EXHIBIT 10.20
EXECUTION COPY
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LOAN AND PLEDGE AGREEMENT
between
RASTER GRAPHICS, INC.
(the "Borrower")
and
GRETAG IMAGING GROUP, INC.
(the "Lender")
Dated as of October 6, 1998
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS.............................................. 1
1.1. Defined Terms............................................ 1
SECTION 2. AMOUNT AND TERMS OF LOAN; CLOSING........................ 4
2.1. Loan..................................................... 4
2.2. Closing.................................................. 4
SECTION 3. PAYMENT OF LOAN; INTEREST;TRANSFER....................... 6
3.1. Repayment of the Loans................................... 6
3.2. Interest................................................. 6
3.3. Terms of Payment......................................... 6
3.4. Computation of Interest and Fees......................... 7
3.5. Indemnity................................................ 7
3.6. Optional Prepayment...................................... 7
3.7. Termination of Committed Amount.......................... 7
SECTION 4. PLEDGE OF COLLATERAL..................................... 7
4.1. Pledge of Collateral..................................... 7
4.2. Delivery of Collateral................................... 8
4.3. Further Assurances....................................... 8
4.4. Voting Rights; Dividends, etc............................ 8
4.5. Covenants of the Borrower................................ 8
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE
BORROWER............................................... 9
5.1. Corporate Status and Licensing........................... 9
5.2. Corporate Power and Authority; Enforceable Obligations... 9
5.3. Compliance with Law and Other Instruments................ 9
5.4. Litigation............................................... 10
5.5. Consents................................................. 10
5.6. Financial Information.................................... 10
5.7. Taxes, Assessments and Fees.............................. 10
5.8. Capitalization........................................... 10
5.9. Accuracy of Information.................................. 11
5.10. Absence of Default....................................... 11
5.11. Obligations Pari Passu................................... 11
5.12. Withholding Tax.......................................... 11
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5.13. Title to Properties...................................... 11
5.14. Material Adverse Change.................................. 11
5.15. Title to Collateral; First Priority Lien................. 11
5.16. Authorized Stock......................................... 11
SECTION 6. CONDITIONS PRECEDENT..................................... 12
6.1. Borrower Approval........................................ 12
6.2. Documentation............................................ 12
6.3. Changes, Etc............................................. 12
6.4. Corporate Proceedings of the Borrower.................... 12
6.5. Borrower Incumbency Certificate.......................... 13
6.6. Representations and Warranties........................... 13
6.7. Performance; No Default.................................. 13
6.8. Governmental Approvals................................... 13
6.9. Legal Opinions........................................... 13
6.10. Compliance Certificate................................... 13
6.11. Security Arrangements.................................... 13
6.12. Option Agreement......................................... 13
6.13. Additional Matters....................................... 13
SECTION 7. COVENANTS................................................ 14
7.1. Senior Obligations....................................... 14
7.2. Limitation of Liens...................................... 14
7.3. Use of Proceeds.......................................... 14
7.4. Constitutive Documents; Preservation of Existence, Etc.;
Conduct of Business...................................... 14
7.5. Compliance with Applicable Law........................... 15
7.6. Notices.................................................. 15
7.7. Further Assurances....................................... 15
7.8. Sale; Merger............................................. 15
7.9. Appointment as Attorney-in-Fact.......................... 15
7.10. Maintenance of Shares.................................... 16
SECTION 8. EVENTS OF DEFAULT........................................ 16
8.1. Events of Default........................................ 16
8.2. Remedies on Default, Etc................................. 17
8.3. Exercise of Remedies..................................... 19
SECTION 9. TAXES.................................................... 19
9.1. Excluded Taxes........................................... 19
9.2. Additional Amounts; Indemnified Taxes.................... 19
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9.3. Other Taxes.............................................. 20
SECTION 10. STOCK OPTION............................................. 20
10.1. Grant of Stock Option.................................... 20
10.2. Exercise of Stock Option................................. 21
10.3. Stock Option Closing..................................... 21
SECTION 11. MISCELLANEOUS........................................... 22
11.1. Amendments and Waivers.................................. 22
11.2. Notices................................................. 22
11.3. No Waiver; Cumulative Remedies.......................... 23
11.4. Survival of Representations and Warranties.............. 23
11.5. Payment of Expenses and Taxes........................... 23
11.6. Successors and Assigns; Assignments..................... 24
11.7. Severability............................................ 24
11.8. Integration............................................. 24
11.9. CONSENT TO JURISDICTION................................. 24
11.10. Right to Set-Off........................................ 24
11.11. Payments................................................ 25
11.12. No Partnership; Etc..................................... 25
11.13. Enforcement of Agreement................................ 25
11.14. GOVERNING LAW........................................... 25
11.15. WAIVERS OF JURY TRIAL................................... 26
11.16. Counterparts............................................ 26
EXHIBIT A Form of Promissory Note
EXHIBIT B Initial Note
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LOAN AND PLEDGE AGREEMENT
October 6, 1998
Gretag Imaging Group, Inc.
c/o Gretag Imaging, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Dear Sirs:
Raster Graphics, Inc. (the "Borrower"), a Delaware corporation, agrees
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with Gretag Imaging Group, Inc. (together with its successors and permitted
assigns, the "Lender"), a company organized under the laws of Delaware, as
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follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
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have the following meanings:
"Agreement": this Loan and Pledge Agreement, as amended, supplemented or
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otherwise modified from time to time.
"Applicable Law": as to any Person, the Certificate of Incorporation and
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By-Laws or other constituent documents, organizational, or governing documents
of such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding such Person or any of its property or to which such Person or any
of its property is subject.
"Borrower": as defined in the preamble hereto.
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"Borrower Common Stock": as defined in subsection 10.1(a).
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"Borrower Obligations": the collective reference to the unpaid principal
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of and interest on the Loans and all other obligations and liabilities of the
Borrower to the Lender, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise out of,
or in connection with, the Loan Agreement, and which shall include the unpaid
principal of and any accrued interest on
the Initial Note and all such obligations and liabilities of the Borrower
arising out of the Initial Note.
"Business Day": a day other than a Saturday, Sunday or other day on which
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commercial banks in New York, New York, or Zurich, Switzerland, are authorized
or required by law to close.
"Closing Amount": as defined in subsection 2.2(a).
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"Closing Date": as defined in subsection 2.2(a).
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"Closing Notice": as defined in subsection 2.2(a).
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"Collateral": as defined in subsection 4.1.
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"Committed Amount": U.S. Dollars 5,000,000.
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"Default": any of the events specified in section 8, whether or not any
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requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"Event of Default": any of the events specified in section 8, provided
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that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Excluded Taxes": as defined in subsection 9.1.
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"Financial Statements": as defined in subsection 5.6.
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"Governmental Authority": any nation or governmental entity, any state or
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other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Indemnified Liabilities": as defined in subsection 11.5.
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"Indemnified Taxes": as defined in subsection 9.2(d).
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"Initial Note": as defined in subsection 2.2(c).
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"Inkjet Option": as defined in the Option Agreement.
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"Lender": as defined in the preamble hereto.
