EXHIBIT 10.1
STOCKHOLDERS OPTION AGREEMENT
AGREEMENT, dated as of May 29, 1997 by and among Nitinol Medical
Technologies, Inc., a Delaware corporation (the "Purchaser"), Image Technologies
Corporation, a Delaware corporation (the "Company"), and the holders (the
"Stockholders") of (1) the shares of common stock, $.01 par value per share
("Common Stock") and (2) the warrants to purchase shares of Common Stock
("Warrants"), of the Company listed on Schedule A hereto. All such shares of
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Common Stock, together with the Warrants, are collectively referred to as the
"Shares."
In order to induce the Purchaser to enter into a Series A Preferred Stock
Purchase Agreement (the "Series A Purchase Agreement") with the Company of even
date herewith, pursuant to which the Purchaser is purchasing certain shares of
the Company's Series A Convertible Preferred Stock, $.01 par value per share
(the "Series A Preferred"), the Purchaser has requested the Stockholders, and
the Stockholders have agreed, to enter into this Agreement.
The parties hereto agree as follows:
ARTICLE I
STOCK OPTION
Section 1.1 Grant of Stock Option. Each of the Stockholders hereby grants
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to the Purchaser an irrevocable option (the "Option") to purchase all Shares
currently owned by such Stockholder as set forth on Schedule A hereto and any
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additional Shares acquired by such Stockholder (whether by purchase, dividend,
stock split, recapitalization or otherwise) after the date of this Agreement
(all such Shares being referred to as the "Stockholder's Shares" and,
collectively, as the "Stockholder Shares"). The aggregate purchase price
payable by the Purchaser for the Stockholder Shares is $24,500,000, to be paid
pro rata per Stockholder Share, thirty-two percent (32%) of which shall be paid
in cash and the balance of which shall be paid in shares of common stock, $.001
par value per share, of the Purchaser (the "Purchaser Common Stock") (as it may
be adjusted pursuant to Section 1.6, collectively, the "Purchase Price"). For
purposes of the foregoing, the Purchaser Common Stock shall be valued at the
average of the closing prices of Purchaser Common Stock as reported by the
Nasdaq National Market System on each of the last ten trading days ending five
business days prior to the Closing (as defined below).
Section 1.2 Exercise of Option.
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(a) The Option may be exercised by the Purchaser, in whole but not in
part, at any time after the date hereof and prior to the Option Extension
Deadline (as defined below), subject to extension as provided in this paragraph
(a). No later than April 30, 1999, the Company shall provide the Purchaser with
a certificate (the "Certificate") signed by its President certifying as to the
Company's cumulative pre-tax losses ("Pre-Tax Losses") for the period from April
1, 1997 through March 31, 1999. In the event such Pre-Tax Losses are in excess
of $2,171,000, the Purchaser, in its sole discretion, shall have 30 days
following receipt of the Certificate (the end of such 30-day period being
referred to herein as the "Option Extension Deadline") to elect to extend the
option exercise period for an additional six-month period. For purposes of the
foregoing, any amounts accrued by the Company for the payment of bonuses
pursuant to Section 3 of the employment agreements of even date herewith between
the Company and each of ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and any
accrued interest on borrowings of the Company under that certain Loan and
Security Agreement (the "Loan and Security Agreement") of even date herewith
between the Purchaser and the Company, shall not be included in any calculation
of Pre-Tax Losses. In the event the Purchaser elects to extend the option
exercise period it shall provide written notice to such effect to each of the
Stockholders on or before the Option Extension Deadline.
(b) In the event the Purchaser wishes to exercise the Option for the
Stockholder Shares, the Purchaser shall send a written notice (the "Exercise
Notice") to the Stockholders specifying the place, the date (not more than 120
days from the date of the Exercise Notice), and the time for the closing of such
purchase. The closing of the purchase of Stockholder Shares pursuant to this
Section 1.2(b) (the "Closing") shall occur at the place, on the date and at the
time designated by the Purchaser in its Exercise Notice, provided that if, at
the date of the Closing herein provided for, the conditions set forth in
Sections 1.4 and 1.5 shall not have been satisfied (or waived), the Purchaser
may postpone the Closing until a date within five business days after such
conditions are satisfied. Any such postponement shall not relieve the
Stockholders of any liability for failure to meet the conditions specified in
Section 1.5 hereof.
(c) The Purchaser shall not be under any obligation to deliver an Exercise
Notice and may allow the Option to terminate without purchasing any Stockholder
Shares hereunder; provided, however, that once the Purchaser has delivered to
the Stockholders an Exercise Notice, subject to the terms and conditions of this
Agreement and the satisfaction of the provisions of Section 1.5 hereof, the
Purchaser shall be bound to effect the purchase as described in such Exercise
Notice.
Section 1.3 Closing. At the Closing, (a) each Stockholder shall deliver
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to the Purchaser (in accordance with the Purchaser's instructions) a certificate
or certificates
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(the "Certificates") representing the number of such Stockholder's Shares to be
purchased at such Closing, duly endorsed or accompanied by stock powers duly
executed in blank and (b) the Purchaser shall deliver to such Stockholder (i) a
certified or bank cashier's check or checks payable to or upon the order of such
Stockholder in the amount set forth opposite such Stockholder's name on Schedule
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A hereto and (ii) a certificate representing shares of Purchaser Common Stock
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valued in accordance with Section 1.1.
