-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IIq4wN4qez3qE3h6KO7rkAgdz+jEDyQbOaBq23a97djkRl+Gpq9qzmstsHYB8Ij0 S9dlweJQIDwWPAdGOZixDg== 0001047469-98-013955.txt : 19980408 0001047469-98-013955.hdr.sgml : 19980408 ACCESSION NUMBER: 0001047469-98-013955 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980327 ITEM INFORMATION: FILED AS OF DATE: 19980407 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VISUAL EDGE SYSTEMS INC CENTRAL INDEX KEY: 0001015172 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEMBERSHIP SPORTS & RECREATION CLUBS [7997] IRS NUMBER: 133778895 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-20995 FILM NUMBER: 98588592 BUSINESS ADDRESS: STREET 1: 2424 NORTH FEDERAL HIGHWAY STREET 2: SUITE 100 CITY: BOCA RATON STATE: FL ZIP: 33431 BUSINESS PHONE: 5617507559 MAIL ADDRESS: STREET 1: 2424 NORTH FEDERAL HIGHWAY STREET 2: SUITE 100 CITY: BOCA RATON STATE: FL ZIP: 33431 8-K 1 FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________ FORM 8-K CURRENT REPORT Pursuant to Section l3 or l5(d) of the Securities Exchange Act of l934 Date of Report (Date of earliest event reported) MARCH 27, 1998 -------------- VISUAL EDGE SYSTEMS INC. ------------------------ (Exact name of registrant as specified in its charter) DELAWARE 0-20995 13-3778895 - ------------------------------------------------------------------------------ (State or other juris- (Commission (I.R.S. Employer diction of incorporation) File Number) Identification No.) 2424 NORTH FEDERAL HIGHWAY, SUITE 100, BOCA RATON, FL 33431 - ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (561) 750-7559 -------------- (Registrant's telephone number, including area code) Item 5. OTHER EVENTS On March 27, 1998, the Company entered into a Purchase Agreement (the "Marion Agreement") with Marion Interglobal, Ltd., an investment group ("Marion"). The Marion Agreement calls for the Company to receive up to $11,000,000 from Marion in exchange for shares of the Company's common stock, par value $.01 per share (the "Common Stock"), as explained herein. Pursuant to the Marion Agreement, the purchase of Common Stock is to occur in three tranches as follows: (i) on March 27, 1998 the Company sold to Marion 1,200,000 shares of Common Stock for an aggregate consideration of $3,000,000; $1,500,000 of the $3,000,000 has been funded, with the remaining $1,500,000 to be funded on the business day after the Company's shelf registration statement with respect to the shares sold to Marion has been declared effective by the Securities and Exchange Commission; (ii) sixty days following the registration of all the underlying shares of Common Stock under the Marion Agreement, the Company will sell to Marion 800,000 shares of Common Stock for an aggregate consideration of $2,000,000; and (iii) on or prior to September 30, 1998 the Company shall sell a number of shares of Common Stock (to be determined by when the closing occurs, which would range from 2,666,667 shares to 3,200,000 shares) for an aggregate consideration of $6,000,000. The third tranche is contingent on Marion's satisfaction that the Company has met or exceeded the financial targets expected by Marion, in its sole discretion. The Company has agreed to use the $6,000,000 in proceeds from the third tranche to redeem the Company's outstanding Convertible Notes (the "Notes") and Series A Preferred Stock ("Preferred Stock") issued in the financing consummated by the Company in June 1997. The issuance and sale of 1,400,000 shares of Common Stock in the first tranche and all of the shares to be issued in the second tranche to Marion, is subject to approval by the Company's stockholders. The Company will pay transaction fees to Marion upon completion of each tranche as follows: (i) 1,200,000 shares of Common Stock for the first $3,000,000 tranche; (ii) 800,000 shares of Common Stock for the second $2,000,000 tranche; and (iii) no additional fee for the completion of the third tranche. Further, upon the consummation of the second tranche of the Marion Agreement, Mr. Alan Lubell, Chairman of the Board of the Company, has agreed to transfer to Marion 250,000 shares of Common Stock, which shares are required to be registered under the Securities Act of 1933, as amended. In addition, if the third tranche of the aforementioned financing is completed, then until March 30, 2001, the Company is required to obtain the prior written consent of Marion before the consummation of any additional financing transaction except for any credit facilities or lines of credit with lenders or equipment financing arrangements. Further, the Company may not redeem the warrants issued in its initial public offering without the prior written consent of Marion. As a condition to the consummation of this equity financing, the Company renegotiated the terms of its outstanding Notes and Preferred Stock with certain investment funds (the "Funds") who hold all of the outstanding Notes and Preferred Stock. Specifically, the Company entered into the Agreement and Second Amendment to Bridge Securities Purchase Agreement -2- and Related Documents (the "Second Amendment"), among the Company and the Funds. Pursuant to the Second Amendment, the Funds agreed that they would not convert, prior to December 31, 1998, any shares of Preferred Stock or any principal amount of the Notes into shares of Common Stock, unless a "Material Transaction" (defined as a change of control of the Company, a transfer of all or substantially all of the Company's assets or a merger of the Company into another entity) has occurred. Further, the Funds agreed that they would not, prior to March 31, 1999, publicly sell any shares of Common Stock owned or acquired by the Funds, unless a Material Transaction has occurred; the Funds are permitted, after June 30, 1998 and subject to the Company's right of first refusal, to privately sell any shares of Common Stock that they own or acquire, provided the purchaser agrees in writing to be bound by the same resale restrictions. The Funds have granted to the Company an option to redeem the Preferred Stock and the Notes owned by the Funds as follows: (i) up to $2,500,000 may be redeemed on or before April 30, 1998; (ii) an additional $2,500,000 may be redeemed on or before May 31, 1998; and (iii) an additional $2,500,000 may be redeemed from and after June 1, 1998. If the date that the Company redeems such Preferred Stock and Notes is on or before June 30, 1998, the redemption price will be 80% of the principal amount outstanding of the Notes being redeemed or 80% of the liquidation preference of the Preferred Stock being redeemed, plus accrued interest and dividends in the event that all of the Preferred Stock and Notes owned by the Funds are not redeemed by June 30, 1998. If the redemption of the Notes and Preferred Stock is after June 30, 1998 but on or before December 31, 1998, the 80% referred to in the preceding sentence shall increase by 2% per month, up to 90% in December 1998. If the redemption of the Notes and Preferred Stock occurs after December 31, 1998, the redemption price shall be as provided in the original agreement between the Company and the Funds. The Company is required to redeem all of the Preferred Stock outstanding prior to redemption of any of the Notes. In addition, the Funds have granted to the Company and to Marion an option to acquire, on or before March 31, 1999, all of the shares of Common Stock owned by the Funds. In connection with the Second Amendment, the Funds received 100,000 shares of Common Stock, as well as the right to receive 200,000 additional shares of Common Stock in the event that all of the Preferred Stock and Notes owned by the Funds have not been redeemed by the Company by June 30, 1998. Further, the exercise price of 100,000 warrants (each to purchase one share of the Company's Common Stock) owned by the Funds has been reduced from $10.675 per share to $3.25 per share and the exercise price of 200,000 additional warrants (each to purchase one share of the Company's Common Stock) owned by the Funds has been reduced from $4.00 per share to $3.25 per share. The Company has agreed to register all of such shares of Common Stock (including the shares underlying warrants) under the Securities Act of 1933, as amended. -3- (c) Exhibits 99.1 Purchase Agreement, dated as of March 27, 1998, among the Company and Marion Interglobal, Ltd. 99.2 Registration Rights Agreement, dated as of March 27, 1998, among the Company and Marion Interglobal, Ltd. 99.3 Second Amendment to Bridge Securities Purchase Agreement and Related Documents, dated as of March 27, 1998, among the Company, Infinity Investors Limited, Infinity Emerging Opportunities Limited, Summit Capital Limited (as the transferee of Sandera Partners, L.P.) and Glacier Capital Limited (as the transferee of Lion Capital Partners, L.P.) -4- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of l934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. VISUAL EDGE SYSTEMS INC. -------------------------------- (Registrant) By: /s/ Earl Takefman ------------------------------ Earl Takefman Chief Executive Officer Date: April 6, 1998 -5- EXHIBIT INDEX NO. 99.1 Purchase Agreement, dated as of March 27, 1998, among the Company and Marion Interglobal, Ltd. 99.2 Registration Rights Agreement, dated as of March 27, 1998, among the Company and Marion Interglobal, Ltd. 99.3 Second Amendment to Bridge Securities Purchase Agreement and Related Documents, dated as of March 27, 1998, among the Company, Infinity Investors Limited, Infinity Emerging Opportunities Limited, Summit Capital Limited (as the transferee of Sandera Partners, L.P.) and Glacier Capital Limited (as the transferee of Lion Capital Partners, L.P.) -6- EX-99.1 2 PURCHASE AGREEMENT EXHIBIT 99.1 PURCHASE AGREEMENT This PURCHASE AGREEMENT ("AGREEMENT") is entered into as of March 27, 1998 by and between VISUAL EDGE SYSTEMS INC., a Delaware corporation (the "COMPANY"), with headquarters located at 2424 North Federal Highway, Suite 100, Boca Raton, Florida 33431 and Marion Interglobal, Ltd. ("PURCHASER") and/or its assigns (each, a "PURCHASER TRANSFEREE"). RECITALS A. The Company and Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the provisions of Regulation D ("REGULATION D"), as promulgated by the United States Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "SECURITIES ACT"). B. Purchaser desires to purchase, upon the terms and conditions stated in this Agreement, up to Eleven Million ($11,000,000) U.S. Dollars of shares of the Company's common stock, par value $0.01 per share (the "COMMON STOCK"). Collectively, the shares of Common Stock to be issued to the Purchaser are referred to herein as the "COMMON SHARES." C. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement in the form attached hereto as Exhibit A (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company has agreed to provide certain registration rights under the Securities Act, the rules and regulations promulgated thereunder and applicable state securities laws. AGREEMENTS NOW, THEREFORE, in consideration of their respective promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Purchaser hereby agree as follows: ARTICLE I PURCHASE AND SALE OF COMMON SHARES 1.1 PURCHASE OF COMMON SHARES. Subject to the terms and conditions of this Agreement, the issuance, sale and purchase of the Common Shares shall be consummated in up to three tranches, which shall occur in up to three closings (each, a "CLOSING") as follows: (a) FIRST TRANCHE. Prior to March 31, 1998 (the "FIRST CLOSING DATE"), and subject to Section 1.3 below and the satisfaction or waiver of the applicable conditions set forth in Articles VI and VII herein, the Company shall issue and sell to the Purchaser, and the Purchaser agrees to purchase from the Company, 1,200,000 Common Shares for an aggregate consideration of $3,000,000, or $2.50 per Common Share. In addition, the Purchaser shall receive an aggregate of 1,200,000 additional Common Shares as a transaction fee. The events described in this Section 1(a) are referred to herein as the "FIRST TRANCHE." (b) SECOND TRANCHE. On the sixtieth (60th) day after the Company has provided notice to the Purchaser that all of the Common Shares described in Sections 1.1(a)-1.1(c) (I.E. an aggregate of 7,200,000 shares of Common Stock) have been registered (the "SECOND CLOSING DATE") under the Securities Act on a registration statement that has been declared effective by the SEC (the "REGISTRATION STATEMENT"), then, subject to Section 1.3 below and the satisfaction or waiver of the applicable conditions set forth in Articles VI and VII herein, the Company shall issue and sell to the Purchaser, and the Purchaser agrees to purchase from the Company, 800,000 Common Shares for an aggregate consideration of $2,000,000, or $2.50 per Common Share. In addition, the Purchaser shall receive an aggregate of 800,000 additional Common Shares as a transaction fee. The events described in this Section 1(b) are referred to herein as the "SECOND TRANCHE." (c) THIRD TRANCHE. On or prior to September 30, 1998 (the "THIRD CLOSING DATE" and, together with the First Closing Date and the Second Closing Date, a "CLOSING DATE"), and subject to Section 1.3 below and the satisfaction or waiver of the applicable conditions set forth in Articles VI and VII herein, the Company shall issue and sell to the Purchaser, and the Purchaser agree to purchase from the Company, the number of Common Shares set forth in the following sentence for an aggregate consideration of $6,000,000. The number of Common Shares to be issued and sold to the Purchaser in this third tranche shall be as follows: (i) 3,200,000 Common Shares if the Third Closing Date occurs on or before June 30, 1998; (ii) 3,000,000 Common Shares if the Third Closing Date occurs between July 1, 1998 and July 31, 1998; (iii) 2,823,529 Common Shares if the Third Closing Date occurs between August 1, 1998 and August 31, 1998; and (iv) 2,666,667 Common Shares if the Third Closing Date occurs between September 1, 1998 and September 30, 1998. The events described in this Section 1(c) are referred to herein as the "THIRD TRANCHE." The $6,000,000 raised by the Company in the Third Tranche shall be used to repay and redeem, as applicable, certain of the Company's outstanding convertible notes and Series A Preferred Stock on the terms as set forth in the agreement (the "INFINITY AGREEMENT") attached hereto as Exhibit B between the Company and certain investment funds (the "INFINITY FUNDS") who hold certain of the Company's outstanding securities. 