Exchange Agreement
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This Exchange Agreement, dated as of February 18, 1999 (this "Exchange
Agreement"), by and among Imaging Technologies Corporation (the "Company"), NP
Partners ("NP") and Olympus Securities, Ltd. ("Olympus" and together with NP,
the "Investors").
Recitals:
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(a) the Company filed a Certificate of Designation, Powers, Preferences
and Rights of the Series of Preferred Stock of Imaging Technologies Corporation
to be designated Series E Convertible Preferred Stock (the "Certificate of
Designation") with the Department of State of the State of Delaware on January
28, 1999;
(b) the Company entered into (i) the Securities Purchase Agreement
dated as of February 2, 1999 (the "Series E Purchase Agreement") by and among
the Company and the purchasers listed in the Series E Purchase Agreement (the
"Purchasers"), pursuant to which the Company issued units (the "Units") to the
Purchasers consisting of (A) a share of Series E Convertible Preferred Stock,
par value $1,000 per share and stated value of $5,000 (the "Series E Preferred
Stock"), and (B) warrants (the "Warrants") to purchase 5,000 shares of common
stock, par value $.005 per share (the "Common Stock"), and (ii) a Registration
Rights Agreement dated as of February 2, 1999 (the "Registration Rights
Agreement") by and among the Company and the Purchasers, pursuant to which the
Company agreed to register the shares of Common Stock to be issued upon
conversion of the Series E Preferred Stock and the exercise of the Warrants;
(c) the Company issued a Non-convertible Subordinated Promissory Note
dated September 18, 1998 for the principal amount of $500,000 to the order of NP
(the "NP Note");
(d) the Company issued a Non-convertible Subordinated Promissory Note
dated September 18, 1998 for the principal amount of $500,000 to the order of
Olympus (the "Olympus Note" and together with the NP Note, the "Notes"); and
(e) the Company has offered to exchange the Notes for Units, and each
of NP and Olympus has agreed to exchange their Notes for Units, subject to the
following terms and conditions. Capitalized terms used and not otherwise defined
herein shall have the meanings given such terms in the Series E Purchase
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Exchange Agreement, the Company and each of NP and Olympus agree as
follows:
1. Exchange. Within five (5) business days of the Company obtaining
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Shareholder Approval, the Investors shall exchange their Notes (including
accrued and unpaid interest to the date of exchange to the nearest $5,000) for
Units consisting of one share of Series E Preferred Stock and Warrants to
purchase 5,000 shares of Common Stock at the exchange rate of one Unit for each
$5,000 of principal and accrued and unpaid interest of the Notes (the "Investor
Units").
The shares of Series E Preferred Stock to be issued to the Investors will be
based on a stated value of $5,000 per share of Series E Preferred Stock.
2. Exchange Procedures. Within five (5) business days of the Company
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obtaining Shareholder Approval in accordance with the terms of Section 3.14 of
the Series E Purchase Agreement, each Investor will (u) deliver its original
Note to the Company's counsel, and (v) execute and deliver to the Company's
counsel a purchase agreement (the "Investor Purchase Agreement") and a
registration rights agreement, each substantially in the form attached hereto
(the "Exchange Agreements"), and the Company will (w) issue and deliver to each
Investor stock certificates representing the shares of Series E Preferred Stock
to be issued in connection with the exchange, (x) issue and deliver to the
Investors the Warrants to be issued as part of the Units, (y) execute and
deliver each of the Exchange Agreements, and (z) the Company shall deliver to
the Investors and each Investor shall deliver to the Company the other
applicable documents set forth in Section 4.1(a) and Section 4.1(b) of the
Investor Purchase Agreement, respectively.
3. Registration. The Company shall register the shares of Common Stock
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to be issued upon conversion of the Series E Preferred Stock and upon exercise
of the Warrants in the Registration Statement which shall register the shares of
Common Stock to be issued in connection with the Series E Purchase Agreement.
4. Shareholder Approval. The proposals for which the Company will use
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its best efforts to obtain Shareholder Approval shall include the shares of
Common Stock issuable upon conversion and upon exercise of the Investor Units.