Section 1.4 Stockholder Conditions. The obligation of each Stockholder to
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sell Stockholder Shares at the Closing is subject to the following conditions:
(i) The representations and warranties of the Purchaser contained
in Article IV shall be true and correct in all material respects on the
date thereof as if made on such date.
(ii) All waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") applicable to the exercise of the
Option shall have expired or been terminated.
(iii) There shall be no preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining the purchase
of the Stockholder Shares pursuant to the exercise of the Option.
(iv) All Stockholder Shares are purchased at the Closing.
Section 1.5 Purchaser's Conditions. The obligation of the Purchaser to
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purchase the Stockholder Shares at the Closing is subject to the following
conditions:
(i) The representations and warranties of the Stockholders and the
Company contained in Article II and Article III, respectively, shall be true and
correct in all material respects on the date thereof as if made on such date.
(ii) All waiting periods under the HSR Act applicable to the
exercise of the Option shall have expired or been terminated.
(iii) There shall be no preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or order promulgated or enacted by any governmental
authority,
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prohibiting or otherwise restraining the purchase of the Stockholder Shares
pursuant to the exercise of the Option.
(iv) The Company shall have complied with its covenants in
Article VI of this Agreement.
Section 1.6 Adjustment Upon Changes in Capitalization or Merger.
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In the event of any change in the Company's capital stock by reason of
stock dividends, stock splits, mergers, consolidations, recapitalizations,
combinations, conversions, exchanges of shares, extraordinary or liquidating
dividends, or other changes in the corporate or capital structure of the Company
which would have the effect of diluting or changing the Purchaser's rights
hereunder, the number and kind of shares or securities subject to the Option and
the Purchase Price per Stockholder Share (but not the total Purchase Price)
shall be appropriately and equitably adjusted so that the Purchaser shall
receive upon exercise of the Option the number and class of shares or other
securities or property that the Purchaser would have received in respect of the
Stockholder Shares purchasable upon exercise of the Option if the Option had
been exercised immediately prior to such event. Each Stockholder shall take
such steps in connection with such consolidation, merger, liquidation or other
such action as may be necessary to assure that the provisions hereof shall
thereafter apply as nearly as possible to any securities or property thereafter
deliverable upon exercise of the Option.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders severally represents and warrants to the Purchaser
as follows:
Section 2.1 Title to Shares. Such Stockholder has good and marketable
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title to the Stockholder's Shares free and clear of any and all covenants,
conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever. Schedule A
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attached hereto sets forth a true and correct description of all shares of (and
rights to acquire) capital stock of the Company owned by such Stockholder.
Schedule B attached hereto is a true and complete list of the stockholders,
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optionholders, warrantholders and other security holders of the Company showing
(i) the number of shares of Common Stock, Preferred Stock or other securities or
rights of the Company held by each Stockholder as of the date of this Agreement
and the consideration paid to the Company, if any, therefore, and (ii) the fully
diluted percentage interest in the Company held by each Stockholder, after
giving effect to the transactions contemplated hereby and the exercise of all
options, warrants or other rights or securities convertible into or exchangeable
or exercisable for Common Stock or other securities of the Company
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(including shares issued or issuable under the Company's 1997 Stock Option Plan
and shares issuable upon exercise of any warrants issued or issuable to Junewicz
& Company ("Junewicz," and any such warrants referred to collectively as the
"Junewicz Warrants") pursuant to that certain engagement letter dated May 23,
1997 between the Company and Junewicz (the "Junewicz Agreement") and (iii) the
number of shares of Common Stock or other securities of the Company issuable
upon the exercise of options, warrants or other rights held by each
optionholder, warrantholder or rights holder as of the date of this Agreement,
together with the grant date, exercise price, vesting schedule and expiration
date of each outstanding option, warrant or other right. Except as set forth on
Schedule B, there are no shares of Common Stock, preferred stock or other
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securities or capital stock of the Company issued or outstanding. Except as set
forth on Schedule B attached hereto (i) no subscription, warrant, option,
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convertible security or other right (contingent or otherwise) to purchase or
acquire any shares of capital stock of the Company is authorized or outstanding,
(ii) the Company has no obligation (contingent or otherwise) to issue any
subscription, warrant, option, convertible security or other such right or to
issue or distribute to holders of any shares of its capital stock any evidences
of indebtedness or assets of the Company and (iii) the Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any shares of
its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof.
Section 2.2 Authority. Such Stockholder has the full right, power and
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authority to enter into this Agreement and to transfer, convey and sell to the
Purchaser at the Closing the Stockholder's Shares to be sold by such Stockholder
hereunder and, upon consummation of the purchase contemplated hereby, the
Purchaser will acquire from such Stockholder good and marketable title to such
Stockholder's Shares, free and clear of all covenants, conditions, restrictions,
voting trust arrangements, liens, charges, encumbrances, options and adverse
claims or rights whatsoever. Such Stockholder has duly executed and delivered
this Agreement and this Agreement constitutes the valid and binding obligation
of such Stockholder enforceable against such Stockholder in accordance with its
terms. The execution of and performance of the transactions contemplated by
this Agreement and compliance with its provisions by such Stockholder will not
violate any provision of law and will not conflict with or result in any breach
of any of the terms, conditions or provisions of, or constitute a default under,
or require a consent or waiver under, the Certificate of Incorporation or By-
Laws of the Company (each as amended to date) or any agreement or instrument to
which such Stockholder is a party or by which he or any of his properties is
bound, or any decree, judgment, order, statute, rule or regulation applicable to
such Stockholder.