1.2 FORM OF PAYMENT. On each Closing Date, the Purchaser shall pay the purchase price payable for the Common Shares issued and sold on such date by wire transfer to the account designated by the Company, upon satisfaction of the applicable Closing conditions as of each Closing Date as set forth in Articles VI and VII herein. 1.3 SHAREHOLDER APPROVAL. In no event shall the aggregate number of shares to be issued and sold by the Company to the Purchaser (i) on any single Closing Date or (ii) on one or more Closing Dates, exceed 20% of the number of shares of Common Stock outstanding as of such date 2 (the "MAXIMUM NUMBER OF SHARES") unless the Company has received Shareholder Approval (as hereinafter defined) with respect to such issuances of Common Shares that exceed the Maximum Number of Shares. "SHAREHOLDER APPROVAL" means the approval of the Company's stockholders, in accordance with Nasdaq Rule 4460(i), to the issuance of a number of shares of Common Stock to the Purchaser in excess of the Maximum Number of Shares. In the event that the aggregate number of shares to be issued and sold by the Company to the Purchaser (i) on any single Closing Date or (ii) on one or more Closing Dates, exceeds the Maximum Number of Shares, the number of Common Shares that exceeds the Maximum Number of Common Shares shall be placed into escrow in accordance with the terms of the Escrow Agreement attached hereto as Exhibit C (the "ESCROW AGREEMENT"). The Escrow Agreement shall provide that, upon notice by the Company to the Escrow Agent (as defined therein) that Shareholder Approval has occurred, certificates evidencing the escrowed Common Shares shall be delivered to the Purchaser. A form of the letter to be delivered by certain of the Company's stockholders listed on Schedule 7.1(v), stating that they will vote in favor of the issuance of a number of Common Shares to the Purchaser in excess of the Maximum Number of Shares, is attached hereto as Exhibit D. 1.4 CLOSING. Each Closing will take place at the offices of Morgan, Lewis &Bockius LLP, 101 Park Avenue, New York, New York 10178, or at such other place as the Company and the Purchaser mutually agree, at 10:00 A.M. local time, on such applicable Closing Date. ARTICLE II PURCHASER'S REPRESENTATIONS AND WARRANTIES The Purchaser represents and warrants to the Company as of the date hereof, and as of the date of each Closing, solely with respect to itself and its purchase hereunder, as set forth in this Article II: The Purchaser makes no other representations or warranties, express or implied, to the Company in connection with the transactions contemplated hereby and any and all prior representations and warranties, if any, which may have been made by the Purchaser to the Company in connection with the transactions contemplated hereby shall be deemed to have been merged in this Agreement and any such prior representations and warranties, if any, shall not survive the execution and delivery of this Agreement. 2.1 INVESTMENT PURPOSE. Purchaser is purchasing the Common Shares for Purchaser's own account for investment only and not with a view toward or in connection with the public sale or distribution thereof in violation of the applicable securities laws. Purchaser will not, directly or indirectly, offer, sell, pledge or otherwise transfer the Common Shares or any interest therein except pursuant to transactions that are exempt from the registration requirements of the Securities Act and/or sales registered under the Securities Act, the rules and regulations promulgated pursuant thereto and applicable state securities laws. Purchaser understands that Purchaser must bear the economic risk of this investment until the Common Shares are registered as contemplated by the Registration Rights Agreement pursuant to the Securities Act and any applicable state securities laws or an exemption from such registration is available. 3 2.2 ACCREDITED INVESTOR STATUS. Purchaser is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D and Purchaser has indicated on a duly executed Investor Questionnaire and Representation Agreement in the form attached hereto as Exhibit E and delivered to the Company in which capacity that it so qualifies as an "accredited investor." 2.3 INFORMATION. Purchaser or its counsel have been furnished all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Common Shares which have been specifically requested by Purchaser, including without limitation the Company's Annual Reports on Form 10-KSB/A for the year ended December 31, 1996 and a form of the Company's Annual Report on Form 10-KSB for the year ended December 31, 1997, substantially in the form in which it will be filed with the SEC on or before March 31, 1997 (the "1997 FORM 10-KSB"); Quarterly Report on Form 10-QSB for the period ended September 30, 1997; Quarterly Report on Form 10-QSB for the period ended June 30, 1997; Quarterly Report on Form 10-QSB for the period ended March 31, 1997; Current Reports on Form 8-K filed with the SEC on April 14, 1997, June 23, 1997, June 25, 1997, November 14, 1997, December 30, 1997 and February 9, 1998, each as amended (if applicable); and Proxy Statement filed with the Securities and Exchange Commission ("SEC") on April 7, 1997 (such documents collectively, the "SEC DOCUMENTS"). Purchaser has been afforded the opportunity to ask questions of the Company and has received what Purchaser believes to be complete and satisfactory answers to any such inquiries. Purchaser understands that Purchaser's investment in the Common Shares involves a high degree of risk, including without limitation the risks and uncertainties disclosed in the SEC Documents. Subject to the foregoing, Purchaser acknowledges the disclosures presented under the caption "Risk Factors" in the Company's Form 10-KSB/A for the year ended December 31, 1996, and the 1997 Form 10-KSB, and the incorporation of those disclosures by reference herein. 2.4 GOVERNMENTAL REVIEW. Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Common Shares. 2.5 TRANSFER OR RESALE. Purchaser understands that (i) except as provided in the Registration Rights Agreement, the Common Shares have not been and are not being registered under the Securities Act or any state securities laws, and may not be offered, sold, pledged or otherwise transferred unless subsequently registered thereunder or an exemption from such registration is available (which exemption the Company expressly agrees may be established as contemplated in clauses (b) and (c) of Section 5.1 hereof); (ii) any sale of such Common Shares made in reliance on Rule 144 under the Securities Act (or a successor rule) ("RULE 144") may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of such Common Shares without registration under the Securities Act under circumstances in which the seller may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Common Shares under the Securities Act or any state securities laws or 4 to comply with the terms and conditions of any exemption thereunder (in each case, other than pursuant to this Agreement or the Registration Rights Agreement). 2.6 LEGENDS. Purchaser understands that, subject to Article V hereof, the certificates for the Common Shares, until such time as the Common Shares have been registered under the Securities Act as contemplated by the Registration Rights Agreement or otherwise may be sold by Purchaser pursuant to Rule 144 (subject to and in accordance with the procedures specified in Article V hereof), will bear a restrictive legend (the "LEGEND") in substantially the following form: THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SHARES OF COMMON STOCK REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATING TO SUCH SHARES OF COMMON STOCK UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS OR THE COMPANY IS FURNISHED WITH AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO IT THAT SUCH REGISTRATION IS NOT REQUIRED. 2.7 ORGANIZATION AND QUALIFICATION. Purchaser is a corporation duly organized and existing in good standing under the laws of its jurisdiction of incorporation, and has the requisite corporate power to own its properties and to carry on its business as now being conducted. Purchaser is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction where the failure so to qualify or be in good standing could have a material adverse effect on the transactions contemplated hereby. 2.8 AUTHORIZATION: ENFORCEMENT. (a) Purchaser has the requisite corporate power and authority to enter into and perform this Agreement and the Registration Rights Agreement, and to perform its obligations hereunder in accordance with the terms hereof; (b) the execution, delivery and performance of this Agreement and the Registration Rights Agreement by the Purchaser and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization of the Company, its board of directors, or its stockholders or any other person, body or agency, and no filing with any person, body or agency, is required with respect to any of the transactions contemplated hereby or thereby; (c) this Agreement and the Registration Rights Agreement have been duly executed and delivered by the Purchaser; and (d) this Agreement and the Registration Rights Agreement constitute legal, valid and binding obligations of the Purchaser enforceable against it in accordance with their respective terms, except (i) to the extent that such validity or enforceability may be subject to or affected by any bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors' rights or remedies of creditors 5 generally, or by other equitable principles of general application, and (ii) as rights to indemnity and contribution under the Registration Rights Agreement may be limited by Federal or state securities laws. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to the Purchaser as of the date hereof, and as of the date of each Closing, as set forth in this Article III. The Company makes no other representations or warranties, express or implied, to the Purchaser in connection with the transactions contemplated hereby and any and all prior representations and warranties, if any, which may have been made by the Company to the Purchaser in connection with the transactions contemplated hereby shall be deemed to have been merged in this Agreement and any such prior representations and warranties, if any, shall not survive the execution and delivery of this Agreement. 3.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized and existing in good standing under the laws of Delaware, and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction where the failure so to qualify or be in good standing would have a Material Adverse Effect. "MATERIAL ADVERSE EFFECT" means any effect which is (or could reasonably be expected to be) materially adverse to the business, operations, properties, financial condition or operating results of the Company, taken as a whole, or on the transactions contemplated hereby. 3.2 AUTHORIZATION: ENFORCEMENT. (a) The Company has the requisite corporate power and authority to enter into and perform this Agreement and the Registration Rights Agreement, and to issue and sell the Common Shares in accordance with the terms hereof; (b) the execution, delivery and performance of this Agreement and the Registration Rights Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation the issuance of the Common Shares) have been duly authorized by all necessary corporate action and, except as contemplated by Section 1.3 herein or as set forth on Schedule 3.2 hereof, no further consent or authorization of the Company, its board of directors, or its stockholders or any other person, body or agency, and no filing with any person, body or agency, is required with respect to any of the transactions contemplated hereby or thereby; (c) this Agreement and the Registration Rights Agreement have been duly executed and delivered by the Company; and (d) this Agreement and the Registration Rights Agreement constitute legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, except (i) to the extent that such validity or enforceability may be subject to or affected by any bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors' rights or remedies of creditors generally, or by other equitable principles of general application, and (ii) as rights to indemnity and contribution under the Registration Rights Agreement may be limited by Federal or state securities laws. 6 3.3 CAPITALIZATION. The capitalization of the Company as of the date hereof, including the authorized capital stock, the number of shares issued and outstanding and the number of shares reserved for issuance pursuant to the Company's stock option plans is set forth on Schedule 3.3. No shares of capital stock of the Company (including the Common Shares) are, and no such shares will be, subject to preemptive rights or any other similar rights of the stockholders of the Company or of any other person or entity or any liens or encumbrances. Except as disclosed in Schedule 3.3, as of the date of this Agreement and as of each Closing Date, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, or securities or rights convertible into or exercisable or exchangeable for, any shares of capital stock of the Company, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of Common Stock, and (ii) there are no agreements or arrangements under which the Company is obligated to register the sale of any of its securities under the Securities Act (except the Registration Rights Agreement). The Company has furnished to Purchaser true and correct copies of the Company's Certificate of Incorporation as in effect on the date hereof ("CERTIFICATE OF INCORPORATION"), and the Company's By-laws as in effect on the date hereof (the ("BY-LAWS"). 