Exhibit 99.3
TRANSFER AGENT AGREEMENT
THIS TRANSFER AGENT AGREEMENT (this "Agreement"), dated as of June 13,
1997, among VISUAL EDGE SYSTEMS INC. a Delaware corporation (the "Company"),
INFINITY INVESTORS LIMITED, a Nevis West Indies corporation ("Infinity"),
INFINITY EMERGING OPPORTUNITIES LIMITED, a Nevis West Indies corporation
("IEOL"), SANDERA PARTNERS, L.P. (Sandera"), a Texas limited partnership, and
LION CAPITAL PARTNERS, L.P. ("Lion"), a Texas limited partnership, being
collectively being referred to as the "Holders") and AMERICAN STOCK TRANSFER &
TRUST COMPANY (the "Transfer Agent").
R E C I T A L S:
WHEREAS, pursuant to that certain Bridge Securities Purchase Agreement
dated the date hereof (the "Purchase Agreement") by and among the Company and
the Holders, the Company agreed to issue to the Holders $7,500,000 aggregate
principal amount of convertible notes (the "Convertible Notes"), which are (i)
at any time after January 1, 1998, convertible, at the option of the Holders,
into shares of common stock, $.01 par value per share, of the Company (the
"Common Stock") and (ii) under certain circumstances described in the Purchase
Agreement exchangeable for shares of Series A Convertible Preferred Stock of the
Company (the "Preferred Shares") which, at the option of the Holders, are
convertible into shares of Common Stock (such shares issuable upon such
conversion of the Convertible Notes and/or Preferred Shares being referred to as
the "Shares"); and
WHEREAS, the Company and the Holders have agreed to enter into this
Agreement with the Transfer Agent to (i) facilitate the closing of the Purchase
Agreement (the "Closing"), (ii) provide for a system of accounting for the
Convertible Notes and Preferred Shares (the "Convertible Instruments") and (iii)
facilitate the conversion of the Convertible Instruments and issuance of the
Shares associated therewith.
NOW, THEREFORE, in consideration of the foregoing, the parties hereby agree
as follows:
1. CLOSINGS. The Transfer Agent hereby agrees to act as an escrow agent
to facilitate the Closing as follows:
(a) On the date hereof, the Holders shall wire transfer to an account
designated by the Transfer Agent $7,500,000 in the aggregate (the "Purchase
Price"), and the Company shall deliver to the Transfer Agent (i) the Convertible
Notes, (ii) the Grant Shares (as defined in the Purchase Agreement) and (iii)
the Warrants (as defined in the Purchase
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(VISUAL EDGE SYSTEMS INC.)
Agreement), in the names of the Holders and in the amounts as set forth on
Schedule 1 hereto. The Transfer Agent may, at its discretion, confirm the
authenticity of the Convertible Notes, Grant Shares and Warrants by transmitting
a copy of the same in the form received from the Company to Infinity, on behalf
of the Holders, or its counsel, for written or oral verification as to the form
thereof.
(b) Immediately following such deliveries, together with a delivery
from the Company to the Transfer Agent of a fully executed copy of the Purchase
Agreement, the Transfer Agent shall wire transfer to the Company the Purchase
Price less $26,500 (I) (the "Expense Reimbursement Fee"), (II) $187,500 (the
"Alpine Fee") and (III) the sum specified by the Company (the "Bank Payoff
Amount") necessary to repay in full the Barnett Bank Facility (as such term is
defined in the Purchase Agreement), pursuant to wire transaction or other
instructions as provided by the Company. The Transfer Agent shall also wire
transfer (I) the Expense Reimbursement Fee to the Holders, care of HW Partners
L.P., pursuant to wire transfer or other instructions provided by HW Partners,
L.P., (II) the Alpine Fee to Alpine Capital Partners, Inc. pursuant to wire
transfer or other instructions provided by Alpine Capital Partners, Inc., and
(III) the Bank Payoff Amount to the bank specified by the Company, pursuant to
wire transfer or other instructions provided by the Company. All interest (if
any) earned on the funds placed in escrow and prior to their distribution as set
forth herein shall be for the account of the Holders.
(c) Contemporaneous with the transfer of funds as described in
Subsection (b) above, the Transfer Agent shall (i) deliver the Grant Shares and
the Warrants to the Holders at the addresses set forth herein and (ii) hold the
Convertible Notes for the benefit of the Holders, as hereafter described.
