Exhibit 10.2
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IMAGING TECHNOLOGIES CORPORATION
SUBORDINATED NOTE PURCHASE AGREEMENT
September 17, 1998
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TABLE OF CONTENTS
PAGE
Section 1 AUTHORIZATION AND SALE OF SUBORDINATED PROMISSORY NOTES AND WARRANTS . . .1
1.1 AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 SALE OF SUBORDINATED NOTES AND WARRANTS. . . . . . . . . . . . . . . . . .1
Section 2 CLOSING DATE; DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.1 CLOSING DATE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.2 DELIVERY.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY . . . . . . . . .2
3.1 ORGANIZATION AND STANDING. . . . . . . . . . . . . . . . . . . . . . . . .2
3.2 CORPORATE POWER; AUTHORIZATION.. . . . . . . . . . . . . . . . . . . . . .2
3.3 ISSUANCE AND DELIVERY OF THE SECURITIES. . . . . . . . . . . . . . . . . .2
3.4 GOVERNMENTAL CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . .3
3.5 SEC DOCUMENTS; FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . .3
3.6 NO MATERIAL MISSTATEMENT . . . . . . . . . . . . . . . . . . . . . . . . .3
3.7 NO MATERIAL ADVERSE CHANGE.. . . . . . . . . . . . . . . . . . . . . . . .3
3.8 USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Section 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS. . . . . . . .3
4.1 AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
4.2 INVESTMENT EXPERIENCE. . . . . . . . . . . . . . . . . . . . . . . . . . .4
4.3 INVESTMENT INTENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4.4 REGISTRATION OR EXEMPTION REQUIREMENTS.. . . . . . . . . . . . . . . . . .4
4.5 NO LEGAL, TAX OR INVESTMENT ADVICE.. . . . . . . . . . . . . . . . . . . .4
4.6 LEGENDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 5 CONDITIONS TO CLOSING OF PURCHASERS. . . . . . . . . . . . . . . . . . . .5
5.1 REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . . . . . . . . . . . .5
5.2 PERFORMANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.3 QUALIFICATIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.4 COMPLIANCE CERTIFICATE.. . . . . . . . . . . . . . . . . . . . . . . . . .5
5.5 FULL PARTICIPATION.. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.6 OPINION OF COMPANY COUNSEL.. . . . . . . . . . . . . . . . . . . . . . . .5
Section 6 CONDITIONS TO CLOSING OF COMPANY . . . . . . . . . . . . . . . . . . . . .6
6.1 REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . . . . . . . . . . . .6
6.2 COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
6.3 QUALIFICATIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Section 7 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7.1 AMENDMENTS AND WAIVERS.. . . . . . . . . . . . . . . . . . . . . . . . . .6
7.2 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
7.3 SURVIVAL.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
7.4 SUCCESSORS AND ASSIGNS.. . . . . . . . . . . . . . . . . . . . . . . . . .7
7.5 ENTIRE AGREEMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
7.6 NOTICES, ETC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
7.7 SEVERABILITY OF THIS AGREEMENT.. . . . . . . . . . . . . . . . . . . . . .7
7.8 COUNTERPARTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
7.9 FURTHER ASSURANCES.. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
7.10 EXPENSES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
7.11 ACKNOWLEDGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Schedule A -- Schedule of Purchasers
Schedule B -- Schedule of Exceptions
Exhibit A-1 -- Form of Non-Convertible Subordinated Promissory Note
Exhibit A-2 -- Form of Convertible Subordinated Promissory Note
Exhibit B -- Form of Warrant
Exhibit C -- Form of Opinion of Company Counsel
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The Company also entered into another Subordinated Note Purchase Agreement,
substantially identical in all material respects to this Exhibit 10.2, except
for the following details:
Principal Amount of Principal Amount of Number of
Investor Convertible Note Non-Convertible Note Warrants Governing Law
-------- ------------------- -------------------- --------- -------------
Xxxxx Xxxx 0 $1,500,000 $300,000 California
IMAGING TECHNOLOGIES CORPORATION
SUBORDINATED NOTE PURCHASE AGREEMENT
This Subordinated Note Purchase Agreement (the "Agreement") is made as
of September 17, 1998, by and among Imaging Technologies Corporation, a Delaware
corporation (the "Company"), with its principal office at 00000 Xxx Xxxxxxxx,
Xxx Xxxxx, Xxxxxxxxxx 00000, and the purchasers set forth on SCHEDULE A hereto
(the "Purchasers").