3.4 ISSUANCE OF SHARES. The Common Shares have been duly authorized and, upon issuance and sale in accordance with the terms hereof, will be validly issued, fully paid and non-assessable. The Common Shares shall be entitled to be traded on the same markets as the other shares of Common Stock of the Company are traded, and will not be subject to preemptive rights or other similar rights of stockholders of the Company or of any other person or entity. 3.5 NO CONFLICTS. The execution, delivery and performance of this Agreement and the Registration Rights Agreement by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby, will not (a) result in a violation of the Certificate of Incorporation or By-laws or (b) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company is a party, or result in a material violation of any law, rule, regulation, order, judgment or decree applicable to the Company or by which any property or asset of the Company is bound or affected (except as contemplated by Section 1.3 herein or except for such possible conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect or that are related to any inaccuracies or omissions in any representation or warranty of the Purchaser set forth herein). Except as set forth on Schedule 3.5, or except (A) such as may be required under the Securities Act in connection with the performance of the Company's obligations under the Registration Rights Agreement, (B) filing of a Form D with the SEC, (C) filing of any required Nasdaq SmallCap listing applications and (D) compliance with the state securities or Blue Sky laws of applicable jurisdictions, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency or any regulatory or self-regulatory agency in order for it to execute, deliver or perform any of its obligations under this Agreement or the Registration Rights Agreement or to perform its obligations in accordance with the terms hereof or thereof. 7 3.6 SEC DOCUMENTS. Except as disclosed in Schedule 3.6, since December 31, 1996 the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"). The Company has made available to the Purchaser true and complete copies of the SEC Documents, except for exhibits, schedules and incorporated documents. The financial statements of the Company included in the SEC Documents have been prepared in accordance with U.S. generally accepted accounting principles, consistently applied, and the rules and regulations of the SEC during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they do not include footnotes or are condensed or summary statements) and, fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flow for the periods then ended (subject, in the case of unaudited statements, to normal, immaterial year-end audit adjustments). 3.7 ABSENCE OF CERTAIN CHANGES. Since December 31, 1997, there has been no Material Adverse Effect on the Company, except as disclosed in Schedule 3.7 or as disclosed in the SEC Documents. 3.8 ABSENCE OF LITIGATION. Except as disclosed in Schedule 3.8 or in the SEC Documents, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, or self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its directors or officers in their capacities as such, which could reasonably be expected to result in an unfavorable decision, ruling or finding which would have a Material Adverse Effect or would adversely affect the transactions contemplated by this Agreement or any of the documents contemplated hereby or which would adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, this Agreement or any of such other documents. 3.9 S-3 REGISTRATION. The Company is currently eligible to register the resale of its Common Stock on a registration statement on Form S-3 under the Securities Act. 3.10 NO GENERAL SOLICITATION. Neither the Company nor any distributor participating on the Company's behalf in the transactions contemplated hereby (if any) nor any person acting for the Company, or any such distributor, has conducted any "general solicitation," as described in Rule 502(c) under Regulation D, with respect to any of the Common Shares being offered hereby. 3.11 NO INTEGRATED OFFERING. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would either require registration of any of the Common Shares under the Act or prevent the parties hereto from consummating, or delay or interfere with the consummation of, the transactions contemplated hereby pursuant to an 8 exemption from the registration under the Securities Act pursuant to the provisions of Regulation D. 3.12 NO BROKERS. The Company has taken no action, directly or indirectly, which would give rise to any claim by any person for brokerage commissions, finder's fees or similar payments by Purchaser relating to this Agreement or the transactions contemplated hereby, except for dealings with Evan Bines the fees of which shall be paid in full by the Company. 3.13 INTELLECTUAL PROPERTY. Except as disclosed in the SEC Documents, the Company owns, is licensed to use, or possesses adequate and enforceable rights to use all material patents, patent applications, trademarks, trademark applications, trade names, service marks, copyrights, copyright applications, licenses, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) and other similar rights and proprietary knowledge (collectively, "INTANGIBLES") used or necessary for the conduct of its business as described in the 1997 Form 10-KSB. 3.14 CERTAIN TRANSACTIONS. Except as disclosed in the SEC Documents and except for arm's length transactions pursuant to which the Company makes payments in the ordinary course of business upon terms no less favorable than the Company could obtain from third parties, none of the officers, directors, or employees of the company is presently a party to any transaction with the Company (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. ARTICLE IV COVENANTS 4.1 BEST EFFORTS. The parties shall use their best efforts to timely satisfy each of the conditions described in Articles VI and VII of this Agreement. 4.2 SECURITIES LAWS. The Company agrees to timely file a Form D with respect to the Common Shares with the SEC as required under Regulation D and to provide a copy thereof to each Purchaser promptly after such filing. 4.3 REPORTING STATUS. So long as the Purchaser or a Purchaser Transferee beneficially owns any of the Common Shares, (a) the Company shall timely file all reports required to be filed with the SEC pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and 9 regulations thereunder would permit such termination, and (b) the Company will maintain its ability and eligibility to register the resale of its Common Shares on Form S-3. 4.4 INFORMATION. Upon the request of the Purchaser or any Purchaser Transferee, the Company agrees to send the following reports to the Purchaser or Purchaser's Transferee until the Purchaser and Purchaser's Transferee transfers, assigns or sells all of its Common Shares in transactions in which the transferee is (unless such transferee is an affiliate) not subject to securities law resale restrictions: (a) a copy of its Annual Report on Form 10-KSB, its Quarterly Reports on Form 10-QSB, any proxy statements and any Current Reports on Form 8-K; and (b) copies of all press releases issued by the Company. The Company further agrees to promptly provide to the Purchaser and Purchaser's Transferee any information with respect to the Company, its properties, or its business or Purchaser's investment as the Purchaser and Purchaser's Transferee may reasonably request; provided, however, that the Company shall not be required to give the Purchaser any material nonpublic information. 4.5 PROSPECTUS DELIVERY REQUIREMENT. The Purchaser understands that the Securities Act may require delivery of a prospectus relating to the Common Shares in connection with any sale thereof pursuant to a registration statement under the Securities Act covering the resale by the Purchaser of the Common Shares being sold, and the Purchaser shall comply with the applicable prospectus delivery requirements of the Securities Act in connection with any such sale. 4.6 CORPORATE EXISTENCE. So long as the Purchaser or any Purchaser Transferee beneficially owns any Common Shares, the Company shall maintain its corporate existence, except in the event of a merger, consolidation or sale of all or substantially all of the Company's assets, as long as the surviving or successor entity in such transaction (i) assumes the Company's obligations hereunder and under the Registration Rights Agreement entered into in connection herewith and (ii) is a publicly traded corporation whose common stock is listed for trading on the Nasdaq SmallCap Market, the Nasdaq National Market, the New York Stock Exchange or the AMEX. 4.7 USE OF PROCEEDS. The Company covenants that, in the event that the Third Tranche is consummated, the entire $6,000,000 of proceeds raised by the Company in the Third Tranche shall be used to repay and redeem, as applicable, certain of the Company's outstanding convertible notes and Series A Preferred Stock on the terms as set forth in the Infinity Agreement attached hereto as Exhibit B between the Company and the Infinity Funds. ARTICLE V LEGEND REMOVAL, TRANSFER, CERTAIN SALES, ADDITIONAL SHARES 5.1 REMOVAL OF LEGEND. The Legend shall be removed and the Company shall issue, or shall cause to be issued, a certificate without such Legend to the holder of Common Shares upon which it is stamped, if, (a) the resale of such Common Shares is registered under the Securities Act or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions and reasonably satisfactory to the 10 Company and its counsel (the reasonable cost of which shall be borne by the Purchaser) to the effect that a public sale or transfer of such Common Shares may be made without registration under the Securities Act pursuant to an exemption from such registration requirements. The Purchaser agrees to sell all registered Common Shares, including those represented by a certificate(s) from which the Legend has been removed, or which were originally issued without the Legend, pursuant to an effective registration statement, in accordance with the manner of distribution described in such registration statement and to deliver a prospectus in connection with such sale or in compliance with an exemption from the registration requirements of the Securities Act. In the event the Legend is removed from any certificate evidencing Common Shares or any certificate evidencing Common Shares is issued without the Legend and such Common Shares are to be disposed of other than pursuant to the registration statement or pursuant to Rule 144, then prior to, and as a condition to, such disposition, the certificate evidencing such Common Shares shall be relegended as provided herein in connection with any disposition if the subsequent transfer thereof would be restricted under the Securities Act. Also, in the event the Legend is removed from any certificate evidencing Common Shares or any certificate evidencing Common Shares is issued without the Legend and thereafter the effectiveness of a registration statement covering the resale of such Common Shares is suspended or the Company determines that a supplement or amendment thereto is required by applicable securities laws, then upon reasonable advance notice to Purchaser holding such Common Shares, the Company may require that the Legend be placed on any such certificate evidencing Common Shares that cannot then be sold pursuant to an effective registration statement or Rule 144 or with respect to which the opinion referred to in clause (b) next above has not been rendered, which Legend shall be removed when such Common Shares may be sold pursuant to an effective registration statement or Rule 144 or such holder provides the opinion with respect thereto described in clause (b) next above. ARTICLE VI CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL 6.1 The obligation of the Company hereunder to issue and sell the Common Shares to the Purchaser at the Closing is subject to the satisfaction, AS OF EACH CLOSING