Preferred Stock Purchase Agreement

Exhibit 10(i)



ACCENT COLOR SCIENCES, INC.



PREFERRED STOCK PURCHASE AGREEMENT



This Preferred Stock Purchase Agreement (the "Agreement") is made as of the Closing Date (as hereinafter defined) by and between Accent Color Sciences, Inc., a Connecticut corporation (the "Company"), with its principal office at 800 Connecticut Boulevard, East Hartford, Connecticut 06018, and each of the purchasers who are signatories hereto and any other purchasers who are made a party to this Agreement pursuant to Section 1 (individually, a "Purchaser" and collectively, the "Purchasers").





The Company has engaged Pennsylvania Merchant Group (the "Placement Agent") as exclusive agent of the Company in connection with the placement and sale (the "Offering") of up to 40,000 shares of the Company's Series C Convertible Preferred Stock, no par value per share (the "Series C Stock"). Shares of Series C Stock will be sold by the Company to Purchasers pursuant to Regulation D under the Securities Act of 1933, as amended (the "Act"). The purchase price of the shares to be offered in the Offering (the "Offering Price") will be $100.00 per share. The Placement Agent has delivered to each prospective purchaser a private placement memorandum, dated September 21, 1998 as supplemented by a first supplement to the private placement memorandum dated November 1, 1999 (collectively the "Placement Memorandum"), describing the Company's business, financial and operating condition, the Offering and information regarding risks to be evaluated when contemplating an investment in the Company through the Offering.





In consideration of the mutual promises, representations, warranties and conditions set forth in the Agreement, the Company and each Purchaser (severally and not jointly) agree as follows:



1. PURCHASE AND SALE OF SHARES.



1.1 Issue of Shares.



(a) The Company has authorized the issuance and sale of up to 40,000 shares of its Series C Stock (the "Shares") pursuant to the provisions of this Agreement.







(b) In reliance upon the Purchaser's representations and warranties contained in Section 4 hereof, and subject to the terms and conditions set forth herein, the Company hereby agrees to sell to each Purchaser the aggregate amount of Shares set forth below such Purchaser's signature on the subscription page bearing such Purchaser's name, such Shares to be sold at the Offering Price.



(c) In reliance upon the representations and warranties of the Company contained herein, and subject to the terms and conditions set forth herein, each Purchaser hereby agrees to purchase the amount of Shares as determined on the subscription page bearing such Purchaser's name at the Offering Price. Each Purchaser shall severally, and not jointly, be liable for only the purchase of the amount of Shares that appears on the subscription page hereof that relates to such Purchaser.



(d) The Company's agreement with each of the Purchasers is a separate agreement and the sale of the Shares to each of the Purchasers is a separate sale.



2. CLOSING DATE; DELIVERY.



2.1 Closing. The closing of the sale and purchase of the Shares under this Agreement (the "Closing") shall consist of the sale and purchase of the Shares and shall be held at the offices of the Placement Agent at such time and date selected by the Placement Agent and the Company occurring on or before December 1, 1999, or such later date to which the offering period is extended by the Company and the Placement Agent (the "Closing Date").



2.2 Delivery. Within five (5) days following the Closing, subject to the terms and conditions hereof, the Company shall deliver to each Purchaser stock certificates, registered in the name of the Purchaser, representing the shares to be purchased by the Purchaser from the Company, dated as of the Closing, against payment of the purchase price therefor in immediately available funds by wire transfer or previously cleared check, unless other means of payment shall have been agreed upon by the Purchaser and the Company.



3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.



The Company hereby represents and warrants to each Purchaser as of the date hereof and as of the Closing Date as follows:



3.1 Organization. The Company is a corporation, duly incorporated, validly and legally existing and under the laws of the jurisdiction of its incorporation. The Company has all requisite power and authority to own or lease its properties and to conduct its business as it is now being conducted. The Company holds all licenses and permits required for the conduct of its business as it is now being conducted other than those which, if not obtained, would not have a material adverse effect on the business, financial condition or results of operations of the Company. The Company is qualified as a foreign or domestic corporation and is in good standing in all







states where the conduct of its business or its ownership or leasing of property requires such qualification, except where the failure to so qualify would not have a material adverse effect on the business, financial condition or results of operations of the Company. The Company has previously delivered a true and complete copy of its Certificate of Incorporation ("Certificate") and Bylaws to the Placement Agent. The Company does not own any equity securities of, or equity interest in, any corporation, partnership, limited liability company or other person.