Section 1
AUTHORIZATION AND SALE OF SUBORDINATED PROMISSORY NOTES AND WARRANTS
1.1 AUTHORIZATION. The Company has authorized the sale and issuance of
non-convertible subordinated promissory notes in the form of EXHIBIT A-1
attached hereto (the "Non-Convertible Notes") and convertible subordinated
promissory notes in the form of EXHIBIT A-2 attached hereto (the "Convertible
Notes" and together with the Non-Convertible Notes, the "Subordinated Notes") in
the aggregate principal amounts as set forth on Schedule A attached hereto under
the headings "Principal Amount of Non-Convertible Note" and "Principal Amount of
Convertible Note," respectively (collectively, the "Proceeds") and warrants in
the form of EXHIBIT B attached hereto ("the Warrants") to purchase up to the
number of shares of the Company's Common Stock (the "Common Stock") set forth
opposite each such Purchaser's name on SCHEDULE A hereto under the heading
"Number of Warrant Shares."
1.2 SALE OF SUBORDINATED NOTES AND WARRANTS. Subject to the terms and
conditions of this Agreement, the Company agrees to issue and sell to each
Purchaser, and each Purchaser agrees severally and not jointly to purchase from
the Company, both a Non-Convertible Note and a Convertible Note in the principal
amounts set forth opposite such Purchaser's name on SCHEDULE A attached hereto
under the headings "Principal Amount of Non-Convertible Note" and "Principal
Amount of Convertible Note," respectively (collectively, the "Purchase Price"),
and a Warrant to purchase up to the number of shares of Common Stock set forth
opposite the Purchaser's name on SCHEDULE A hereto under the heading "Number of
Warrant Shares.".
Section 2
CLOSING DATE; DELIVERY
2.1 CLOSING DATE. The closing of the purchase and sale of the
Subordinated Notes hereunder (the "Closing") shall be held at the offices of
Xxxxxx Xxxx LLP, 1600 Pioneer Tower, 000 XX Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxx
00000, at 11:00 a.m. on September 17, 1998, or at such other time and place upon
which the Company and the Purchasers shall agree. The date of the Closing is
hereinafter referred to as the "Closing Date."
2.2 DELIVERY. At the Closing, the Company will deliver to each
Purchaser a Non-Convertible Note and a Convertible Note each made payable to
such Purchaser in the principal amounts as set forth opposite the Purchaser's
name on SCHEDULE A hereto under the headings "Principal Amount of
Non-Convertible Note" and "Principal Amount of Convertible Note," respectively,
and a Warrant to purchase up to the number of shares of Common Stock set forth
opposite the Purchaser's name on SCHEDULE A hereto under the heading "Number of
Warrant Shares." Such delivery shall be against payment of the purchase price
therefor by check or wire transfer to the Company in the amount of the Purchase
Price.
Section 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents and warrants to each Purchaser as of the
Closing Date that, except as set forth on the Schedule of Exceptions attached
hereto as SCHEDULE B (the "Schedule of Exceptions"), which exceptions shall be
deemed to be representations and warranties as if made hereunder:
3.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State of
Delaware and is in good standing as a domestic corporation under the laws of
said state.
3.2 CORPORATE POWER; AUTHORIZATION. The Company has all requisite
legal and corporate power and has taken all requisite corporate action to
execute and deliver this Agreement, to sell and issue the Subordinated Notes and
the Warrants (collectively, the "Securities") and to carry out and perform all
of its obligations under this Agreement and the Securities. This Agreement and
the Securities each constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with their respective terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting the enforcement of creditors' rights generally and (ii)
as limited by equitable principles generally. The execution and delivery of this
Agreement and the Securities does not, and the performance of this Agreement and
the Securities and the compliance with the provisions hereof and thereof and the
issuance, sale and delivery of the Securities by the Company will not,
materially conflict with, or result in a material breach or violation of the
terms, conditions or provisions of, or constitute a material default under, or
result in the creation or imposition of any material lien pursuant to the terms
of, the Certificate of Incorporation or Bylaws of the Company or any statute,
law, rule or regulation or any state or federal order, judgment or decree or any
indenture, mortgage, lease or other material agreement or instrument to which
the Company or any of its properties is subject.
3.3 ISSUANCE AND DELIVERY OF THE SECURITIES. The issuance and delivery
of the Securities is not subject to preemptive or any other similar rights of
the stockholders of the Company or any liens or encumbrances.