Section 2.3 Government Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority is required on the part of such
Stockholder or the Company in connection with the execution and delivery of this
Agreement or the
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transactions to be consummated at the Closing, as contemplated by this Agreement
(except that the pre-merger notification provisions of the HSR Act may apply).
Section 2.4 Litigation. Such Stockholder is not a party to, subject to or
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bound by any agreement or any judgment, order, writ, prohibition, injunction or
degree of any court or other government body, and there is no action, suit or
proceeding or governmental inquiry or investigation pending which would prevent
the execution or delivery of this Agreement by such Stockholder or the transfer,
conveyance and sale of the Stockholder's Shares to be sold by such Stockholder
to the Purchaser pursuant to the terms hereof.
Section 2.5 Brokers. No broker or finder has acted for such Stockholder
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in connection with this agreement or the transactions contemplated hereby,
except that, pursuant to the Junewicz Agreement, a true and correct copy of
which is attached hereto as Exhibit C, the Company has retained Junewicz in
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connection with the transactions contemplated by this Agreement and, except for
compensation due to Junewicz, no broker or finder is entitled to any brokerage
or finder's fee or other commissions in respect of such transactions based upon
agreements, arrangements or understandings made by or on behalf of such
Stockholder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows:
Section 3.1 Authority. The execution, delivery and performance by the
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Company of this Agreement, and the consummation by the Company of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action. This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company
enforceable in accordance with its terms. The execution of and performance of
the transactions contemplated by this Agreement and compliance with its
provisions by the Company will not violate any provision of law and will not
conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, or require a consent or waiver
under, its Certificate of Incorporation or By-Laws (each as amended to date) or
any indenture, lease, agreement or other instrument to which the Company is a
party or by which it or any of its properties is bound, or any decree, judgment,
order, statute, rule or regulation applicable to the Company.
Section 3.2 Capitalization. The authorized capital stock of the Company
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(immediately prior to the Closing) consists of 5,000,000 shares of common stock,
$0.01 par value per share (the "Common Stock"), of which 1,139,680 shares are
issued and
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outstanding, and 1,000,000 shares of Preferred Stock, $0.01 par value per share,
all of which 1,000,000 shares have been designated as Series A Preferred, none
of which shares is issued or outstanding. All of the issued and outstanding
shares of Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable. The total number of shares of Common Stock that
may be issued under the 1997 Stock Option Plan is 200,000, of which no shares
are issuable pursuant to outstanding stock options. No options to be issued
pursuant to the 1997 Stock Option Plan will vest or become exercisable prior to
the expiration of the Option. Except as set forth in Exhibit B hereto, (i) no
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subscription, warrant, option, convertible security or other right (contingent
or otherwise) to purchase or acquire any shares of capital stock of the Company
is authorized or outstanding, (ii) the Company has no obligation (contingent or
otherwise) to issue any subscription, warrant, option, convertible security or
other such right or to issue or distribute to holders of any shares of its
capital stock any evidences of indebtedness or assets of the Company, and (iii)
the Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any shares of its capital stock or any interest therein or to
pay any dividend or make any other distribution in respect thereof.
Section 3.3 Government Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority is required on the part of the Company
in connection with the execution and delivery of this Agreement, or the
transactions to be consummated at the Closing, as contemplated by this
Agreement, except such filings as shall have been made prior to and shall be
effective on and as of the Closing (except that the pre-merger notification
provisions of the HSR Act may apply).
Section 3.4 Litigation. There is no action, suit or proceeding, or
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governmental inquiry or investigation, pending, or, to the best of the Company's
knowledge, any basis therefor or threat thereof, against the Company, which
questions the validity of this Agreement or the right of the Company to enter
into it.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to each of the Stockholders that the
Purchaser has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery and
performance by the Purchaser of this Agreement and the consummation by the
Purchaser of the transactions contemplated hereby (i) have been duly authorized
by the Board of Directors of the Purchaser and no other corporate action on the
part of the Purchaser is necessary to authorize the execution, delivery or
performance by the Purchaser of this Agreement and the consummation by the
Purchaser of the transactions contemplated hereby and (ii) will not result in a
violation of any order, writ, injunction, decree, statute, rule or regulation
applicable to the Purchaser (except
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that the pre-merger notification requirements of the HSR Act may apply). This
Agreement has been duly executed and delivered by the Purchaser and is a valid
and binding agreement of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
generally.
ARTICLE V
COVENANTS OF THE STOCKHOLDERS
Each of the Stockholders hereby covenants and agrees that:
Section 5.1 No Proxies for or Encumbrances on Stockholder Shares. Except
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as provided in this Agreement, such Stockholder shall not during the term of
this Agreement, without the prior written consent of the Purchaser, directly or
indirectly, (i) grant any proxies or enter into any voting trust or other
agreement or arrangement with respect to the voting of any Stockholder Shares or
(ii) sell, assign, transfer, encumber or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to the
direct or indirect sale, assignment, transfer, encumbrance or other disposition
of, any Shares. Such Stockholder shall not seek or solicit any such sale,
assignment, transfer, encumbrance or other disposition or any such contract,
option or other arrangement or assignment or understanding and agrees to notify
the Purchaser promptly and to provide all details requested by the Purchaser if
such Stockholder shall be approached or solicited, directly or indirectly, by
any person with respect to any of the foregoing.
