.5 AUTHORIZATION AND FILINGS. Except as set forth in Schedule 6.5,
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no authorization, consent, approval, license, exemption or other action by, and
no registration, qualification, designation, declaration or filing with, any
Authority or any other Person is required to be made or obtained by the Company
in order to execute or deliver the Related Documents or to consummate the
transactions contemplated hereby or thereby other than the filing of financing
statements to perfect the security interests granted under the Security
Agreement.
6.6 ABSENCE OF CONFLICTS. Except as set forth in Schedule 6.6,
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neither the execution and delivery of the Related Documents nor the consummation
of the transactions contemplated hereby or thereby nor the performance of or
compliance with the terms and conditions in the Related Documents will (a)
violate any Law; (b) conflict with or result in a breach or violation of or a
default or loss of benefit under or permit the acceleration of any obligation
under any provision of the Certificate of Incorporation or Bylaws of the
Company, or
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any agreement or instrument to which the Company is a party or by which the
Company or any of its properties is bound, or (c) except as provided in the
Security Agreement, result in the creation or imposition of any Lien on any
property or asset of the Company, in each case or in the aggregate which would
have a material adverse effect on the Condition of the Company.
6.7 SECURITY INTEREST. Upon the payment for the Notes, the filing of
the UCC-1 financing statements referred to in the Security Agreement, the
appropriate filings with the U.S. Patent and Trademark Office and the U.S.
Copyright Office and the appropriate notice to Silicon Valley Bank, except to
the extent permitted by the Security Agreement and this Agreement, the Security
Agreement creates a valid first priority security interest and lien upon the
collateral covered thereby, enforceable against the Company and all third
parties and securing the payment of all obligations purported to be secured
thereby; provided that you will not have a perfected security interest in any
collateral which is not subject to the California Uniform Commercial Code
pursuant to Section 9104 or that cannot be perfected by the filing of a UCC-1
financing statement that is specified in California Uniform Commercial Code
Section 9302 (other than accounts at Silicon Valley Bank and collateral covered
by your filings with the U.S. Patent and Trademark Office and the U.S. Copyright
Office as to which you will have a perfected security interest after taking
appropriate action) (the "Nonperfected Collateral"), except to the extent that
after the date hereof appropriate actions are taken that will perfect such
security interests; provided, further, that such Nonperfected Collateral does
not, individually or in the aggregate, constitute a material portion of the
assets of the Company. Subject to the preceding sentence, such security
interests will be perfected security interests subject to no prior security
interests, claims, liens, or encumbrances.
6.8 FINANCIAL STATEMENTS. The Company has furnished to you true and
complete copies of the unaudited consolidated financial statements of the
Company as at and for the year ended March 31, 1994 and the audited consolidated
financial statements of the Company as at and for the years ended March 31,
1993, and March 31, 1992, (collectively, the "ANNUAL FINANCIAL STATEMENTS").
The Annual Financial Statements, including the related schedules and notes
thereto, are in accordance with the books and records of the Company and were
prepared in accordance with GAAP applied on a consistent basis (except as may be
indicated in the notes thereto or reports thereon and except that the Annual
Financial Statement for the year ended March 31, 1994, does not include notes
thereto and may not have been prepared in accordance with GAAP in immaterial
respects) and present fairly the financial position and the results of
operations and changes in financial position of the Company as at the dates
thereof and for the periods then ended. The Company has furnished to you
unaudited financial statements of the Company as at and for the period ended
June 30, 1994 (the "UNAUDITED FINANCIAL STATEMENTS"). The Unaudited Financial
Statements are in accordance with the books and records of the Company and were
prepared in accordance with GAAP in all material respects applied on a
consistent basis (other than for the omission of notes thereto) and present
fairly the financial position of and the results of operations and changes in
financial position of the Company as at and for the period ended June 30, 1994.
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6.9 LIABILITIES. Except as provided for in the Annual Financial
Statements or the Unaudited Financial Statements, or as set forth in the
Schedules hereto, at the last day of the respective periods covered by the
Annual Financial Statements and the Unaudited Financial Statements, there were
no liabilities or obligations, whether accrued, absolute, contingent or
otherwise, and whether due or to become due and whether or not required to be
recorded or reflected on such financial statements ("LIABILITIES") other than
Liabilities that are not individually or in the aggregate material to the
Condition of the Company. The Company is not aware of any reasonable basis for
the assertion against the Company of any other debt, duty, liability, obligation
or loss contingency other than Liabilities that are not individually or in the
aggregate material to the Condition of the Company.
6.10 NO ADVERSE CHANGE. Except as otherwise permitted by this
Agreement or as disclosed on any schedule hereto, since the date of the
Unaudited Financial Statements, the Company has operated its business diligently
and only in the ordinary course of business, and has not:
(a) incurred any liabilities, other than in the ordinary course of
business consistent with past practice;
(b) suffered any material adverse change in the Condition of the
Company other than the occurrence of operating losses or the occurrence of any
event that is not inconsistent with past operating history of the Company;
(c) sold, encumbered, assigned or transferred any assets or
properties of the Company, other than in the ordinary course of business
consistent with past practice;
(d) as of the date of this Agreement, created, incurred, assumed or
guaranteed any Indebtedness or subjected any of its assets to any Lien except
for Indebtedness or Liens that are not, individually or in the aggregate,
material to the Condition of the Company;
(e) changed or amended its Certificate of Incorporation or Bylaws in
any respect material to the holders of the Notes;
(f) declared, set aside or paid any dividends or made any other
distributions in cash or property on the Company's capital stock other than as
permitted by the Ailicec Agreement;
(g) directly or indirectly redeemed, purchased or otherwise acquired
any shares of capital stock of the Company except for the repurchase of shares
from employees in an amount not to exceed, in the aggregate, $25,000 and for the
redemption of Performance Preferred Stock issued to Ailicec that is permitted by
the Ailicec Agreement;
(h) suffered any resignation or termination of employment of any key
officers
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and, the Company, to the best of its knowledge, does not know of any impending
resignation or termination of employment of any such key officers;
(i) except in the ordinary course of the Company's business,
materially increased the compensation payable or to become payable by the
Company to any of its officers or directors or materially increased any bonus,
insurance, pension or other employee benefit plan, payment or arrangement made
by the Company for or with any such officers or directors;
(j) entered into any agreement or commitment to do any of the things
described in this section 6.10.
6.11 TAXES.
(a) The Company has filed on a timely basis, within the original
filing period or any applicable extension period, all returns and reports of all
Taxes, including, without limitation, federal income tax returns, withholding
tax returns and declarations of estimated Tax and Tax reports, that are required
to be filed with respect to the Company or its income, properties or operations,
except where the failure to so file would not have a material adverse effect on
the Condition of the Company. All information set forth in all returns and
reports of all Taxes, including, without limitation, federal income tax returns,
reports, notices, accounts and information is true, complete and accurate in all
material respects. All Taxes required to be paid by the Company that are or were
due and payable prior to the date hereof (without regard to whether such Taxes
have been assessed) have been paid, except where the failure to so pay would not
have a material adverse effect, individually or in the aggregate, on the
Condition of the Company.
(b) The Company has made adequate provisions in accordance with GAAP
in the Unaudited Financial Statements for the payment of all Taxes for which the
Company may be liable that were not yet due and payable as of the date of the
Unaudited Financial Statements regardless of whether the liability for such
Taxes is disputed.
(c) There is no claim or assessment pending or, to the knowledge of
the Company, threatened against the Company for any alleged deficiency in Taxes
and the Company does not know of any pending audit or investigation with respect
to any Tax liability (direct or indirect) of the Company for any period for an
amount, individually or in the aggregate, in excess of $25,000. There are no
agreements in effect to extend the period of limitations for the assessment or
collection of any Tax for which the Company may be liable, and no requests for
such agreements are pending.
(d) The Company has in all material respects satisfied for all
periods through the date hereof all federal, state, foreign and local
withholding Tax requirements (including, without limitation, income, social
security and employment Tax withholding for all types of compensation).
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6.12 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. The Company has
good and marketable title to or, in the case of leases and licenses, valid and
subsisting leasehold interests or licenses in, all of its properties and assets
of whatever kind (whether real or personal, tangible or intangible) free and
clear of any Liens, except as set forth in Schedule 6.12, for Permitted Liens or
as provided in the Security Agreement. All facilities, equipment and other
material items of tangible property and assets owned by the Company are in good
operating condition and repair, subject to normal wear and maintenance, are
usable in the regular and ordinary course of business and conform to all
applicable Laws relating to their construction, use and operation, except where
such failure, individually or in the aggregate, would not have a material
adverse effect on the Condition of the Company. No Person other than the Company
owns any equipment or other tangible assets or property situated on the premises
of the Company or necessary to the operation of the business of the Company,
except for leased items, as to which leases, the Company is not in default
thereof.
6.13 PATENTS, TRADEMARKS AND COPYRIGHTS.
(a) A list and brief description of all licenses, trademarks,
service marks, trade names, logos, brands, copyrights, patents, franchises, and
permits that are material to the Company's business, all applications for
registration and registrations of such trademarks, service marks, copyrights,
patents, franchises, and permits that are material to the Company's business,
and all licenses, contracts, rights, and arrangements with respect to the
foregoing that are material to the Company's business are set forth in Schedule
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6.13 (the "INTELLECTUAL PROPERTY RIGHTS").
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(b) Except as set forth in Schedule 6.13, the Company is the sole
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owner of the entire, unencumbered right, title and interest to all such
Intellectual Property Rights free and clear of all Liens other than Permitted
Liens, and all such Intellectual Property Rights are valid and enforceable.
(c) The Company owns or possesses the right to use its Proprietary
Technology, and all rights with respect to the foregoing, necessary for the
conduct of its business as now and contemplated to be conducted, without any
material conflict or infringement of the rights of others. The Company has
maintained the confidentiality of the Proprietary Technology. Each engineer and
officer of the Company (other than ▇▇▇ ▇▇▇▇▇▇▇▇, the Chief Financial Officer)
has executed a proprietary information and inventions agreement to protect the
Company's rights to all Proprietary Technology.
6.14 CONTRACTS. Except as set forth Schedule 6.14, (a) the Material
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Contracts are valid and in full force and effect as to the Company and, to the
best of the Company's knowledge, the other parties thereto; (b) the Company is
not in violation of or default under its Certificate of Incorporation, Bylaws or
any Material Contract, and no condition or event exists that after notice or
lapse of time or both, would result in a breach or violation of, or a default or
loss of benefit by the Company thereunder; (c) to the best of the Company's
knowledge, none of the other parties to any Material Contract are in violation
of or default under any Material
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Contract in any material respect which would cause a material adverse effect on
the condition; and (d) the Company has not received any notice of cancellation
or any written communication threatening cancellation of any Material Contract
by any party thereto. Schedule 6.13 lists all Material Contracts.
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6.15 MANUFACTURING AND MARKETING RIGHTS. Except for Material
Contracts listed on Schedule 6.13, the Company has not granted rights to
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manufacture, produce or assemble its products or use any of its Proprietary
Technology to any other person except for grants that are not material to the
Condition of the Company, and is not bound by any agreement that affects the
Company's exclusive right to develop, manufacture or assemble its products or
any other products that utilize the Proprietary Technology.
6.16 PERMITS; COMPLIANCE WITH LAWS. The Company has obtained and
maintains in full force and effect all permits, licenses, consents, approvals,
registrations, memberships, authorizations and qualifications under all
applicable Laws, and with all applicable Authorities, required for the conduct
by it of its business and the ownership or possession by it of its properties
and assets, except to the extent the failure to so obtain and maintain would not
have a material adverse effect, individually or in the aggregate, on the
Condition of the Company. The Company is in compliance in all respects with all
Laws applicable to it or to the conduct by it of its business or to its
ownership and possession of its properties and assets, except where the failure
to so comply, does not, individually or in the aggregate, have a material
adverse effect on the Condition of the Company. All required reports and filings
with Authorities have been properly made as and when required, except where the
failure to report or file would not, individually or in the aggregate, have a
material adverse effect on the Condition of the Company.
6.17 RETURNS AND COMPLAINTS. The Company has received no customer
complaints concerning alleged defects in its products (or the design thereof)
that would materially adversely affect the Condition of the Company.
6.18 EMPLOYEES. The Company is not bound by or subject to (and none
of its asset or properties is bound by or subject to) any written or oral,
express or implied, contract, commitment or arrangement with any labor union,
and no labor union has requested or, to the knowledge of the Company, has sought
to represent any employees, representatives or agents of the Company. No strike
or labor dispute involving the Company has ever occurred or been threatened.
6.19 ERISA; EMPLOYEE BENEFITS.
(a) The Company has not incurred any liability to the Pension
Benefit Guaranty Corporation (the "PBGC") except for required premium
payments, which payments have been paid when due. To the best of the Company's
knowledge, no prohibited transactions or events have occurred which might give
rise to any liability of the Company under Section 406 of ERISA or Section
4975 of the Code.