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"Lien": as to any Person as at any date, any mortgage, lien, pledge,
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adverse claim, charge, security interest or other encumbrance existing on such
date in or on, or any interest or title existing on such date of any vendor,
lessor, lender or other secured party to or of, such Person under any
conditional sale or other title retention agreement or capital lease with
respect to, any property or asset of such Person, or the signing or filing of
any financing statement which names such Person as debtor, or the signing of any
then effective security agreement authorizing any other party as the secured
party thereunder to file any financing statement.
"Loan": any loan made by the Lender to the Borrower hereunder on a
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Closing Date.
"Merger": as defined in the Merger Agreement.
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"Merger Agreement": as defined in subsection 3.1.
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"Option Agreement": as defined in subsection 4.5.
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"O-Sub": as defined in subsection 4.1.
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"O-Sub Shares": as defined in subsection 4.1.
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"Other Taxes": as defined in subsection 9.3.
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"Outstanding Note Obligations": as defined in subsection 10.1(d).
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"Pending Reports": as defined in the Merger Agreement.
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"Person": any individual, Borrower, corporation, firm, partnership, joint
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venture, limited liability company, association, organization, state or agency
of a state or other entity, whether or not having a separate legal personality.
"Promissory Note": as defined in subsection 2.2(b).
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"Settlement": as defined in the Merger Agreement.
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"Settlement Deposit": as defined in subsection 2.2(a).
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"Stock Option": as defined in subsection 10.1(a).
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"Stock Option Closing": as defined in subsection 10.3(a).
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"Stock Option Closing Date": as defined in subsection 10.3(a).
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"Stock Option Consideration": as defined in subsection 10.1(b).
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"Stock Option Notice Date": as defined in subsection 10.2.
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"Stock Option Shares": as defined in subsection 10.1(a).
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"Subsidiary": at any particular time, any Person whose affairs and
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policies the Borrower controls or has the power to control, whether by ownership
of share capital, contract, the power to appoint or remove members of the
governing body of that Person or otherwise, except that the Company's French
subsidiary shall be excluded from this definition.
"Subsidiary Stock Option": as defined in the Option Agreement.
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"SVB Facility": as defined in subsection 2.2(a).
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"Total Obligations": as defined in subsection 2.2(a).
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"U.S. Dollars": the freely transferable lawful currency of the United
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States.
SECTION 2. AMOUNT AND TERMS OF LOAN; CLOSING
2.1 Loan. The Borrower shall borrow from the Lender and, subject to the
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terms and conditions hereof, the Lender shall lend to the Borrower, an amount up
to the sum of the Committed Amount; provided that immediately following the loan
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of any Closing Amount on the related Closing Date, the sum of the aggregate
amount of all Closing Amounts and any outstanding accrued interest thereon shall
not exceed the Committed Amount.
2.2 Closing. (a) On each of the dates (collectively referred to as the
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"Closing Dates") specified by the Borrower by irrevocable notice to the Lender
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(each, a "Closing Notice"), the Borrower shall borrow from the Lender the
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principal amount (each, a "Closing Amount") specified in the Closing Notice
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relating to such Closing Date, and the Lender shall lend the Closing Amount to
the Borrower; provided (i) the date of execution of this Agreement shall be a
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Closing Date on which the Borrower shall borrow from the Lender the principal
amount of $500,000; (ii) except as expressly provided in this Section 2.2(a),
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each of the Closing Amounts shall be in the amount of not more than $500,000;
(iii) the sum of the aggregate amount of all the Closing Amounts (including the
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principal amount of $500,000 loaned under the Initial Note) and any outstanding
accrued interest
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thereon as of any Closing Date (collectively, the "Total Obligations" from time
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to time), shall not exceed the Committed Amount, and the sum of the Total
Obligations and the aggregate principal amount and any accrued interest (the
"SVB Amount") outstanding under the Borrower's credit facility with Silicon
Valley Bank, or any refinancing or modification thereof, shall not exceed
$6,000,000; (iv) except as expressly provided in this Section 2.2(a), no Closing
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Date may occur less than 14 calendar days following the immediately preceding
Closing Date, if any; (v) except as expressly provided in this Section 2.2(a), a
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Closing Notice with respect to a Closing Date may not be delivered less than 5
Business Days prior to such Closing Date; (vi) no Closing shall occur following
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February 28, 1999; provided further if the Borrower is obligated to deposit
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$850,000 (the "Settlement Deposit") in escrow in connection with the execution
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and delivery of a memorandum of understanding relating to the Settlement
satisfactory in form and substance to Lender and its counsel, the Borrower may
specify a Closing Date in a Closing Notice not less than 5 Business Days
following such notice to borrow from the Lender, and the Lender shall, subject
to subsection 2.2(a)(iii) and (iv), lend to the Borrower, the Settlement Deposit
in accordance with subsection 7.3 hereof. Borrower shall give notice to Silicon
Valley Bank prior to each Closing Date of the Closing Amount and the Total
Obligations.
(b) Each Closing shall take place at the offices of Debevoise & Xxxxxxxx,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 11:00 a.m. (New York time) on the
Closing Date. At each Closing, the Borrower shall deliver to the Lender a
promissory note, in the form of Exhibit A hereto, with respect to the Closing
Amount (each delivered note, a "Promissory Note"). If on any Closing Date the
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Borrower shall fail to borrow from the Lender the amount specified in the
relevant Closing Notice as provided herein, or if at any Closing any of the
conditions to such Closing specified in Section 6 shall not have been fulfilled
to the satisfaction of the Lender, or waived by the Lender, the Lender shall, at
its election, be relieved of all further obligations to advance any funds
hereunder, without thereby waiving any other rights it may have by reason of
such failure or nonfulfillment.
(c) Upon the execution of this Agreement, that certain Promissory Note,
dated September 23, 1998, pursuant to which the Borrower borrowed $500,000 from
the Lender and which is attached as Exhibit B hereto (the "Initial Note"), shall
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be deemed for purposes of this Agreement to be a Loan made pursuant to this
Agreement and any reference to "Loan", "Promissory Note", "Closing Amount" or
"Borrower Obligations" shall be construed to include such Initial Note, the
amount advanced thereunder and/or the obligations of the Borrower thereunder, as
the context requires, and the amounts loaned pursuant to the Initial Note shall
be deemed to have been loaned under this Agreement as part of the Committed
Amount.
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SECTION 3. PAYMENT OF LOAN; INTEREST;
TRANSFER
3.1 Repayment of the Loans. The outstanding Loans and all accrued
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interest thereon shall be payable forthwith upon written demand from the Lender
to the Borrower, provided that, except upon the occurrence of an Event of
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Default, the Lender shall not make such demand unless and until either the
Merger Agreement, dated as of the date hereof, among Borrower, Gretag Imaging
Group, Inc. and Gretag Acquisition Corp. (the "Merger Agreement") shall have
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been terminated (for whatever reason) or the Merger shall have occurred.
3.2 Interest. (a) The Borrower shall pay interest to the Lender on the
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unpaid principal amount of each Closing Amount from the Closing Date with
respect to such Closing Amount until the full payment thereof, payable upon
written demand in accordance with Section 3.1, at an interest rate per annum
equal to 8.5% per annum.
(b) If all or a portion of (i) the principal amount of the Loan, (ii) any
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interest payable thereon or (iii) any other amount payable hereunder shall not
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be paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest from the date such amount is due until
such amount is paid in full, at an interest rate per annum equal to the lesser
of (a) 1.5 times the interest rate then payable to the Borrower in accordance
with Section 3.2(a) with respect to the amount so unpaid and (b) the maximum
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amount permitted by law.