Section 5.2 No Shop. Such Stockholder shall not directly or indirectly
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(i) solicit, initiate or encourage (or authorize any person to solicit, initiate
or encourage) any inquiry, proposal or offer from any person to acquire the
business, property or capital stock of the Company or any direct or indirect
subsidiary thereof, or any acquisition of a substantial equity interest in, or a
substantial amount of the assets of, the Company or any direct or indirect
subsidiary thereof, whether by merger, purchase of assets, tender offer or other
transaction or (ii) participate in any discussion or negotiations regarding, or
furnish to any other person any information with respect to, or otherwise
cooperate in any way with, or participate in, facilitate or encourage any effort
or attempt by any other person to do or seek any of the foregoing. Such
Stockholder shall promptly advise the Purchaser of the terms of any
communications it may receive relating to any of the foregoing.
Section 5.3 Conduct of Stockholders. Such Stockholder will not (i) take,
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agree or commit to take any action that would make any representation and
warranty of such Stockholder hereunder inaccurate in any respect as of any time
prior to the termination of this Agreement or (ii) omit, or agree or commit to
omit, to take any action necessary to prevent any such representation or
warranty from being inaccurate in any respect at any such time.
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ARTICLE VI
COVENANTS OF THE COMPANY
The Company hereby covenants and agrees that during the term of this
Agreement, the Company shall not, without the prior written consent of the
Purchaser:
(a) authorize or issue, or enter into any agreement for the issuance of,
any shares of any class or series of stock of the Company or any rights, options
or warrants to subscribe for, purchase or otherwise acquire Common Stock or any
capital stock or other capital stock or securities of the Company or any
evidence of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable or exercisable for Common Stock of the Company
other than (i) up to an aggregate of 200,000 shares of Common Stock issued
pursuant to the Company's 1997 Stock Option Plan as in effect on the date
hereof, (ii) shares of Series A Preferred (and shares of Common Stock of the
Company issuable upon conversion thereof) issuable pursuant to the Series A
Purchase Agreement, (iii) shares of Series A Preferred (and shares of Common
Stock of the Company issuable upon conversion thereof) issued pursuant to the
Loan and Security Agreement and (iv) the Junewicz Warrants and shares of Common
Stock issuable upon exercise of the Junewicz Warrants;
(b) grant or award any option pursuant to the 1997 Stock Option Plan that
vests or becomes exercisable prior to the expiration of the Option or accelerate
the vesting of any such option prior to the expiration of the Option;
(c) grant or award any option pursuant to the 1997 Stock Option Plan to
either of ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇;
(d) create, incur, assume, guarantee or become liable, contingently or
otherwise with respect to any indebtedness or obligation, other than pursuant to
the Loan and Security Agreement or in the ordinary course of business consistent
with past practice;
(e) create, incur or allow to be created or exist any lien, encumbrance,
mortgage, pledge or other security interest of any kind upon any of its assets
except (i) liens securing the obligations of the Company under the Loan and
Security Agreement, (ii) liens securing taxes or governmental charges not yet
due, or (iii) liens described on Schedule D hereto; or
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(f) enter into any agreement or arrangement relating to the patents,
patent applications, trademarks, service marks, trademark and service ▇▇▇▇
applications, trade names, copyright registrations and licenses or other product
rights necessary for the conduct of the Company's business as conducted and as
proposed to be
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conducted which could adversely affect the Company's ownership interest or
rights therein.
ARTICLE VII
PURCHASER RIGHT OF FIRST REFUSAL
(a) In the event the Purchaser does not exercise the Option, then, in such
event, during the 12-month period commencing on the date of expiration of the
Option, the Company shall not enter into any agreement for the (i) sale of all
or substantially all of the capital stock of the Company, (ii) merger of the
Company with or into, or the consolidation of the Company with, any other
corporation, or any similar combination with any other corporation or (iii)
sale, lease or disposition of all or substantially all of the Company's
properties or assets (any such transaction referred to as a "Purchase
Transaction"), unless in each such case the Company shall have first complied
with this Agreement. The Company shall deliver to the Purchaser a written
notice of any proposed or intended Purchase Transaction (the "Offer"), which
Offer shall (i) identify and describe in reasonable detail the terms of the
proposed Purchase Transaction, (ii) describe in reasonable detail the price and
other terms of the proposed Purchase Transaction, (iii) identify by name the
persons or entities that will be parties to the proposed Purchase Transaction,
and (iv) offer to enter into an agreement with the Purchaser on the same terms
and conditions as the proposed Purchase Transaction. The Purchaser shall have
the right, for a period of sixty (60) days following receipt of such Offer, to
exercise its right to enter into an agreement with the Company on the same terms
and conditions specified in the Offer. The Offer by its term shall remain open
and irrevocable for such 60-day period.
(b) To accept the Offer, the Purchaser must deliver a written notice to
the Company, prior to the end of the 60-day period, setting forth its desire to
enter into an agreement with the Company at the price and upon the other terms
specified in the Offer.
(c) The obligation of the Purchaser to enter into an agreement with the
Company pursuant to the provisions of this Article VII is subject in all cases
to the preparation, execution and delivery by the Company and the Purchaser of
definitive agreements relating to such transaction reasonably satisfactory in
form and substance to the Purchaser and its counsel. Each party agrees to
negotiate diligently and in good faith to enter into such definitive agreements.