DATE, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion: (i) The Purchaser shall have executed this Agreement and the Registration Rights Agreement and delivered the same to the Company. The Purchaser shall have completed and executed the Investor Questionnaire and delivered the same to the Company. (ii) The Purchaser shall have wired the purchase price for the Common Shares being purchased on such Closing Date to the account of the Company. (iii) The representations and warranties of the Purchaser shall be true and correct in all material respects as of the date when made and as of each Closing Date as though made at that time 11 (except for representations and warranties that speak as of a specific date, which representations and warranties shall be true and correct as of such date), and the Purchaser shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Purchaser at or prior to the Closing. (iv) The Escrow Agreement shall have been validly executed and delivered by the Purchaser and the Escrow Agent. (v) The Infinity Agreement attached hereto as Exhibit B shall have been validly executed and delivered by the Purchaser and the Infinity Funds. ARTICLE VII CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE 7.1 The obligation of the Purchaser hereunder to purchase the Common Shares to be purchased by it on the date of the Closing is subject to the satisfaction AS OF EACH DATE OF CLOSING, of each of the following conditions, provided that these conditions are for the Purchaser's sole benefit and may be waived by the Purchaser at any time in the Purchaser's sole discretion: (i) The Company shall have executed this Agreement and the Registration Rights Agreement and delivered the same to Purchaser. (ii) The Company shall have delivered to the Purchaser duly issued Common Shares being so purchased at the Closing, in such number and denominations as are reasonably requested by Purchaser. (iii) The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of each Closing Date as though made at that time and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the applicable Closing Date. Purchaser shall have received a certificate, executed by the Chief Executive Officer or Chief Financial Officer of the Company, dated as of the applicable Closing Date to the foregoing effect. (iv) The Escrow Agreement shall have been validly executed and delivered by the Company and the Escrow Agent. (v) Purchaser shall have received, from each person or entity listed on Schedule 7.1(v), a letter stating that such person or entity, as the case may be, will vote their shares so that Shareholder Approval is received, and the Company may issue a number of Common Shares to the Purchaser that exceeds the Maximum Number of Shares. 12 (vi) The Infinity Agreement attached hereto as Exhibit B shall have been validly executed and delivered by the Company and the Infinity Funds. 7.2 The obligation of the Purchaser hereunder to purchase the Common Shares to be purchased by it on the Second Closing Date and the Third Closing Date is subject to the satisfaction AS OF EACH SUCH CLOSING DATE, of each of the following conditions, provided that these conditions are for the Purchaser's sole benefit and may be waived by the Purchaser at any time in the Purchaser's sole discretion: (i) The conditions set forth in Section 7.1 above shall continue to be satisfied. (ii) The Company shall have delivered to the Purchaser a notice that Shareholder Approval had occurred with respect to the issuance of a number of Common Shares to the Purchaser in excess of the Maximum Number of Shares. (iii) The Company shall have delivered to the Purchaser notice that the Registration Statement had been declared effective by the SEC. 7.3 The obligation of the Purchaser hereunder to purchase the Common Shares to be purchased by it on the Third Closing Date is subject to the satisfaction of each of the following conditions, provided that these conditions are for the Purchaser's sole benefit and may be waived by the Purchaser at any time in the Purchaser's sole discretion: (i) The conditions set forth in Sections 7.1 and 7.2 above shall continue to be satisfied. (ii) The Purchaser, in its sole discretion, shall be satisfied that the Company has met or exceeded the financial targets expected by the Purchaser, and has delivered a letter to the Company setting forth its satisfaction with the Company's performance under this Section 7.3(ii). ARTICLE VIII GOVERNING LAW; MISCELLANEOUS 8.1 GOVERNING LAW: JURISDICTION. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. The parties hereto irrevocably consent to the jurisdiction of the United States federal courts and state courts located in the State of New York in any suit or proceeding based on or arising under this Agreement or the transactions contemplated hereby and irrevocably agree that all claims in respect of such suit or proceeding may be determined in such courts. 8.2 COUNTERPARTS. This Agreement may be executed in two or more counterparts, including, without limitation, by facsimile transmission, all of which counterparts shall be 13 considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. 8.3 HEADINGS. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. 8.4 SEVERABILITY. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction. 8.5 ENTIRE AGREEMENT: AMENDMENTS. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Purchaser makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived other than by an instrument in writing signed by the party to be charged with enforcement and no provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Purchaser. 8.6 NOTICE. Any notice herein required or permitted to be given shall be in writing and may be personally served or delivered by nationally-recognized overnight courier or by facsimile machine confirmed telecopy, and shall be deemed delivered at the time and date of receipt (which shall include telephone line facsimile transmission). The addresses for such communications shall be: IF TO THE COMPANY: Visual Edge Systems Inc. Attn: Mr. Earl T. Takefman, CEO 2424 North Federal Highway, Suite 100 Boca Raton, Florida 33431 Telephone: (561) 750-7559 Telecopy: (561) 750-7299 with a copy to: Morgan, Lewis & Bockius LLP Attn: David W. Pollak, Esq. 101 Park Avenue, 45th Floor New York, NY 10178-0060 Telephone: (212) 309-6058 Telecopy: (212) 309-6273 14 IF TO PURCHASER: Marion Interglobal, Ltd. 12803 Water Point Blvd. Windermere, Florida 34786 Attn: Mr. Ron Seales Telephone: (407) 876-5550 Telecopy: (407) 876-5117 Each party shall provide notice to the other party of any change in address. 8.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Neither the Company nor the Purchaser shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, the Purchaser may assign all or part of its rights and obligations hereunder to any of its "affiliates," as that term is defined under the Securities Act, without the consent of the Company so long as such affiliate is an accredited investor (within the meaning of Regulation D under the Securities Act) and agrees in writing to be bound by this Agreement. This provision shall not limit the Purchaser's right to transfer the Common Shares pursuant to the terms of this Agreement or to assign the Purchaser's rights hereunder to any such transferee pursuant to the terms of this Agreement. 8.8 THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person. 8.9 SURVIVAL. The representations and warranties of the Company and the Purchaser and the agreements and covenants set forth herein shall survive for one (1) year after the Closing hereunder. 8.10 FURTHER ASSURANCES. Each party 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 may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 15 IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused this Agreement to be duly executed as of the date first above written. PURCHASER: MARINE INTERGLOBAL, LTD. By: /s/ Ronald Seale -------------------------------------- Name: Ronald Seale Title: Senior Managing Director VISUAL EDGE SYSTEMS INC. By: /s/ Earl Takefman -------------------------------------- Name: Earl Takefman Title: Chief Executive Officer 16 EXHIBIT A REGISTRATION RIGHTS AGREEMENT EXHIBIT B INFINITY AGREEMENT EXHIBIT C ESCROW AGREEMENT EXHIBIT D Letter from Certain Stockholders of the Company Exhibit E FORM OF INVESTOR QUESTIONNAIRE EX-99.2 3 REGISTRATION RIGHTS AGREEMENT EXHIBIT 99.2 REGISTRATION RIGHTS AGREEMENT ----------------------------- THIS REGISTRATION RIGHTS AGREEMENT, dated as of March 27, 1998 (the "Agreement"), is made by and between VISUAL EDGE SYSTEMS INC., a Delaware corporation (the "Company"), and MARION INTERGLOBAL, LTD. (the "Investor"). WITNESSETH: WHEREAS, in connection with the Purchase Agreement dated as of the date hereof between the Investor and the Company (the "Purchase Agreement"), the Company has agreed, upon the terms and subject to the conditions of the Purchase Agreement, to issue and sell to the Investor Eleven Million ($11,000,000) U.S. Dollars of shares of the Company's Common Stock, par value $0.01 per share (the "Common Stock"). Collectively, the shares of common stock to be issued to the Purchaser are collectively referred to herein as the "Common Shares." In connection with the sale of the Common Shares to the Investor, the Investor will be entitled to registration rights as set forth in this Agreement; WHEREAS, to induce the Investor to execute and deliver the Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "1933 Act"), and applicable state securities laws with respect to the Common Shares; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows: 1. DEFINITIONS. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings: (a) "HOLDERS" are stockholders of the Company who, by virtue of agreements with the Company, are entitled to include their securities in certain Registration Statements filed by the Company. (b) "INVESTOR" refers to the investor who purchased Common Shares from the Company pursuant to the Purchase Agreement and includes any transferee or assignee of the Investor who agrees to become bound by the provisions of this Agreement in accordance with Section 8 hereof. (c) "REGISTRABLE SECURITIES" means the Common Shares, together with any shares of Common Stock which may be issued as a dividend or other distribution and any additional shares of Common Stock which are required to be included in a Registration Statement pursuant to Section 2(a) below. (d) "REGISTRATION PERIOD" means the period between the date of this Agreement and the earlier of (i) the date on which all of the Registrable Securities have been sold, or (ii) the date on which the Registrable Securities (in the opinion of the Company's counsel) may be sold without registration. (e) "REGISTRATION STATEMENT" means a registration statement filed with the Securities and Exchange Commission (the "SEC") under the 1933 Act. (f) The terms "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration effected by preparing and filing a Registration Statement in compliance with the 1933 Act and applicable rules and regulations thereunder, and the declaration or ordering of effectiveness of such Registration Statement by the SEC. 2. REGISTRATION. (a) MANDATORY REGISTRATION. The Company will file a Registration Statement with the SEC registering the Registrable Securities for resale within twenty (20) business days of the First Closing Date of the purchase of the Common Shares (the "Closing Date"). The Company shall use its best efforts to cause such Registration Statement to be declared effective by the SEC as soon as practicable after filing. Such best efforts shall include, but not be limited to, promptly responding to all comments received from the staff of the SEC. (b) PIGGYBACK REGISTRATIONS. If, at any time prior to the expiration of the Registration Period, the Company decides to register any of its securities for its own account or for the account of others (excluding registrations relating to equity securities to be issued in connection with an acquisition of any entity or business or in connection with stock option or other employee benefit plans), the Company will promptly give the Investor written notice thereof, and will use its best efforts to include in such registration all or any part of the Registrable Securities so requested by the Investor (excluding any Registrable Securities previously included in a Registration Statement). The Investor's request for registration must be given to the Company in writing within ten (10) days after receipt of the notice from the Company. If the registration for which the Company gives notice is a public offering involving an underwriting, the Company will so advise the Investor as part of the above-described written notice. In such event, if the managing underwriter(s) of the public offering impose a limitation on the number of shares of Common Stock which may be included in the Registration Statement, then the Company will be obligated to include only such limited portion, if any, of the Registrable Securities with respect to which the Investor has requested inclusion hereunder. Any exclusion of Registrable Securities shall be made pro-rata among all Holders of the Company's securities seeking to include shares of Common Stock in proportion to the number of shares of Common Stock sought to be included by such Holders. No right to registration of Registrable -2- Securities under this Section 2(b) shall be construed to limit in any