3.3 Terms of Payment. (a) The Borrower shall cause to be paid all sums
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with respect to the Loan, whether on account of principal, interest, fees or
otherwise, to the account of the Lender specified in subsection 11.11 or as
otherwise specified in writing by the Lender from time to time.
(b) All payments to be made by the Borrower hereunder, whether on account
of principal, interest, fees or otherwise, shall be made in U.S. Dollars prior
to 11:00 A.M., New York time, on the due date thereof.
(c) The Borrower shall make all payments hereunder regardless of any right
of set-off, defense or counterclaim, including, without limitation, any defense
or coun terclaim based on (i) any law, rule or policy which is now or hereafter
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promulgated by any Governmental Authority and which may adversely affect the
Borrower's obligation to make, or the right of the Lender to receive, such
payments, and (ii) any other similar events impeding, preventing or delaying the
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parties hereto or any other Person from performing their respective obligations
hereunder or under any other contract or agreement.
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(d) Any amounts paid by or on behalf of the Borrower to the Lender under
this Agreement shall be applied as follows: first to the payment in full of all
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obligations then due under this Agreement other than those in respect of
principal of and interest on the Loans, second to the payment in full of accrued
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and unpaid interest on the Loans, and third to the payment of principal of the
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Loans in inverse order of the Closing Dates thereof.
3.4 Computation of Interest and Fees. (a) Interest shall be calculated
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on the basis of a 360-day year for the actual days elapsed.
(b) Each determination of an interest rate by the Lender pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower in
the absence of manifest error.
3.5 Indemnity. The Borrower agrees to indemnify the Lender and its
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successors and assigns and to hold the Lender and its successors and assigns
harmless from any loss or expense which the Lender or its successors and assigns
may sustain or incur as a con sequence of (a) failure of the Borrower to borrow
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the amount specified in the Closing Notice after the Borrower has delivered the
Closing Notice, or (b) any prepayment by the Borrower of principal of or
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interest on the Loan, or any fee or other amount due hereunder upon acceleration
after an Event of Default or pursuant to any other provision of this Loan
Agreement.
3.6 Optional Prepayment. The Borrower may prepay the Loan in whole or
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in part at any time, without penalty but with interest to the date of
prepayment.
3.7 Termination of Committed Amount. Upon any prepayment hereunder the
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Committed Amount shall be terminated forthwith.
SECTION 4. PLEDGE OF COLLATERAL
4.1 Pledge of Collateral. As security for the complete and punctual
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satisfaction by the Borrower of the Borrower Obligations, the Borrower hereby
pledges, assigns, hypothecates, transfers and delivers to the Lender all of the
outstanding shares of capital stock (the "O-Sub Shares") of Onyx Graphics
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Corporation ("O-Sub") and any proceeds therefrom and all other or additional
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stock or securities or property paid or distributed in respect of such shares by
way of (i) dividend or other distribution, (ii) stock split, spin off, split-up,
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reclassification, combination of shares or other corporate rearrangement and
(iii) any consolidation, merger, exchange of stock, conveyance of assets,
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liquidation or other corporate reorganization (together with the O-Sub Shares,
the "Collateral") and grants to the Lender a first lien on, and security
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interest in, the Collateral, provided, that if
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an Event of Default occurs, Lender exercises its remedies as set forth in
Section 8.2 and Lender becomes the owner of the O-Sub Shares, the account
receivable on O-Sub's balance sheet from Borrower shall be canceled up to an
aggregate amount of $1,500,000; provided, that in no event shall the net
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equity on O-Sub's balance sheet be less than $1,100,000.
4.2 Delivery of Collateral. All certificates or instruments
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representing or evidencing the Collateral shall be delivered to and held by the
Lender as secured party or its designee until such time as the Borrower
Obligations have been satisfied in full.
4.3 Further Assurances. The Borrower agrees that at any time, and from
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time to time, the Borrower will promptly execute and deliver all further
instruments and documents, and take all other action that may be necessary or
desirable or that the Lender may request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Lender to exercise its rights and remedies hereunder.
4.4 Voting Rights; Dividends, etc. (a) So long as no Event of Default
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shall have occurred and be continuing, the Borrower shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Collateral for any purpose not inconsistent with the terms of this Agreement or
any Promissory Note issued hereunder.
(b) So long as no Event of Default shall have occurred and be continuing,
the Borrower shall be entitled to receive and retain any and all cash dividends
paid in respect of the Collateral.
(c) Upon the occurrence and during the continuance of an Event of Default
(i) all rights of the Borrower to exercise the voting and other consensual
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rights and to receive and retain dividends which it would otherwise be entitled
to receive and retain pursuant to Section 4.4(a) and (b), respectively, shall
cease, and all such rights shall thereupon become vested in the Lender who shall
thereupon have the sole right to exercise such voting and other consensual
rights and to receive and retain dividends and interest paid in respect of the
Collateral, and (ii) all dividends which are received by the Borrower contrary
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to the provisions of the preceding clause (i) shall be received in trust for the
benefit of the Lender and shall be segregated from other funds of the Borrower
and forthwith paid over to the Lender as Collateral in the same form as so
received (with any necessary endorsement).
4.5 Covenants of the Borrower. Until the Borrower Obligations have been
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satisfied in full, the Borrower will not sell, assign, transfer, convey, or
otherwise dispose of, or grant any option with respect to, the Collateral or
create or permit to exist any Lien upon or with respect to the Collateral except
to the Lender, its affiliates or any Person approved by the Lender or pursuant
to the Asset and Subsidiary Stock Option Agreement,
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dated as of the date hereof, between the Borrower and Gretag Imaging Group, Inc.
(the "Option Agreement").
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SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWER
To induce the Lender to enter into this Agreement and to make the Loan,
the Borrower hereby represents and warrants to the Lender as of the date hereof,
each Closing Date and the Stock Option Closing Date that:
5.1 Corporate Status and Licensing. The Borrower and each of its
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Subsidiaries is a corporation duly organized and validly existing under the laws
of the jurisdiction of incorporation or organization. The Borrower and each of
its Subsidiaries has the corporate power and authority to own its property and
to transact the business in which it is engaged or presently proposes to engage,
and is duly qualified or licensed as a foreign corporation in good standing in
each jurisdiction in which the failure so to qualify or be licensed would have a
material adverse effect on the Borrower or O-Sub.
5.2 Corporate Power and Authority; Enforceable Obligations. The
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Borrower has all necessary power to execute, deliver and perform the terms and
provisions of this Agreement, and the transactions contemplated hereby, and has
taken all necessary internal action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly executed and
delivered on behalf of the Borrower and constitutes a legal, valid and binding
obligation of the Borrower enforceable in accordance with its terms. The
Borrower has furnished to the Lender complete and correct copies of its
constitutive documents, and such constitutive documents are in full force and
effect and have not been modified or amended.