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(b) No ERISA Plan is a defined benefit plan, multi-employer plan or
plan subject to the minimum funding standards of Section 412 of the Code (that
is, a pension plan within the meaning of the Code).
(c) No proceeding has been initiated by any Person (including the
PBGC) to terminate any ERISA Plan.
(d) With respect to each ERISA Plan, (i) all payments and
contributions due from the Company to date have been made and all amounts
properly accrued to date as liabilities of the Company that have not been paid
have been properly reflected in the books of the Company, except for payments
and contributions that are not, individually or in the aggregate, material to
the Condition of the Company; (ii) to the best of the Company's knowledge, the
Company has complied with, and each ERISA Plan conforms in form and operation
to, all applicable laws and regulations applicable to the ERISA Plans,
including, without limitation, ERISA and the Code except where the failure to
so comply would not, individually or in the aggregate, have a material adverse
effect on the Condition of the Company; and (iii) each ERISA Plan that is an
employee pension benefit plan intended to qualify under Section 401 of the
Code (that is, an ERISA Plan that is not a welfare plan) has received a
favorable determination letter from the Internal Revenue Service with respect
to such qualification, its related trust has been determined to be exempt from
taxation under Section 501(a) of the Code, and nothing has occurred since the
date of such letter that has adversely affected or is likely to adversely
affect such qualification or exemption.
(e) Each ERISA Plan maintained by the Company or for the benefit of
the employees is listed in Schedule 6.19.
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6.20 ENVIRONMENTAL MATTERS.
The Company is not aware of and has not received notice of any past,
present or future events, conditions, circumstances, activities, practices,
incidents, actions or plans that might interfere with or prevent compliance or
continued compliance in all material respects with any Environmental Law, or
might give rise to any common law or legal liability, or otherwise form the
basis of any claim, prosecution, action, demand, suit, arbitration, proceeding,
based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling or the emission, discharge,
release or threatened release into the environment, of any pollutant,
contaminant, chemical or industrial, toxic or hazardous substance or waste, the
result of which would have a material adverse effect on the Condition of the
Company.
6.21 LITIGATION. Except as set forth in Schedule 6.21, there are no
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claims, prosecutions, actions, demands, suits, arbitrations, proceedings,
hearings, studies, investigations or reviews pending or, to the best of the
Company's knowledge, threatened against or affecting the Company, any ERISA
Plan or any of their respective properties or assets at law, in equity or
otherwise, in, before or by any Authority, which, if resolved against the
Company, individually
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or in the aggregate, would have a material adverse effect on the Condition of
the Company or the transactions contemplated in the Related Documents. The
Company does not know of any reasonably likely basis for any such claims,
prosecutions, actions, demands, suits, arbitrations, proceedings, hearings,
studies, investigations or reviews, which in the Company's judgement, is
reasonably likely to have a material adverse effect on the Condition of the
Company or the transactions contemplated in the Related Documents. Except as
set forth in Schedule 6.21, there are no unsatisfied judgments or outstanding
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orders, injunctions, decrees, stipulations or awards of any Authority against
the Company or against any of its properties or assets that, individually or
in the aggregate, exceed $25,000 or are otherwise material to the Condition of
the Company.
6.22 INSURANCE. The assets, properties and operations of the
Company are insured under various policies of general liability and other
forms of insurance to the extent reasonably considered appropriate by the
Company. All such policies are in full force and effect in accordance with
their terms, no notice of cancellation has been received, and there is no
existing default or event which, after notice or lapse of time or both, would
constitute a violation or default thereunder. Such policies or amounts
reasonably believed by the Company to be adequate in relation to the business
and assets of the Company and all premiums to date have been paid in full.
6.23 NO MARGIN REGULATION VIOLATION. None of the transactions
contemplated by the Related Documents will violate or result in a violation of
Section 7 of the Securities Exchange Act of 1934 or any regulations issued
pursuant thereto, including, without limitation, Regulation G, Regulation T,
Regulation X and Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System.
6.24 BROKERS AND FINDERS. The Company has not employed any broker,
finder, consultant or intermediary in connection with the transactions
contemplated by the Related Documents that would be entitled to a broker's,
finder's or similar fee or commission in connection therewith, except for
Endeavor Capital Management.
6.25 RELATED PARTY TRANSACTIONS. Except as set forth on Schedule
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6.25, to the best of the Company's knowledge no officer or director of the
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Company or member of the immediate family of any of the foregoing:
(a) owns or has owned, directly or indirectly, any interest in
(except for less than one percent stock holdings for investment purposes in
securities of publicly traded companies), or is an officer, director, employee
or consultant of, any Person which is or was engaged in business as, a
competitor, lessor, lessee, supplier or customer of the Company;
(b) owns, directly or indirectly, as a whole or in part, any
tangible or intangible property that the Company uses or contemplates using in
the conduct of its business; or
(c) has any cause of action or other claim whatsoever against, or
owes any
11
amount to, the Company, except for immaterial claims in the ordinary course of
business such as for accrued vacation pay, accrued benefits under employee
benefit plans, and medical, dental and other similar health benefit plans
existing on the date hereof.
6.26 RESERVATION OF SHARES. The Common Stock issuable on conversion
of the Warrants has been duly and validly reserved for issuance and (assuming
compliance by the holders thereof with the terms of the Warrant and payment by
the holders thereof of the exercise price of that Warrant) on issuance in
accordance with the terms of the Warrant will be duly and validly issued,
fully paid and nonassessable and will be free of restrictions on transfer
other than restrictions on transfer under applicable Federal and state
securities laws and as provided herein.
7. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. This Agreement is
made with you in reliance upon your representations to the Company, which by
your acceptance hereof you confirm, represent and warrant, that:
7.1 INVESTMENT INTENT. You are acquiring the Notes, the Warrants and
the Common Stock issuable upon exercise of the Warrants (collectively,
"SECURITIES") pursuant to this Agreement with your own funds for your own
account and not as a nominee or agent. No one else has any interest,
beneficial or otherwise, in any of the Securities to be purchased by you.
Except as provided herein, you are not obligated to transfer any Securities to
anyone else nor do you have any agreements or understandings to do so. You are
purchasing the Securities for investment for an indefinite period and not with
a view to the sale or distribution of any Securities, by public or private
sale or other disposition, and you have no intention of selling, granting any
participation in or otherwise distributing or disposing of any Securities. You
do not intend to subdivide your purchase of Securities with anyone.
Notwithstanding the foregoing, the disposition of your property shall be at
all times within your own control, and that your right to sell or otherwise
dispose of all or any part of the Securities purchased by you pursuant to an
effective registration statement under the 1933 Act or under an exemption
available from such registration available under the 1933 Act shall not be
prejudiced; provided that you comply with section 12.14.
7.2 NO PUBLIC OFFERING. You are able to bear the economic risk of
your investment in the Securities. You are aware that you must be prepared to
hold the Securities for an indefinite period and that the Securities have not
been registered under the 1933 Act or registered or qualified under any state
securities law, on the ground, among others, that no distribution or public
offering of Securities is to be effected and Securities are being issued by
the Company without any public offering within the meaning of Section 4(2) of
the 1933 Act. You have had an opportunity to discuss the Company's business,
management and financial affairs with its management. You are not subscribing
for the Securities as a result of or subsequent to any advertisement, article,
notice, or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio or any solicitation of a
subscription by a person not previously known to you in connection with
investments in securities generally.
12
7.3 CERTIFICATES TO BE LEGENDED. You understand that each Note and
Warrant will bear a legend on the face thereof (or on the reverse thereof with
a reference to such legend on the face thereof) required by the Securities and
Exchange Commission or a state securities commission.
7.4 NOTES AND WARRANTS WILL BE "RESTRICTED SECURITIES". You
understand that the Notes and Warrants will be "restricted securities" as that
term is defined in Rule 144 under the 1933 Act and, accordingly, that the
Notes and Warrants must be held indefinitely unless they are subsequently
registered under the 1933 Act or an exemption from such registration is
available. You understand and agree that the Company is not under any
obligation to register Notes or Warrants under the 1933 Act or to comply with
Regulation A or any other exemption and that Rule 144 is not currently
available for sales of Notes and Warrants.
7.5 ACCREDITED INVESTOR. You have been advised or are aware of the
provisions of Regulation D under the 1933 Act relating to the accreditation of
investors, and you are an "accredited investor" as defined in Regulation D
under the 1933 Act.
7.6 SOPHISTICATION OF THE PURCHASER. You have such knowledge and
experience in financial and business matters that you are capable of
evaluating the merits and risks of your investment contemplated by this
Agreement and have the capacity to protect your own interests. You acknowledge
that investment in the Securities is highly speculative and involves a
substantial and high degree of risk of loss of your entire investment. You
have adequate means of providing for current and anticipated financial needs
and contingencies, are able to bear the economic risk for an indefinite period
of time and have no need for liquidity of the investment in the Securities and
could afford complete loss of such investment.
7.7 BROKERS' FEES. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or
on behalf of you, except for Endeavor Capital Management.
8. COVENANTS. The Company hereby covenants that so long as any Notes
are outstanding:
8.1 NOTICE. The Company shall promptly give written notice to you of:
(a) any litigation or administrative or regulatory proceeding affecting
the Company where the amount claimed against the Company is $50,000 or more, or
where the granting of the relief requested might have a material adverse effect
on the Condition of the Company;
(b) any Event of Default or any event which, upon giving of notice or
lapse of time or both, would constitute an Event of Default;
13
(c) any change in the location of any place of business of the Company
or of the establishment of any new, or the discontinuation of any existing,
place of business; and
(d) any event that would cause Schedule 6.2 to be inaccurate in any
------------
material respect at any time after the date of this Agreement; and
(e) entering into or committing to enter into any transaction that is
material to the Condition of the Company, other than in the ordinary course of
its business.
8.2 FINANCIAL STATEMENTS. The Company shall deliver to you in form and
detail satisfactory to you the following financial information:
(a) INTERIM FINANCIAL STATEMENTS. As soon as available but no later
than 30 days after the end of the first three fiscal quarters of each fiscal
year of the Company, the Company shall deliver to you an unaudited balance
sheet of the Company as of the end of such period and statements of income and
cash flows for such period, and for that portion of the Company's financial
reporting year ending with such period, prepared and attested by a responsible
financial officer of the Company as being prepared in accordance with GAAP in
all material respects (except for the omission of notes thereto) and as being
complete and correct and fairly presenting the Company's financial condition
and the results of the Company's operations. If any such interim financial
statements are not prepared on a consistent basis, a note to that effect will
be included therein.
(b) ANNUAL AUDITED FINANCIAL STATEMENTS. As soon as available but no
later than 120 days after the end of each financial reporting year, the Company
shall deliver to you the Company's balance sheet as of the end of such year and
statements of income and cash flows for such year, with notes to each, all in
reasonable detail and prepared in accordance with GAAP, setting forth in
comparative form corresponding figures for the preceding fiscal year, certified
by a nationally recognized independent certified public accountant whose report
in connection therewith shall not have been a qualified report, or contain a
disclaimer because of a restricted or a limited examination by such accountant
of any material portion of the Company's records. If any such annual audited
financial statements are not prepared on a consistent basis, a note to that
effect will be included therein.
8.3 ACCESS. The Company shall permit Endeavor Capital or such other
persons as a Majority of the Investors may designate to visit and inspect any of
the properties of the Company, to examine its books and records and take copies
and excerpts therefrom and to discuss its affairs with its officers, employees
and independent accountants during normal working hours on Business Days
following reasonable notice. Any such person provided access shall be required
to sign a confidentiality agreement containing such terms as are reasonable and
customary.
8.4 PAYMENT OF TAXES. The Company shall pay or otherwise discharge all
Taxes, assessments and other governmental charges or levies imposed upon it or
any of its
14
properties or income on or prior to the date on which penalties attach thereto.
8.5 FINANCIAL ACCOUNTING PRACTICES. The Company shall make and keep
books, records and accounts, and maintain a system of internal accounting
controls in accordance with GAAP.
8.6 CONTRACTS. The Company shall comply with all agreements or
instruments to which it is a party or by which it or any of its properties (now
owned or hereafter acquired) may be subject or bound; provided that the Company
shall not be deemed to be in violation of this section 8.6 as a result of any
failure to comply which would not have a material adverse effect on the
Condition of the Company or on the ability of the Company to perform its
obligations under the Related Documents.
8.7 EXISTENCE. The Company shall maintain and preserve its existence,
present form of business, and all rights (including, without limitation,
Intellectual Property Rights), privileges and franchises necessary or
desirable in the normal course of its business, and keep all of its property
in good working order and condition, ordinary wear and tear excepted, except
where the same would not have a material adverse effect on the Condition of
the Company.
8.8 COMPLIANCE WITH LAWS. The Company shall comply in all material
respects with all Laws to which it or its properties or assets is or may
become subject.