(d) Notwithstanding the foregoing, by joint written agreement, the
Holders and the Company may agree to effect the Closing without using the
services of the Transfer Agent. In such event, the Holders shall (i) wire
transfer the Purchase Price, less the Expense Reimbursement Fee, Alpine Fee and
Bank Payoff Amount to the Company against counter-delivery by the Company of the
original Convertible Notes, Grant Shares and Warrants to the Holders or their
designee, (ii) wire transfer the Expense Reimbursement Fee to HW Partners, L.P.,
(iii) wire transfer the Alpine Fee to Alpine Capital Partners, Inc., (iv) wire
transfer the Bank Payoff Amount in a mutually agreeable manner and (v)
thereafter deliver the Convertible Notes to the Transfer Agent to be held for
the benefit of the Holders pursuant to the terms of this Agreement.
(e) As contemplated by Section 3.8 of the Purchase Agreement, upon a
Recapitalization Event (as defined therein), the Company shall promptly deliver
the Preferred Shares, together with the letter specified by Section 3.8 of the
Purchase Agreement, to the Transfer Agent, with a copy thereof to the Holders.
Thereafter, the Transfer Agent shall account for the Convertible Notes and
Preferred Shares in accordance with the terms hereof, including reduction in the
Accounting Ledger (as hereafter defined) of the principal balance of
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(VISUAL EDGE SYSTEMS INC.)
the Convertible Notes by the principal amount (liquidation value) of the
Preferred Shares received upon consummation of a Recapitalization Event.
2. OWNERSHIP OF CONVERTIBLE NOTES. Record and beneficial ownership of
the Convertible Instruments shall remain in the name of the Holders (unless and
until transferred pursuant to the terms thereof, with written notice thereof to
the Transfer Agent). Any transfer or purported transfer of the Convertible
Instruments (a) not made pursuant to the terms of the Convertible Instruments
and (b) not properly noticed to the Transfer Agent shall be null and void AB
INITIO and shall not be given effect thereto by the Transfer Agent. The
Transfer Agent shall not be required to acknowledge any transfer of the
Convertible Instruments unless accompanied by written confirmation thereof from
the Holders.
3. PAYING AGENT. The Transfer Agent shall act as paying agent for the
Convertible Instruments. Accordingly, all payments of interest, dividends,
redemption and/or principal amounts required of the Company related to the
Convertible Instruments shall be made to the Transfer Agent for the account and
benefit of the holders of such Convertible Instruments as registered on the
books of the Transfer Agent (each, a "Registered Holder"). Upon the receipt of
any such payment of interest or principal amounts, in cash, the Transfer Agent
shall promptly wire transfer such sum to the account of the Registered Holders
as reflected on the books of the Transfer Agent. The wire transfer account of
each Holder is as set forth on Schedule 2 attached hereto. The address of each
Holder is as set forth in Section 8 hereof. In the event the Company exercises
its option to pay interest or dividends on the Convertible Instruments in shares
of Common Stock, the Company shall so advise the Transfer Agent at least two (2)
Business Days prior to the applicable interest or dividend payment date, and
shall irrevocably direct the Transfer Agent to issue the appropriate number of
shares of Common Stock representing interest or dividends, as applicable, to the
Registered Holder on the applicable interest or dividend payment date.
4. ACCOUNTING AGENT. The Transfer Agent shall act as the accounting
agent of the Company and the Registered Holders and shall establish and maintain
an accounting ledger for the Convertible Instruments (the "Accounting Ledger").
The Transfer Agent shall credit (reduce) the outstanding balance of liquidation
preference of the Convertible Instruments by all (i) payments of principal,
interest or dividends made by the Company to the Transfer Agent as paying agent
as required pursuant to Section 3 above and (ii) by the appropriate amount upon
delivery of Shares to the applicable Registered Holder following receipt of a
Notice of Conversion (as defined in Section 5 below). At such time as the
balance of the Convertible Notes and liquidation preference of the Preferred
Shares, as applicable, as reflected on the Accounting Ledger is zero following
the procedures described in this Agreement, the Transfer Agent shall return such
Convertible Notes and/or Preferred Shares to the Company marked "paid in full"
or "cancelled", respectively.
5. ISSUANCE OF CONVERTED SHARES.
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(VISUAL EDGE SYSTEMS INC.)
(a) Consistent with the terms of the Certificate of Designation and
each Convertible Note, in order to convert all or a portion of a Convertible
Instrument into Shares, a Registered Holder shall deliver written notice (each,
a "Notice of Conversion"), in the form annexed to the Purchase Agreement, to the
Transfer Agent for the portion of the Convertible Instrument that it elects to
so convert and a calculation of the number of Shares to be issued upon such
conversion. Upon receipt by the Transfer Agent of any such Notice of Conversion
(including receipt via facsimile) from any Registered Holder, the Transfer Agent
shall immediately deliver a copy thereof to the Company, via facsimile,
requesting the Company to confirm the number of Shares to be issued to such
Registered Holder in connection therewith.