5.3 Compliance with Law and Other Instruments. Neither the Borrower nor
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any of its Subsidiaries is in default under any agreement that is material to O-
Sub or Borrower to which it is a party, and neither the execution, delivery or
performance of this Agreement, nor the consummation of the transactions
contemplated hereby, nor compliance with the terms and provisions hereof, will
contravene any provision of law, statute, rule or regulation to which the
Borrower is subject, or any judgment, decree, franchise, order or permit
applicable to the Borrower, or will conflict or will be inconsistent with or
will result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of the
property or assets of the Borrower or any of its Subsidiaries pursuant to, the
terms of any indenture, mortgage, deed of trust, agreement or other instrument
to which the Borrower or any such Subsidiary is a party or bound or to which
they may be subject, or violate any provision of the constitutive documents of
the Borrower or any such Subsidiary.
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5.4 Litigation. Except as set forth on Schedule 5.4 hereto, there are
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no actions, suits or proceedings pending or, to the best of the Borrower's
knowledge, threatened, against or affecting the Borrower or any of its
Subsidiaries before any court, tribunal or before any governmental or
administrative body or agency.
5.5 Consents. No consent of any other party (including, without
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limitation, creditors of the Borrower) and no order, permission, consent,
approval, license, autho rization, registration or validation of, or notice to
or filing with, or exemption by, any Governmental Authority is required to
authorize, or is required in connection with, the execution, delivery and
performance by the Borrower of this Agreement, or the taking of any action
contemplated hereby, including, without limitation, the pledge by the Borrower
of the Collateral, the issuance and delivery of the Stock Option Shares pursuant
to Section 10 or the validity or enforceability of this Agreement or, if any of
the foregoing are required, they have been obtained and are in full force and
effect and certified copies of which have been delivered to the Lender and to
counsel to the Lender.
5.6 Financial Information. Except as set forth on Schedule 5.6, the
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audited financial statements of the Borrower and its Subsidiaries as of December
31, 1996 are, and, when filed with the SEC, the audited financials contained in
the Pending Reports (the "Financial Statements") will be, including in each case
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the related schedules and notes, complete and correct in all material respects
and fairly present the financial condition of the Borrower and its Subsidiaries
as of the date[s] thereof and the results of their operations for the periods
therein stated and have been prepared in accordance with generally accepted
accounting principles in the jurisdiction in which the Financial Statements were
prepared, consistently applied throughout the periods involved.
5.7 Taxes, Assessments and Fees. Each of the Borrower and its
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Subsidiaries has filed or caused to be filed all U.S. federal income tax returns
and all other material returns required to be filed, and have paid all taxes
shown to be due and payable on said returns or on any assessments made against
such Person or any of their respective proper ties, and all other taxes,
assessments, fees or other charges imposed on such Person or any of their
respective properties by any Governmental Authority; and no material tax liens
or material liens with respect to any assessments, fees or other charges have
been filed and, to the knowledge of such Person, no claims are being asserted
with respect to any such taxes, assessments, fees or other charges.
5.8 Capitalization. Schedule 5.8 hereto contains the complete and
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correct description of the capitalization of the Borrower and O-Sub, including a
list of all Persons owning the outstanding capital stock, stock options and
instruments exchangeable or convertible into or exercisable for any capital
stock of O-Sub, together with the quantities thereof held by each such Person.
The O-Sub Shares are duly authorized, valid, issued, fully-paid and non-
assessable.
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5.9 Accuracy of Information. Neither this Agreement, nor any
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certificate or written statement of factual information furnished to the Lender
by or on behalf of the Borrower in connection herewith, contains or will contain
as of their respective dates any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements taken as a whole
contained herein and therein not misleading.
5.10 Absence of Default. No Default or Event of Default has occurred and
------------------
is continuing.
5.11 Obligations Pari Passu. The Borrower Obligations rank at least pari
---------------------- ----
passu in right of payment with all its other indebtedness except that amounts
-----
owing under the SVB Facility, including additional amounts borrowed thereunder
in accordance herewith and any accrued interest thereon, shall be prior in right
of payment to the payment obligations of the Borrower hereunder.
5.12 Withholding Tax. There is no U.S. tax, levy, impost, deduction,
---------------
charge or withholding imposed, levied or made on or by virtue of the execution
or delivery of this Agreement.
5.13 Title to Properties. Subject to subsection 4.2, the Borrower and
-------------------
its Subsidiaries have good title to all of their respective properties and
assets referred to in the Financial Statements (except properties and assets
disposed of since the relevant date in the ordinary course of business).
5.14 Material Adverse Change. Except as described in Schedule 5.14,
-----------------------
since December 31, 1996, there has been no occurrence or development resulting,
or likely to result, in a material adverse effect on the Borrower or its
Subsidiaries.
5.15 Title to Collateral; First Priority Lien. The Borrower is the legal
----------------------------------------
and beneficial owner of the Collateral free and clear of any Lien except for the
Lien created by this Agreement and by the Option Agreement. The pledge of the
Collateral pursuant to this Agreement creates a valid and perfected first
priority security interest in the Collateral, securing the payment of the
Borrower Obligations.
5.16 Authorized Stock. The Borrower has taken all necessary corporate
----------------
and other action to authorize and reserve for issuance and to permit it to issue
and deliver, and, has reserved for issuance, such number of shares of Borrower
Common Stock necessary for delivering the Stock Option Shares upon the exercise
of the Stock Option. The authorized capital stock of the Company is sufficient
to permit the issuance of enough shares to consummate the exercise of the Stock
Option pursuant to Section 10. The Stock Option Shares, upon issuance, will be
duly and validly issued, fully paid and nonassessable, will be delivered free
and clear of any and all Liens and will not give rise
11
to any preemptive rights on the part of any Person. Upon issuance of the Stock
Option Shares, the holder of such Stock Option Shares shall have the same rights
(including, without limitation, voting rights) as the existing holders of
Borrower Common Stock.
SECTION 6. CONDITIONS PRECEDENT
The agreement of the Lender to disburse any Closing Amount is subject to
the satisfaction or waiver by the Lender, immediately prior to or concurrently
with the Closing Date with respect to such Closing Amount, of the following
conditions precedent:
6.1 Borrower Approval. All necessary internal approval on the part of
-----------------
the Borrower and all necessary or appropriate permits, approvals,
authorizations, consents and waivers from creditors of the Borrower shall have
been received in connection with the execution of this Agreement, and the
consummation of the transactions contemplated hereby (including, without
limitation, any necessary powers-of-attorney).
6.2 Documentation. The Lender shall have received this Agreement and
-------------
the Promissory Note(s), executed and delivered by a duly authorized officer of
the Borrower. Each of this Agreement and the Promissory Note(s) shall be in form
and substance satis factory to the Lender, shall be in full force and effect
and shall be in accordance with the requirements of all applicable law.
6.3 Changes, Etc. Except as described in Schedule 5.14, since December
------------
31, 1996, there shall have been no occurrence or development resulting, or
likely to result, in a material adverse effect on the Borrower or its
Subsidiaries (it being expressly understood that the transactions contemplated
by this Agreement shall not be deemed to have a material adverse effect on
Borrower or its Subsidiaries), and the Borrower shall have delivered to the
Lender an Officer's Certificate, dated as of the Closing Date, certifying that
the condition set forth in this subsection has been fulfilled.