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3.4 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement except for: (i) the filing of a Notice of
Transaction pursuant to Section 25102(f) of the California Corporate Securities
Law of 1968, as amended, and the rules thereunder (the "Law"), which filing will
be effected within the time prescribed by law; and (ii) such other
qualifications or filings under the Securities Act of 1933, as amended (the
"Securities Act"), and the regulations thereunder and all other applicable
securities laws as may be required in connection with the transactions
contemplated by this Agreement, which filings will be effected within the time
prescribed by law.
3.5 SEC DOCUMENTS; FINANCIAL STATEMENTS. As of their respective filing
dates, all documents (the "SEC Documents") filed by the Company with the
Securities and Exchange Commission (the "SEC") complied in all material respects
with the requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or the Securities Act, as applicable. None of the SEC Documents
as of their respective dates contained any untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
3.6 NO MATERIAL MISSTATEMENT None of the representations or warranties
of the Company contained in this Agreement or in the Securities, and none of the
other information furnished to Purchasers or their representatives in connection
with this Agreement, when considered as a whole, contains, or will contain, any
misstatement of a material fact or omits to state any fact necessary in light of
the circumstances under which made, to make those statements which have been
made, not misleading.
3.7 NO MATERIAL ADVERSE CHANGE. Except as otherwise disclosed herein,
since March 31, 1998, there have not been any changes in the assets,
liabilities, financial condition, business prospects or operations of the
Company from that reflected in the SEC Documents except changes in the ordinary
course of business which have not been, either individually or in the aggregate,
materially adverse.
3.8 USE OF PROCEEDS. The Company shall use the Proceeds for the
purposes of redeeming outstanding shares of its Series C Preferred Stock and for
working capital.
Section 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company as of the
Closing Date as follows:
4.1 AUTHORIZATION. Purchaser represents and warrants to the Company
that: (i) Purchaser has all requisite legal and corporate or other power and
capacity and has taken all
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requisite corporate or other action to execute and deliver this Agreement and
his or its Securities, to purchase his or its Securities and to carry out and
perform all of his or its obligations under this Agreement; and (ii) this
Agreement and his or its Securities each constitute the legal, valid and binding
obligation of the Purchaser, enforceable in accordance with its terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, or similar
laws relating to or affecting the enforcement of creditors' rights generally and
(b) as limited by equitable principles generally.
4.2 INVESTMENT EXPERIENCE. Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Purchaser is aware of the
Company's business affairs and financial condition and has had access to and has
acquired sufficient information about the Company to reach an informed and
knowledgeable decision to purchase his or its Securities. Purchaser has such
business and financial experience as is required to give it the capacity to
protect his or its own interests in connection with the purchase of his or its
Securities.
4.3 INVESTMENT INTENT. Purchaser is purchasing his or its Securities
for his or its own account as principal, for investment purposes only, and not
with a present view to, or for, resale, distribution or fractionalization
thereof, in whole or in part, within the meaning of the Securities Act.
Purchaser understands that its acquisition of his or its Securities has not been
registered under the Securities Act or registered or qualified under any state
securities law in reliance on specific exemptions therefrom, which exemptions
may depend upon, among other things, the bona fide nature of Purchaser's
investment intent as expressed herein. Purchaser has, in connection with his or
its decision to purchase his or its Securities, relied solely upon the SEC
Documents and the representations and warranties of the Company contained
herein. Purchaser will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) his or its Securities except in
compliance with the Securities Act, and the rules and regulations promulgated
thereunder.
4.4 REGISTRATION OR EXEMPTION REQUIREMENTS. Purchaser further
acknowledges and understands that his or its Securities may not be resold or
otherwise transferred except in a transaction registered under the Securities
Act or unless an exemption from such registration is available.
4.5 NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that
nothing in this Agreement or any other materials presented to Purchaser in
connection with the purchase and sale of his or its Securities constitutes
legal, tax or investment advice. Purchaser has consulted such legal, tax and
investment advisors as he or it, in his or its sole discretion, has deemed
necessary or appropriate in connection with his or its purchase of his or its
Securities.
4.6 LEGENDS. To the extent applicable, each of the Securities shall be
endorsed with the legend set forth below:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
4
SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD OR TRANSFERRED
FOR VALUE DIRECTLY OR INDIRECTLY, IN THE ABSENCE OF SUCH REGISTRATION UNDER THE
ACT AND QUALIFICATION UNDER APPLICABLE STATE LAWS, OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE ACT AND QUALIFICATION UNDER APPLICABLE STATE LAWS,
THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE REASONABLE SATISFACTION OF
THE COMPANY."