way the registration required under Section 2(a) above. The obligations of the Company under this Section 2(b) will expire upon the earlier of: (i) the effectiveness of the Registration Statement filed pursuant to Section 2(a) above; (ii) after the Company has afforded the opportunity for the Investor to exercise registration rights under this Section 2(b) for two registrations; or (iii) when all of the Registrable Securities held by the Investor may be sold by the Investor under Rule 144 under the 1933 Act without being subject to any volume restrictions. (c) LATE REGISTRATION PAYMENTS. If the Registration Statement required pursuant to Section 2(a) above has not been declared effective by June 30, 1998 (the "Required Effective Date"), the Company will make a cash payment to the Investor in the amount of $3 million as compensation for such delay. Such payment will be made the business day following the Required Effective Date. 3. ADDITIONAL OBLIGATIONS OF THE COMPANY. In connection with the registration of the Registrable Securities, the Company shall have the following additional obligations: (a) The Company shall keep the Registration Statement effective pursuant to Rule 415 under the 1933 Act at all times during the Registration Period as defined in Section l(d) above. (b) The Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) filed by the Company shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective at all times during the Registration Period, and, during such period, shall comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the sellers thereof as set forth in the Registration Statement. (c) Upon the request of the Investor, the Company shall furnish to the Investor (i) promptly after the same is prepared and publicly distributed, filed with the SEC or received by the Company, one copy of the Registration Statement and any amendment thereto; each preliminary prospectus and final prospectus and each amendment or supplement thereto; and (ii) such number of copies of a prospectus, including a preliminary prospectus, and all amendments and supplements thereto, and such other documents as the Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the Investor. -3- (d) The Company shall use its best efforts to (i) register and qualify the Registrable Securities covered by the Registration Statement under such other securities or blue sky laws of such jurisdictions as the Investor reasonably requests, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions. Notwithstanding the foregoing provision, the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (ii) subject itself to general taxation in any such jurisdiction, (iii) file a general consent to service of process in any such jurisdiction, (iv) provide any undertakings that cause more than nominal expense or burden to the Company or (v) make any change in its charter or bylaws. (e) In the event the Investor requests underwriters for such offering, such underwriters shall be selected by the Company and will be reasonably acceptable to the Investor and the Company shall enter into and perform its obligations under an underwriting agreement in usual and customary form including, without limitation, customary indemnification and contribution obligations, with the managing underwriter of such offering. The Investor shall be responsible for payment of the attorney fees and costs incurred in connection with such underwritten offering in accordance with Section 5. (f) The Company shall notify the Investor of the happening of any event of which the Company has knowledge as a result of which the prospectus included in the Registration Statement as then in effect includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (a "Suspension Event"). The Company shall make such notification as promptly as practicable after the Company becomes aware of such Suspension Event, shall promptly use its best efforts to prepare a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and shall deliver a number of copies of such supplement or amendment to each Investor as such Investor may reasonably request. Notwithstanding the foregoing provision, the Company shall not be required to maintain the effectiveness of the Registration Statement or to amend or supplement the Registration Statement for a period (a "Delay Period") expiring upon the earlier to occur of (i) the date on which such material information is disclosed to the public or ceases to be material or (ii) the date on which the Company is able to comply with its disclosure obligations and SEC requirements related thereto. (g) The Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement and, if such an order is issued, shall use its best efforts to obtain the withdrawal of such order at the earliest possible -4- time and to notify the Investor (or, in the event of an underwritten offering, the managing underwriters) of the issuance of such order and the resolution thereof. (h) The Company shall permit a single firm of counsel designated by the Investor (or Investors) who hold a majority in interest of the Registrable Securities being sold pursuant to such registration to review the Registration Statement and all amendments and supplements thereto (as well as all requests for acceleration or effectiveness thereof) a reasonable period of time prior to their filing with the SEC. (i) The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close of the period covered thereby, an earning statement (in a form complying with the provisions of Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day of the Company's fiscal quarter following the date of the Registration Statement. (j) At the request of the Investor the Company shall furnish on the date that Registrable Securities are delivered to an underwriter for sale in connection with the Registration Statement (i) a letter, dated such date, from the Company's independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters; and (ii) an opinion, dated such date, from counsel representing the Company for purposes of such Registration Statement, in form and substance as is customarily given in an underwritten public offering, addressed to the underwriters and the Investor. (k) The Company shall make available for inspection by the Investor, any underwriter participating in any disposition pursuant to the Registration Statement, and any attorney, accountant or other agent retained by any such Investor or underwriter (collectively, the "Inspectors"), all pertinent financial and other records, pertinent corporate documents and properties of the Company (collectively, the "Records"), as shall be reasonably necessary to enable each Inspector to exercise its due diligence responsibility, and cause the Company's officers, directors and employees to supply all information which any Inspector may reasonably request for purposes of such due diligence; provided, however, that each Inspector shall hold in confidence and shall not make any disclosure (except to an Investor) of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement, (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court or government body of competent jurisdiction, or (iii) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company shall not be required to disclose any confidential information in such Records to any Inspector until and unless such Inspector shall have entered into confidentiality agreements (in form and substance satisfactory to the Company) with the Company with respect thereto, substantially in the form of this Section 3(k). The Investor agrees that it shall, upon -5- learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein shall be deemed to limit the Investor's ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations. (l) The Company shall use its best efforts either to (i) cause all the Registrable Securities covered by the Registration Statement to be listed on a national securities exchange and on each additional national securities exchange on which similar securities issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) secure designation of all the Registrable Securities covered by the Registration Statement as a National Association of Securities Dealers Automated Quotations System ("Nasdaq") "national market system security" within the meaning of Rule llAa2-1 of the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the quotation of the Registrable Securities on the Nasdaq National Market System or, if, despite the Company's best efforts to satisfy the preceding clause (i) or (ii), the Company is unsuccessful in satisfying the preceding clause (i) or (ii), to secure listing on a national securities exchange or Nasdaq authorization and quotation for such Registrable Securities and, without limiting the generality of the foregoing, to arrange for at least two market makers to register with the National Association of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable Securities. (m) The Company shall cooperate with the Investor and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities to be sold pursuant to the denominations or amounts as the case may be, and registered in such names as the managing underwriter or underwriters, if any, or the Investor may reasonably request; and, within five business days after a Registration Statement which includes Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Registrable Securities (with copies to the Investor whose Registrable Securities are included in such Registration Statement) instructions to the transfer agent to issue new stock certificates without a legend and an opinion of such counsel that the Common Shares have been registered. 4. OBLIGATIONS OF THE INVESTOR. In connection with the registration of the Registrable Securities, the Investor shall have the following obligations: (a) It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement with respect to the Investor that the Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of the Registrable Securities and shall execute such documents -6- in connection with such registration as the Company may reasonably request. At least five (5) business days prior to the first anticipated filing date of the Registration Statement, the Company shall notify the Investor of the information the Company requires from such Investor (the "Requested Information") if such Investor elects to have any of such Investor's Registrable Securities included in the Registration Statement. If within two (2) business days prior to the filing date the Company has not received the Requested Information from the Investor (a "Non-Responsive Investor"), then the Company may file the Registration Statement without including Registrable Securities of such Non-Responsive Investor. (b) The Investor, by such Investor's acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder, unless the Investor has notified the Company in writing of the Investor's election to exclude all of the Investor's Registrable Securities from the Registration Statement. (c) In the event the Investor determines to engage the services of an underwriter as provided in Section 3(e), the Investor agrees to enter into and perform the Investor's obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the managing underwriter of such offering and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities, unless the Investor has notified the Company in writing of the Investor's election to exclude all of the Investor's Registrable Securities from the Registration Statement. (d) The Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(f) or 3(g), the Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until the Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f) or 3(g) and, if so directed by the Company, the Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in the Investor's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. (e) The Investor may not participate in any underwritten registration hereunder unless the Investor (i) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, and (ii) agrees to pay its pro rata share of all underwriting discounts and commissions and other fees and expenses of investment bankers and any manager or managers of such underwriting and legal expenses of the underwriter applicable with respect to its Registrable Securities. -7- (f) Subject to such other reasonable requirements as may be imposed by the underwriter as a condition of inclusion of a holder's Registrable Securities in the registration statement, each holder of Registrable Securities agrees by acquisition of such Registrable Securities, if so required by the managing underwriter, not to sell, make any short sale of, loan, grant any option for the purchase of, effect any public sale or distribution of or otherwise dispose of, except as part of such underwritten registration, any equity securities of the Company, during such reasonable period of time requested by the underwriter. 5. EXPENSES OF REGISTRATION. All reasonable expenses, including underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the Company, shall be borne by the Investor. The Investor shall bear the fees and disbursements of its counsel. 