6.4 Corporate Proceedings of the Borrower. The Lender shall have
-------------------------------------
received evidence, in form and substance satisfactory to the Lender, that all
necessary corporate and other approval on the part of the Borrower was taken
with respect to (a) the execution, delivery and performance of this Agreement,
-
and (b) the transactions contemplated hereunder, certified by an authorized
-
officer of the Borrower as of a date not earlier than ten days prior to the
Closing Date, which certificate shall be in form and substance satisfactory to
the Lender and shall state that the evidence thereby certified have not been
amended, modified, revoked or rescinded; provided that in the case of a Closing
--------
Date occurring as of the date hereof, the notice period specified in clause (b)
of this subsection shall be waived by the Lender.
12
6.5 Borrower Incumbency Certificate. The Lender shall have received a
-------------------------------
certificate of the Borrower, as to the incumbency and signature of the officers
of the Borrower executing this Agreement, satisfactory in form and substance to
the Lender, executed by an authorized officer of the Borrower.
6.6 Representations and Warranties. Each of the representations and
------------------------------
warranties made by the Borrower in or pursuant to this Agreement shall be true
and correct in all material respects on and as of the Closing Date as if made on
and as of the Closing Date.
6.7 Performance; No Default. The Borrower shall have performed and
-----------------------
complied in all respects with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing, and at the Closing, and after giving effect to the consummation of the
transactions contemplated hereby, no condition or event shall exist which
constitutes a Default or Event of Default under this Agreement.
6.8 Governmental Approvals. Each order, permission, consent, approval,
----------------------
license, authorization, or validation of, or notice to or filing with, or
exemption by, any Governmental Authority which is required to authorize, or is
required in connection with, the execution, delivery and performance by the
Borrower or the Lender of this Agreement or the taking of any action
contemplated hereby shall have been made or obtained, and each such order,
permission, consent, approval, license, authorization, registration, validation,
notice, filing and exemption shall be in full force and effect.
6.9 Legal Opinions. The Lender shall have received executed opinions,
--------------
addressed to the Lender and dated the Closing Date, from Venture Law Group
covering such matters incident to the transactions contemplated by this Loan
Agreement as the Lender may reasonably require.
6.10 Compliance Certificate. The Borrower shall have delivered to the
----------------------
Lender an Officer's Certificate, dated the Closing Date, certifying that the
conditions specified in this Section 6 have been fulfilled.
6.11 Security Arrangements. The Lender shall have a duly perfected first
---------------------
priority security interest in the Collateral.
6.12 Option Agreement. The Option Agreement shall not have been
----------------
terminated.
6.13 Additional Matters. All proceedings in connection with the
------------------
documents contemplated hereby and all documents, instruments and other legal
matters in connection with the transactions contemplated by this Agreement shall
be satisfactory in form and substance to the Lender and to counsel to the
Lender, and the Lender and
13
counsel to the Lender shall have received counterpart originals or certified or
other types of copies of all such documents and legal opinions in respect of any
aspect or con sequence of the transactions contemplated hereby as it shall
reasonably request.
SECTION 7. COVENANTS
The Borrower covenants that, from the date hereof and for so long as any
amount of principal of or interest on the Loans is outstanding and owing to the
Lender hereunder, or any other sum is outstanding and owing to the Lender
hereunder:
7.1 Senior Obligations. The Borrower shall ensure that the Borrower
------------------
Obligations under this Agreement at all times rank at least pari passu with all
---- -----
other present and future indebtedness of the Borrower except that amounts owing
under the Borrower's credit facility (the "SVB Facility") with Silicon Valley
------------
Bank, including additional amounts borrowed thereunder and accrued interest
thereon in accordance herewith, shall be prior in right of payment to the
payment obligations of the Borrower hereunder. The Borrower shall not effect
any additional borrowing under the SVB Facility if the aggregate amount of
principal and accrued interest owing under the SVB Facility, after giving effect
to such borrowing, plus the aggregate amount of principal and accrued interest
owing hereunder, would exceed $6,000,000. To the extent it is deemed to be
necessary, the Lender and Silicon Valley Bank will negotiate in good faith a
debt and subordination agreement mutually satisfactory to the Lender and Silicon
Valley Bank in each party's sole discretion.
7.2 Limitation of Liens. The Borrower shall not create or permit to
-------------------
subsist any Lien upon the whole or any part of the O-Sub Shares or proceeds
thereof (except Liens created by this Agreement or the Option Agreement).
7.3 Use of Proceeds. Unless otherwise agreed to by Lender in writing,
---------------
Borrower hereby covenants that if the Settlement Deposit is advanced to the
Borrower pursuant to this Agreement on any Closing Date, such Settlement Deposit
shall be used solely to make the necessary deposit of $850,000 in escrow in
connection with the execution and delivery of a memorandum of understanding
relating to the Settlement. If requested by the Lender, Lender shall pay on
behalf of Borrower the Settlement Deposit directly to the escrow account
established for the purposes of such deposit. The Borrower shall use all other
proceeds of the Loan solely to meet such of its current payment obligations in
the ordinary course of business which cannot be met from other funds available
to the Borrower.
7.4 Constitutive Documents; Preservation of Existence, Etc.; Conduct of
-------------------------------------------------------------------
Business. The Borrower shall not permit any provision of the constitutive
--------
documents of
14
it or any of its Subsidiaries to be amended without the written consent of
the Lender if such amendment would directly or indirectly prevent the Borrower
from performing, or materially adversely affect its ability to perform, its
obligations under this Agreement. The Borrower shall at all times preserve and
keep in full force and effect, and cause each of its Subsidiaries to preserve
and keep in full force and effect, its existence as a company and its rights and
franchises. The Borrower shall, and shall cause each of its Subsidiaries to,
comply with all contractual obligations binding on it or its property and
Applicable Law.
7.5 Compliance with Applicable Law. The Borrower shall, and shall cause
------------------------------
each of its Subsidiaries to, timely comply with all Applicable Law and shall,
and shall cause each of its Subsidiaries to, procure, maintain and comply with
all permits, licenses and other authorizations required for the conduct of its
business except where the failure to do so would have only a de minimis effect
-- -------
on the Borrower and its Subsidiaries, taken as a whole.
7.6 Notices. The Borrower will promptly give notice to the Lender of:
-------
(a) the occurrence of any Default or Event of Default; and
(b) any (i) default or event of default under any contractual obligation
-
of the Borrower or any of its Subsidiaries or (ii) litigation, investigation
--
or proceeding which may exist at any time involving the Borrower or any of
its Subsidiaries.
7.7 Further Assurances. The Borrower, at its own cost, expense and
------------------
liability, shall cause to be promptly and duly taken, executed, acknowledged and
delivered all such further acts, documents and assurances as may from time to
time be necessary in order to protect the Lender's rights under this Agreement,
including, without limitation, the exercise of the Stock Option, and otherwise
as may reasonably be requested by the Lender in order to carry out the intent
and purposes of this Agreement and the transac tions contemplated hereby.
7.8 Sale; Merger. Except pursuant to the Merger Agreement or the Option
------------
Agreement, neither the Borrower nor any of its Subsidiaries shall enter into any
merger or consolidation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or lease, convey, sell, assign, transfer or
otherwise dispose of, in a single transaction or a series of related
transactions, a material portion of its property, business or assets, or make
any material change in its present method of conducting business.