Section 5
CONDITIONS TO CLOSING OF PURCHASERS
Each Purchaser's obligation to purchase his or its Securities at the
Closing is, at the option of the Purchaser, subject to the fulfillment or waiver
as of the Closing Date of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in Section 3 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the date of such Closing.
5.2 PERFORMANCE. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
5.3 QUALIFICATIONS. All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required as of the Closing in connection with the lawful issuance
and sale of his or its Securities pursuant to this Agreement shall have been
duly obtained and shall be effective as of the Closing.
5.4 COMPLIANCE CERTIFICATE. The President and Chief Executive Officer
of the Company shall have delivered to Purchaser a certificate certifying that
the conditions specified in Sections 5.1 and 5.2 have been fulfilled.
5.5 FULL PARTICIPATION. Each other Purchaser shall have purchased the
Securities in the principal amounts set forth opposite such Purchaser's name on
SCHEDULE A attached hereto and Xxxxx Xxxx (the "Other Investor"), who is
purchasing a subordinated note and warrant under a certain Subordinated Note
Purchase Agreement dated the date hereof, shall have purchased the subordinated
note and warrant in the amounts set forth opposite the Other Investor's name on
SCHEDULE A attached thereto.
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5.6 OPINION OF COMPANY COUNSEL. Each Purchaser shall have received
from Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the Company, an opinion dated
the date of the Closing, in substantially the form as EXHIBIT C attached hereto.
Section 6
CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell and issue the Securities at the
Closing is, at the option of the Company, subject to the fulfillment or waiver
of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of each Purchaser contained in Section 4 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the date of such Closing.
6.2 COVENANTS. Each Purchaser shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by the Purchaser on or before the
Closing.
6.3 QUALIFICATIONS. All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required as of the Closing in connection with the lawful issuance
and sale of his or its Securities pursuant to this Agreement shall have been
duly obtained and shall be effective as of the Closing.
Section 7
MISCELLANEOUS
7.1 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively but only
if so expressly stated), only with the written consent of the Company and the
holders of a majority of the aggregate principal amount of the Subordinated
Notes purchased hereunder. Any amendment or waiver effected in accordance with
this Section shall be binding upon each holder of any of the Securities
purchased under this Agreement at the time outstanding, each future holder of
all such Securities, and the Company.
7.2 GOVERNING LAW. This Agreement shall be governed in all respects by
and construed in accordance with the laws of the State of Oregon without any
regard to conflicts of laws principles. Each party hereby irrevocably submits to
the non-exclusive jurisdiction of the state and federal courts sitting in
Portland, Multnomah County, Oregon, for the adjudication of any dispute
hereunder or in connection herewith, and hereby waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the
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venue of such suit, action or proceeding is improper. Each party hereby waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
7.3 SURVIVAL. The representations, warranties, covenants and
agreements made in this Agreement shall survive any investigation made by the
Company or the Purchasers and the Closing.
7.4 SUCCESSORS AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement. Notwithstanding the foregoing,
no Purchaser shall assign its rights or obligations under this Agreement without
the prior written consent of the Company.
7.5 ENTIRE AGREEMENT. This Agreement, together with the Securities,
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof.
7.6 NOTICES, ETC. All notices and other communications required or
permitted under this Agreement shall be in writing and may be delivered in
person, by facsimile, overnight delivery service or registered or certified
mail, addressed to the Company at the address set forth at the beginning of this
Agreement, or to the Purchasers at their respective addresses set forth on the
signature pages hereto or at such other address as the Company or each Purchaser
shall have furnished to the other parties in writing. All notices and other
communications shall be effective upon the earlier of actual receipt thereof by
the person to whom notice is directed or (i) in the case of notices and
communications sent by personal delivery or facsimile, one business day after
such notice or communication arrives at the applicable address or was
successfully sent to the applicable facsimile number, (ii) in the case of
notices and communications sent by overnight delivery service, at noon (local
time) on the second business day following the day such notice or communication
was sent, and (iii) in the case of notices and communications sent by United
States mail, seven days after such notice or communication shall have been
deposited in the United States mail.