8.9 INDEBTEDNESS. The Company shall not incur any Indebtedness, except
for the following:
(a) the acquisition of supplies or inventory on normal trade credit
in the ordinary course of the Company's business;
(b) Indebtedness with respect to letters of credit issued in favor of
Ailicec or Xerox Corporation;
(c) the Notes;
(d) short-term commercial borrowing, including factoring arrangements,
in an amount not to exceed the lesser of (i) $500,000, (ii) 1.2 times the
principal amount and accrued interest outstanding under the Notes and (iii)
0.5 times the amount of collectible accounts receivable of the Company (as
determined in accordance with GAAP);
(e) Indebtedness incurred on commercially reasonable terms to purchase
or lease equipment at its fair market value in the ordinary course of the
Company's business; and
(f) extensions, renewals and replacements of any of the foregoing
Indebtedness or Indebtedness reflected on the Unaudited Financial Statements;
provided, however, (i) any such
-------- -------
15
extension, renewal or replacement obligation shall be on terms at least as
favorable to the Company as the obligation being extended, renewed or
replaced, and (ii) the amount so extended, renewed or replaced shall be in an
amount not greater than the amount of the obligation extended, renewed or
replaced.
8.10 LIENS. The Company shall not create, incur, assume or permit to
exist any Lien, on any of its property, except Permitted Liens.
8.11 LOANS. The Company shall not lend any money, make any advances or
extend any credit to any Person or assume, guarantee, endorse or otherwise
become liable with respect to the obligations of any Person other than in the
ordinary course of its business.
8.12 SIGNIFICANT TRANSACTIONS. The Company shall not change its name,
liquidate or dissolve, or enter into any consolidation, merger or partnership;
acquire all or substantially all of the business or assets of any Person
(whether through stock or asset purchase or otherwise); prepay any
Indebtedness that exceeds $25,000, other than to Ailicec or to holders of the
Notes, or reorganize, reclassify or recapitalize its capital stock; transfer,
lease or otherwise dispose of all or any substantial part of its assets or the
Proprietary Technology.
8.13 TRANSACTIONS WITH AFFILIATES. Except for normal employment
relationships, transactions with Ailicec and transactions specified on Schedule
--------
6.25, the Company shall not enter into or carry out any transaction with
----
(including, without limitation, purchasing property or services from, selling
property or services to or providing any guarantees or loans to) any Affiliate,
unless such transaction is on fair and reasonable terms no less favorable to the
Company than it would obtain in a comparable arm's length transaction with a
Person that is not an Affiliate.
8.14 WARRANTS. If all amounts owed by the Company to you or your
assigns under any Note issued to you are not repaid within six months after
the date such Note is issued, the Company shall issue and deliver a Warrant to
you, or your permitted assigns, as the case may be, on the last day of each
month thereafter, for as long as any amount under each Note remains
outstanding, for an amount of shares of Common Stock of the Company equal to
2% of the principal amount of that Note outstanding at that time divided by
$2.15.
8.15 REGISTRATION RIGHTS.
(a) Form S-3.
--------
(i) If any Holder or Holders holding Warrants or Registrable
Securities that in the aggregate is not less than 25% of the Registrable
Securities request that the Company file a registration statement on Form
S-3 (or any successor form to Form S-3) for a public offering of the
Registrable Securities the reasonably anticipated aggregate price to the
public of which, net of underwriting discounts and commissions, would
exceed
16
$500,000, and the Company is then entitled to use Form S-3 under
applicable Commission rules to register the Registrable Securities for
such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form and
to cause such Registrable Securities to be qualified in such
jurisdictions as the Holder or Holders may reasonably request; provided,
however, that the Company shall not be required to effect more than one
registration pursuant to this section 8.15(a) in any 6 month period. The
substantive provisions of section 8.15(c) shall be applicable to each
registration initiated under this section 8.15(a).
(ii) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this section 8.15(a): (i) in any
particular jurisdiction in which the Company would be required to execute
a general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to
service in such jurisdiction and except as may be required by the 1933
Act; (ii) if the Company, within 10 days of the receipt of the request of
the initiating Holders, gives notice of its bona fide intention to effect
the filing of a registration statement with the Commission within 90 days
of receipt of such request (other than with respect to a registration
statement relating to a Rule 145 transaction, an offering solely to
employees or any other registration that is not appropriate for the
registration of Registrable Securities); (iii) during the period starting
with the date 60 days prior to the Company's estimated date of filing of,
and ending on the date 6 months immediately following, the effective date
of any registration statement pertaining to securities of the Company
(other than a registration of securities in a Rule 145 transaction or
with respect to an employee benefit plan), provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or (iv) if the Company shall
furnish to such Holder a certificate signed by the President of the
Company stating that in the good faith judgment of the Board of Directors
it would be seriously detrimental to the Company or its shareholders for
registration statements to be filed in the near future, then the
Company's obligation to use its best efforts to file a registration
statement shall be deferred for a period not to exceed 120 days from the
receipt of the request to file such registration by such Holder.
(b) Optional Registrations. If at any time or times after the Closing,
----------------------
the Company shall determine to register any of its securities (for itself or for
any other securities holder of the Company) under the 1933 Act or any successor
legislation (other than a registration relating to stock option plans, employee
benefit plans or a Rule 145 transaction), and in connection therewith the
Company may lawfully register its Common Stock, the Company will promptly give
written notice thereof to the then Holders of all issued or issuable Registrable
Securities. The Company shall use its best efforts (i) to include in such
registration all Registrable Securities that such Holders may request in a
writing delivered to the Company within 15 days after receipt by such Holder of
the notice given by the Company, (ii) to effect such registration under the 1933
Act and (iii) to cause such Registrable Securities to be qualified in such
jurisdictions as the Holder or Holders may request; provided, however, if the
-------- -------
managing
17
underwriter for the Company advises the Company in writing that including all
or part of the Registrable Securities in such offering will adversely affect
the marketing of the proposed offering, then, in connection with any such
underwritten offering by the Company of any of its securities, such
registration of Registrable Securities shall be limited to not less than 5% of
the total number of shares to be sold in the case of an initial public
offering of the Company's securities, and 10% of the total number of shares to
be sold in the case of a subsequent offering; further provided, however, that
such limitation shall be imposed upon the Holders and other holders of Common
Stock having similar registration rights to those of the Holders pro rata on
the basis of the total number of (i) shares of Registrable Securities owned by
the requesting Holders and (ii) shares of Common Stock owned, or obtainable by
them upon the exercise of rights with respect to other securities, by such
other requesting holders. In the event of such limitation, shares of persons
not having similar registration rights will not be included in such
registration. Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this section 8.15(b) in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service
in such jurisdiction and except as may be required by the ▇▇▇▇ ▇▇▇. The
Company shall have the right to select the managing underwriter or
underwriters for any underwritten offering made pursuant to a registration
under this section 8.15. Subject to the foregoing, if such proposed
registration is in connection with an underwritten offering of Common Stock,
upon request of any Holder, the Company shall use its reasonable efforts to
cause the managing underwriter therefor to include in such offering the
Registrable Securities as to which the Holder requests such inclusion, on
terms and conditions comparable to those of the securities offered on behalf
of the Company.
(c) Expenses of Registration. All expenses of the registration and
------------------------
offering incurred in connection with any registration pursuant to this section
8.15 shall be borne by the Company, except that the Holders shall bear
underwriting commissions and discounts attributable to their Registrable
Securities being registered and the fees and expenses of separate counsel, if
any, for such Holders; and provided, however, a proportionate share of the
expenses of the registration and offering incurred in connection with any
registration pursuant to this section 8.15 after the third such registration
shall be borne pro rate by the Holder or Holders requesting the registration on
the basis of the ratio of the number of their shares so registered to the total
number of the shares included in such registration.
(d) Transfer of Registration Rights. The rights to cause the Company to
-------------------------------
register securities granted Holders under this section 8.15 may be assigned to a
transferee or assignee in connection with any transfer or assignment of Warrants
or Registrable Securities by any Holder provided that: (i) such transfer may
otherwise be effected in accordance with applicable securities laws, and (ii)
such assignee or transferee acquires at least 5,000 shares of the Registrable
Securities or Warrants representing at least 5,000 shares of the Registrable
Securities (in each case appropriately adjusted for recapitalizations or stock
splits).
(e) Standoff Agreement. The Holders shall, if requested by the managing
------------------
18
underwriter or underwriters of any proposed firm underwritten offering of
securities by the Company, agree not to sell any of their Registrable Securities
or any other securities of the Company owned by such Holders in any transaction
other than pursuant to such underwritten offering for a period of up to 180 days
beginning on the effective date of the registration statement, provided that the
Company's officers and directors and each holder of 10% or more of the Company's
issued and outstanding Common Stock also agree to such limitations. The Holders
shall, upon request, execute a written agreement confirming and agreeing to the
foregoing.
(f) Registration Indemnification. In the event of any registration
----------------------------
under the 1933 Act of Registrable Securities of any Holder pursuant to this
section 8.15, the Company will hold harmless such Holder and each underwriter
of such securities and each other person, if any, who controls such Holder or
such underwriter within the meaning of the 1933 Act, against any losses,
claims, damages or liabilities to which such Holder or such underwriter or
controlling person may become subject under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement, or any
preliminary prospectus or final prospectus or amendment or supplement thereto
on the effective date thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; and will
reimburse such Holder and each such underwriter and each such controlling
person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, or any
preliminary prospectus or final prospectus or amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such Holder or such underwriter
specifically for use in the preparation thereof.
It shall be a condition precedent to the obligation of the Company to
include in any registration statement any Registrable Securities then held by a
Holder that the Company shall have received an undertaking satisfactory to it
and its counsel from each Holder, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in the preceding paragraph) the
Company, each director of the Company, each officer of the Company who shall
sign such registration statement and any person who controls the Company within
the meaning of the 1933 Act, with respect to any statement or omission from such
registration statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, if such statement or omission
was made in reliance upon and in conformity with information furnished to the
Company through an instrument duly executed by the Holder specifically for use
in the preparation of such registration statement, preliminary prospectus or
final prospectus or such amendment or supplement thereto.
19
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of these provisions, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action. In case any such action is
brought against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party for
any legal or other expenses incurred by the latter in connection with the
defense thereof.
(g) Rule 144 Undertakings. At any time and from time to time after the
---------------------
expiration of 90 days following the earlier of the close of business on such
date as (i) a registration statement filed by the Company under the 1933 Act
becomes effective or (ii) the Company registers a class of securities under
section 12 of the Securities Exchange Act of 1934, as amended, the Company shall
use its best efforts to make publicly available and available to the Holders,
pursuant to Rule 144 of the Commission under the 1933 Act, such information as
is necessary to enable the Holders to make sales of Registrable Securities
pursuant to that Rule and the Company shall use its best efforts to timely file
with the Commission all documents and reports required of the Company under the
Securities Exchange Act of 1934. The Company shall furnish to any Holder upon
request (after the preceding sentence shall have become applicable), a written
statement executed by the Company as to compliance with the current public
information requirements of Rule 144.
(h) Information, Documents, Etc. The Company agrees that it will
----------------------------
furnish to the Holders the number of prospectuses, offering circulars or other
documents, or any amendments or supplements thereto, incident to any
registration, qualification or compliance referred to in this section 8.15 as
the Holders from time to time may reasonably request.
(i) Cooperation. In connection with any registration of Common Stock
-----------
pursuant to this section 8.15, the Company agrees to:
(i) enter into such customary agreements (including, in the event of
any underwritten public offering, an underwriting agreement containing such
terms and provisions, as are customarily contained in underwriting
agreements for comparable offerings and, if no underwriting agreement is
entered into, an indemnification agreement on such terms as is customary in
transactions of such nature) and take all such other actions as the Holders
or the underwriters, if any, participating in such offering and sale may
reasonably request in order to expedite or facilitate such offering and
sale;
(ii) furnish, at the request of the Holders or any underwriters
participating in such offering and sale, (i) a comfort letter or letters,
dated the date of the final prospectus with respect to the Common Stock
registered and/or the date of the
20
closing for the sale of the Common Stock from the independent certified
public accountants of the Company and addressed to the Holders and any
underwriters participating in such offering and sale, which letter or
letters shall be in form and substance as is customarily given by
independent certified public accountants, and (ii) an opinion, dated the
date of the closing for the sale of the Common Stock, of the counsel
representing the Company with respect to such offering and sale addressed
to the Holders and any such underwriters, which opinion shall be in form
and substance as is customary in transactions of a similar nature for
similar entities;
(iii) make available for inspection by the Holders and the
underwriters, if any, participating in such offering and sale (which
inspecting underwriters shall, if reasonably possible, be limited to any
manager or managers for such participating underwriters), one counsel for
the Holders and any such underwriters, taken together, and one accountant
or accounting firm retained by the Holders and any such underwriters, taken
together, all financial and other records, corporate documents and
properties of the Company, and supply such additional information, as they
shall reasonably request; provided that any such party shall keep the
--------
contents thereof confidential in the manner prescribed by a confidentiality
agreement containing customary terms to be executed by the persons who are
provided such access.