6. INDEMNIFICATION. In the event any Registrable Securities are included in a Registration Statement under this Agreement: (a) To the extent permitted by law, the Company will indemnify and hold harmless the Investor, the directors, if any, of such Investor, the officers, if any, of such Investor, each person, if any, who controls the Investor within the meaning of the 1933 Act or the Exchange Act, any underwriter (as defined in the 1933 Act) for the Investor, the directors, if any, of such underwriter and the officers, if any, of such underwriter, and each person, if any, who controls any such underwriter within the meaning of the 1933 Act or the Exchange Act (each, an "Indemnified Person"), against any losses, claims, damages, expenses or liabilities (joint or several) (collectively "Claims") to which any of them become subject under the 1933 Act insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any of the following statements, omissions or violations in the Registration Statement, or any post-effective amendment thereof, or any prospectus included therein: (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or (iii) any violation or alleged violation by the Company of the 1933 Act, or any state securities law or any rule or regulation (the matters in the foregoing clauses (i) through (iii) being, collectively, "Violations"). Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (A) shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with -8- information furnished to the Company by any Indemnified Person or underwriter for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(c) hereof; (B) with respect to any preliminary prospectus shall not inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected in the prospectus, as then amended or supplemented, if a prospectus was timely made available by the Company pursuant to Section 3(c) hereof; and (C) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Persons and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 8. (b) In connection with any Registration Statement in which the Investor is participating, the Investor agrees to indemnify and hold harmless, to the same extent and in the same manner set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement, each person, if any, who controls the Company within the meaning of the 1933 Act or the Exchange Act, any underwriter and any other stockholder selling securities pursuant to the Registration Statement or any of its directors or officers or any person who controls such stockholder or underwriter within the meaning of the 1933 Act or the Exchange Act (collectively and together with an Indemnified Person, an "Indemnified Party"), against any Claim to which any of them may become subject, under the 1933 Act, insofar as such Claim arises out of or is based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with information furnished to the Company by the Investor for use in connection with such Registration Statement, and the Investor will promptly reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investor pursuant to Section 8. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(b) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented. (c) Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action (including any governmental action), such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be -9- made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof and this indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying parties. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. 7. CONTRIBUTION. To the extent any indemnification provided for herein is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6, (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation, and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities. 8. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to have the Company register Registrable Securities pursuant to this Agreement shall be automatically assigned by the Investor to transferees or assignees of all or any portion of such securities only if (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within three (3) business days after such assignment, (ii) the Company is, within three (3) business days after such transfer or assignment, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being transferred or assigned, (iii) following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws, (iv) at or before the time the Company received the written notice contemplated by clause (ii) of this sentence, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein, (v) such transfer shall have been made in accordance with the applicable requirements of the Purchase Agreement, and (vi) such transferee shall be an "accredited investor" as that term is defined in Rule 501 of Regulation D promulgated under the 1933 Act. 9. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Investor. Any amendment or waiver effected in accordance with this Section 9 shall be binding upon the Investor and the Company. -10- 10. MISCELLANEOUS. (a) CONFLICTING INSTRUCTIONS. A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities. (b) NOTICES. Any notices required or permitted to be given under the terms of this Agreement shall be sent by certified or registered mail (with return receipt requested) or delivered personally or by courier (including a nationally recognized overnight delivery service) or by facsimile transmission. Any notice so given shall be deemed effective three days after being deposited in the U.S. Mail, or upon receipt if delivered personally or by courier or facsimile transmission, in each case addressed to a party at the following address or such other address as each such party furnishes to the other in accordance with this Section 10(b): IF TO THE COMPANY: Visual Edge Systems Inc. Attn: Mr. Earl T. Takefman, CEO 2424 North Federal Highway, Suite 100 Boca Raton, Florida 33431 Telephone: (561) 750-7559 Telecopy: (561) 750-7299 with a copy to: Morgan, Lewis & Bockius LLP Attn: David W. Pollak, Esq. 101 Park Avenue, 45th Floor New York, NY 10178-0060 Telephone: (212) 309-6058 Telecopy: (212) 309-6273 IF TO THE INVESTOR: Marion Interglobal, Ltd. 12803 Water Point Blvd. Telephone: (407) 876-5550 Telecopy: (407) 876-5117 -11- (c) WAIVER. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. (d) GOVERNING LAW. This Agreement shall be enforced, governed by and construed in accordance with the laws of the State of New York applicable to the agreements made and to be performed entirely within such state, without giving effect to rules governing the conflict of laws, and any disputes arising hereunder will be adjudicated in federal or state court situated therein. Each party hereto consents to such venue in New York and to the personal and subject matter jurisdiction of said courts and, to the extent permitted by applicable law, agrees to waive any objection as to such jurisdiction or venue, and agrees not to assert any defense based on lack of jurisdiction or venue. (e) SEVERABILITY. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof. (f) ENTIRE AGREEMENT. This Agreement and the Purchase Agreement (including all schedules and exhibits thereto) constitute the entire agreement among the parties hereto with respect to the subject matter hereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or therein. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. (g) SUCCESSORS AND ASSIGNS. Subject to the requirements of Section 8 hereof, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto. (h) USE OF PRONOUNS. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. (i) HEADINGS. The headings and subheadings in the Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (j) COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission, and facsimile signatures shall be binding on the parties hereto. -12- (k) FURTHER ACTS. Each party 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 may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. (l) CONSENTS. All consents and other determinations to be made by the Investors pursuant to this Agreement shall be made by Investors holding a majority of the Registrable Securities. -13- IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written. COMPANY: VISUAL EDGE SYSTEMS INC. By: /s/ Earl Takefman ----------------------------------- Name: Earl Takefman Title: Chief Executive Officer INVESTOR: MARION INTERGLOBAL, LTD. By: /s/ Ron Seale ----------------------------------- Name: Ron Seale Title: Senior Managing Director -14- EX-99.3 4 SECOND AMENDMENT TO BRIDGE SECURITIES PUR. AGMT. EXHIBIT 99.3 AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT AND RELATED DOCUMENTS THIS AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT AND RELATED DOCUMENTS (the "Amendment") dated as of March __, 1998 among VISUAL EDGE SYSTEMS INC., a Delaware corporation (the "Company"), INFINITY INVESTORS LIMITED, INFINITY EMERGING OPPORTUNITIES LIMITED, SUMMIT CAPITAL LIMITED (as the transferee from SANDERA PARTNERS, L.P.) and GLACIER CAPITAL LIMITED (as the transferee from LION CAPITAL PARTNERS, L.P.) (collectively, the "Purchasers"). R E C I T A L S: A. The Company and the Purchasers have entered into that certain Bridge Securities Purchase Agreement dated as of June 13, 1997 (the "Initial Purchase Agreement"), as amended by that certain First Amendment to Bridge Securities Purchase Agreement and Related Documents (the "First Amendment") dated as of December 31, 1997. B. The Company and the Purchasers have entered into that certain Agreement dated as of March 13, 1998 pursuant to which, among other items, the Company issued to the Purchasers 1,550 additional shares of Preferred Stock (the "Letter Agreement") (the Initial Purchase Agreement, as amended by the First Amendment, the Letter Agreement and this Amendment being referred to herein as the "Purchase Agreement"). C. The Company and the Purchasers now desire to amend the Purchase Agreement, and certain of the related Financing Documents (as defined in the Purchase Agreement) executed and delivered in connection therewith in order to (i) provide for the issuance of additional shares of Common Stock to the Purchasers, (ii) make certain amendments to the Financing Documents and (iii) confirm the continued legality, validity and binding effect of the Financing Documents, as amended by this Amendment. D. Contemporaneous herewith, the Company and Marion Interglobal, Ltd. ("Marion") have entered into and consummated the transactions contemplated by that certain Purchase Agreement in the form annexed hereto as Exhibit A (the "Marion Agreement"), pursuant to which, among other things, Marion has agreed to invest up to $11,000,000 in the Company, including $3,000,000 of gross cash proceeds in a first tranche (the "Initial Marion Investment"). - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 1 (Visual Edge Systems Inc.) NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 DEFINITIONS. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Purchase Agreement. ARTICLE II AGREEMENTS The Company and the Purchasers hereby agree as follows: SECTION 2.1 CONVERSION TO COMMON STOCK. (a) The Purchasers shall not, during the period commencing on the date hereof and ending on December 31, 1998, unless a Material Transaction has occurred, convert any shares of Preferred Stock or the principal amount of any of the Convertible Notes into shares of Common Stock (the "Principal Moratorium"). (b) A Material Transaction shall mean (i) the occurrence of a Change of Control of the Company, (ii) a transfer of all or substantially all of the assets of the Company to any Person in a single transaction or series of related transactions, or (iii) a consolidation or merger of the Company with or in to another Person (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of the outstanding shares of Common Stock or in which the Company is the surviving entity, or which is effected solely to change the jurisdiction of incorporation of the Company). A Change of Control shall mean after the date of this Amendment and after giving effect to the consummation of all transactions contemplated under the Marion Agreement, any Person or group of Persons (within the meaning of Sections 13 and 14 of the Exchange Act and the rules and regulations of the Commission relating to such sections) shall have acquired beneficial ownership (within the meaning of Rules 13d-3 and 13d-5 promulgated by the Commission pursuant to the Exchange Act) of 50.1% or more of the outstanding shares of Common Stock of the Company. (c) The Principal Moratorium shall not apply and the Purchasers shall be entitled, at their option, to convert all or any shares of Preferred Stock or the principal amount of all or any of the Convertible Notes into shares of Common Stock contemporaneous with or immediately preceding any Material Transaction. - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 2 (Visual Edge Systems Inc.) (d) The Principal Moratorium shall be subject to and conditioned upon consummation of the Initial Marion Investment on the terms set forth in the Marion Agreement, with the Company supplying to the Purchasers evidence thereof reasonably satisfactory to the Purchasers (which may include, at the request of the Purchasers, a written certification from Marion to that effect). SECTION 2.2 ADDITIONAL COMMON STOCK; REGISTRATIONS. (a) Contemporaneous herewith, the Company shall issue 100,000 shares of Common Stock (the "New Shares") to the Purchasers, allocated among the Purchasers as set forth on SCHEDULE 1 hereto. In addition, if the Company has not exercised its voluntary redemption right set forth in Section 3.4 of the Purchase Agreement and redeemed on or before the First Call Date all of the Preferred Shares and repaid the entire sum due and