AGREEMENT
This Agreement is entered into by and between Xerox Corporation,
a corporation organized under the laws of the State of New York
("Xerox") and Accent Color Sciences, a corporation organized
under the laws of the State of Connecticut ("ACS") and amends
certain agreements between the parties as more specifically
described herein. This Agreement shall be effective on the date
the last signature is affixed hereto ("Effective Date").
WHEREAS, the parties have certain rights and obligations under
certain agreements currently in force between them; and
WHEREAS, Xerox has notified ACS that Xerox does not wish to
distribute the cut-sheet version of the ACS 135 printer as an OEM
product; and
WHEREAS, the parties are interested in engaging in a Finishing
Partner relationship; and
WHEREAS, the parties desire to amicably resolve the situation;
NOW, THEREFORE, in consideration of the mutual promises and
undertakings hereinafter set forth, the parties agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following terms have the following
meanings:
1.1 "Development Agreement" shall mean that certain agreement
between the parties styled a Product Development and Distribution
Agreement which was effective February 16, 1996.
1.2 "Financial Institution" shall mean a bank, trust company,
national banking association, savings bank, industrial bank,
private banker, foreign banking corporation, federal savings and
loan association, a savings institution chartered and supervised
as a savings and loan or similar institution under federal law or
the laws of a state, a federal credit union, or a credit union
chartered and supervised under the laws of a state.
1.3 "Loan Agreement" shall mean that certain agreement between
the parties styled a "Loan Agreement and Promissory Note" dated
February 29, 1996.
1.4 "Registration Rights Agreement" shall mean that certain
agreement between the parties styled a "Registration Rights
Agreement" dated February 29, 1996.
1.5 "Security Agreement" shall mean certain agreement between the
parties styled a "Security Agreement" effective February 29,
1996.
1.6 "Warrant Agreements" shall mean those certain agreements
between the parties each styled a Warrant to Purchase the Common
Stock of Accent Color Sciences, one effective February 29, 1996
and the other effective April 19, 1996.
SECTION 2. DEVELOPMENT AGREEMENT TERMINATED
2.1 The Development Agreement is terminated as of the Effective
Date and neither party shall hereafter have any rights or
obligations arising therefrom or with respect thereto.
2.2 Xerox will consider an application from ACS to become a Xerox
Finishing Partner on and subject to Xerox's customary terms and
conditions.
SECTION 3. EXERCISE OF WARRANTS/ISSUANCE OF ADDITIONAL SHARES
3.1 Xerox hereby exercises its right to purchase shares of ACS
common stock as set forth in each of the Warrant Agreements and
with respect to all 375,000 shares of ACS common stock subject
thereto (the "Warrant Shares"). Xerox and ACS hereby acknowledge
and agree that the exercise price for the purchase of the Warrant
Shares, in the aggregate amount of $1,375,000 (the "Warrant
Shares Purchase Price"), under the Warrant Agreements shall be
paid by reducing ACS indebtedness to Xerox under the Loan
Agreement as of the Effective Date. The Warrant Shares Purchase
Price shall be applied to reduce the indebtedness under the Loan
Agreement in the manner set forth in Section 5 of the Loan
Agreement. ACS hereby acknowledges the application of such
purchase price in reduction of its indebtedness under the Loan
Agreement as full payment for the Warrant Shares pursuant to the
Warrant Agreements and agrees to promptly cause a certificate
evidencing such 375,000 shares of its common stock to be issued
and delivered to Xerox.
3.2 Upon the Effective Date and in partial consideration of the
agreements of Xerox set forth herein, ACS will issue to Xerox
50,000 shares of its common stock, no par value (the "New Common
Shares". Xerox represents that it is acquiring these shares for
investment and without a view to the distribution thereof (other
than in connection with a registration thereof under the
Registration Rights Agreement) and acknowledges that the
certificate representing such shares will bear a legend
restricting the transfer of such shares in accordance with
applicable securities laws. The New Common Shares shall be
deemed to be "Registrable Securities" as defined in the
Registration Rights Agreement and entitled to all the benefits
applicable to "Shares" under and as defined in the Registration
Rights Agreement.
3.3 ACS hereby represents and warrants that when issued each of
the Warrant Shares and the New Common Shares will be duly
authorized, validly issued, fully paid and nonassessable.
3.4 Xerox hereby exercises its right under Section 2.2 of the
Registration Rights Agreement to require ACS to effect the
registration of the Warrant Shares and the New Common Shares
(collectively the 425,000 shares making up the Warrant Shares and
the New Common Shares may be hereinafter referred to as the
"Registrable Shares") for public sale pursuant to a registration
statement to be filed with the Securities and Exchange Commission
in accordance with the Registration Rights Agreement. Xerox
agrees that, without intending to modify any other rights or
obligations under the Registration Rights Agreement, ACS shall be
deemed in compliance with the Registration Rights Agreement if it
shall file a registration statement within 90 days following the
Effective Date or December 31, 1997, whichever is later. ACS
hereby acknowledges Xerox's right to demand registration of the
Registrable Shares and receipt of the demand for such
registration. ACS agrees to use its best efforts to file the
registration statement within the time frame set forth above and
will provide to Xerox a draft of such registration statement on
or before December 1, 1997. ACS hereby waives any rights it may
have to delay the filing of a registration statement as set forth
in Section 2.2(c) of the Registration Rights Agreement.
SECTION 4. AMENDMENT TO LOAN AGREEMENT
4.1 The Loan Agreement is amended to the extent that after giving
effect to the repayment of principal to Xerox under the Loan
Agreement as set forth in paragraph 3.1 above, commencing on the
first day of the first full month after the Effective Date to and
including December 1, 1997, ACS shall in equal consecutive
monthly installment payments pay the remaining principal and
accrued interest under the Loan Agreement.