(j) Action to Suspend Effectiveness; Supplement to Registration
-----------------------------------------------------------
Statement. In connection with any registration of Common Stock pursuant to
---------
this Section 8.15:
(i) The Company will notify the Holders and their counsel promptly
of (i) any action by the Commission to suspend the effectiveness of the
registration statement covering the Common Stock requested to be
registered or the institution or threatening of any proceeding for such
purpose (a "STOP ORDER") or (ii) the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Common Stock requested to be registered for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose.
Immediately upon receipt of any such notice, the Holders shall cease to
offer or sell any Common Stock pursuant to the registration statement in
the jurisdiction to which such Stop Order or suspension relates. The
Company will use all reasonable efforts to prevent the issuance of any
such Stop Order or the suspension of any such qualification and, if any
such Stop Order is issued or any such qualification is suspended, to
obtain as soon as possible the withdrawal or revocation thereof, and will
notify the Holders and their counsel at the earliest practicable date of
the date on which the Holders may offer and sell Common Stock pursuant to
the registration statement.
(ii) For as long as sales of Registrable Securities are permitted
pursuant to a registration statement filed pursuant to this section 8.15,
the Company will notify the Holders and their counsel promptly of the
occurrence of any event or the existence of any state of facts that, in
the judgment of the Company, should be set forth in such registration
statement. Immediately upon receipt of such notice, the Holders shall
cease to offer or sell
21
any Common Stock pursuant to such registration statement, cease to
deliver or use such registration statement and, if so requested by the
Company, return to the Company, at its expense, all copies (other than
permanent file copies) of such registration statement. The Company will,
as promptly as practicable, take such action as may be necessary to amend
or supplement such registration statement in order to set forth or
reflect such event or state of facts. The Company will furnish copies of
such proposed amendment or supplement to the Holders and their counsel.
9. TERMS OF NOTES.
9.1 PREPAYMENT. The Company shall have the right, at any time and
from time to time to prepay all or any portion of the amount due under the
Notes without premium or penalty, so long as any amount prepaid is applied
first to reduce accrued interest. The aggregate principal amount of each
partial prepayment of Notes shall be allocated among the holders of Notes then
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts of Notes outstanding, with adjustments, to the extent
practicable, to compensate for any prior prepayments not made in exactly such
proportion.
9.2 CONVERSION.
(a) The Company intends to issue shares of its Series F Preferred
Stock (the "SERIES F PREFERRED STOCK" prior to the maturity of the Notes (the
"EQUITY CLOSING"). The Company will notify you in writing at least 30 days
prior to the issuance and sale of such Series F Preferred Stock of the price
per share of Series F Preferred Stock (the "PURCHASE PRICE") and the proposed
closing date therefor.
(b) You may elect to convert all or part of the unpaid principal
balance and accrued interest under the Notes held by you into that number of
whole, fully paid and nonassessable shares of Series F Preferred Stock that
equals the sum of such unpaid principal balance or accrued interest to be
converted divided by the Purchase Price. You may make such election by
notifying the Company in writing of the amount of unpaid principal balance or
accrued interest that you would like to convert and the number of shares of
Series F Preferred Stock to be issued to you within 15 days after your receipt
of notice of the proposed issuance of the Series F Preferred Stock pursuant to
section 9.2(a). In connection with such election or decision to make such
election, upon your request, the Company shall deliver drafts of all
agreements and documents to be delivered by or to the holders of the Series F
Preferred Stock in connection with the Equity Closing as they become available
(the "EQUITY DOCUMENTS").
(c) Before you shall be entitled to convert any Notes into Series F
Preferred Stock, you must surrender such Notes, duly endorsed for cancellation,
to the Company and agree to become a party to and bound by the Equity Documents.
The Company, shall, as soon as practical thereafter, issue and deliver to you,
or your nominee or nominees (acting on your behalf), a certificate for the
number of full shares of Series F Preferred Stock to which you shall
22
be entitled and, in the case of a partial conversion, a new Note representing
the remaining unpaid principal balance thereunder.
(d) The conversion shall be deemed to have been made as of the Equity
Closing Date, and the Person or Persons entitled to receive the Series F
Preferred Stock issuable on such conversion shall be treated for all purposes as
the recordholder or holders of such Series F Preferred Stock on such date and
shall become a party to and be bound by all Equity Documents.
(e) No fractional share shall be issued on conversion of the Notes,
but in lieu thereof, upon conversion of the remaining unpaid principal balance
and accrued interest under the Notes held by you, the Company shall pay to you
an amount in cash equal to such fraction multiplied by the Purchase Price. On
conversion of any Note the Company shall pay any and all applicable issuance
taxes that may be payable in respect of any issuance or delivery of shares of
Series F Preferred Stock on such conversion. The Company shall not, however,
be required to pay, and you shall pay, any tax that may be payable in respect
of any transfer involved in the issuance and delivery of shares of Series F
Preferred Stock in a name other than your name (if such transfer is permitted
as provided herein), and no such issuance or delivery shall be made unless and
until the Person requesting such issuance has paid to the Company the amount
of any such tax, or it is established to the satisfaction of the Company that
such tax has been paid.
10. EVENTS OF DEFAULT AND REMEDIES
10.1 EVENTS OF DEFAULT. Any one or more of the following shall
constitute an "EVENT OF DEFAULT":
(a) the Company defaults in the payment of any principal or
interest due under any Note when the same shall have become due and such
default shall continue unremedied for more than 5 days in the case of
principal due or 15 days in the case of interest due;
(b) the Company fails to observe or perform any covenant,
condition or agreement in any of the Related Documents other than as set forth
in section 10.1(a), which is not remedied within 30 days after you notify the
Company that such failure has occurred; provided that such 30 day period shall
be reduced by the number of days in excess of 10 days that any senior officer
of the Company knew of such failure, but shall in no event be reduced to less
than 20 days;
(c) any representation or warranty made by the Company in this
Agreement shall prove to have been false, incorrect, incomplete or misleading
in any material respect when made or deemed made, such representation or
warranty continues to be material and the Company shall fail to correct the
fact or circumstance which made such representation or warranty false,
incorrect, incomplete or misleading within 30 days after you notify the
Company of such misrepresentation; provided that such 30 day period shall be
reduced by the number of days in excess of 10 days that any senior officer
knew the information that caused such representation or
23
warranty to be false, incorrect, incomplete or misleading in such material
respect, but shall in no event be reduced to less than 20 days;
(d) The Company shall not have suffered cumulative pre-tax
losses (after deduction of interest but excluding any extraordinary charges)
since July 1, 1994, greater than $600,000 at any time prior to December 31,
1994, which amount shall be increased by $50,000 for each month thereafter
until June 30, 1995.
(e) the occurrence of any event specified in paragraphs (b),
(c), (e), (f), (g), (h) (only with respect to ▇▇▇▇ ▇▇▇▇▇▇) and (j) (with
respect to the foregoing paragraphs (b) (c), (e), (f), (g) and (h)) of section
6.10 that is not remedied within 30 days after you notify the Company of such
occurrence; provided that such 30 day period shall be reduced by the number of
days in excess of 10 days that any senior officer of the Company knew of such
occurrence, but shall in no event be reduced to less than 20 days.
(f) entry of a decree or order by a court of competent
jurisdiction for relief in respect of the Company in any involuntary case
under applicable bankruptcy, insolvency or other similar Laws now or hereafter
in effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any substantial part of its
assets, or ordering the winding up or liquidation of its affairs, if such
decree or order shall remain unstayed and in effect for a period of 60 days;
(g) commencement by the Company of a voluntary case under any
applicable bankruptcy, insolvency or other similar Laws now or hereafter in
effect, or consent by the Company to the entry of an order for relief in any
involuntary case under any such Law or to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, sequestrator or
similar official of the Company or any substantial part of its property, or
any general assignment by the Company for the benefit of creditors, or failure
by the Company generally to pay its debts as they become due, or any corporate
action by the Company in furtherance of any of the foregoing; or
(h) Ailicec has brought an action in a court of competent
jurisdiction claiming that a default has occurred under the Ailicec Agreement;
provided, however, that if Ailicec subsequently waives such default (as to
this Agreement) in writing, the Event of Default hereunder shall be considered
to be cured without prejudice to Ailicec's rights under such Purchase and Debt
Restructuring Agreement. Notwithstanding the foregoing, if any event referred
to in this clause (g) is otherwise considered to be an Event of Default
hereunder, this clause (g) shall not affect any of your rights under any other
provisions of this Agreement.
10.2 ACCELERATION. If any one or more of the foregoing Events of
Default occur, a Majority of the Investors may at any time (unless all
defaults shall theretofore have been remedied) declare the entire unpaid
principal of and all accrued interest on the Notes immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
24
are hereby expressly waived by the Company. On any such acceleration of the
maturity of the Notes, the Company shall immediately pay to the holder of each
Note, in lawful money of the United States, the entire principal balance
unpaid on such Note, together with interest accrued thereon to the date of
such payment.
11. EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated, the Company will pay the reasonable fees and expenses
of Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to you, in connection with the
preparation, negotiation and execution of the Related Documents and the
reasonable costs of perfecting your security interest in any Collateral.
12. MISCELLANEOUS
12.1 ISSUANCE TAXES. The Company will pay all issuance taxes in
connection with the initial issuance and sale of the Notes to you and will
save you and any subsequent holder of Notes harmless, without limitation as to
time, against any and all liabilities with respect to all such taxes. The
obligations of the Company under this section 12.1 shall survive the payment
of the Notes and the termination of this Agreement.
12.2 EXCHANGE OF NOTE. At any time, and from time to time, upon
not less than 10 days' notice to that effect given by the registered holder of
a Note, and, upon surrender of such Note at its office, the Company shall
deliver in exchange therefor, without expense to the holder thereof, except as
set forth below, a Note of like tenor of such Note so surrendered, as the
holder thereof shall specify as permitted hereunder, dated as of the date to
which interest shall have been paid on such Note so surrendered or, if such
surrender is prior to the payment of any interest thereon, then dated as of
the date of issue, payable to such Person or Persons, or order, as may be
designated by the holder thereof. The Company may require the payment of a sum
sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer.
12.3 LOSS, THEFT, ETC. OF NOTE. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, mutilation or
destruction of a Note, and in the case of any such loss, theft or destruction
upon delivery of a bond of indemnity in such form and amount as shall be
reasonably satisfactory to the Company, or in the event of such mutilation
upon surrender and cancellation of such Note, the Company will make and
deliver without expense to the holder thereof, a new Note, of like tenor, in
lieu of such lost, stolen, destroyed or mutilated Note. If you or any
subsequent institutional holder is the owner of any such lost, stolen or
destroyed Note, then the affidavit of an authorized officer of such owner,
setting forth the fact of loss, theft or destruction and of its ownership of
such Note at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Note other than the written
agreement of such owner to indemnify the Company.
12.4 POWERS AND RIGHTS NOT WAIVED; REMEDIES CUMULATIVE. No delay
or
25
failure on your part in the exercise of any power or right shall operate as
a waiver thereof, nor shall any single or partial exercise of the same
preclude any other or further exercise thereof or the exercise of any other
power or right, and your rights and remedies are cumulative to and are not
exclusive of any rights or remedies you would otherwise have, and no waiver or
consent given or extended pursuant hereto shall extend to or affect any
obligation or right not expressly waived or consented to.
12.5 AMENDMENTS AND WAIVERS. Any term of the Related Documents may be
amended and the observance of any term of the Related Documents may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and a Majority of
the Investors. Any amendment or waiver effective in accordance with this
section 12.5 shall be binding upon each holder of any Notes or Warrants, each
future holder of all such Notes or Warrants and the Company.
12.6 NOTICES. Any notice, consent, authorization or other
communication to be given hereunder shall be in writing and shall be deemed
duly given and received when delivered personally or transmitted by facsimile
transmission with receipt acknowledged by the addressee or three days after
being mailed by first class mail, or the next Business Day after being
deposited for next-day delivery with a nationally recognized overnight
delivery service, charges and postage prepaid, properly addressed to the party
to receive such notice at the following address for such party (or at such
other address as shall be specified by like notice):
(a) if to the Company, to:
Jetfax, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
General Counsel Associates
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
26
(b) if to you, to the address indicated on Schedule A, with copies to:
Endeavor Capital Management
Two ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
12.7 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits), and the Related Documents contain the entire agreement of the parties
and supersede all prior negotiations, correspondence, agreements and
understandings, written and oral, between or among the parties, regarding the
subject matter hereof.
12.8 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns,
including each successive holder or holders of a Note or Warrant.