The Company shall, upon receipt thereof, promptly confirm or dispute the number
of Shares to be issued to the Registered Holder, providing written notice
thereof via facsimile to the Transfer Agent and the Registered Holder (the
"Company Notice"). In the event the Company confirms the number of Shares to be
so issued, it shall, as part of the Company Notice, direct the Transfer Agent to
issue such Shares to the Registered Holder. In the event the Company disputes
the number of Shares to be so issued, the Company and the Registered Holder
shall immediately, in good faith, seek to resolve such dispute.
(b) The Transfer Agent shall not be required to issue any Shares
unless and until receipt (including via facsimile) of (i) written notice from
either (x) the Company, confirming the number of Shares to be issued or (y) the
Registered Holder and the Company, setting forth the number of Shares to be
issued, or (ii) a final nonappealable order of a court of competent jurisdiction
directing the Transfer Agent to issue a specified number of Shares.
Notwithstanding the foregoing, each Holder expressly reserves all rights and
remedies against the Company for the failure of the Company to confirm to the
Transfer Agent in any applicable Company Notice the number of Shares issuable as
set forth in a properly completed and accurate Notice of Conversion.
(c) Reference is hereby made to that certain Registration Rights
Agreement appended to the Purchase Agreement. At such time as a Second
Registration Statement as contemplated therein has been declared effective by
the Securities and Exchange Commission covering the resale of the Shares, the
Company shall cause its legal counsel to deliver to the Transfer Agent an
opinion certifying that Shares may be sold by the Registered Holder pursuant to
such registration statement with the purchaser thereof receiving share
certificates, without restrictive legend, which opinion shall remain effective
so long as such Second Registration Statement remains in full force and effect.
In the event that, at any time, the Second Registration Statement ceases to be
effective, the Company or its legal counsel shall immediately deliver written
notice thereof to the Transfer Agent and the Registered Holders stating that the
opinion of the Company's legal counsel may no longer be relied upon by the
Transfer Agent (unless and until an additional or amended, as applicable, Second
Registration Statement is so declared effective with an accompanying opinion to
that effect from the Company's legal counsel). Upon the receipt of any Notice
of Conversion while a Second Registration Statement is effective, the share
certificates representing the Shares described above shall be with a restrictive
legend unless the Registered Holder, either in connection with the delivery of
the Notice of Conversion or
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(VISUAL EDGE SYSTEMS INC.)
thereafter, delivers written notice to the Transfer Agent and the Company
(including notice via telecopy) that the Shares have been sold by the Registered
Holder pursuant to such registration statement, whereupon the Transfer Agent
shall issue share certificates to the purchaser thereof without restrictive
legend.
6. TERMINATION. This Agreement shall terminate promptly upon the earlier
to occur of (i) written demand by the Company and all Registered Holders or (ii)
no unpaid balance or liquidation preference remains with respect to any of the
Convertible Instruments. Notwithstanding the foregoing, the Transfer Agent may
terminate its obligations under this Agreement at such time as the Transfer
Agent no longer serves as the Transfer Agent for the Company's Common Stock, by
delivery of written notice thereof to the Registered Holders and the Company.
Upon delivery of such notice, the Transfer Agent shall deliver the original
Convertible Instruments to Infinity on behalf of all Registered Holders,
together with a copy of the Accounting Ledger (with corresponding copies
delivered to the Company). Immediately thereafter, Infinity and the Company
shall, in good faith, attempt to establish an agreement similar to this
Agreement with the Company's new stock transfer agent.
7. FEES. The Company hereby agrees to pay the Transfer Agent for
reasonable fees charged for all services rendered hereunder.
8. NOTICES. Any notice or demand to be given or that may be given under
this Agreement shall be in writing and shall be (a) delivered by hand, (b)
delivered through or by expedited mail or package service, or (c) transmitted by
telecopy, in each case with personal delivery acknowledged, addressed to the
parties as follows. Each such notice or demand shall be effective (i) if given
by telecopy, when such telecopy is transmitted to telecopier number specified in
this Agreement, (ii) if given by any other means, when delivered at the
addressed as specified herein.
As to the Company Visual Edge Systems Inc.
2424 North Federal Highway, Ste. 100
Boca Raton, Florida 33431
Telephone: (514) 937-0787
Fax: (514) 937-0286
With a copy to: David W. Pollak
Morgan, Lewis & Bockius, LLP
101 Park Avenue
New York, York 10178
Fax: (212) 309-6058
As to: Infinity Investors Limited and
Infinity Emerging Opportunities Limited
27 Wellington Road
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(VISUAL EDGE SYSTEMS INC.)