7.9 Appointment as Attorney-in-Fact. Borrower hereby irrevocably
-------------------------------
constitutes and appoints Lender and any officer or agent thereof, with full
power of substitution, as Borrower's attorney-in-fact, with full irrevocable
power and authority in the place and
15
stead of Borrower and in the name of Borrower or otherwise, from time to time in
the Lender's discretion, to execute and deliver any and all bills of sale,
assignments or other instruments which the Lender may deem necessary or
advisable to effectuate any sale, transfer, assignment or delivery in exercise
of any or all of the remedies hereunder whether pursuant to power of sale or
otherwise, and to take any other action to accomplish the purposes of this
Agreement, including, without limitation, to ask, demand, collect, xxx for,
recover, compound, receive and give acquittance and receipt for moneys due and
to become due under or in connection with the Collateral, to receive, endorse,
and collect any drafts or other instruments, documents and chattel paper in
connection therewith, to file any claims or take any action or institute any
proceedings which the Lender may deem to be necessary or desirable for the
collection thereof, Borrower hereby ratifying and confirming all that such
attorney or any substitute shall lawfully do by virtue hereof. This power of
attorney is a power coupled with an interest and shall be irrevocable.
Nevertheless, if so requested by the Lender or any purchaser, Borrower shall
ratify and confirm any such sale, assignment, transfer or delivery by executing
and delivering to the Lender or such purchaser all bills of sale, assignments,
releases and other proper instruments to effect such ratification and
confirmation as may be designated in any such request.
7.10 Maintenance of Shares. Prior to the Stock Option Closing Date, the
---------------------
Borrower shall not, and shall cause its Subsidiaries not to, take any action
that could reasonably be expected to result in the representations and
warranties of the Borrower set forth in subsection 5.16 in this Agreement
becoming untrue.
SECTION 8. EVENTS OF DEFAULT
8.1 Events of Default. If one or more of the following events shall
-----------------
have occurred (whatever the reason for such event and whether it shall be
voluntary or invol untary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) Non-payment. The Borrower fails to pay any principal of or any
-----------
interest on the Loan or any other amount payable by the Borrower under this
Agreement, as and when the same shall become due and payable, whether at
stated maturity, by man datory prepayment, by acceleration or otherwise; and
such default, if due to any technical or administrative error, is not
remedied within five days;
(b) Breach of Other Obligations. Any of the representations and
---------------------------
warranties of Borrower hereunder proves to have been incorrect in any
material respect or the Borrower defaults in performance or observance of, or
compliance with, any of its other obligations set out in this Agreement, or
any Promissory Note, which default is
16
incapable of remedy or, if such default is in the reasonable opinion of the
Lender capable of remedy, is not in the reasonable opinion of the Lender
remedied within 30 days after notice of such default shall have been given to
the Borrower by the Lender, or any representation or warranty referred to in
section 5 hereof proves to have been incorrect or untrue in any material
respect when made or deemed made;
(c) Involuntary Bankruptcy. Any decree or order by a court of competent
----------------------
jurisdiction shall have been entered (and such decree or order shall have
continued undischarged or undismissed and unstayed for a period of at least
60 days) (i) ad judging the Borrower bankrupt or insolvent, (ii) constituting
- --
an order for relief with respect to the Borrower in any involuntary
bankruptcy or insolvency case, (iii) ap proving as properly filed a petition
---
seeking reorganization of, or an arrangement or adjustment with respect to,
the Borrower under any applicable bankruptcy or insolvency law, or (iv)
--
appointing a receiver, custodian, liquidator or trustee or assignee in the
bankruptcy, liquidation, reorganization or insolvency of the Borrower or of
any of its properties; or
(d) Voluntary Bankruptcy. The Borrower or any of its Subsidiaries
--------------------
initiates or consents to proceedings relating to it under any bankruptcy,
reorganization, in solvency, moratorium, intervention law or law with
similar effect, or under any other law for the relief of, or relating to,
debtors, or makes or enters into a conveyance, assignment, arrangement, or
composition with or for the benefit of its creditors or appoints or applies
for the appointment of an administrator, receiver, trustee, in tervenor, or
assignee for the benefit of creditors (or other similar official) to take
possession or control or a substantial part of all of its undertaking or
assets, or takes any proceeding under any law for a readjustment or deferment
of its indebtedness or any part of it;
(x) the Lender may by notice to the Borrower declare the Commitment to be
terminated forthwith; whereupon the Commitment shall immediately terminate; or
(y) the Lender may by notice to the Borrower, declare the outstanding principal
amount of the Loan (with accrued interest thereon) and all other amounts owing
under this Agreement to be due and payable forthwith, whereupon the same shall
immediately become due and payable.
8.2 Remedies on Default, Etc. Subject to subsection 8.3, (a) if an
------------------------
Event of Default shall occur and be continuing, the Lender may exercise, in
addition to all other rights and remedies granted to it in this Agreement, all
rights and remedies of a secured party under the applicable Uniform Commercial
Code or any other applicable law. Without limiting the generality of the
foregoing, to the extent permitted by applicable law, the Lender, without demand
of performance or other demand, presentment, protest,
17
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Borrower or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Lender or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. The Lender shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in the
Borrower, which right or equity is hereby waived or released. The Lender shall
apply the net proceeds of any action taken by it pursuant to this Section, after
deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Lender
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Borrower Obligations,
first, to the payment of any Borrower Obligations other than principal or
-----
interest, second, to the payment of all interest accrued on the Loans, and
------
third, to the payment of the outstanding principal of the Loans, in inverse
-----
order of the dates on which such Loans were advanced, and only after such
application and after the payment by the Lender of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Lender account for the surplus, if any, to the Lender. To the
extent permitted by applicable law, the Borrower waives all claims, damages and
demands it may acquire against the Lender arising out of the exercise by them of
any rights hereunder, except to the extent arising as a result of the gross
negligence or willful misconduct of the Lender. If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such notice shall
be deemed reasonable and proper if given at least 10 days before such sale or
other disposition.
(b) Upon the occurrence of any Event of Default, the Lender's remedies
shall be, to the fullest extent of the law, cumulative, and no right, power or
remedy conferred by this Agreement upon the Lender shall be exclusive of any
right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. In case of a default in
the payment of any principal of or interest on the Loan, the Borrower shall pay
to the Lender such further amount as shall be sufficient to cover all losses,
expenses, liabilities or costs actually sustained or incurred by the Lender as a
result of such Event of Default. No course of dealing and no delay on the part
of the Lender in exercising any right shall operate as a waiver thereof or
otherwise prejudice the Lender's rights, powers or remedies.
18
(c) Notwithstanding any provision of this Agreement to the contrary, this
Agreement, and the pledge of the Collateral hereunder, in no way limit, modify
or amend the rights of the Borrower pursuant to the Option Agreement, including,
without limitation, the right of the Borrower to exercise the Inkjet Option or
the Subsidiary Stock Option at such price determined thereunder.
8.3 Exercise of Remedies. In the event that the Merger Agreement has
--------------------
been terminated, prior to exercising any remedies hereunder the Lender shall
seek repayment of outstanding amounts hereunder through the exercise of either
the Inkjet Option or the Subsidiary Stock Option and shall not exercise such
remedies unless and until (a) the Lender is unable to exercise either such
-
option by reason of any temporary restraining order, preliminary or permanent
injunction or other similar prohibition being in effect, or by reason of any
statute, rule, regulation or order having been enacted or entered which would
make such exercise illegal or of which such exercise would constitute a
violation; or (b) the Lender has otherwise been unable to exercise one or the
-
other of such options in accordance with the Option Agreement by the date
designated for closing thereunder in the absence of breach on the part of the
Lender thereunder.