(d) The rights of the Purchaser under this Article VII shall only apply in
the event that the proposed Purchase Transaction is related to, results from or
follows any change, modification or amendment of, or waiver of rights under, the
License Agreement of even date herewith by and between the Company and ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1 Expenses. All costs and expenses incurred in connection with
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this Agreement shall be paid by the party incurring such cost or expense.
Section 8.2 Further Assurances. The Purchaser and the Stockholders will
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each execute and deliver or cause to be executed and delivered all further
documents and instruments and use their respective best efforts to secure such
consents and take all such further action as may be reasonably necessary in
order to consummate the transactions contemplated hereby or to enable the
Purchaser and any assignee to exercise and enjoy all benefits and rights of the
Stockholders with respect to the Option and the Stockholder Shares.
Section 8.3 Additional Agreements. Subject to the terms and conditions of
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this Agreement, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations and
which may be required under any agreements, contracts, commitments, instruments,
understandings, arrangements or restrictions of any kind to which such party is
a party or by which such party is governed or bound, to consummate and make
effective the transactions contemplated by this Agreement.
Section 8.4 Specific Performance. The parties hereto agree that the
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Purchaser may be irreparably damaged if for any reason any Stockholder fails to
sell such Stockholder's Shares (or other securities deliverable pursuant to
Section 1.6) upon exercise of the Option or to perform any of its other
obligations under this Agreement, or if the Company fails to perform any of its
obligations under Article VII of this Agreement, and that the Purchaser would
not have any adequate remedy at law for money damages in such event.
Accordingly, the Purchaser shall be entitled to specific performance and
injunctive and other equitable relief to enforce the performance of this
Agreement by each Stockholder and to enforce the performance of Article VII of
this Agreement by the Company. This provision is without prejudice to any other
rights that the Purchaser may have against any Stockholder for any failure to
perform its obligations under this Agreement.
Section 8.5 Notices. All notices, requests, consents and other
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communications under this Agreement shall be in writing and shall be delivered
by hand, sent by fax or nationally recognized overnight courier or mailed by
first class certified or registered mail, return receipt requested, postage
prepaid:
If to the Company, at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: President, or at such other address or addresses as may have been
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furnished in writing by the Company to the Purchaser with a copy to ▇▇▇▇▇ ▇.
▇▇▇▇, Esq., ▇▇▇▇▇ and ▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
If to a Stockholder, at his address set forth on Schedule A to this
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Agreement or at such other address or addresses as may have been furnished in
writing by such Stockholder to the Purchaser, with a copy to ▇▇▇▇▇ ▇. ▇▇▇▇,
Esq., ▇▇▇▇▇ and ▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; or
If to the Purchaser, at Nitinol Medical Technologies, Inc., ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address as may have been
furnished to the Company and the Stockholders in writing by the Purchaser, with
a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Notices provided in accordance with this Section 8.5 shall be deemed given
(1) when received, if sent by hand, (2) when received, if sent by fax prior to
5:00 p.m. local time at the place received (otherwise on the next following
business day), (3) one business day after delivery to a nationally recognized
overnight courier service, and (4) three business days after deposit in the U.S.
mail, first class certified or registered, postage prepaid.
Section 8.6 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Stockholder Shares.
Section 8.7 Amendments; Termination. Any term of this Agreement,
-----------------------
including the allocation of the Purchase Price between cash and Purchaser Common
Stock set forth in Section 1.1, may be amended or modified and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactivity or prospectively), with the written consent of
the Purchaser, the Company and Stockholders holding at least a majority of the
Shares. Any amendment, modification or waiver effected in accordance with this
Section 8.7 shall be binding upon each Stockholder, the Company and the
Purchaser. This Agreement may be terminated upon written consent of the parties
hereto.
Section 8.8 Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that the Purchaser may assign its
rights and obligations to any affiliate of the Purchaser and provided, further,
that no Stockholder may assign, delegate or otherwise transfer any of its rights
or obligations under this Agreement without the consent of the Purchaser.
-12-
Section 8.9 Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the laws of the Commonwealth of Massachusetts
without giving effect to the principles of conflicts of laws thereof.
Section 8.10 Counterparts; Effectiveness. This Agreement may be signed in
---------------------------
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instruments.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
Section 8.11 Obligations Separate. The obligations of the Stockholders
--------------------
hereunder are several and not joint.
* * * Remainder of page intentionally left blank * * *
-13-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PURCHASER:
NITINOL MEDICAL TECHNOLOGIES, INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
COMPANY:
IMAGE TECHNOLOGIES CORPORATION
By: /s/▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
STOCKHOLDERS:
/s/▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ f/b/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-14-
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇ and /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------------
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
-15-
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
DELAWARE GUARANTY & TRUST, F.B.O.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ PARTNERS L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: General Partner
/s/ J. ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
J. ▇▇▇▇ ▇▇▇▇▇▇▇▇
JUNEWICZ & CO., INC.
By: /s/ J. ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: J. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
-16-
Schedule A
----------
Number of
Name and Address Stockholder
of Stockholder Shares/1/
---------------- -----------
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ 412,385
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 201,646
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ f/b/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 200,000
Nations Security Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 36,375
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 16,666
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 16,666
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 50,000
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 5,556
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------
/1/ Represents shares of Common Stock of the Company unless otherwise
indicated.