3.2 Capitalization. The authorized, issued and outstanding capital stock of the Company on September 21, 1999 is as set forth in the Placement Memorandum under the heading "SUMMARY -- Capitalization." All of the issued and outstanding shares of the Company's common stock have been duly authorized, validly issued and are fully paid and nonassessable. Except as set forth on Schedule 3.2 hereof, there are no existing subscriptions, options, stock option plans, warrants, calls, commitments, agreements, conversion or other rights of any character (contingent or otherwise) to purchase or otherwise acquire from the Company at any time, or upon the happening of any stated event, any shares of the capital stock of the Company.



3.3 Authority. The Company has all requisite power and authority to enter into this Agreement, the Registration Rights Agreement (as defined in Section 3.11 hereof) and the Placement Agent Warrant (as defined in Section 6.6 hereof), and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement, the Registration Rights Agreement and the Placement Agent Warrant, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate action on the part of the Company or will be so duly authorized by the Closing Date and, upon their execution and delivery by the Company, such agreements will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors' rights and subject to general equity principles.



3.4 Securities Filings.



(a) The Company has filed with the Securities and Exchange Commission (the "SEC") the documents set forth as Exhibits A, B, C and D of the Placement Memorandum (the "SEC Filings"). The SEC filings set forth as Exhibits B, C and D are amendments to the Company's Annual Report on Form 10K for 1998, the Company's Quarterly Report on Form 10Q for the quarter ended March 31, 1999 and the Company's Quarterly Report for the quarter ended June 30, 1999, respectively, all as filed with the SEC in response to the position of the SEC that the Company's Series B Convertible Preferred Stock should have been presented in the "mezzanine" section of its balance sheet rather than in the equity section of its balance sheet. The Company has filed with the SEC all reports and all other filings required to be filed with the SEC under the rules and regulations of the SEC.



(b) Except as disclosed in Section 3.4(a) hereof, the SEC Filings conformed in all material respects to the requirements of the Securities Exchange Act of







1934, as amended (the "Exchange Act"), and the rules and regulations of the SEC thereunder as of their respective filing dates and did not contain an 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 not misleading. The documents or portions thereof that were incorporated by reference in the SEC Filings pursuant to the requirements of the Exchange Act, when such incorporated documents or portions were first filed with the SEC, conformed in all material respects with any applicable requirements of the Exchange Act and the rules and regulations of the SEC thereunder.



(c) Except as disclosed in Section 3.4(a) hereof, the consolidated financial statements of the Company included in the SEC Filings fairly presented in all material respects the financial position and results of operations of the Company at their respective dates and for the respective periods to which they apply. Such financial statements have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved except as stated therein.



3.5 Placement Memorandum. The Placement Agent has advised the Company that it has delivered to each prospective purchaser the Placement Memorandum, which describes the Company's business, financial and operating condition, the Offering and information regarding risks to be evaluated when contemplating an investment in the Company through the Offering.



(a) The Placement Memorandum does not contain an 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 not misleading.



(b) Except as disclosed in Section 3.4(a) hereof, the financial statements of the Company included in the Placement Memorandum fairly present in all material respects the financial position and results of operations of the Company at their respective dates and for the respective periods to which they apply. Such financial statements have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved except as stated therein.



3.6 Issuance of the Shares. The Shares, when issued pursuant to the terms of this Agreement, shall be duly and validly authorized and issued, fully paid and nonassessable.



3.7 No Conflict with Law or Documents. The execution, delivery and consummation of this Agreement, the Registration Rights Agreement, the Placement Agent Warrant and the transactions contemplated hereby and thereby will not (a) conflict with any provisions of the Certificate or Bylaws of the Company or (b) result in any violation of or default or loss of a benefit under, or permit the acceleration of any obligation under (in each case, upon the giving of notice, the passage of time, or both), any mortgage, indenture, lease, agreement or other instrument, permit, franchise, license, judgment, order, decree, law, ordinance, rule or regulation applicable to the Company or any of its properties.







3.8 Consents, Approvals and Private Offering. Except for any filings required under federal and applicable state securities laws, all of which shall have been made as of the Closing Date to the extent required as of such time, and the consent of each holder of the Company's Series B Preferred Stock waiving its conversion rights with respect to all shares i ...