12.9 SEVERABILITY. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid or unenforceable, the remainder of this Agreement, or the application
of such provision to Persons or circumstances other than those to which it is
held to be invalid or unenforceable, shall not be affected thereby.
12.10 GOVERNING LAW. This Agreement shall be governed by and
construed and interpreted in accordance with the Law of the State of New York.
12.11 INTERPRETATION. All parties have been assisted by counsel in
the preparation and negotiation of this Agreement and the transactions
contemplated hereby, and this Agreement shall be construed according to its
fair language. The rule of construction to the effect that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement.
12.12 FURTHER ASSURANCES. Each party shall execute such other and
further certificates, instruments and other documents as may be necessary and
proper to implement, complete and perfect the transactions contemplated by
this Agreement.
27
12.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, and all of which
together shall be considered one and the same agreement.
12.14 ASSIGNMENT. You may assign or transfer all or any part of the
Securities provided that the conditions specified in this section are satisfied,
which conditions are intended to insure compliance with the provisions of the
1933 Act and state securities laws in respect of the transfer of any of the
Securities. Prior to any transfer or attempted transfer of any Securities, the
holder thereof shall give the Company written notice of its intention to
transfer, describing briefly the nature of any such proposed transfer. If, in
the written opinion of counsel for such holder, in form and substance reasonably
satisfactory to the Company and its counsel, the proposed transfer may be
effected without registration of such Securities, the Securities proposed to be
transferred may be transferred in accordance with the terms of said notice and
in compliance with applicable securities laws and regulations. The Company
shall not be required to effect any such transfer prior to the receipt of such
favorable opinion. If you transfer any interest in your Notes, you shall
transfer your related interest in the Security Agreement and Intercreditor
Agreement. The Company shall not assign this Agreement or any rights hereunder
or delegate any duties hereunder. Any attempted or purported assignment or
delegation in violation of the preceding sentence shall be void.
12.15 MAXIMUM INTEREST RATE. In no event shall the interest rate and
other charges under this Agreement and the Note exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that a court
determines that you have received interest and other charges under this
Agreement in excess of the highest permissible rate applicable hereto, such
excess shall be deemed received on account of, and shall automatically be
applied to reduce, the outstanding principal amount under the Note and the
provisions hereof shall be deemed amended to provide for the highest
permissible rate. If there is no outstanding principal amount thereof, you
shall refund such excess to the Company.
12.16 UPDATING SCHEDULES. Before each Closing, the Company shall
update the Schedules to this Agreement to account for any events that occur
subsequent to any prior Closing that the Company believes are appropriate for
inclusion therein.
13. DEFINITIONS.
13.1 GLOSSARY. For purposes of this Agreement, the following terms
shall have the following meanings, which shall be equally applicable to both
the singular and plural forms of any of such terms:
"AFFILIATE" shall mean any Person (a) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, the Company (b) which beneficially owns or holds five
percent or more of any equity or capital interest of the
28
Company, (c) five percent or more of the equity or capital interest of which is
beneficially owned or held by the Company or a subsidiary of the Company or (d)
any natural person who is a relative of any of the foregoing Persons. The term
"CONTROL" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting stock, as an officer or director, by contract or
otherwise.
"AUTHORITY" shall mean any government or political subdivision, or any
agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury, arbitrator or
mediator, in each case whether federal, state, local or foreign.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday,
statutory holiday, or other day on which banks in the State of California are
required by law to close or are customarily closed.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMISSION" shall mean the U.S. Securities and Exchange Commission.
"ENVIRONMENTAL LAWS" shall mean all federal, state, local and foreign
Laws relating to pollution or protection of the environment, including, without
limitation, Laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes, and any and all
regulations, codes, plans, orders, decrees, judgments, injunctions, notices or
demand letters issued, entered, promulgated or approved thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"ERISA PLAN" shall mean any employee benefit plan within the meaning
of Section 3(3) of ERISA, which covers, or during the period of five years
ending on the date hereof, has covered, employees of the Company or any Commonly
Controlled Entity.
"GAAP" shall mean generally accepted accounting principles (as such
principles may change from time to time).
"HOLDER" means any holder of Warrants or Common Stock issued on
exercise of Warrants.
29
"INDEBTEDNESS" of the Company shall mean: (a) all indebtedness or
liability for or on account of money borrowed by the Company; (b) all
obligations of the Company evidenced by bonds, debentures, notes or similar
instruments; and (c) capitalized lease obligations of the Company.
"LAW" shall mean any judgment, decree, order, statute, law, ordinance,
rule or regulation of any Authority (including common law), constitution,
statute, treaty, regulation, rule, ordinance, judgment, order, foreign
injunction, writ, decree or award of any Authority.
"LIEN" shall mean any voluntary or involuntary lien, security
interest, mortgage, pledge, charge, encumbrance, title defect or title retention
agreement other than licenses permitting the commercial exploitation of
Proprietary Technology that are entered into in the ordinary course of business,
except that to the extent that any such license specifically creates a security
interest, such security interest shall be considered a Lien.
"MATERIAL CONTRACT" means any agreement to which the Company is a
party or by which any of its properties or assets are bound or affected material
to the Condition of the Company.
"MAJORITY OF THE INVESTORS" shall mean holders of Notes who in the
aggregate hold more than 50% of the unpaid principal amount of the outstanding
Notes,
"PERMITTED LIENS" means (i) liens for Taxes not yet due and payable or
which are being contested in good faith and with respect to which adequate
reserves have been established on the Unaudited Balance Sheet; (ii) carriers',
warehousemen's, mechanics', materialmen's and other like Liens and charges
incurred in the ordinary course of business and which are not delinquent or are
being contested in good faith and do not, individually or in the aggregate,
exceed $50,000; (iii) Liens on inventory held by suppliers thereof that are
incurred in the ordinary course of business and which are not delinquent or are
being contested in good faith; (iv) custom bonds incurred in the ordinary course
of business and which are not delinquent or are being contested in good faith
and do not, individually or in the aggregate, not exceed $50,000; (v) the
interests of the lessors and sublessors of any such leased properties; (vi)
existing Liens reflected on Schedule 6.12; (vii) Liens arising in connection
-------------
with worker's compensation and unemployment insurance incurred, in each case, in
the ordinary course of business that do not, individually or in the aggregate
exceed $50,000; (viii) purchase money Liens given to secure Indebtedness
permitted under section 8.9(a) hereof or to purchase or lease equipment to
secure Indebtedness permitted under section 8.9(e) hereof; (ix) restrictions on
the use of property or minor irregularities of title as normally exist with
respect to similar properties which do not in the aggregate materially impair
the use thereof in the operation of the Company's business; (x) Liens in favor
of any lender or factor extending credit to the Company or purchasing
receivables of the Company as permitted under section 8.9(d) hereof; (xi) Liens
in favor of any Holder pursuant to the Related Documents; (xii) the Lien in
favor of Ailicec pursuant to the Ailicec Agreement; (xiii) judgement Liens in
existence less than 40 days after the entry thereof or with respect to which
30
execution has been stayed, which, individually or in the aggregate secure an
amount less than $50,000 or the payment of which an insurance company has
acknowledged in writing is covered in full by an insurance policy under which
the Company is a beneficiary; (ix) extensions, renewals and replacements of the
foregoing Liens with respect to the property covered by the Lien extended,
renewed or replaced.
"PERSON" shall mean a natural person, corporation, partnership, trust,
unincorporated association, joint venture, joint-stock company, limited
liability company, Authority, or any other entity.
"PROPRIETARY TECHNOLOGY" shall mean the full range of trade secrets,
technical knowledge and experience, confidential information and other
proprietary knowledge, whether or not patentable, possessed by or accumulated by
the Company concerning the design, formulation, manufacturing, quality control,
testing, storage, development, improvement, installation and operation of the
Company's products and services, including, without limitation, Intellectual
Property Rights, technical, engineering and operating data relating to the
products, designs, schematics, plans, operating principles, formulas, computer
software programs, electronically recordable data or concepts, marketing data,
inventions, improvements, research and development records and reports,
experimental and engineering reports, product specifications, manufacturing
specifications, raw materials specifications, drawings, photographs, models,
compilations of information, records, books and papers, quality control reports
and specifications, manufacturing and production techniques and methods and any
other information possessed by the Company, relating to its products or
services.
"REGISTRABLE SECURITIES" shall mean the shares of Common Stock
issuable or issued on exercise of the Warrants or any shares of Common Stock
issuable or issued with respect to such shares of Common Stock by way of a stock
dividend or stock split, or other distribution, with respect to or in exchange
for or replacement of such Common Stock or other securities.
"RELATED DOCUMENTS" shall mean this Agreement, the Notes, the
Warrants, the Security Agreement and the Intercreditor Agreement.
"TAX" or "TAXES" shall be understood to include any tax or similar
governmental charge, impost or levy (including, without limitation, income
taxes, franchise taxes, transfer taxes or fees, sales taxes, excise taxes, ad
valorem taxes, withholding taxes, minimum taxes, use taxes, occupancy taxes,
property taxes, employment taxes, stamp taxes or windfall profit taxes),
together with any related liabilities, penalties, fines, additions to tax or
interest, imposed by the United States or any state, county, local or foreign
government or subdivision or agency therefor.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
13.2. INDEX. The following terms shall have the respective
meanings specified on the indicated page of this Agreement:
Ailicec ........................... 2
Audited Financial Statements ...... 5
31
Closing........................... 2
Company........................... 1
Condition......................... 3
Control........................... 28
Equity Closing.................... 22
Equity Documents.................. 22
Event of Default.................. 23
First Closing..................... 1
Intellectual Property Rights...... 8
Intercreditor Agreement........... 3
Liabilities....................... 6
Nonperfected Collateral........... 5
Notes............................. 1
PBGC.............................. 9
Purchase Price.................... 22
Security Agreement................ 3
Series F Preferred Stock.......... 22
Stop order........................ 21
Subsequent Closing................ 1
Subsequent Documents.............. 4
Unaudited Financial Statements.... 5
Warrants.......................... 3
32
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date first set forth above.
Very truly yours,
JETFAX, INC.
By _______________________________
▇▇▇▇ ▇▇▇▇▇▇
President
The foregoing Agreement is hereby agreed to and accepted.
[Name of Purchaser]
By:___________________________
Name:_________________________
Title:________________________
33
EXHIBIT A
CERTIFICATE NO. ___________ DATE: _______________, 1994
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAW, AND NEITHER THIS
NOTE NOR ANY INTEREST HEREIN MAY BE ENCUMBERED, PLEDGED, HYPOTHECATED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT THEREFOR UNDER SAID ACT AND QUALIFICATION UNDER SAID
LAW OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO MAKER
AND CONCURRED IN BY MAKER'S COUNSEL TO THE EFFECT THAT SUCH REGISTRATION
AND QUALIFICATION ARE NOT REQUIRED.
NOTE
$_____________ ________________, 1994
10% Menlo Park, California
FOR VALUED RECEIVED, the undersigned, JetFax, Inc., a Delaware
corporation ("Maker"), promises to pay to __________________ or order
("Holder"), at the principal offices of Maker (or at such other place as Holder
may from time to time designate by written notice to Maker), in lawful money of
the United States, the principal sum of $_________ with interest thereon at the
rate of 10% simple interest per annum on the principal amount of this Note
remaining unpaid from time to time from the date hereof until such principal
amount is fully repaid.
1. PAYMENTS. Payments of interest only shall be due and payable in
quarterly installments as provided herein. Interest on the principal amount of
this Note remaining unpaid shall be due and payable on January 31, April 30,
July 31 and October 31 of each year during the term hereof. The entire unpaid
principal balance, together with all accrued but unpaid interest, shall be due
and payable on the date that is the later of (a) December 31, 1995 or (b) the
date that is one year from the date hereof. Should interest or principal not be
paid when due on this Note, the Maker shall pay, to the extend permitted by
applicable law, interest on such past due amounts from such due date until
payment in full thereof at a rate equal to 2% simple interest per annum above
the rate otherwise applicable under this Note. All interest shall be computed on
the basis of the actual number of days elapsed and on a year of 365 days.
2. PREPAYMENT. Maker shall have the right, at any time and from
time to time, to prepay all or any portion of the amount due under this Note
without premium or penalty, so long as any amount prepaid is applied first to
reduce accrued interest.
3. INCORPORATION OF NOTE PURCHASE AGREEMENT AND SECURITY AGREEMENT.
This Note is issued pursuant to the provisions of, and is the Note referred to
in, the Note Purchase agreement dated as of August 3, 1994 (the "Agreement"),
between Maker and the purchasers listed in Schedule A to the Agreement (the
"Purchasers"), and is secured by and pursuant to a Security
Agreement dated August 3, 1994 in favor of each of the Purchasers (the "Security
Agreement").
4. DEFAULT. The Agreement contains certain Events of Default upon
the occurrence of which payment due under this Note may be accelerated as
provided therein.