owing on all of the Convertible Notes in accordance with the terms thereof (the "Complete Redemption Event"), then on July 1, 1998 the Company shall issue 200,000 shares of Common Stock (the "Additional New Shares") to the Purchasers, allocated among the Purchasers in the same ratios as the New Shares are allocated among the Purchasers as set forth on SCHEDULE 1 hereto. (b) The Company hereby covenants and agrees to include within the resale registration statement to be filed by the Company on Form S-3 with the Commission contemplated by the Marion Agreement (the "Marion Registration Statement") all shares of Common Stock (i) owned by the Purchasers as of the date of this Amendment (including the New Shares and, to the extent legally permissible, the Additional New Shares), (ii) issuable upon exercise of all Warrants owned by the Purchasers as of the date of this Amendment, and (iii) issued as dividends or interest on or before March 31, 1998 with respect to the Preferred Shares and the Convertible Notes, in each case which have not previously been registered for resale with the Commission pursuant to Registration No. 333-40415 as declared effective by the Commission on November 21, 1997 (the "Existing Registration Statement"). The shares of Common Stock owned by or issuable to the Purchasers which the parties expect to be included in the Marion Registration Statement are summarized on SCHEDULE 2 attached hereto. (c) On or before July 31, 1998 (the "Required Filing Date"), the Company shall file an additional resale registration statement on Form S-3 with the Commission (the "Additional Registration Statement") covering (i) any Additional New Shares (if not included in the Marion Registration Statement) and (ii) any shares of Common Stock issuable (x) upon conversion of the Preferred Shares and Convertible Notes or (y) as dividends or interest thereon, not included in the Existing Registration Statement or the Marion Registration Statement. The Required Filing Date, shall be extended until August 15, 1998 if, on or about the Required Filing Date the Company provides written notice to the Purchasers that the Company reasonably expects (based upon an executed letter of intent, term sheet or similar document) to secure Qualified Equity Financing in an amount sufficient to effect a Complete Redemption Event on or before August 15, 1998. (d) The Company shall use its best lawful efforts to cause the Marion Registration Statement and the Additional Registration Statement to be declared effective by the Commission as - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 3 (Visual Edge Systems Inc.) soon as possible. The Company further covenants and agrees to maintain the effectiveness of the Existing Registration Statement, the Marion Registration Statement and the Additional Registration Statement for the periods contemplated by the Registration Rights Agreement. (e) The Company covenants and agrees to promptly file a post effective amendment to the Existing Registration Statement (and to include in the Marion Registration Statement and the Additional Registration Statement) a change from Sandera Partners L.P. to Summit Capital Limited, and from Lion Capital Partners, L.P. to Glacier Capital Limited, as the selling shareholders thereunder. SECTION 2.3 PURCHASERS SALE RESTRICTIONS. (a) The Purchasers hereby agree that they shall not sell or otherwise transfer (including any direct or indirect short sale) in any public resale under the Existing Registration Statement, Marion Registration Statement or Additional Registration Statement or pursuant to Rule 144 (the "Resale Limitation") any shares of Common Stock of the Company owned by them or acquired by them under the terms of any of the Financing Documents prior to the earlier to occur of (i) the consummation of a Material Transaction or (ii) March 31, 1999. The parties acknowledge that the number of issued and outstanding shares of Common Stock owned by the Purchasers as of the date hereof is as summarized on Schedule 2 hereto. (b) The Purchasers may, at any time from and after June 30, 1998, resell in a private transaction exempt from the registration requirements of the Securities Act any shares of Common Stock owned by the Purchasers or acquired by them under the terms of any of the Financing Documents without the consent of the Company, Marion or any other party (the "Private Sale Right"); PROVIDED, HOWEVER, the transferee thereof must agree in writing to be bound by the Resale Limitation and the Option Right (as hereafter defined). The Purchasers hereby authorize the Company to add a legend to all shares of Common Stock owned by the Purchasers referring to the Resale Limitation, the Option Right and the Right of First Refusal (as hereafter defined) (including a reference that the Resale Limitation, Option Right and Right of First Refusal are binding upon any transferee thereof). (c) The Purchasers hereby grant to the Company an option (the "Option Right"), exercisable by the Company or by Marion (as the assignee thereof from the Company) by written notice to the Purchasers (the "Option Notice") on or before March 31, 1999 to acquire all, but not less than all, of the shares of Common Stock of the Company then owned by the Purchasers for a purchase price equal to (x) if such exercise occurs on or before the First Call Date, $4.50 per share of Common Stock and (y) if such exercise occurs after the First Call Date, the greater of (i) $4.50 per share of Common Stock or (ii) the product of 90% multiplied by the weighted average trading price as reported by Bloomberg, L.P. for the Common Stock for the twenty (20) Trading Days ending on the date immediately preceding the delivery of the Option Notice (the "Option Price"). Within three (3) Business Days following the delivery of the Option Notice, (x) the Company or Marion, as applicable, shall deliver to the Purchasers the applicable - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 4 (Visual Edge Systems Inc.) Option Price, and (y) the Purchasers shall deliver to the Company or Marion, as applicable, the certificates representing the shares of Common Stock acquired pursuant to the Option Notice. SECTION 2.4 RIGHT OF FIRST REFUSAL. (a) If prior to March 31, 1999 the Purchasers receive an offer from a third party (a "Private Offer") to purchase any or all of the shares of Common Stock then owned by the Purchasers, less any shares previously sold or transferred by the Purchasers in compliance with the terms of this Amendment (the "Remaining Shares"), and the Purchasers desire to accept such Private Offer, the Purchasers shall promptly send via facsimile a Notice of Offer (as hereafter defined) to the Company, offering to sell such Remaining Shares to the Company in accordance with Section 2.4(b) below. Such Notice of Offer shall be irrevocable for a period of 24 hours from the receipt via facsimile of the Notice of Offer by the Company. The term "Notice of Offer" shall mean a document setting forth the price and any other material terms and conditions of the Private Offer, as well as the name and address of the third party offeror. (b) Whenever a Private Offer to purchase the Remaining Shares has been received by the Purchasers which the Purchasers desire to accept, and a Notice of Offer thereof has been sent to the Company, the parties shall comply with the following procedures. For a period of 24 hours from its receipt of such Notice of Offer via facsimile, the Company shall have the right, in its discretion, without obligation, to purchase all (but not less than all) of the Remaining Shares so offered (the "Right of First Refusal") at a price equal to and on the terms specified in the Notice of Offer. If the Company elects to purchase all of the Remaining Shares so offered, it must send written notice thereof to the Purchasers within such 24 hour period. Upon exercise by the Company of such election, the Company shall purchase the Remaining Shares so offered effective as of the date of delivery of the written notice to the Purchasers, with the closing thereof occurring within three (3) Business Days thereafter. If the Company does not elect to purchase the Remaining Shares so offered within this prescribed time period, the Purchasers shall have the right to sell (the "Sale Option") the Remaining Shares subject to such Private Offer within three (3) Business Days after the delivery of the Notice of Offer to the Company, with the transferee taking such Remaining Shares subject to the terms of the Resale Limitation and the Option Right. Upon exercise of the Sale Option, the Purchasers shall be required to consummate such sale at the same price set forth in the Notice of Offer. In the event such Sale Option is not fully consummated within three (3) Business Days after the delivery of the Notice of Offer, the provisions of this Section 2.4 must again be complied with by the Purchasers prior to any disposition of the Remaining Shares prior to March 31, 1999. (c) The Company may, at its option, assign the Right of First Refusal to Marion. SECTION 2.5 INTEREST AND DIVIDEND PAYMENTS. The Company shall on March 31, 1998, pay to the Purchasers in shares of Common Stock all accrued and unpaid dividends through March 31, 1998 on the Preferred Stock and all accrued and unpaid interest on the Convertible Notes through March 31, 1998. Upon the occurrence of a Complete Redemption Event on or prior to the - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 5 (Visual Edge Systems Inc.) First Call Date, the Purchasers hereby agree to waive and forgive the obligation of the Company to pay accrued dividends on the Preferred Shares and accrued interest on the Convertible Note for the period April 1, 1998 through June 30, 1998. SECTION 2.6 WARRANTS. (a) The New Warrants (as such term is defined in the Purchase Agreement) are hereby amended by changing the exercise price set forth therein from $4.00 per share to $3.25 per share. (b) The Existing Warrants (as such term is defined in the First Amendment) (including the 30,000 Existing Warrants previously transferred to Alpine Capital Partners) are hereby amended by changing the exercise price set forth therein from $10.675 per share to $3.25 per share. The Buyers acknowledge and agree that no further amendment to the exercise price of the Existing Warrants (or issuance of additional common stock purchase warrants), pursuant to the Black-Scholes model or otherwise, is required in accordance with the exercise price reset provisions contained in Schedule 1 to the Existing Warrants. SECTION 2.7 DEFINITION IN PURCHASE AGREEMENT. (a) Effective as of the date hereof, the definitions of "Equity Financing" and "Qualified Equity Financing" in Section 1.1 of the Purchase Agreement are amended to read in their entirety as follows: "Equity Financing" means a financing resulting in the receipt solely of cash proceeds by the Company consummated through the issuance of equity securities (or securities convertible into or exchangeable for equity securities) of the Company." "Qualified Equity Financing" means an Equity Financing (x) with Marion resulting in the receipt of $5,000,000 or less of gross cash proceeds by the Company consummated in accordance with the terms of the Marion Agreement (the "Retained Equity Proceeds") and (y) with Marion , 100% of the Net Cash Proceeds of which in excess of the Retained Equity Proceeds are used to repay the Convertible Notes and redeem the shares of Preferred Stock pursuant to Section 3.4 below." (b) As specified in the First Amendment, the Retained Equity Proceeds may be retained by the Company and not utilized to redeem a portion of the Preferred Stock without causing a decrease in the Conversion Price to 50% of the lowest Closing Bid Price during the 30 Trading Days immediately preceding the consummation thereof, as contemplated therein. SECTION 2.8 VOLUNTARY PREPAYMENTS. - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 6 (Visual Edge Systems Inc.) (a) Effective as of the date hereof, Section 3.4 of the Purchase Agreement is amended to read in its entirety as follows: "SECTION 3.4. VOLUNTARY PREPAYMENTS. (a) Subject to the terms of this Section 3.4, the Company may, at its option, following three (3) days prior written notice to the Purchasers (the expiration of such three (3) day period being referred to as the "Prepayment Date"; PROVIDED, HOWEVER, if such date is not a Business Day, the Prepayment Date shall be the next Business Day thereafter) prepay all or any portion of the Convertible Instruments remaining unconverted on the Prepayment Date, specifying the amount of the prepayment pursuant to the terms of this Article III. Partial prepayments shall be in an aggregate principal amount of $500,000 or increments of $10,000 in excess thereof. The Company's voluntary redemption right specified in this Section 3.4 may only be exercisable for $2,500,000 aggregate principal amount of the Convertible Instruments on or before April 30, 1998, an additional $2,500,000 aggregate principal amount of the Convertible Instruments on or before May 31, 1998, and an additional $2,500,000 aggregate principal amount of the Convertible Instruments from and after June 1, 1998. (b) If the Prepayment Date is on or before June 30, 1998 (the "First Call Date"), the price to be paid by the Company to prepay or redeem the Convertible Instruments shall be the Stated Redemption Price. The Stated Redemption Price shall mean the sum of (x) the product of the aggregate