Cork, Ireland
Telephone: 353-21-501-109
Fax: 353-21-501-255
Attn: J. A. Loughran
With a copy to: HW Partners, L.P.
1601 Elm Street
4000 Thanksgiving Tower
Dallas, Texas 75201
Telephone: 214/720-1600
Fax: 214/720-1662
Attn.: Barrett Wissman
As to: Sandera Partners, L.P. and
Lion Capital Partners, L.P.
1601 Elm Street
4000 Thanksgiving Tower
Dallas, Texas 75201
Telephone: 214/720-1600
Fax: 214/720-1662
Attn: Barrett Wissman
With a copy to: HW Partners, L.P.
1601 Elm Street
4000 Thanksgiving Tower
Dallas, Texas 75201
Telephone: 214/720-1600
Fax: 214/720-1662
Attn: Barrett Wissman
As to any other As set forth on the books of
Registered Holder: the Transfer Agent.
As to the Transfer
Agent American Stock Transfer
& Trust Company
2601 15th Avenue
Brooklyn, New York 11219
Fax: (718) 331-1852
Telephone: (718) 331-1852
9. NONCONTRAVENTION. The Company agrees that it will not at any time
take any action or undertake any activity that would in any material way impede,
restrict or limit the right
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(VISUAL EDGE SYSTEMS INC.)
and ability of the Registered Holders to convert the Convertible Instruments and
receive Shares pursuant to the terms and provisions of this Agreement.
10. INDEMNIFICATION. The Company agrees to indemnify and hold harmless
the Transfer Agent, each officer, director, employee and agent of the Transfer
Agent, and each person, if any, who controls the Transfer Agent within the
meaning of the Securities Act of 1933, as amended (the "Act"), or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), against any losses,
claims, damages, or liabilities, joint or several, to which it, they or any of
them, or such controlling person, may become subject, under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon the
performance by the Transfer Agent of its duties pursuant to the Agreement; and
will reimburse the Transfer Agent, and each officer, director, employee and
agent of the Transfer Agent, and each such controlling person for any reasonable
legal or other expenses reasonably incurred by it or any of them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any case if
such loss, claim, damage or liability arises out of or is based upon any action
not taken in good faith, or any action or omission that constitutes gross
negligence or willful misconduct.
Promptly after receipt by an indemnified party under this Section 10 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the Company under this Section,
notify in writing the Company of the commencement thereof, and failure so to
notify the Company will relieve the Company from any liability under this
Section as to the particular item for which indemnification is then being sought
but not from any other liability which it may have to any indemnified party.
Failure by the Transfer Agent to notify the Company shall not relieve the
Company from its indemnification obligations hereunder, unless such failure
materially prejudices the Company. In case any such action is brought against
any indemnified party, and it notifies the Company of the commencement thereof,
the Company will be entitled to assume the defense thereof, with counsel who
shall be to the reasonable satisfaction of such indemnified party. The Company
shall not be liable to any such indemnified party on account of any settlement
of any claim of action effected without the consent of the Company.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, except where the Delaware
General Corporation Law would apply, without giving effect to conflicts of law
rules of such jurisdiction. Any action brought to enforce, or otherwise arising
out of, this Agreement, shall be heard and determined in either a federal or
state court sitting in the State of New York.
12. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, constitutes the full
and entire understanding of the parties with respect to the subject matter
hereof. Neither this Agreement nor any term hereof may be amended, waived,
discharged, or terminated other than
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(VISUAL EDGE SYSTEMS INC.)
by a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by facsimile signature.
[SIGNATURE PAGE FOLLOWS]
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(VISUAL EDGE SYSTEMS INC.)
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
date first above written.
VISUAL EDGE SYSTEMS INC.
By: /s/ Alan Lubell
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Title: Chairman of the Board
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INFINITY INVESTORS LIMITED
By: /s/ J. A. Loughran
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Title: Director
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INFINITY EMERGING
OPPORTUNITIES LIMITED
By: /s/ J. A. Loughran
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Title: Director
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SANDERA PARTNERS, L.P.
By: Sandera Capital Management, L.P.,
its General Partner
By: Sandera Capital, L.L.C.,
its General Partner
By: /s/ Clark K. Hunt
-------------------------------------
Title: Managing Director
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LION CAPITAL PARTNERS, L.P.
By: Mountain Capital Management,
L.L.C., its General Partner
By: /s/ Clark K. Hunt
-------------------------------------------
Title: Managing Director
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AMERICAN STOCK TRANSFER &
TRUST COMPANY
By: /s/ Herbert J. Lemmer
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Title: Vice President
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(VISUAL EDGE SYSTEMS INC.)