A-1
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 5,556
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President 16,668
Instramed Surgical Associates, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 25,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇. ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 40,000
▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. 25,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 10,571
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ 3,571
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ 7,142
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ 7,142
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ 3,571
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A-2
Delaware Guaranty & Trust, 15,031
F.B.O. ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Partners L.P. 30,063
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ 11,071
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Junewicz & Company Warrant to
Suite 2000 purchase
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 17,737
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ shares of
Common
Stock/2/
=========
Total: 1,157,417
----------------------
/2/ In the event the Purchaser converts the principal amount borrowed by the
Company under the Loan and Security Agreement into additional shares of
Series A Preferred, Junewicz & Company shall be entitled to receive a
warrant to purchase a number of shares of Common Stock equal to 5% of the
number of additional shares of Series A Preferred issued to the Purchaser.
If the principal amount of the loan equals $2,000,000 and such principal
amount is converted into additional shares of Series A Preferred, Junewicz
shall be entitled to receive a warrant to purchase 27,405 shares of Common
Stock of the Company.
A-3
Schedule B
----------
IMAGE TECHNOLOGIES CORPORATION
SCHEDULE OF STOCKHOLDERS AND OPTIONHOLDERS
MAY 29, 1997
=====================================================================================================================
NAME CERT. NUMBER OF CONSIDER- DATE NUMBER OF DATE NUMBER OF PERCENTAGE
NO. SHARES OF ATION ISSUED SHARES OF ISSUED SHARES OWNERSHIP
COMMON PAID PER SERIES A UNDERLYING ON A FULLY
STOCK SHARE PREFERRED THE DILUTED
OUTSTANDING STOCK WARRANT BASIS/2/
OUTSTANDING
---------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇ C-1 412,385/1/ Cash and 5/29/97 27.54
▇▇▇▇▇▇▇▇ Services
Rendered
---------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. C-2 201,646/1/ Cash and 5/29/97 14.22
▇▇▇▇▇▇▇ Services
Rendered
---------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ C-3 200,000 $1.00 5/29/97 14.21
F/B/O ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
------------------------
/1/ Represents the number of shares remaining after the redemption of an
aggregate of 45,094 shares of Common Stock represented by Stock Certificates
No. C-22 and C-23, pursuant to a certain Redemption Agreement of even date
entered into with Nitinol Medical Technologies, Inc.
/2/ Represents the individual percentage ownership after taking into account to
conversion of the outstanding preferred stock and the exercise of the warrant
issued to Junewicz & Co., Inc. to purchase 17,737 shares of Common Stock.
Page 2
=====================================================================================================================
NAME CERT. NUMBER OF CONSIDER- DATE NUMBER OF DATE NUMBER OF PERCENTAGE
NO. SHARES OF ATION ISSUED SHARES OF ISSUED SHARES OWNERSHIP
COMMON PAID PER SERIES A UNDERLYING ON A FULLY
STOCK SHARE PREFERRED THE DILUTED
OUTSTANDING STOCK WARRANT BASIS/2/
OUTSTANDING
---------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. C-4 36,375 $1.00 5/29/97 2.53
▇▇▇▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. C-5 16,666 $3.19 5/29/97 1.22
▇▇▇▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. C-6 16,666 $3.19 5/29/97 1.22
▇▇▇▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. C-7 50,000 $3.19 5/29/97 3.43
▇▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇. C-8 5,556 $3.19 5/29/97 0.40
▇▇▇▇▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. C-9 5,556 $3.19 5/29/97 0.40
▇▇▇▇, Jr.
---------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. C-10 16,668 $3.19 5/29/97 1.12
▇▇▇▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇ C-11 25,000 $3.19 5/29/97 1.77
and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------
Bjorn R. C-12 40,000 Services 5/29/97 2.77
▇▇▇▇▇▇ Rendered
---------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇ C-13 25,000 $3.19 5/29/97 1.77
▇▇▇▇▇▇▇▇, Jr.
---------------------------------------------------------------------------------------------------------------------
Page 3
====================================================================================================================================
NAME CERT. NUMBER OF CONSIDERATION DATE NUMBER OF DATE NUMBER OF PERCENTAGE
NO. SHARES PAID PER ISSUED SHARES OF ISSUED SHARES OWNERSHIP
COMMON SHARE SERIES A UNDERLYING ON A FULLY
STOCK PREFERRED THE DILUTED
OUTSTANDING STOCK WARRANT BASIS/2/
OUTSTANDING
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ C-14 10,571 $7.00 5/29/97 0.80
▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ C-15 3,571 $7.00 5/29/97 0.20
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ C-16 7,142 $7.00 5/29/97 0.40
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ C-17 7,142 $7.00 5/29/97 0.40
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ Von C-18 3,571 $7.00 5/29/97 0.20
▇▇▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
Delaware C-19 15,031 $6.65 5/29/97 0.10
Guaranty &
Trust, F/B/O
▇▇▇▇ ▇.
▇▇▇▇▇▇ ▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ C-20 30,063 $6.65 5/29/97 0.30
Partners,
L.P.
------------------------------------------------------------------------------------------------------------------------------------
J. ▇▇▇▇ C-21 11,071 Services 5/29/97 0.81
Junewicz Rendered
------------------------------------------------------------------------------------------------------------------------------------
Nitinol P-1 -0- $6.65 5/29/97 345,722 5/29/97 23.00
Medical
Technologies,
Inc.