7.7 SEVERABILITY OF THIS AGREEMENT. If any provision of this Agreement
shall be determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
7.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.9 FURTHER ASSURANCES. Each party to this Agreement shall do and
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments
and documents as the other party hereto may
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reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
7.10 EXPENSES. Irrespective of whether the Closing is effected, the
Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement and the
Securities. If the Closing is effected, the Company shall, at the Closing,
reimburse the reasonable fees of a single special counsel for Xx. Xxxxxx and
American Industries, Inc. and shall, upon receipt of a xxxx therefor, reimburse
the out of pocket expenses of such counsel.
7.11 ACKNOWLEDGEMENT. By executing this Agreement, each Purchaser
hereby acknowledges and agrees that Xxxxxxx, Phleger & Xxxxxxxx LLP represents
the Company solely and that the Purchasers have each had an opportunity to
consult with their own attorney in connection with this Agreement and the
Securities.
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The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
IMAGING TECHNOLOGIES CORPORATION,
a Delaware corporation
By: /S/ XXXXX XXXXX
--------------------------------------
Xxxxx Xxxxx, President and
Chief Executive Officer
"PURCHASERS"
AMERICAN INDUSTRIES, INC.,
An Oregon corporation
By /S/ XXXXXX XXXXXXXX
--------------------------------------
Its: PRESIDENT
--------------------------------------
Address: 0000 XX Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
By: /S/ XXXXXXX XXXXXX
--------------------------------------
Xxxxxxx Xxxxxx
Address: 00000 XX Xxxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
[SIGNATURE PAGE TO SUBORDINATED NOTE PURCHASE AGREEMENT]
SCHEDULE A
SCHEDULE OF PURCHASERS
Principal Principal
Amount of Amount of Total Principal Number
Purchaser Non-Convertible Convertible Amount of of Warrant
Name Note Note Notes Shares
---------------------- --------------- ----------- -------------- ----------
American Industries, Inc. $ 950,000 $ 437,500 $1,387,500 190000
Xxxxxxx Xxxxxx $ --- $ 237,500 $ 237,500 $ ---
--------------- ----------- -------------- ----------
TOTALS $ 950,000 $ 675,000 $1,625,000 190000
--------------- ----------- -------------- ----------
--------------- ----------- -------------- ----------
SCHEDULE B
SCHEDULE OF EXCEPTIONS
The following are exceptions to the representations and warranties of Imaging
Technologies Corporation (the "Company") set forth in that certain Subordinated
Note Purchase Agreement dated as of September __, 1998 (the "Agreement"), with
reference to the Section designations of the Agreement. The references to
specific Sections are not meant and should not be construed as limiting the
noted exceptions to a particular Section. Although the Company has used its
reasonable best efforts to cross-reference the exceptions to all applicable
representations and warranties, no assurance can be given that all necessary
cross-references have been identified and any exception noted below is therefore
deemed disclosed for purposes of all relevant Sections whether or not
cross-referenced. Capitalized terms not otherwise defined in this Schedule of
Exceptions have the meaning given them in the Agreement. Nothing herein
constitutes an admission of any liability or obligation of the Company nor an
admission against the Company's interest. The inclusion of any agreement or
other matter herein or any exhibit hereto should not be interpreted as
indicating that the Company has determined that such an agreement or other
matter is necessarily material to the Company.
SECTION NUMBER EXCEPTIONS
Section 3.2 CORPORATE POWER; AUTHORIZATION.
1. Pursuant to the terms of that certain Promissory Note
between McMican Corporation dba New Media Memory and Bank of
Xxxxx Xxxxx (the "Lender"), dated June 17, 1997, that
certain Commercial Security Agreement between McMican
Corporation dba New Media Memory and Lender, dated June 17,
1997, that certain Loan Agreement between McMican
Corporation dba New Media Memory and Lender, dated October
20, 1997 and that certain Change in Terms Agreement between
McMican Corporation dba New Media Memory and Lender, dated
May 17, 1998 (collectively, the "Xxxxx Xxxxx Line of
Credit"), the Company has outstanding approximately $390,000
in principal amount of indebtedness. The Xxxxx Xxxxx Line of
Credit matured on August 15, 1998 and requires that the
Company obtain Lender's written consent prior to issuing the
Subordinated Notes. The Company is currently in the process
of obtaining additional credit from Imperial Bank to pay off
all amounts owed to the Lender under the Xxxxx Xxxxx Line of
Credit. As a result, the Company has not obtained Lender's
written consent to issuing the Subordinated Notes.