SECTION 9. TAXES
9.1 Excluded Taxes. Any and all payments by the Borrower under this
--------------
Agreement (including, without limitation, all payments of principal, interest,
premium and fees) shall be made free and clear of, and without deduction or
withholding for or on account of, any and all present or future taxes, levies,
imposts, deductions, charges, fees, duties or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by the United States (or any
political subdivision or taxing authority of the United States), or any related
surcharge, penalties, interest or expenses (all such taxes, levies, imposts and
charges and all such deductions, withholdings, penalties, interest and
liabilities being "Excluded Taxes"), unless such deduction or withholding is
--------------
required by applicable law.
9.2 Additional Amounts; Indemnified Taxes. If any deduction or
-------------------------------------
withholding of Excluded Taxes is required by law to be made from or in respect
of any sum payable hereunder or in respect of the Loan (or if the Borrower is
required by law to make, or otherwise makes, any direct payment to any
Governmental Authority on account of Excluded Taxes):
(a) the Borrower shall pay to the Lender such additional amount as may be
necessary so that after all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under this
sec tion) the Lender receives on the due date thereof an amount equal to the
sum it would have received had no such deductions or withholdings been made;
19
(b) the Borrower shall make such deductions or withholdings (or direct
payment);
(c) the Borrower shall pay the full amount deducted or withheld to the
relevant Governmental Authority before penalties attach thereto or interest
accrues thereon (but if any such penalties or interest accrues, the Borrower
shall pay such amounts when due to the appropriate Governmental Authority);
and
(d) the Borrower shall furnish, promptly after the date of such
withholding or deduction (or direct payment), to the Lender, in respect of
which such deductions (or payments) are made, an original certificate of the
official receipt issued by such Authority confirming the payment to such
Authority of all amounts required to be deducted or paid;
provided that no such additional amounts shall be payable for or on account of
--------
net income taxes imposed on the Lender by reason of the receipt of payments
under this Agreement (Excluded Taxes, other than such net income taxes, known
herein as "Indemnified Taxes"); provided further however that Section 9.2(a)
----------------- -------- -------
shall not apply in the case of any assignment of a Loan or any portion thereof
after the date hereof by the Lender to any assignee that is not entitled to a
zero rate of withholding with respect to interest pursuant to an applicable tax
treaty or other provision of law.
9.3 Other Taxes. The Borrower shall pay any and all present or future
-----------
stamp, value added, transfer, capital, documentary, and excise taxes and other
similar charges or levies, including interest and penalties with respect
thereto, by reason of the preparation, execution, issuance, delivery, amendment,
supplement, waiver, modification or enforcement of this Agreement or any
document contemplated hereby ("Other Taxes").
-----------
SECTION 10. STOCK OPTION
10.1 Grant of Stock Option. (a) Subject to the terms and conditions set
---------------------
forth herein, the Borrower hereby grants to Purchaser an irrevocable option (the
"Stock Option") to purchase such number of shares of the Borrower's common
------------
stock, par value $0.001 per share ("Borrower Common Stock") determined pursuant
---------------------
to Section 10.1(b).
(b) The number of shares (the "Stock Option Shares") of Borrower Common
-------------------
Stock to be sold to the Purchaser upon exercise of the Stock Option shall be the
number of shares such that (a) the ratio of (i) the number of Stock Option
- -
Shares to (ii) the sum of the number of Stock Option Shares and 10,226,744, is
--
equal to (b) the ratio of (i) the Stock Option Consideration to (ii) the sum of
- - --
the Stock Option Consideration plus $13,314,248.50.
20
(c) In the event of any change in Borrower Common Stock by reason of a
stock dividend, split-up, merger, recapitalization, combination, exchange of
shares, or similar transaction, the type and number of the Stock Option Shares
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction, so that the Lender shall receive upon
exercising the Stock Option the number and class of shares that Lender would
have received in respect of Borrower Common Stock if the exercise of the Stock
Option had been consummated immediately prior to such event or the record date
therefor, as applicable.
10.2 Exercise of Stock Option. (a) Lender may exercise the Stock
------------------------
Option, at any time by providing to the Company a written notice (the date of
which being herein referred to as the "Stock Option Notice Date") to that effect
------------------------
specifying the amount of consideration (the "Stock Option Consideration") to be
--------------------------
paid, which shall not exceed the greater of $5,000,000 and the Outstanding Note
Obligations, and a date not earlier than two Business Days from the Stock Option
Notice Date for the closing of the purchase of the Stock Option Shares. The
parties hereto agree and acknowledge that upon exercise of the Stock Option and
payment of the Stock Option Consideration, such Stock Option Consideration shall
be deemed to be additional purchase price for the equity of the Company.
(b) The Lender shall pay the Stock Option Consideration by the
cancellation of, in the following order, in an aggregate amount up to the Stock
Option Consideration: first, any obligations of the Borrower other than those in
-----
respect of principal of and interest on any outstanding Loans, second any
------
accrued interest on any outstanding Loans through the date of such cancellation
and third any outstanding principal under the Loans (cancelled in inverse order
-----
of the Closing Dates thereof) (together the "Outstanding Note Obligations"), the
----------------------------
balance, if any, of such Stock Option Consideration to be paid in cash.
10.3 Stock Option Closing. (a) The closing of the purchase of the Stock
--------------------
Option Shares (the "Stock Option Closing") shall take place at 10:00 a.m., New
--------------------
York City time at the offices of Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 on the date specified by Lender in the Stock Option Notice
(or such other date upon which the parties hereto may mutually agree) (the
"Stock Option Closing Date").
--------------------------
(b) At the Stock Option Closing:
(1) the Borrower shall issue and deliver or cause to be delivered to
the Lender or its designee the Stock Option Shares in the form of a stock
certificate or certificates therefor in good form for delivery and free
and clear of all Liens, registered in the name of the Lender or its
designee; and
21
(2) the Lender shall (A) deliver or cause to be delivered to the
-
Borrower such instruments, in form and substance reasonably satisfactory
to the Borrower, as are necessary or appropriate in the reasonable
judgment of the Borrower to effect the cancellation of the Outstanding
Note Obligations in an aggregate amount up to the Stock Option
Consideration and (B) deliver or cause to be delivered the excess of the
-
Stock Option Amount over such Outstanding Note Obligations, if any, in
immediately available funds by wire transfer to the account of the
Borrower specified in subsection 11.11.