5. ATTORNEYS FEES. Upon the occurrence of an Event of Default,
Maker shall be liable for the reasonable costs of enforcement and collection of
this Note, including reasonable attorney's fees. Maker expressly waives demand,
presentment, notice of dishonor, diligence in collection and notice of protests
and agrees to all extensions and partial payments before or after maturity.
6. GOVERNING LAWS. This Note shall be governed by, construed and
interpreted in accordance with, the laws of the State of New York, without
regard to conflicts of law provisions thereof.
7. COMPLIANCE. In no event shall the interest rate and other
charges under this Note exceed the highest rate permissible under any law that
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that a court determines that Holder has received
interest and other charges under this Note in excess of the highest permissible
rate applicable hereto, such excess shall be deemed received on account of, and
shall automatically be applied to reduce, the outstanding principal amount
hereunder and the provisions hereof shall be deemed amended to provide for the
highest permissible rate. If there is no outstanding principal amount under this
Note, Holder shall refund such excess to Maker.
8. ASSIGNABILITY. This Note may be assigned or transferred only as
permitted in the Agreement.
IN WITNESS WHEREOF, Maker has executed this Note or caused this Note to be
executed as of the date first set forth above.
JETFAX, INC
By: ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
President
EXHIBIT E
CERTIFICATE NO. ________ DATE: ____________, 1994
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE ON EXERCISE OF
THIS WARRANT (TOGETHER, THE "SECURITIES") HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE
SECURITIES LAW, AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE
ENCUMBERED, PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT THEREFOR UNDER
SAID ACT AND QUALIFICATION UNDER SAID LAW OR AN OPINION OF COUNSEL
SATISFACTORY IN FORM AND SUBSTANCE TO THE CORPORATION AND CONCURRED IN BY
THE CORPORATION'S COUNSEL TO THE EFFECT THAT SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED.
JETFAX, INC.
COMMON STOCK PURCHASE WARRANT
TO PURCHASE UP TO _________ SHARES OF COMMON STOCK
VOID AFTER _______________, 1999
JetFax, Inc., a Delaware corporation (the "Corporation"), hereby
certifies that, for good and valuable consideration, receipt and sufficiency of
which are hereby acknowledged by the Corporation,____________________________
(the "Holder") is entitled, subject to the terms and conditions set forth below,
to purchase from the Corporation up to ___________ fully paid and nonassessable
shares (the "Shares") of the Common Stock, par value $.01 per share, of the
Corporation ("Common Stock"), at a purchase price of $2.15 per Share (the
"Purchase Price") at any time or times on or prior to the Expiration Date (as
defined below). This Warrant shall expire and be of no further force or effect
at the earlier of the time when it has been exercised with respect to all Shares
which the Holder is entitled to purchase hereunder or 5:00 p.m., California
time, on the Expiration Date. Such number of Shares and the Purchase Price are
subject to adjustment, as hereinafter provided. Such number shall be reduced at
such time or times as this Warrant is exercised in part by the number of Shares
as to which this Warrant is then exercised.
14. Manner of Exercise. The Holder of this Warrant may exercise his or
------------------
her rights hereunder at any time by written notice to the Corporation as set
forth herein. This Warrant may be exercised as a whole at any time, or in part
from time to time, by the Holder by delivering this Warrant, for cancellation
if it is exercised as a whole or for endorsement if it is exercised in part,
together with a Subscription in the form appearing at the end hereof properly
completed and duly executed by or on behalf of the Holder and such other
information and investment representations as may be reasonably requested by
the Corporation for the purpose of complying with applicable securities laws,
to the Corporation at its office in Menlo Park, California (or at the office
of the agency maintained for such purpose or at such other office or agency of
the Corporation as it may designate by notice in writing to the Holder at the
address thereof appearing on the books of the Company), accompanied by payment
by certified or official bank check payable to the order of the Corporation,
in an aggregate amount equal to the Purchase Price as then adjusted times the
number of Shares as to which this Warrant is then being exercised.
Notwithstanding the foregoing, at the closing of the Corporation's initial
public offering of its capital stock at a price per share equal to or greater
than the Purchase Price as then adjusted (the "IPO"), this Warrant shall
automatically be exercised, with no notice required by the Holder and in lieu
of the cash exercise provided for in the preceding sentence, on a net issuance
basis so that the Holder will receive a number of Shares equal to the product
of (a) the price per share paid to the Corporation for its sale of Common
Stock in the IPO (the "IPO Price") minus the Purchase Price as then adjusted
and (b) a fraction, the numerator of which is the number of Shares the Holder
is entitled to purchase hereunder and the denominator of which is the IPO
Price. In the event of any exercise of this Warrant that is partial, the
Corporation shall endorse this Warrant as having been exercised to that extent
and return this Warrant to the Holder for the balance. Anything in this
Warrant to the contrary notwithstanding, this Warrant may not be exercised to
any extent after 5:00 p.m., California time, on the Expiration Date or after
it has been exercised in the aggregate for the number of Shares that the
Holder is entitled to purchase hereunder, and unless this Warrant is being
exercised with respect to all Shares subject to this Warrant, this Warrant may
be exercised only with respect to whole Shares.
15. Delivery of Stock Certificates on Exercise. The Corporation will,
------------------------------------------
or will direct its transfer agent to, issue, as soon as practicable after any
exercise of this Warrant, and in any event within thirty days thereafter, at
the Corporation's expense (including the payment by it of any applicable issue
taxes), in the name of and deliver to the Holder, or as the Holder may direct
(on payment by the Holder of any applicable transfer taxes and compliance with
all restrictions on transferability set forth herein), a certificate or
certificates for the number of fully paid and nonassessable Shares as to which
this Warrant is so exercised, plus, in lieu of any fractional shares to which
the Holder would otherwise be entitled, cash equal to such fraction or
fractions multiplied by the Purchase Price as then adjusted.
16. Anti-Dilution Adjustments.
-------------------------
16.1 Stock Dividends, Splits, Etc. The number of Shares
-----------------------------
purchasable on exercise of this Warrant shall be subject to adjustment from time
to time in the event that the Corporation shall (a) pay a dividend in, or make a
distribution of, shares of Common Stock on any of its outstanding Common Stock,
(b) subdivide its outstanding shares of Common Stock into a greater number of
shares, (c) combine its outstanding shares of Common Stock into a smaller number
of shares or (d) issue by reclassification of its Common Stock any shares of
capital stock of the Corporation (other than a reclassification resulting from a
merger or consolidation covered in section 3.2 or a Buy-Out Event (as defined
below)). In any such case, the total number of Shares issuable upon exercise of
this Warrant immediately prior thereto shall be adjusted so that the Holder
shall be entitled to receive at the same aggregate Purchase Price (as set forth
in section 3.3) the number of shares of stock or other securities of the
Corporation or otherwise to which the Holder would have owned or would have been
entitled to receive immediately following the occurrence of any of the events
described above had this Warrant been exercised in full immediately prior to the
occurrence (or applicable record date) of such event. An adjustment made
pursuant to this section 3.1 shall, in the case of a stock dividend or
distribution, be made as of the record date therefor and, in the case of a
subdivision, combination or a reclassification, be made as of the effective date
thereof. In any such case, appropriate adjustments shall be made in the
application of the provisions hereof with respect to the rights of the Holder
after a recapitalization to the end that the provisions hereof shall be
applicable after that event as nearly equivalent as may be practicable.
16.2. Reorganization, Recapitalization, Consolidation, Merger or
----------------------------------------------------------
Sale of Assets. In the event of any reorganization or recapitalization of the
Corporation (other than as provided in section 3.1) or in the event that the
Corporation consolidates with or merges into another corporation in a
transaction in which the Corporation is not the resulting corporation or
transfers all or substantially all of its assets to another entity, then and
in each such event (other than a Buy-Out Event), the Holder, on exercise of
this Warrant as provided herein, at any time after the consummation of such
reorganization, recapitalization, consolidation, merger or transfer, shall be
entitled to receive the stock or other securities or property to which the
Holder would have been entitled on such consummation if the Holder had
exercised this Warrant immediately prior thereto. In such case, the terms of
this Warrant shall survive the consummation of any such reorganization,
recapitalization, consolidation, merger or transfer and shall be applicable to
the shares of stock or other securities or property receivable on the exercise
of this Warrant after such consummation.
16.3 Adjustment of Purchase Price. On each adjustment of the number
----------------------------
of Shares or other securities issuable upon exercise of this Warrant pursuant
to this section 3, the Purchase Price shall thereafter be the number obtained
by dividing (a) the product of the number of Shares issuable on full exercise
of this Warrant immediately prior
to such adjustment by the Purchase Price in effect immediately prior to such
adjustment by (b) the number of Shares or other securities issuable upon full
exercise of this Warrant after such adjustment.
16.4 Rounding. All calculations under this section 3 shall be made
--------
to the nearest cent or to the nearest one-hundredth of a Share, as the case
may be, but in no event shall the Corporation be obligated to issue any
fractional share on any exercise of this Warrant.
17. Expiration Date. This Warrant shall expire and shall be of no further
---------------
force or effect at the earlier of the following times (the "Expiration Date")
(a) the time when the Warrant has been exercised with respect to all Shares
which the Holder is or may be entitled to purchase hereunder, (b) 5:00 p.m.,
California time, on the fifth anniversary of the date of this Warrant, or (d)
a Buy-Out Event. A "Buy-Out Event" shall occur if a purchaser acquires more
than 66-2/3% of the fully diluted Common Stock of the Corporation, whether
through stock purchase, merger or otherwise.
18. Further Assurances. The Corporation will not, by amendment of its
------------------
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issuance or sale of
securities or any other voluntary action, avoid or seek to avoid, directly or
indirectly, the performance of any of the terms of this Warrant, but will at all
times in good faith take all necessary action to carry out all such terms.
Without limiting the generality of the foregoing, the Corporation (a) will not
create any par value, or increase the par value, of any shares of stock
receivable on exercise of this Warrant above the amount payable therefor on such
exercise, (b) will take all such action as may be necessary or appropriate so
that the Corporation may validly and legally issue fully paid and nonassessable
shares of stock on the exercise of this Warrant, and (c) will not transfer all
or substantially all of its assets to any person, or consolidate with or merge
into any person or permit any person to consolidate with or merge into the
Corporation (if the Corporation is not the surviving person), unless such person
shall be bound by all of the terms of this Warrant. This Warrant shall be
binding on the successors and assigns of the Corporation.
19. Notices of Record Dates, Etc.
----------------------------
(a) If the Corporation shall fix a record date of the holders of
Common Stock (or other stock or securities at the time deliverable on
exercise of this Warrant) for the purpose of entitling or enabling them
to receive any dividend (other than a stock dividend) or other
distribution, or to receive any right to subscribe for or purchase any
shares of any class of any other securities, or to receive any other
right,
(b) in the event of any reorganization or recapitalization of the
Corporation, any Buy-Out Event, any reclassification of the capital stock
of the Corporation, any consolidation or merger of the Corporation with
or into another corporation or any transfer of all or substantially all
of the assets of the Corporation to another entity,
(c) in the event of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation or
(d) if the Corporation has filed a registration statement under the
Securities Act of 1933, as amended, with the Securities and Exchange
Commission for an offering of the Corporation's capital stock,
then, in any such event, the Corporation will mail or cause to be mailed to the
Holder a notice specifying, as the case may be, (i) the date on which a record
is to be taken for the purpose of such dividend, distribution or right and
stating the amount and character of such dividend, distribution or right, (ii)
the date on which a record is to be taken for the purpose of voting on or
approving such reorganization, recapitalization, Buy-Out Event,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding up and the date on which such event is to take place and the time, if
any is to be fixed, as of which the holders of record of Common Stock (or such
other stock or securities at the time deliverable on exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities) for securities or other property deliverable on such
reorganization, recapitalization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding up or (iii) the date on which
the Corporation's registration statement was filed and the class of securities
proposed to be registered. Such notice shall be mailed at least twenty-one
days prior to the record date therein specified or within twenty-one days after
filing the registration statement, as the case may be.
20. Replacement of Warrant. On receipt of evidence reasonably
----------------------
satisfactory to the Corporation of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction, on
delivery of a bond or other indemnity reasonably satisfactory to the
Corporation, or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Corporation covenants that it will issue a new
Warrant, of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant.
21. Covenant to Reserve Common Stock. The Corporation shall at all times
--------------------------------
reserve and keep available out of its authorized but unissued Common Stock the
full number of shares of Common Stock deliverable upon exercise of this Warrant
and shall, at its own expense, take all such actions and attain all such permits
and orders as may be necessary to enable the Corporation lawfully to issue such
Common Stock upon exercise of this Warrant.