2. Pursuant to its agreements with Imperial Bank, the
Company is required to obtain the written consent of
Imperial Bank prior to the sale and issuance of Notes and
Warrants pursuant to the Agreement, and prior to the sale of
certain other notes and warrants and certain shares of the
Company's common stock being sold in connection herewith.
The Company has not obtained Imperial Bank's written
consent.
Section 3.3 ISSUANCE AND DELIVERY OF SECURITIES.
The Company has agreed to issue the Warrants to the
Purchasers pursuant to the Agreement, and certain warrants
(the "Other Warrants") to other investors (the "Other
Investors") under separate purchase agreements. In addition,
pursuant to the Agreement, the Company has agreed to issue
and sell to the Purchasers the Convertible Notes, which are
convertible at the option of the Purchasers into shares of
the Company's Common Stock. Under the terms of Section 4(g)
of that certain Securities Purchase Agreement dated August
21, 1997, between the Company and the holders of the
outstanding shares of the Company's Series C Preferred Stock
(the "Series C Holders"), the Company is required to offer
any equity or convertible debt securities it intends to
issue to the Series C Holders prior to offering the
securities to any third party. The Company has not offered
the Warrants, the Convertible Notes or the Other Warrants to
the Series C Holders, who will retain their right of first
offer until the closing of the Company's settlement with the
Series C Holders, which will not occur until after the
Company has issued the Warrants and the Convertible Notes to
the Purchasers and the Other Warrants to the Other
Investors.
Section 3.4 GOVERNMENTAL CONSENTS.
In connection with the issuance of the Subordinated Notes
and the Warrants under this Agreement, the Company was
required to obtain and has obtained a qualification by
permit from the Commissioner of Corporations of the State of
California to exempt the payment of the interest under the
Subordinated Notes from the usury laws of the State of
California.
Section 3.7 NO MATERIAL ADVERSE CHANGE.
1. On June 19, 1998, the Company delivered notice to the
Series C Holders of its election to redeem for cash all
shares of Series C Preferred Stock tendered for conversion
in lieu of converting such shares. Certain disputes have
arisen between the Company and the Series C Holders with
respect to such notice and the Company's right to redeem all
shares of Series C Preferred Stock tendered for conversion
in lieu of converting
such shares. The Series C Holders have asserted that the
Company is in default of its obligations to them.
2. The Company has recently been informed by Imperial Bank,
the Company's primary lender, that the Company is not in
compliance with all of the provisions of its loan agreements
with Imperial Bank, including without limitation, the
provisions regarding certain minimum ratios the Company is
required to maintain. The Company's noncompliance with many
of these provisions results from the expected one-time
charge to earnings that the Company intends to include in
its financial statements as of and for the fiscal year ended
June 30, 1998, which one-time charge the Company currently
anticipates will be as much as approximately $9,000,000.
3. On September 3, 1998, the Company issued unsecured
promissory notes to certain investors in the aggregate
principal amount of $500,000. Pursuant to its agreements
with Imperial Bank, the Company was required to obtain
Imperial Bank's consent prior to issuing these notes. The
Company did not obtain Imperial Bank's consent.
4. See the disclosures in Section 3.3 above.
EXHIBIT A-1
FORM OF NON-CONVERTIBLE SUBORDINATED PROMISSORY NOTE
See Exhibit 10.3
EXHIBIT A-2
FORM OF CONVERTIBLE SUBORDINATED PROMISSORY NOTE
See Exhibit 10.4
EXHIBIT B
FORM OF WARRANT
See Exhibit 10.5
EXHIBIT C
FORM OF LEGAL OPINION
[FORM OF LEGAL OPINION]
September 17, 1998
To the Purchasers Listed
on Schedule A to the
Imaging Technologies Corporation
Subordinated Note Purchase Agreement
dated September 17, 1998
Ladies and Gentlemen:
We have acted as counsel for Imaging Technologies Corporation,
a Delaware corporation (the "Company"), in connection with the issuance and sale
of its Subordinated Promissory Notes pursuant to the Imaging Technologies
Corporation Subordinated Note Purchase Agreement dated September 17, 1998 (the
"Note Purchase Agreement") among the Company and you. This opinion letter is
being rendered to you pursuant to Section 5.6 of the Note Purchase Agreement in
connection with the Closing of the sale of the Subordinated Promissory Notes.
Capitalized terms not otherwise defined in this opinion letter have the meaning
given them in the Note Purchase Agreement.