------------------------------------------------------------------------------------------------------------------------------------
Page 4
=================================================================================================================================
NAME CERT. NUMBER OF CONSIDER DATE NUMBER OF DATE NUMBER OF PERCENTAGE
NO. SHARES OF -ATION ISSUED SHARES OF ISSUED SHARES OWNERSHIP
COMMON PAID PER SERIES A UNDERLYING ON A FULLY
STOCK SHARE PREFERRED THE DILUTED
OUTSTANDING STOCK WARRANT BASIS/2/
OUTSTANDING
---------------------------------------------------------------------------------------------------------------------------------
Warrant J-1 -0- $6.65 -- -- 5/29/97 17,737 1.19
Issued to
Junewicz &
Co., Inc.
=================================================================================================================================
TOTAL 1,139,680 345,722 17,737 100.00%
===== ========= ======= ====== =======
Page 5
OPTIONHOLDERS
-------------
1) Warrant granted to Junewicz & Co., Inc. to purchase 17,737 shares of Common
Stock at $6.65 per share prior to May 28, 2002. In addition, a warrant to
purchase up to 27,405 shares of Common Stock will be issued in the event
that any monies borrowed pursuant to the Loan and Security Agreement and
footnote Number 2 set forth on Page A-3 of the Stockholders Option
Agreement dated as of May 28, 1997.
2) The Company has established the 1997 Stock Option Plan and reserved a total
of 200,000 shares for the issuance of grants in accordance with the terms
of the Stock Option Plan. To date, no options has been granted.
[LETTERHEAD OF JUNEWICZ & CO., INC. APPEARS HERE]
May 23, 1997
Image Technologies Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. R. ▇▇▇ ▇▇▇▇▇▇▇▇
President and CEO
Gentlemen:
This letter agreement (the "Agreement") will confirm the arrangement under
which Junewicz & Co., Inc. ("Junewicz") has been engaged by Image Technologies
Corporation (the "Company") to act as its exclusive financial advisor in
connection with the transactions being contemplated with Nitinol Medical
Technologies, Inc. ("Nitinol").
As the Company's financial advisor, Junewicz has introduced the Company and
other investors to Nitinol and has assisted the Company in structuring and
negotiating the transactions being contemplated with Nitinol.
The Company and Junewicz further agree as follows:
1. Transactions Contemplated with Nitinol
--------------------------------------
The transactions being contemplated between the Company, R. ▇▇▇ ▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and Nitinol, ▇▇▇▇▇▇ Capital
Management and ▇▇▇▇ ▇. ▇▇▇▇▇▇ (collectively "▇▇▇▇▇▇") are as follows:
At the first closing, the following transactions will occur:
a) Nitinol will purchase $2.3 million of Series A Preferred Stock
("Preferred Stock") from the Company ("Transaction 1a");
b) ▇▇▇▇▇▇ will purchase $300,000 of Common Stock ("Common Stock") from the
Company ("Transaction 1b"); and
c) The Company will purchase $300,000 of Common Stock from ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ("Transaction 1c").
Subsequent to the first closing, the following transactions may occur:
d) Nitinol will provide a credit line to the Company of up to $2.0 million
of senior debt (the "Revolving Credit Loan"). Nitinol will have the right to
convert all or any portion of the amount drawn down under the Revolving Credit
Line into additional shares of Preferred Stock of the Company. Nitinol may
also, at any time during the Option Period (defined as the period during Nitinol
may exercise its option to purchase all of the outstanding capital stock of the
Company pursuant to the Stockholders Option Agreement (the "Purchase Option")),
convert all or any
Image Technologies Corporation
May 23, 1997
Page 2
portion of any undrawn amounts under the Revolving Credit Loan into
additional shares of Preferred Stock of the Company ("Transaction
1d").
e) Nitinol will have the option to purchase all remaining shares of the
Company for an additional $24.5 million at any time during the Option
Period ("Transaction 1e").
2. Fees and Expenses
-----------------
In consideration for its services hereunder, Junewicz shall receive 7,500
shares of the Company's Common Stock as a retainer payment. Such shares shall
be issued on or before the closing of Transactions 1a, 1b and 1c. In addition,
Junewicz shall be entitled to receive the following indicated compensation from
the indicated obligors at the closing of the respective transactions:
a) The Company shall pay to Junewicz a cash fee equal to 5% of the gross
proceeds of any sale of Preferred Stock by the Company to Nitinol. In
addition, the Company shall issue to Junewicz an amount of warrants
equal to 5% of the number of shares of Preferred Stock sold by the
Company to Nitinol, less the number of shares of Common Stock
redeemed by the Company from ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ in Transaction 1c.