4.2 In all other respects the Loan Agreement remains in full
force and effect.
4.3 Except as otherwise disclosed by ACS to Xerox in writing,
each of the representations and warranties contained in Section
11 of the Loan Agreement and in Section 3 of the Security
Agreement will be true and correct in all material respects on
the Effective Date as though such representations and warranties
were made on and as of the Effective Date.
SECTION 5. AMENDMENT TO SECURITY AGREEMENT
5.1 The Security Agreement is amended to the extent that the
first priority security interest in the Collateral (as such term
is defined in the Security Agreement) granted by ACS to Xerox
pursuant to section 2.1 (a) of the Security Agreement (the "Xerox
Security Interest") is hereby subordinated to any other security
interest in the Collateral granted by ACS to a Financial
Institution for the purpose of securing financing extended to ACS
by such Financial Institution (s) for the purpose of the
continuation or expansion of ACS' business (the "Financial
Institution Security Interest"), provided, however, in the event
that there is an Event of Default (as defined in either the Loan
Agreement or the Security Agreement) then the Xerox Security
Interest will not be subordinated to any Financial Institution
Security Interest granted after the date such Event of Default
occurs and during the period of time such Event of Default is
continuing and provided further, that, if, prior to such Event of
Default occurring, ACS has not granted a Financial Institution
Security Interest, the Xerox Security Interest shall remain a
first priority security interest.
5.2 Xerox waives its rights under section 2.1 (b) of the Security
Agreement insofar as it is necessary for paragraph 5.1 above to
be implemented.
5.3 Except as provided above, the terms of the Security Agreement
remain in full force and effect.
SECTION 6. RELEASE FROM LIABILITY
6.1 Except for the obligations of Xerox hereunder, ACS, on behalf
of itself and all of its affiliated companies, and their
respective shareholders, officers, directors, employees, agents,
successors and assigns, hereby releases, acquits, remises and
forever discharges Xerox and all of Xerox' affiliated companies,
and their respective shareholders, officers, directors,
employees, agents, heirs, successors, and assigns, from all
claims, damages, liabilities, equities, costs, attorney fees,
causes of action of any kind, suits, debts, dues, sums of money,
accounts, bonds, bills, covenants, contracts, controversies,
agreements, promises, judgments, executions, and demands
whatsoever, whether known or unknown, in law, admiralty, or
equity, which they ever had, now have or may have, from the
beginning of the world to the Effective Date, which arise from or
relate to the Development Agreement.
6.2 Except for the obligations of ACS hereunder and under the
Loan Agreement. the Registration Rights Agreement and the
Security Agreement, as amended by this Agreement, Xerox, on
behalf of itself and all of its affiliated companies, and their
respective shareholders, officers, directors, employees, agents,
successors and assigns, hereby releases, acquits, remises and
forever discharges ACS and all of ACS' affiliated companies, and
their respective shareholders, officers, directors, employees,
agents, heirs, successors, and assigns, from all claims, damages,
liabilities, equities, costs, attorney fees, causes of action of
any kind, suits, debts, dues, sums of money, accounts, bonds,
bills, covenants, contracts, controversies, agreements, promises,
judgments, executions, and demands whatsoever, whether known or
unknown, in law, admiralty, or equity, which they ever had, now
have or may have, from the beginning of the world to the
Effective Date, which arise from or relate to the Development
Agreement.
6.3 The parties agree that, except as may be necessary for
compliance with law or as may be necessary to be disclosed to
their respective attorney or accountants in order for such
persons to discharge their professional responsibilities, the
terms of this Agreement may not be made public without the prior
written consent of the other party. It is the intent of the
parties, however, that ACS will issue a mutually acceptable
announcement in the form of a news release on the Effective Date.
SECTION 7. MISCELLANEOUS PROVISIONS
7.1 Remedies, Non-Waiver. No failure or delay by either party in
exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege. No right or remedy in this Agreement is
intended to be exclusive but each shall be cumulative and in
addition to any other remedy referred to herein or otherwise
available to the parties at law or in equity; and the exercise by
Lender of any one or more of such remedies shall not preclude the
simultaneous or later exercised by the parties of any or all such
other remedies.
7.2 Notices. All notices, requests and demands to or upon any
party hereto shall be deemed duly given or made when hand
delivered or sent by United States Registered mail, postage
prepaid, receipt requested, addressed to such party at its
address set forth below:
If to Xerox:
Xerox Corporation
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Director, Corporate Business Development
with a copy to:
Xerox Corporation
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Attention: Senior Vice President and General Counsel
If to ACS:
Accent Color Sciences, Inc.
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Attention: Chief Financial Officer
7.3 Amendment, Modification. This Agreement may be amended or
modified only by a written agreement of the parties hereto
specifically referring to this Agreement.
7.4 Binding Provision. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective
successors and assigns.
7.5 Titles. Heading of sections are for convenience only, are
not part of this Agreement and shall not be deemed to affect the
meaning or construction of any of the provisions hereof.
7.6 Severable Provisions. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability shall not invalidate or rendered unenforceable
such provision in any other jurisdiction.
7.7 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York
without reference to the choice of law principles thereof.
IN WITNESS WHEREOF, the parties have duly executed and
delivered this Agreement as of the date the last signature is
affixed hereto.
ACCENT COLOR SCIENCES, INC. XEROX CORPORATION
By:__________________________
By:__________________________________________
Title:President and CEO Title:VP,GM High End Systems
Printing, XEROX
Date: September 22, 1997 Date: September 22, 1997