22. Issuance Taxes. On exercise of this Warrant, the Corporation shall
--------------
pay any and all issuance taxes that may be payable in respect of any issuance or
delivery of shares of Common Stock on such exercise. The Corporation shall
not, however, be required to pay, and the Holder shall pay, any tax that may
be payable in respect of any transfer involved in the issuance and delivery of
shares of Common Stock in a name other than that of the Holder, and no such
issuance or delivery shall be made unless and until the person requesting such
issuance has paid to the Corporation the amount of any such tax, where it is
established to the satisfaction of the Corporation, that such tax has been
paid.
23. Ownership of Warrant. Until this Warrant is transferred on the books
--------------------
of the Corporation, the Corporation may treat the person in whose name this
Warrant is registered on the books of the Corporation as the absolute owner
hereof for all purposes, notwithstanding any notice to the contrary.
24. Survival of Covenants, Representations and Warranties. All
-----------------------------------------------------
agreements, covenants, representations and warranties herein shall survive the
execution and delivery of this Warrant and any investigation at any time made on
behalf of any party and the exercise, sale and purchase of this Warrant and the
Common Stock issuable on exercise hereof.
25. Voting Rights. This Warrant shall not entitle the Holder, as such, to
-------------
any voting rights or other rights as a stockholder of the Corporation or to any
other rights except the rights stated herein.
26. Entire Agreement. This Warrant, and the Note Purchase Agreement
----------------
between the Corporation and the Holder relating to this Warrant (the "Note
Purchase Agreement"), together contain the entire agreement of the parties and
supersede all prior or contemporaneous written or oral negotiations,
correspondence, understandings and agreements between the parties, regarding the
subject matter hereof.
27. Successors and Assigns. Except as otherwise provided herein, this
----------------------
Warrant shall bind and inure to the benefit of the Holder and the Corporation
and their respective successors and assigns.
28. Notices. All demands, notices and other communications to be given
-------
hereunder shall be in writing and shall be deemed duly given and received when
transmitted by facsimile transmission with receipt acknowledged by the
addressee, when delivered personally or three days after being mailed by first
class mail, postage prepaid, properly addressed, if to the Corporation, at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇ or,
if to the Holder, at the Holder's address contained in the Note Purchase
Agreement between the Holder and the Corporation or at any other address or
facsimile number designated by notice by either party to the other party.
29. Amendments; Waivers; Termination; Governing Law, Headings. This
---------------------------------------------------------
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. This Warrant shall
be governed by and construed and interpreted in accordance with the laws of
the State of California. The headings in this Warrant are for convenience of
reference only and shall not affect the construction or interpretation of any
provision hereof.
30. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
----------------------------------
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday, Sunday or legal holiday.
31. Assignability. This Warrant may not be assigned or transferred other
-------------
than as provided in the Note Purchase Agreement.
32. Adjustment of Purchase Price. In the event the Corporation at any
----------------------------
time or from time to time on or prior to the Expiration Date shall issue
Additional Shares (as defined herein) for a consideration per share less than
$2.15, then the Purchase Price shall be reduced to equal the consideration per
share received by the Corporation for such Additional Shares. No adjustment of
the number of Shares issuable upon exercise of this Warrant shall result from
any adjustment in the Purchase Price pursuant to this Section 19. For purposes
of this Section 19, "Additional Shares" shall mean shares of Common Stock, or
equity securities of the Corporation convertible into shares of Common Stock,
issued by the Corporation from time to time after the date hereof to one or more
investors. Notwithstanding the foregoing, Additional Shares shall not include
the first 100,000 shares in the aggregate (calculated without including any of
the securities described in Clauses (a), (b), (c) or (d) hereof) of Common
Stock, or equity securities of the Corporation convertible into shares of Common
Stock, issued by the Corporation after the date hereof and prior to January 1,
1996, and Additional Shares shall not include any securities issued or issuable
(a) to Ailicec in connection with the Purchase and Debt Restructuring Agreement
dated as of August 3, 1994 between the Corporation and Ailicec International
Enterprises Limited, (b) to officers, directors, employees or consultants of the
Corporation or issued or issuable pursuant to any employee stock purchase or
employee stock option plan of the Corporation approved by the Corporation's
Board of Directors, (c) pursuant to the Note Purchase Agreement or (d) upon
conversion of any Preferred Stock of the Corporation.
Dated as of ________________, 1994
[SEAL] JETFAX, INC.
By:_____________________________
▇▇▇▇ ▇▇▇▇▇▇
President
ENDORSEMENTS
------------
Number
Number of of Shares
Shares as Remaining
Exercise to which Available Signature of Authorized
Date Exercised for Exercise Officer of the Corporation
-------- --------- ------------ --------------------------
SUBSCRIPTION
(To be completed and signed only on
an exercise of the Warrant.)
To JetFax, Inc.:
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ____________ shares of the Common Stock of JetFax, Inc. of
those to which such Holder is entitled thereunder, and herewith makes payment of
$__________ therefor by certified or official bank check. The undersigned
hereby requests that the certificate(s) for such shares be issued in the name(s)
and delivered to the address(es) as follows:
___________________________
_________________________________________
_________________________________________
_________________________________________
Dated: ___________ ___________________________
__________________________, Holder
By ________________________
Its _______________________
SCHEDULE A
List of Purchasers
Name, Address and Principal Amount of
Facsimile Number Notes to be Purchased Closing Date
------------------ --------------------- ------------
Schedule A
----------
Purchasers
Principal Amount of
Name and Address Notes to be Purchased Closing Date
------------------------------ --------------------- ------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ $ 25,000 8/26/94
▇▇▇▇▇▇▇ Securities
▇▇▇▇ ▇▇▇. ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ $ 25,000 8/26/94
▇▇▇▇▇▇▇ Securities
▇▇▇▇ ▇▇▇. ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 25,000 8/26/94
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Family $ 25,000 8/26/94
1990 Revocable Trust
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. & ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ $ 20,000 8/26/94
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ Investors $ 30,000 8/26/94
Limited Partnership
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇ $150,000 8/26/94
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 25,000 8/26/94
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 25,000 1/20/95
▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Principal Amount of
Name and Address Notes to be Purchased Closing Date
-------------------------------- --------------------- ------------
▇▇▇▇▇▇▇▇▇▇ ▇▇-▇▇▇▇▇▇ $ 10,000 1/20/95
KME Management Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 16,912 1/20/95
▇▇▇▇▇▇ Associates
▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ $ 8,901 1/20/95
▇▇▇▇▇▇ Associates
▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Associates $117,553 1/20/95
▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 6,633 1/20/95
▇▇▇▇▇▇ Associates
▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 25,000 1/20/95
▇▇▇ ▇. ▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 50,000 1/20/95
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Shartsis, ▇▇▇▇▇▇ $ 20,000 1/20/95
& ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Principal Amount of
Name and Address Notes to be Purchased Closing Date
--------------------------------- --------------------- ------------
▇▇▇▇ Lego $ 50,000 1/20/95
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., #▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Rose and Haar $ 10,000 1/20/95
Certified Public Accountants
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Saratoga Springs Co., Ltd. $ 50,000 1/20/95
▇.▇. ▇▇▇ ▇▇▇
Georgetown, Grand Cayman
Cayman Islands,
British West Indies
"Trust Dated 10/12/82 for $150,000 1/20/95
the Benefit of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇'▇ grandchildren"
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Antaeus Enterprises, Inc. $100,000 1/20/95
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ $ 50,000 1/20/95
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ $ 25,000 1/20/95
Family Trust
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ $ 50,000 1/20/95
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PolyVentures II, $250,000 1/20/95
Limited Partnership
▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Principal Amount of
Name and Address Notes to be Purchased Closing Date
---------------------------- --------------------- ------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. $ 25,000 1/20/95
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 50,000 1/20/95
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇. ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ $ 50,000 1/20/95
c/o Merrill ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., #▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ $ 50,000 1/20/95
c/o Merrill ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., #▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 50,000 1/20/95
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 25,000 1/20/95
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇ $150,000 1/20/95
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PolyVentures II, $250,000 1/20/95
Limited Partnership
▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇ $200,000 10/10/95
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ $ 50,000 10/10/95
c/o Merrill ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., #▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Principal Amount of
Name and Address Notes to be Purchased Closing Date
--------------------------------- --------------------- ------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ $100,000 10/10/95
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 50,000 10/10/95
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 25,000 10/10/95
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. $ 25,000 10/10/95
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $ 20,000 10/10/95
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ $ 15,000 10/10/95
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Traslader SA $ 50,000 10/10/95
CP500
1920 Martigny, Switzerland
Granite Capital, LP $250,000 10/10/95
▇▇▇ ▇▇▇▇ ▇▇▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Family Trust $150,000 10/10/95
c/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Investment Mgmt., L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Family Trust $ 12,500 10/10/95
c/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Investment Mgmt., L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Principal Amount of
Name and Address Notes to be Purchased Closing Date
--------------------------------- --------------------- ------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ $12,500 10/10/95
c/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Investment Mgmt., L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ $50,000 10/10/95
c/o Merrill ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., #▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
_______________
TOTAL $2,999,999
FIRST AMENDMENT TO
NOTE PURCHASE AGREEMENT
THIS AMENDMENT is made as of December [__], 1994, by and among JetFax,
Inc., a Delaware corporation (the "Company"), and each of the persons listed on
Schedule A attached to the Note Purchase Agreement (as hereinafter defined).
The persons listed on such Schedule A are hereinafter referred to collectively
as the "Investors" and individually as an "Investor".
WHEREAS, the Company and the Investors are parties to a Note Purchase
Agreement dated as of August 3, 1994 (the "Note Purchase Agreement"); and
WHEREAS, the Company and the Investors desire to amend the Note Purchase
Agreement and the other Related Documents (as defined in the Note Purchase
Agreement) as set forth below pursuant to the provisions of Section 12.5 of the
Note Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and each Investor hereby agree as follows:
1. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Note Purchase Agreement.
2. The first sentence of Section 1 of the Note Purchase Agreement is
hereby amended by deleting the text thereof and substituting the following:
"The Company will authorize the issuance and sale of up to $3,000,000
aggregate principal amount of its 10% Senior Secured Convertible Notes (the
"NOTES", such term to include any such notes issued in substitution
therefor pursuant to section 12) due the later of December 31, 1995 or the
date that is one year from the date of issuance and sale (the "STATED
MATURITY DATE") to be substantially in the form of the Notes set out in
Exhibit A, with such changes therefrom, if any, as may be approved by you
---------
and the Company."
3. Section 4.9 of the Note Purchase Agreement is hereby amended by
deleting the text thereof and substituting the following:
"The Company shall have issued and delivered to you a Warrant in the
form set forth in Exhibit E (collectively, the "WARRANTS") for an amount
---------
of shares of Common Stock of the Company equal to (a) if such Closing
occurs on or before December 31, 1994, 60% of the principal amount of Notes
purchased by you divided by $2.15, or (b) if such Closing occurs after
December 31, 1994, 20% of the principal amount of Notes purchased by you
divided by $2.15."
4. Section 8.14 of the Note Purchase Agreement is hereby amended by
deleting the text thereof and substituting the following:
"If all amounts owed by the Company to you or your assigns under any
Note issued to you are not repaid by or upon the Stated Maturity Date of
such Note, the Company shall issue and deliver a Warrant to you, or your
permitted assigns, as the case may be, on the last day of each month
thereafter, for as long as any amount under each Note remains outstanding,
for an amount of shares of Common Stock of the Company equal to 2% of the
principal amount of that Note outstanding at that time divided by $2.15."
5. The first three sentences of Section 1 of Exhibit A to the Note
Purchase Agreement are hereby amended by deleting the text thereof and
substituting the following:
"Payments of interest only shall be due and payable in quarterly
installments as provided herein. Interest on the principal amount of this
Note remaining unpaid shall be due and payable on January 31, April 30,
July 31 and October 31 of each year during the term hereof. The entire
unpaid principal balance, together with all accrued but unpaid interest,
shall be due and payable on the date that is the later of (a) December 31,
1995 or (b) the date that is one year from the date hereof."
6. Exhibit E to the Note Purchase Agreement is hereby amended by adding
the following new Section 19:
-53-
"19. Adjustment of Purchase Price. In the event the Corporation at
----------------------------
any time or from time to time on or prior to the Expiration Date shall
issue Additional Shares (as defined herein) for a consideration per share
less than $2.15, then the Purchase Price shall be reduced to equal the
consideration per share received by the Corporation for such Additional
Shares. No adjustment of the number of Shares issuable upon exercise of
this Warrant shall result from any adjustment in the Purchase Price
pursuant to this Section 19. For purposes of this Section 19, "Additional
Shares" shall mean shares of Common Stock, or equity securities of the
Corporation convertible into shares of Common Stock, issued by the
Corporation from time to time after the date hereof to one or more
investors for gross consideration received by the Corporation that in the
aggregate exceeds $1,000,000. Notwithstanding the foregoing, Additional
Shares shall not include any securities issued or issuable (a) to Ailicec
in connection with the Purchase and Debt Restructuring Agreement dated as
of August 3, 1994 between the Corporation and Ailicec International
Enterprises Limited, (b) to officers, directors, employees or consultants
of the Corporation or issued or issuable pursuant to any employee stock
purchase or employee stock option plan of the Corporation approved by the
Corporation's Board of Directors, (c) pursuant to the Note Purchase
Agreement or (d) upon conversion of any Preferred Stock of the
Corporation."