5. Termination. If the Company fails to obtain Shareholder Approval on
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or before the date which is 65 days after the Closing Date, this Exchange
Agreement shall terminate within five (5) business days thereafter and shall be
of no further force and effect, unless extended by the parties hereto.
6. Representations and Warranties.
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(a) Each Investor represents and warrants to the Company that this
Exchange Agreement has been duly authorized, validly executed and delivered by
such Investor and constitutes a valid and binding agreement and obligation of
such Investor enforceable against such Investor in accordance with its terms,
subject to limitations on enforcement by general principles of equity and
bankruptcy or other laws affecting the enforcement of creditors' rights
generally and such Investor has full power and authority to execute and deliver
this Exchange Agreement and the other agreements and documents contemplated
hereby, including, without limitation, the Exchange Agreements, and to perform
its obligations hereunder and thereunder.
(b) The Company represents and warrants to the Investors that this
Exchange Agreement has been duly authorized, validly executed and delivered on
behalf of the Company and is a valid and binding agreement and obligation of the
Company enforceable against the Company in accordance with its terms, subject to
limitations on enforcement by general principles of equity
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and by bankruptcy or other laws affecting the enforcement of creditors' rights
generally, and the Company has full power and authority to execute and deliver
this Exchange Agreement and the other agreements and documents contemplated
hereby, including, without limitation, the Exchange Agreements, and to perform
its obligations hereunder and thereunder. The Exchange Agreements are in the
same forms as executed by the Purchasers.
7. Governing Law. This Exchange Agreement shall be governed by and
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interpreted in accordance with the laws of the State of New York without giving
effect to the rules governing the conflicts of laws.
8. Expenses. Each of the parties agrees to pay its own expenses
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incident to this Exchange Agreement and the performance of its obligations
hereunder.
9. Notices. All notices and other communications provided for or
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permitted hereunder shall be made in writing by hand delivery, express overnight
courier, registered first class mail, overnight courier, or telecopier,
initially to the address set forth below, and thereafter at such other address,
notice of which is given in accordance with the provisions of this Section.
if to the Company:
Imaging Technologies Corporation
00000 Xxx Xxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxx Xxxxx
President and Chief Executive Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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if to the Investors:
NP Partners
c/o Citadel Investment Group, LLC
000 Xxxx Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Olympus Securities, Ltd.
c/o Citadel Investment Group, LLC
000 Xxxx Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
Telephone: (000)000-0000
Telecopier: (000)000-0000
With a copy to:
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxxx, XX 00000 - 3693
Attn: Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; three (3) business days
after being deposited in the mail, postage prepaid, if mailed; the next business
day after being deposited with an overnight courier, if deposited with a
nationally recognized, overnight courier service; when receipt is acknowledged,
if telecopied.
10. Acknowledgment of Convertibility. The Company acknowledges and
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agrees that the shares of Series E Preferred Stock to be issued to the Investors
as contemplated hereby, shall upon issuance be immediately convertible in
accordance with the terms of the Certificate of Designation without any waiting
period under the Certificate of Designation as if the Original Issue Date (as
defined in the Certificate of Designation) for the shares of Series E Preferred
Stock issued to the Investors were the same as the Original Issue Date for the
shares of Series E Preferred Stock issued to the Purchasers under the Series E
Purchase Agreement.
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11. Entire Agreement. This Exchange Agreement constitutes the entire
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understanding and agreement of the parties with respect to the subject matter
hereof and supersedes all prior and/or contemporaneous oral or written proposals
or agreements relating thereto all of which are merged herein. This Exchange
Agreement may not be amended or any provision hereof waived in whole or in part,
except by a written amendment signed by both of the parties.
12. Counterparts. This Exchange Agreement may be executed by facsimile
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signature and in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Exchange Agreement was duly executed on the
date first written above.
IMAGING TECHNOLOGIES CORPORATION
By:________________________________
Name:
Title:
NP PARTNERS
By:______________________________
Name:
Title:
OLYMPUS SECURITIES, LTD.
By:______________________________
Name:
Title:
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