In connection with the opinions expressed herein we have made
such examination of matters of law and of fact as we considered appropriate or
advisable for purposes hereof. As to matters of fact material to the opinions
expressed herein, we have relied upon the representations and warranties as to
factual matters contained in and made by the Company pursuant to the Note
Purchase Agreement and upon certificates and statements of government officials
and of officers of the Company. We have also examined originals or copies of
such corporate documents or records of the Company as we have considered
appropriate for the opinions expressed herein. We have assumed for the purposes
of this opinion letter the genuineness of all signatures, the legal capacity of
natural persons, the authenticity of the documents submitted to us as originals,
the conformity to the original documents of all documents submitted to us as
certified, facsimile or photostatic copies, and the authenticity of the
originals of such copies.
As used in this opinion letter, the expression "we are not
aware" or the phrase "to our knowledge", or any similar expression or phrase
with respect to our knowledge of matters of fact, means as to matters of fact
that, based on the actual knowledge of individual attorneys within the firm
principally responsible for handling this matter for the Company (and not
including any constructive or imputed notice of any
To the Purchasers listed on September 17, 1998
Schedule A to the Subordinated Page 2
Note Purchase Agreement
information), and after an examination of documents referred to herein and after
inquiries of certain officers of the Company, no facts have been disclosed to us
that have caused us to conclude that the opinions expressed are factually
incorrect; but beyond that we have made no factual investigation for the
purposes of rendering this opinion letter. Specifically, but without limitation,
we have made no inquiries of securities holders or employees of the Company,
other than such officers.
This opinion letter relates solely to the laws of the State of
California, the Delaware General Corporation Law and the federal law of the
United States, and we express no opinion with respect to the effect or
application of any other laws. Special rulings of authorities administering such
laws or opinions of other counsel have not been sought or obtained.
Based upon our examination of and reliance upon the foregoing
and subject to the limitations, exceptions, qualifications and assumptions set
forth below and except as set forth in the Note Purchase Agreement or the
Schedule of Exceptions thereto, we are of the opinion that as of the date
hereof:
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and the
Company has the requisite corporate power and authority to own its properties
and to conduct its business as, to our knowledge, it is presently conducted.
2. The Company is qualified to do business as a foreign
corporation in California and is in good standing under the laws of the State of
California.
3. The Company has the requisite corporate power and authority
to execute, deliver and perform the Note Purchase Agreement, the Subordinated
Promissory Notes and the Warrants. Each of the foregoing has been duly and
validly authorized by the Company, and duly executed and delivered by an
authorized officer of the Company.
4. The Company's execution and delivery of, and its
performance and compliance as of the date hereof with the terms of, the Note
Purchase Agreement, the Subordinated Promissory Notes and the Warrants do not
violate any provision of any federal or California law, rule or regulation
applicable to the Company or any provision of the Company's Certificate of
Incorporation, as amended, or Bylaws, and do not conflict with or constitute a
default under the material provisions of any agreement specifically identified
on Schedule A attached hereto, other than a default under the agreements related
to the Company's loans from Imperial Bank and Bank of Xxxxx Xxxxx, one or more
of which require the Company to obtain Imperial Bank's and Bank of Yorba Linda's
prior written consent (which consent the Company has not obtained prior
To the Purchasers listed on September 17, 1998
Schedule A to the Subordinated Page 3
Note Purchase Agreement
to entering into the Note Purchase Agreement and consummating the transactions
contemplated thereby).
5. The Purchasers' loans to the Company evidenced by the
Subordinated Promissory Notes are exempt from the usury laws of the State of
California.
We express no opinion as to the Company's compliance or
noncompliance with applicable federal or state antifraud or antitrust statutes,
laws, rules and regulations.
We express no opinion concerning the past, present or future
fair market value of any securities.
We assume that all of the information contained in the
applications for qualification by permit filed by the Company on July 17, 1998
and September 15, 1998, under Section 25113 of the California Corporations Code,
including without limitation all of the information contained in any amendments
or supplements to the applications, was accurate, that no information required
to be included in the applications or in any amendments or supplements to the
applications was not so included, and that the qualifications by permit were
therefore properly obtained by the Company.
This opinion letter is rendered as of the date first written
above solely for your benefit in connection with the Note Purchase Agreement and
may not be delivered to, quoted or relied upon by any person other than you, or
for any other purpose, without our prior written consent. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company. We assume no obligation to advise you of facts, circumstances, events
or developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinions expressed herein.