7. All Notes and Warrants outstanding as of the date hereof are hereby
amended to be identical in form and substance with the terms set forth in this
Amendment. All such outstanding Notes and Warrants shall be deemed so amended
(including without limitation with respect to the amount of shares purchasable
under all such Warrants and the maturity date of all such Notes),
notwithstanding the failure of any Investor to deliver any Note or Warrant for
exchange as provided herein. Upon execution of this Amendment by the Company
and a Majority of the Investors, all Investors shall deliver to the Company all
Notes and Warrants issued to them in exchange for replacement Notes and Warrants
of like tenor with text consistent to the terms set forth in this Amendment.
8. The second and third sentences of the first paragraph of Exhibit C to
the Note Purchase Agreement are
-54-
hereby amended by deleting the text thereof and substituting the following:
"Pursuant to the Agreement, the Investors propose to make a bridge
loan in the aggregate principal amount of up to U.S. $3,000,000, which loan
shall (i) be evidenced by several notes issued to the Investors (the
"Notes"), (ii) mature in no less than twelve months and (iii) be secured by
a security interest in the Collateral (as defined below). Any such loans
in excess of U.S. $3,000,000 principal amount, in the aggregate, shall not
be covered by this Intercreditor Agreement."
9. The second and third sentences of the first paragraph of the
Intercreditor Agreement dated as of August 3, 1994 among the Company, Ailicec
International Enterprises Limited and the Investors are hereby amended by
deleting the text thereof and substituting the following:
"Pursuant to the Agreement, the Investors propose to make a bridge
loan in the aggregate principal amount of up to U.S. $3,000,000, which loan
shall (i) be evidenced by several notes issued to the Investors (the
"Notes"), (ii) mature in no less than twelve months and (iii) be secured by
a security interest in the Collateral (as defined below). Any such loans
in excess of U.S. $3,000,000 principal amount, in the aggregate, shall not
be covered by this Intercreditor Agreement."
10. The term "Agreement" as used in the Note Purchase Agreement, the other
Related Documents and all other instruments and agreements executed thereunder
shall for all purposes refer to the Note Purchase Agreement as amended by this
Amendment.
11. Except to the extent expressly amended by the terms of this Amendment,
all the terms and conditions of the Note Purchase Agreement, the other Related
Documents and all other instruments and agreements executed thereunder remain in
full force and effect.
12. This Amendment may be executed in any number of duplicate
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
-55-
IN WITNESS WHEREOF, the parties have duly signed this Amendment as of the
day and year first written above.
JETFAX, INC. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By: _____________________ __________________________
▇▇▇▇ ▇▇▇▇▇▇
President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
________________________ _________________________
▇▇▇▇▇▇ FAMILY 1990 REVOCABLE ▇▇▇▇ ▇. & ▇▇▇▇▇▇▇▇ ▇.▇▇▇▇
TRUST
By: ___________________ _________________________
Name:___________________ _________________________
Title: _________________
▇▇▇▇ INVESTORS LIMITED ▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇
PARTNERSHIP
By: ___________________ _________________________
Name: _________________ _________________________
Title: _________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
________________________ __________________________
-▇▇-
▇▇▇▇▇▇▇▇▇▇ ▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
_______________________ _________________________
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ASSOCIATES
________________________ By:______________________
Name:____________________
Title:___________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
_________________________ _________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ SHARTSIS, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇
_________________________ By:______________________
Name: ___________________
Title:___________________
▇▇▇▇ LEGO ROSE AND HAAR
________________________ By:______________________
Name:___________________
Title: __________________
-▇▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CO., LTD. TRUST DATED 10/12/82 FOR THE
BENEFIT OF ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇'▇ GRANDCHILDREN
By:_____________________ By:______________________
Name:___________________ Name: ___________________
Title:__________________ Title: _________________
ANTAEUS ENTERPRISES, INC.
By: ___________________
Name: __________________
Title: _________________
READ AND AGREED TO:
AILICEC INTERNATIONAL ENTERPRISES LIMITED
By: ___________________
Name: __________________
Title: _________________
-▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ TO
NOTE PURCHASE AGREEMENT
THIS AMENDMENT is made as of January 4, 1995, by and among JetFax, Inc., a
Delaware corporation (the "Company"), and each of the persons listed on Schedule
A attached to the Note Purchase Agreement (as hereinafter defined). The
persons listed on such Schedule A are hereinafter referred to collectively as
the "Investors" and individually as an "Investor".
WHEREAS, the Company and the Investors are parties to a Note Purchase
Agreement dated as of August 3, 1994, as amended by the First Amendment to Note
Purchase Agreement dated as of December 7, 1994 (the "Note Purchase Agreement");
and
WHEREAS, the Company and the Investors desire to amend the Note Purchase
Agreement and the Warrants (as defined in the Note Purchase Agreement) as set
forth below pursuant to the provisions of Section 12.5 of the Note Purchase
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and each Investor hereby agree as follows:
1. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Note Purchase Agreement.
2. Section 4.9 of the Note Purchase Agreement is hereby amended by
replacing the term "December 31, 1994" in clauses (a) and (b) thereof in both
instances where it appears with the term "January 20, 1995".
3. The third and fourth sentences of Section 19 of Exhibit E to the Note
Purchase Agreement are hereby amended by deleting the text thereof and
substituting the following:
"For purposes of this Section 19, "Additional Shares" shall mean shares of
Common Stock, or equity securities of the Corporation convertible into
shares of Common Stock, issued by the Corporation from time to time after
the date hereof to one or more investors. Notwithstanding the foregoing,
Additional Shares shall not include the first 100,000 shares in the
aggregate
(calculated without including any of the securities described in
Clauses (a), (b), (c) or (d) hereof) of Common Stock, or equity securities
of the Corporation convertible into shares of Common Stock, issued by the
Corporation after the date hereof and prior to January 1, 1996, and
Additional Shares shall not include any securities issued or issuable (a)
to Ailicec in connection with the Purchase and Debt Restructuring Agreement
dated as of August 3, 1994 between the Corporation and Ailicec
International Enterprises Limited, (b) to officers, directors, employees or
consultants of the Corporation or issued or issuable pursuant to any
employee stock purchase or employee stock option plan of the Corporation
approved by the Corporation's Board of Directors, (c) pursuant to the Note
Purchase Agreement or (d) upon conversion of any Preferred Stock of the
Corporation."
4. All Warrants outstanding as of the date hereof are hereby amended to be
identical in form and substance with the terms set forth in this Amendment. All
such outstanding Warrants shall be deemed so amended, notwithstanding the
failure of any Investor to deliver any Warrant for exchange as provided herein.
Upon execution of this Amendment by the Company and a Majority of the Investors,
all Investors shall deliver to the Company all Warrants issued to them in
exchange for replacement Warrants of like tenor with text consistent to the
terms set forth in this Amendment.
5. The term "Agreement" as used in the Note Purchase Agreement, the other
Related Documents and all other instruments and agreements executed thereunder
shall for all purposes refer to the Note Purchase Agreement as amended by this
Amendment.
6. Except to the extent expressly amended by the terms of this Amendment,
all the terms and conditions of the Note Purchase Agreement, the Warrants, the
other Related Documents and all other instruments and agreements executed
thereunder remain in full force and effect.
7. This Amendment may be executed in any number of duplicate counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly signed this
-60-
Amendment as of the day and year first written above.
JETFAX, INC. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By: ___________________ _________________________
▇▇▇▇ ▇▇▇▇▇▇
President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
________________________ ________________________
▇▇▇▇▇▇ FAMILY 1990 REVOCABLE ▇▇▇▇ ▇. & ▇▇▇▇▇▇▇▇ ▇.▇▇▇▇ TRUST
By: ___________________ ________________________
Name:___________________ ________________________
Title: _________________
▇▇▇▇ INVESTORS LIMITED ▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇
PARTNERSHIP
By: ___________________ _________________________
Name: _________________ _________________________
Title: _________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
________________________ ________________________
-▇▇-
▇▇▇▇▇▇▇▇▇▇ ▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
________________________ ________________________
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ASSOCIATES
________________________ By:______________________
Name:____________________
Title:___________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
_________________________ _______________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ SHARTSIS, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇
_________________________ Name: ___________________
Title:___________________
▇▇▇▇ LEGO ROSE AND HAAR
________________________ By:______________________
Name:___________________
Title: __________________
-▇▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CO., LTD. TRUST DATED 10/12/82 FOR THE
BENEFIT OF ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇'▇ GRANDCHILDREN
By:_____________________ By:______________________
Name:___________________ Name: ___________________
Title:__________________ Title: _________________
ANTAEUS ENTERPRISES, INC. ▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇▇▇▇
By: _______________________ _________________________
Name: ______________________ _________________________
Title: _____________________
▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ FAMILY
TRUST
By: ______________________
Name: ______________________
Title: _____________________
-▇▇-
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ TO
NOTE PURCHASE AGREEMENT
THIS AMENDMENT is made as of January 13, 1995, by and among JetFax, Inc., a
Delaware corporation (the "Company"), and each of the persons listed on Schedule
A attached to the Note Purchase Agreement (as hereinafter defined). The
persons listed on such Schedule A are hereinafter referred to collectively as
the "Investors" and individually as an "Investor".
WHEREAS, the Company and the Investors are parties to a Note Purchase
Agreement dated as of August 3, 1994, as amended by the First Amendment to Note
Purchase Agreement dated as of December 7, 1994 and the Second Amendment to Note
Purchase Agreement dated as of January 4, 1995 (the "Note Purchase Agreement");
and
WHEREAS, the Company and the Investors desire to amend the Note Purchase
Agreement as set forth below pursuant to the provisions of Section 12.5 of the
Note Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and each Investor hereby agree as follows:
1. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Note Purchase Agreement.
2. Section 4.9 of the Note Purchase Agreement is hereby amended by adding
the following text at the end of clause (b) of such Section 4.9:
"; provided, however, that notwithstanding anything to the contrary
contained herein, if any Person purchasing Notes hereunder at a Closing
occurring on or before January 20, 1995 executes this Agreement and pays
the purchase price for at least 50% of the Notes such Person is agreeing to
purchase (as indicated on Schedule A hereto) on or before such Closing and
----------
pays the balance for such Notes on or before February 2, 1995, then the
Company shall issue and deliver to such Person, upon the payment of such
balance, Warrants for an amount of shares of Common Stock of the Company
equal to 60% of the principal amount of all of the
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Notes purchased by such Person divided by $2.15."
3. The term "Agreement" as used in the Note Purchase Agreement, the other
Related Documents and all other instruments and agreements executed thereunder
shall for all purposes refer to the Note Purchase Agreement as amended by this
Amendment.
4. Except to the extent expressly amended by the terms of this Amendment,
all the terms and conditions of the Note Purchase Agreement, the Warrants, the
other Related Documents and all other instruments and agreements executed
thereunder remain in full force and effect.
5. This Amendment may be executed in any number of duplicate counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have duly signed this Amendment as of the
day and year first written above.
JETFAX, INC. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------- -----------------------
▇▇▇▇ ▇▇▇▇▇▇
President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------ ----------------
▇▇▇▇▇▇ FAMILY 1990 REVOCABLE ▇▇▇▇ ▇. & ▇▇▇▇▇▇▇▇ ▇.▇▇▇▇
TRUST
By: /s/Jan ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/▇▇▇▇ ▇. ▇▇▇▇
---------------------- -------------------------
Name: ▇▇▇▇▇▇ Family 1990 Revocable /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------- -------------------------
Trust
-----
Title: Trustees
--------
▇▇▇▇ INVESTORS LIMITED ▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇
PARTNERSHIP
By: ___________________ _________________________
Name: _________________ _________________________
Title: _________________
-▇▇-
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
________________________ ________________________
▇▇▇▇▇▇▇▇▇▇ ▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
________________________ ________________________
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ASSOCIATES
________________________ By:______________________
Name:____________________
Title:___________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
_________________________ _______________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ SHARTSIS, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
_________________________ Name: ___________________
Title:___________________
▇▇▇▇ LEGO ROSE AND HAAR
________________________ By:______________________
Name:___________________
Title: __________________
-▇▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CO., LTD. TRUST DATED 10/12/82 FOR THE
BENEFIT OF ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇'▇ GRANDCHILDREN
By:_____________________ By:______________________
Name:___________________ Name: ___________________
Title:__________________ Title: _________________
ANTAEUS ENTERPRISES, INC. ▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇▇▇▇
By: _______________________ _________________________
Name: ______________________ _________________________
Title: _____________________
▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ FAMILY
TRUST
By: ______________________
Name: ______________________
Title: _____________________