principal amount of the Convertible Notes or liquidation preference of the Preferred Shares, as applicable, being redeemed multiplied by 80%, plus (y) any accrued and unpaid interest on the Convertible Notes or dividends on the Preferred Shares, as applicable, being redeemed, through the applicable date of consummation of the prepayment (as specified in Section 3.6 below), unless, with respect to clause (y), the redemption results in a Complete Redemption Event, in which event no such accrued and unpaid dividends or interest shall be owed thereon. (c) If the Prepayment Date is after June 30, 1998 but on or before December 31, 1998 (the "Second Call Date"), the price to be paid by the Company to prepay the Convertible Instruments shall be the Interim Redemption Price. The Interim Redemption Price shall mean the aggregate principal amount of the Convertible Notes or liquidation preference of the Preferred Shares, as applicable, being redeemed multiplied by the following applicable percentage based upon the Prepayment Date, plus any accrued and unpaid interest on the Convertible Notes or dividends on the Preferred Shares, as applicable, being - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 7 (Visual Edge Systems Inc.) redeemed, through the applicable date of consummation of the prepayment redemption: Prepayment Date Applicable Percentage --------------- --------------------- July 1 through July 31 82% August 1 through August 31 84% September 1 through September 30 86% October 1 through October 31 88% November 1 through December 31 90% (d) If the Prepayment Date is after the Second Call Date, the price to be paid by the Company to prepay the Convertible Instruments shall be the Formula Price. The "Formula Price" shall mean the greater of (I) the aggregate principal amount of the applicable Convertible Notes or the liquidation preference of the Preferred Shares, as applicable, being repaid through the date of consummation of the prepayment (as specified in Section 3.6 below) and (II) the sum of (x) the product of (i) the number of shares of Common Stock into which the Convertible Instruments being redeemed are then convertible at the then current Conversion Price and (ii) the average Closing Bid Price for the five (5) Trading Days ending two (2) Business Days immediately preceding the applicable date of consummation of the redemption as specified in Section 3.6 below, and (y) the applicable amount of accrued but unpaid interest on the Convertible Notes or dividends on the Preferred Shares, as applicable, being repaid through the date of consummation of the prepayment (as specified in Section 3.6 below)." (b) As specified in Section 3.6(c) of the Purchase Agreement, the Company shall be required to redeem all of the Preferred Shares issued and outstanding prior to the redemption of any of the Convertible Notes. SECTION 2.9 DELETION OF LIMITATION ON CONVERSION. Effective as of the date hereof, Section 10.5 of the Purchase Agreement (setting forth the Limitation on Conversion described therein) is hereby deleted in its entirety, and all references to the Limitation on Conversion contained in any Financing Document are hereby deleted in their entirety. SECTION 2.10 AMENDMENT TO CERTIFICATE OF DESIGNATION. Promptly after the execution and delivery of this Amendment, the Purchasers and the Company hereby agree to amend the Amended Certificate of Designation consistent with the terms of this Amendment. SECTION 2.11 REIMBURSEMENT FEE. Contemporaneous herewith, the Company shall pay to the Purchasers an aggregate of $20,000 in readily available funds, representing (i) the remainder of the Reimbursement Fee provided for in Section 2.18 of the First Amendment and (ii) an agreed - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 8 (Visual Edge Systems Inc.) upon reimbursement of estimated fees and expenses incurred by the Purchasers in connection with the First Amendment and this Amendment. SECTION 2.12 COMPLIANCE WITH LAWS. (a) Each Purchaser covenants and agrees that in the exercise of the Private Sale Right it shall comply with all applicable securities laws. (b) The Company covenants agrees that in the exercise of either the Option Right or the Right of First Refusal it shall comply with all applicable securities laws. ARTICLE III CONDITIONS PRECEDENT SECTION 3.1 CONDITIONS PRECEDENT. The obligation of the Purchasers to enter into this Amendment is subject to the conditions precedent that on or before the date hereof the Purchasers shall have received all of the following in form and substance acceptable to it and its counsel: (a) this Amendment dated as of the date hereof duly executed by the Company; (b) a certificate of the secretary of the Company setting forth resolutions of its board of directors with respect to the authorization, execution, delivery and performance of this Amendment, the issuance of the New Shares and the other transactions contemplated hereby (collectively, the "Amendment Agreements"), as the case may be, the officers of the Company authorized to sign such agreements and instruments, and specimen signatures of the officers so authorized; (c) evidence that the Company shall have issued the New Shares to the Purchasers; and (d) payment to the Purchasers of the amount set forth in Section 2.11 above; and (e) verification of the consummation of the Initial Marion Investment (as described in Section 2.1(d) above). ARTICLE IV RATIFICATIONS: REPRESENTATIONS AND WARRANTIES SECTION 4.1 RATIFICATIONS. The terms and provisions of the Financing Documents, as modified by this Amendment, are ratified and confirmed and shall continue in full force and effect. The Company acknowledges and agrees that each of the Financing Documents, as amended hereby, is and shall remain in full force and effect and is and shall continue to be the legal, valid and binding obligation of the Company, enforceable against it in accordance with their respective terms. SECTION 4.2 REPRESENTATIONS AND WARRANTIES. The Company hereby represents and warrants to the Purchasers that (a) the Company does not own any equity interest in any Person and does not have any Subsidiaries; (b) the execution, delivery and performance of each of the Amendment Agreements and all other documents executed and/or delivered in connection herewith and all transactions and documents contemplated hereby and thereby have been authorized - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 9 (Visual Edge Systems Inc.) by all requisite corporate action on the part of the Company; (c) each of the Amendment Agreements and all other documents executed and/or delivered in connection herewith constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms, subject to or limited by liquidation, bankruptcy, conservatorship, insolvency, reorganization, rearrangement, moratorium, or other similar laws relating to or affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (d) there is no provision of law, in the charter or bylaws of the Company, and no provision of any existing mortgage, contract, lease, indenture or agreement binding on any of them, which would be contravened by the making or delivery of any of the Amendment Agreements or any other document executed and/or delivered in connection herewith, or by the performance or observance of any of the terms hereof or thereof; (e) the execution, delivery and performance of the Amendment Agreements and the transactions contemplated hereby and thereby do not require any approval or consent of, or filing or registration with, any governmental or any other agency or authority, of stockholders, or of any other party or, if such approval or consent is required, the same has been obtained; (f) except as set forth on Schedule 4.2 hereto, each of the representations and warranties of the Company contained in ARTICLE V of the Purchase Agreement, as amended hereby, are true and correct on and as of the date hereof as though made on such date except for those limited by their terms to the date given or another specific date; (g) except as set forth on Schedule 4.2 hereto, as of the date hereof, no Event of Default has occurred and is continuing.; and (h) the Marion Agreement attached hereto as Exhibit A is a true and correct copy of all agreements between the Company and Marion , and there exist no other oral or written agreements between Marion and the Company other than the agreements embodied in the Marion Agreement. ARTICLE V MISCELLANEOUS SECTION 5.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations, warranties and covenants made in this Amendment or any other document furnished in connection with this Amendment shall survive the execution and delivery of this Amendment, and no investigation by the Purchasers or any closing shall affect the representations, warranties and covenants or the right of the Purchasers to rely upon them. SECTION 5.2 REFERENCES TO FINANCING DOCUMENTS. The Financing Documents and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Financing Documents, as amended hereby, are hereby amended so that any reference therein to the Financing Documents shall mean a reference to the Financing Documents as amended hereby. SECTION 5.3 FURTHER ASSURANCES. The Company agrees that at any time and from time to time, upon the written request of the Purchasers, it will execute and deliver such further documents and do such further acts and things as the Purchasers may reasonably request in order to - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 10 (Visual Edge Systems Inc.) fully effect the purposes of this Amendment and to provide for the continued perfection and priority of the security interests granted to the Purchasers in the Financing Documents. SECTION 5.4 SEVERABILITY. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. SECTION 5.5 APPLICABLE LAW. This Amendment and all other documents executed pursuant hereto shall be governed by and construed in accordance with the laws of the State of New York. SECTION 5.6 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and shall inure to the benefit of the Purchasers and the Company, and their respective successors and assigns, except the Company may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Purchasers. SECTION 5.7 EFFECT OF WAIVER. No consent or waiver, express or implied, by the Purchasers to or for any breach of or deviation from any covenant, condition or duty by the Company shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty. SECTION 5.8 ENTIRE AGREEMENT. THE PURCHASE AGREEMENT AS AMENDED HEREBY, THE OTHER FINANCING DOCUMENTS AND ALL AGREEMENTS EXECUTED IN CONNECTION WITH THIS AMENDMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. SECTION 5.9 HEADINGS. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment. [SIGNATURE PAGE FOLLOWS] - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 11 (Visual Edge Systems Inc.) EXECUTED as of the date first written above. VISUAL EDGE SYSTEMS INC. By: /s/ Earl Takefman ---------------------------------- Name: Earl Takefman -------------------------------- Title: Chief Executive Officer ------------------------------- INFINITY INVESTORS LIMITED By: /s/ J.A. Loughran ---------------------------------- Name: J.A. Loughran -------------------------------- Title: Director ------------------------------- INFINITY EMERGING OPPORTUNITIES LIMITED By: /s/ J.A. Loughran ---------------------------------- Name: J.A. Loughran -------------------------------- Title: Director ------------------------------- SUMMIT CAPITAL LIMITED By: /s/ James E. Martin ---------------------------------- Name: James E. Martin -------------------------------- Title: President ------------------------------- GLACIER CAPITAL LIMITED By: /s/ James E. Martin ---------------------------------- Name: James E. Martin -------------------------------- Title: President ------------------------------- - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 12 (Visual Edge Systems Inc.) SCHEDULE 1 TO AGREEMENT AND SECOND AMENDMENT Name Number of Shares Infinity Investors Limited 60,000 Infinity Emerging Opportunities Limited 13,334 Glacier Capital Limited 13,333 Summit Capital Limited 13,333 ------- Total 100,000 ------- ------- - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 13 (Visual Edge Systems Inc.) SCHEDULE 2 TO AGREEMENT AND SECOND AMENDMENT Shares to Be Included in Marion Registration Statement - ------------------------------------------------------ 1. Additional Grant Shares 73,973 2. Interest Shares for interest paid on and 12/31/97 65,671 3. Interest Shares (assumed number to be registered that will cover actual interest payable on March 31, 52,000 4. Shares underlying New Warrants 200,000 5. New Shares (of which 100,000 will be issued at Closing) 300,000 ------- Total 691,644 ------- ------- Issued and Outstanding Shares Owned as of Date Hereof by Purchasers - ------------------------------------------------------------------- 1. Original Grant Shares 93,677 2. Additional Grant Shares 180,296 3. Interest Shares for interest paid through 12/31/97 65,671 4. Interest Shares (assumed/estimated number) for interest payable 3/31/98 52,000 5. New Shares as of 3/27/98 100,000 6. Less Estimated Number of Shares previously sold by Purchasers ( 27,500) ------- ------- - -------------------------------------------------------------------------------- AGREEMENT AND SECOND AMENDMENT TO BRIDGE SECURITIES PURCHASE AGREEMENT - PAGE 14 (Visual Edge Systems Inc.) -----END PRIVACY-ENHANCED MESSAGE-----