Very truly yours,
XXXXXXX, XXXXXXX & XXXXXXXX LLP
To the Purchasers listed on September 17, 1998
Schedule A to the Subordinated Page 4
Note Purchase Agreement
SCHEDULE A
1. Promissory Note between Imperial Bank and the Company, dated June 23,
1998.
2. Security and Loan Agreement and Addendum thereto (Eximbank Facility)
between Imperial Bank and the Company, dated June 23, 1998.
3. Security and Loan Agreement and Addendum thereto (Foreign Insured A/R
Line) between Imperial Bank and the Company, dated June 23, 1998.
4. Security and Loan Agreement and Addendum thereto (Domestic Line)
between Imperial Bank and the Company, dated June 23, 1998.
5. Corporate Resolution to Borrow by the Company, dated June 23, 1998 (re:
Loan No 711062536-4).
6. Promissory Note between Bank of Xxxxx Xxxxx and McMican Corporation dba
New Media Memory, dated June 17, 1997 ("Loan No. 1054468601").
7. Loan Agreement between Bank of Xxxxx Xxxxx and XxXxxxx Corporation dba
New Media Memory, dated October 20, 1997.
8. Change in Terms Agreement (to Loan No 1054468601) between BYL Bank
Group and McMican Corporation (dba New Media Memory), dated May 17,
1998.
9. Commercial Security Agreement between Bank of Xxxxx Xxxxx and XxXxxxx
Corporation dba New Media Memory, dated June 17, 1997.
10. Commercial Guaranty by Xxxxxxx X. XxXxxxx in connection with Loan No
1054468601, dated May 17, 1998.
11. Commercial Guaranty by the Company in connection with Loan No
1054468601, dated May 17, 1998.
12. Corporate Resolution to Borrow by McMican Corporation (dba New Media
Memory), dated May 17, 1998 (re: Loan No 1054468601).
13. Export-Import Bank of the United States Working Capital Guarantee
Program, Borrower Agreement between the Company and Imperial Bank,
dated June 29, 1998.
To the Purchasers listed on September 17, 1998
Schedule A to the Subordinated Page 5
Note Purchase Agreement
14. Imperial Bancorp Registration Rights Agreement, dated June 23, 1998.
15. Development and Manufacturing Agreement between the Company and Elesys,
Inc., dated September 30, 1997.
16. Development and Manufacturing Agreement between the Company. and Nissei
Sangyo America, Ltd., dated June 30, 1998.
17. Amendment No. 1 to Postscript Software Development and OEM Distribution
License Agreement between the Company and Adobe Systems Incorporated,
dated October 13, 1997.
18. Licensed System Appendix No. 3 to the Postscript Software Development
and OEM Distribution License Agreement between the Company and Adobe
Systems Incorporated, dated October 13, 1997.
19. Multi-Tenant Industrial Lease between Sunhala Enterprises, LLC and the
Company, dated April 1998.
20. Standard Industrial/Commercial Single-Tenant Lease between Xxxxxx X.
Xxxxx Trust and the Company, dated May 2, 1997.
21. Stipulation for Entry of Judgment in Dornsife & Associates, Inc. v.
Color Solutions, Inc.- Settlement for a 10/1/95 promissory note.
22. Promissory Note between the Company and Xxxxx Xxxxxxx and Xxxxxxxx &
Associates, Inc., dated October 1, 1995
23. Convertible Promissory Note between Xxxxx X. Xxxx and the Company,
dated December 31, 1997.
24. Promissory Note between the Company and Dataproducts Corporation, dated
as of June 30, 1998.
25. Stipulation for Entry of Judgment in Syquest Technology, Inc. v. Prima
International.
26. Consulting Agreement between the Company and Xxxxx Xxxx, dated April 1,
1994 and Amendments thereto dated June 12, 1998 and January 22, 1997,
respectively.
To the Purchasers listed on September 17, 1998
Schedule A to the Subordinated Page 6
Note Purchase Agreement
27. Executive Employment Agreement between the Company and Xxxxx Xxxxx,
dated September 1, 1994 and Amendments thereto dated January 22, 1997
and April 1, 1998, respectively.
28. Executive Employment Agreement between the Company and Xxxxxx Xxxxxxxx,
dated July 1, 1990, as amended February 25, 1994, and Amendments
thereto dated January 22, 1997, April 1, 1998 and June 12, 1998,
respectively.