(c) Certificates for the Stock Option Shares delivered at the Stock
Option Closing shall have typed or printed thereon a restrictive legend which
shall read substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Agreement nor any terms hereof
----------------------
may be amended, supplemented, modified or waived other than pursuant to a
written instrument executed by the Lender. The Lender may, from time to time,
(a) enter into with the Borrower written amendments, supplements or
--
modifications hereto for the purpose of adding any provisions to this Agreement
or changing in any manner the rights of the Lender or of the Borrower hereunder
or (b) waive by an instrument, on such terms and conditions as the Lender may
-
specify in such instrument, any of the requirements of this Agreement or any
Default or Event of Default and its consequences. In the case of any waiver,
the Borrower and the Lender shall be restored to their former positions and
rights hereunder, and any Default or Event of Default waived shall be deemed to
be cured and not continuing; no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
11.2 Notices. Any notice required to be given hereunder shall be
-------
sufficient if in writing, and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with proof of
service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
22
If to Lender: Gretag Imaging Group, Inc. If to the Borrower: Raster Graphics, Inc.
c/o Gretag Imaging, Inc. 0000 Xxxxxxx Xxxxxxx
0000 Xxxxxxxx Xxxx Xxx Xxxx, XX 00000
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx Attention: Xxxxxx Xxxxx
With a copy to:
Gretag Imaging Holding AG
Xxxxxxxxxxxxxx 00
XX-0000 Xxxxxxxxxx Xxxxxxxxxxx
Telephone: (000-000) 000-0000
Facsimile: (000-000) 000-0000
Attention: Xx. Xxxxxx Xxxxxxx
With a copy to: With a copy to:
Debevoise & Xxxxxxxx Venture Law Group
000 Xxxxx Xxxxxx 0000 Xxxx Xxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxxxx Xxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx Xxxxxx, Esq. Attention: Xxxxxx X. Xxxxxx, Xx., Esq.
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
------------------------------
in exercising, on the part of the Lender, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
11.4 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made hereunder, and in any document, certificate or statement
delivered
23
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the making of the Loan or the exercise of the
Stock Option hereunder; provided the representations and warranties shall not
--------
survive the first anniversary of the Stock Option Closing Date.
11.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
----------------------------- -
xxxx xxxxx the Lender for all its costs and expenses incurred in connection with
the enforce ment or preservation of any rights under this Agreement and any
such other documents, including, without limitation, the reasonable fees and
disbursements of counsel and (b) to pay, indemnify, and hold the Lender harmless
-
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, ex penses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement and any such other documents
(all the foregoing in this clause (b), collectively, the "Indemnified
-----------
Liabilities"), provided that the Borrower shall have no obligation hereunder to
-----------
the Lender with respect to the Indemnified Liabilities arising from the gross
negligence or willful misconduct of the Lender. The agreements in this
subsection shall survive repayment of the Loan and all other direct amounts
payable hereunder.
11.6 Successors and Assigns; Assignments. This Agreement shall be
-----------------------------------
binding upon and inure to the benefit of the Borrower and the Lender and their
respective successors and assigns. The Lender may assign or transfer any of its
rights or obligations under this Agreement to an affiliate; the Borrower may not
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Lender.
11.7 Severability. 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 in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.8 Integration. This Agreement, the Promissory Notes, if issued, the
-----------
Option Agreement and the Merger Agreement represent the complete and integrated
agreement of the Borrower and the Lender with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties
by the Lender relative to subject matter hereof not expressly set forth or
referred to herein.
11.9 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY AND
-----------------------
UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE
OR FEDERAL COURT SITTING IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF
24
OR RELATING TO THIS AGREEMENT, AND THE BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETER MINED IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF THE PLACE OF
RESIDENCE OR DOMICILE OF THE BORROWER.
11.10 Right to Set-Off. Any deposits or other sums at any time credited
----------------
or due from Borrower may be applied to, or set off against, the Lender's
obligations to the Borrower under this Agreement, at any time after the
occurrence and during the continuance of any Event of Default.
11.11 Payments. All payments to be made under this Agreement shall be
--------
made in U.S. Dollars, by wire transfer of immediately available funds, to:
If to the Borrower:
------------------
Account No. 0103161970
----------
Silicon Valley Bank
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
If to the Lender:
----------------
Account No. 00000000
--------
Bank of Boston
0000 Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Each party shall promptly notify the other in the manner provided herein of any
change in their respective payment information set forth in this section,
provided that such change shall not be effective until the fifth Business Day
--------
following receipt by the other party.
11.12 No Partnership; Etc. Nothing contained in this Agreement shall be
-------------------
deemed or construed to create a partnership, tenancy-in-common, joint tenancy or
joint venture between the Lender and the Borrower or any other Person. The
Lender shall not be in any way responsible or liable for the debts, losses,
obligations or duties of the Borrower or any other Person with respect to this
Agreement or otherwise.
25
11.13 Enforcement of Agreement. The parties hereto agree that
------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
11.14 GOVERNING LAW. THIS AGREEMENT, AND THE RIGHTS AND OBLIGATIONS OF
-------------
THE PARTIES HEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAWS RULE OF SUCH STATE.
11.15 WAIVERS OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY
---------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.16 Counterparts. This Agreement may be executed by the parties hereto
------------
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all, of the parties hereto.
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
RASTER GRAPHICS, INC.
By: /s/ Rak Kumar
------------------------
Name: Rak Kumar
Title: President and CEO
GRETAG IMAGING GROUP, INC.
By: /s/ Xx. Xxxxxx Xxxxxxx
------------------------
Name: Xx. Xxxxxx Xxxxxxx
Title: Treasurer
27
Exhibit A
Loan and Pledge Agreement
FORM OF PROMISSORY NOTE
RASTER GRAPHICS INC.
PROMISSORY NOTE
No. 2
U.S.[$ ] ________, 199_
SPECTRUM, a corporation organized under the laws of the state of Delaware
(the "Borrower"), for value received hereby unconditionally promises to pay, ON
--------
DEMAND by the Lender (in accordance with the terms and conditions of the Loan
Agreement), to the order of Gretag Imaging Group, Inc. (the "Lender") the
------
principal amount of [ ] Dollars (U.S.$[ ]), with accrued interest
(computed on the basis of a 360-day year for the actual number of days,
including the first day but excluding the last day, occurring in the period for
which interest is payable) on the unpaid portion of such principal amount for
the period commencing on the date hereof until such principal amount shall
become due and payable, at the rate per annum specified in the Loan Agreement.
Any payment of principal or accrued interest payable hereunder which is not paid
when due, shall bear interest from the due date until paid in full at the rate
per annum specified in the Loan Agreement for such late payments.
Payments of principal and accrued interest on this Promissory Note shall
be made in lawful money of the United States of America at the place specified
in the Loan Agreement or otherwise specified by the Lender with five business
days' written notice to the Company.
This Promissory Note is one of the Company's Notes due on demand (the
"Promissory Notes") issued pursuant to that certain Loan and Pledge Agreement,
-----------------
dated October 5, 1998 between Borrower and Lender (as the same may be amended
from time to time, the "Loan Agreement"). The Lender is entitled to the
--------------
benefits of the Loan Agreement and may enforce the agreements of the Company
contained therein and exercise the rights and remedies provided for thereby or
otherwise available in respect thereof.
The Borrower hereby waives presentment, demand, protest, dishonor and
notice of any kind in connection with this Promissory Note.
This Promissory Note may be assigned by the Lender to an affiliate, but
may not be assigned by the Borrower without the prior written consent of the
Lender. This Promissory Note shall bind the successors and permitted assigns of
the undersigned.
This Promissory Note is deemed to be made and delivered in New York, New
York and shall be governed by and construed in accordance with the laws of the
State of New York without giving effect to the conflicts of laws and rules of
such state.
IN WITNESS WHEREOF, the undersigned has duly executed this Promissory Note
as of the date and year first above written.
RASTER GRAPHICS, INC.
_________________________
By:
Title:
2