(Transactions 1a and 1d)
b) The Company shall pay to Junewicz a cash fee equal to 6% of the gross
proceeds of any sale of Common Stock by the Company to ▇▇▇▇▇▇ or
other investors originated by Junewicz. In addition, the Company
shall issue to Junewicz an amount of warrants equal to 6% of the
number of shares of Common Stock sold by the Company to ▇▇▇▇▇▇ or
other investors originated by Junewicz. (Transaction 1b)
c) If Nitinol purchases the remaining shares of the Company, the Company
agrees to pay Junewicz an additional cash transaction fee equal to
2.0% of the Aggregate Consideration paid to the Company's
shareholders up to $25 million, and 1.5% of the Aggregate
Consideration on the portion greater than $25 million. (Transaction
1e)
The warrants (to purchase Common Stock) issued to Junewicz under
Transactions 1a, 1b and 1d shall have an exercise price equal to the price paid
for the Preferred Stock or Common Stock by Nitinol, ▇▇▇▇▇▇ or other investors
originated by Junewicz and shall be exerciseable at any time for a period of
five years from the date of the respective transactions. In the event of (i) an
initial public offering by the Company, or (ii) a reorganization, merger or sale
of the Company, the Company shall permit the "cashless exercise" of any warrants
granted to Junewicz in this Paragraph (i.e., the exercise of the warrants
without payment of the exercise price in cash with the result that Junewicz
receives upon exercise cash representing the difference between the exercise
price of the warrants and the initial public offering or sale price of the
Common Stock without requiring Junewicz to pay the exercise price in cash).
For purposes of this agreement, the term "Aggregate Consideration" shall
mean the total fair market value (on the date of payment) of all consideration
(including cash, securities, property, all remaining debt on the Company's
financial statements and other indebtedness and obligations assumed by Nitinol
and any other form of consideration) paid or payable, or otherwise distributed,
directly or indirectly, to the Company or its security holders in connection
with Transaction 1e. In addition to the foregoing compensation, the Company
shall reimburse Junewicz promptly
Image Technologies Corporation
May 23, 1997
Page 3
upon request, for its reasonable out-of-pocket expenses, which may include fees
and disbursements of its legal counsel.
3. Indemnification
---------------
The Company jointly and severally agree to indemnify Junewicz in accordance
with the indemnification provisions (the "Indemnification Provisions") as set
forth in Annex A to this Agreement, which is incorporated by reference into this
Agreement.
4. Prior Representation of Nitinol by Junewicz
-------------------------------------------
The Company has been advised that Junewicz has performed investment banking
services for Nitinol within the past two years and has a continuing personal and
business relationship with Nitinol, its executive officers and with ▇.▇. ▇▇▇▇▇▇▇
& Co., a major shareholder of Nitinol. In addition, the Company was advised
after the engagement of Junewicz but before the execution of any definitive
agreements relating to the transactions discussed herein that Junewicz holds
99,660 warrants in Nitinol. The Company hereby expressly consents to Junewicz,
representation of the Company notwithstanding the information set forth in this
Paragraph. In particular, the information that is set forth in this Paragraph
shall not constitute gross negligence or willful misconduct by Junewicz within
the meaning set forth in Annex A.
5. Governing Law and Other Matters
-------------------------------
This agreement shall be governed by and construed in accordance with the
Laws of the State of New York without regard to the conflict of laws principles
thereof.
Neither this Agreement nor any written advice (written or oral) rendered by
Junewicz in connection with this Agreement may be disclosed to any third party
or circulated or referred to publicly without the prior written consent of
Junewicz.
Please confirm that the foregoing is in accordance with your understanding
by signing and returning the enclosed duplicate copy of this Agreement, which
shall thereupon constitute a binding agreement as of the date set forth above.
Very truly yours,
JUNEWICZ & CO., INC.
By: /s/ J. ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
J. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Confirmed and Agreed to this 23 day of May, 1997:
IMAGE TECHNOLOGIES CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
R. ▇▇▇ ▇▇▇▇▇▇▇▇
President & Chief Executive Officer
Image Technologies Corporation
May 23, 1997
Annex A
In the event that Junewicz becomes involved in any capacity in any action,
proceeding or investigation brought by or against any person including
stockholders of the Company, in connection with any matter referred to in this
Agreement, the Company periodically will reimburse Junewicz for its legal and
other expenses (including the cost of any investigation and preparation)
incurred in connection therewith. The Company also will indemnify and hold
harmless against any losses, claims, damages, expenses or liabilities to any
such person in connection with any matter referred to in this Agreement, except
to the extent that any loss, claim, damage or liability is judicially determined
to have resulted primarily from the gross negligence or willful misconduct of
Junewicz in performing the services that are the subject of this Agreement. If
for any reason the foregoing indemnification is unavailable to Junewicz or
insufficient to hold it harmless, then the Company shall contribute to the
amount paid or payable by Junewicz as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative benefits
of the Company and the other stockholders on one hand and Junewicz on the other
hand in the matters contemplated by this Agreement, as well as the relative
fault of the Company on the one hand and Junewicz on the other hand with respect
to such loss, claim, damage or liability and any other relevant equitable
considerations. The reimbursement, indemnity and contribution obligations of the
Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, including, without limitation, any liability which
the Company may have to Junewicz pursuant to the Agreement and shall extend upon
the same terms and conditions to the controlling person of Junewicz, and shall
be binding upon and inure to the benefit of any successors, assigns, heirs, and
personal representatives of the Company, Junewicz, any such affiliate and any
such person. The Company also agrees that neither Junewicz nor its control
person shall have any liability to the Company or the stockholders of the
Company for or in connection with any matter referred to in this Agreement
except to the extent that any losses, claims, damages, liabilities or expenses
incurred by the Company are judicially determined to have resulted primarily
from the gross negligence or willful misconduct of Junewicz in performing the
services that are subject to this Agreement. The foregoing provisions shall
survive any termination or completion of the engagement provided by this
Agreement and this Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the conflict of laws
principles thereof. The Company agrees that they will not settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder unless such settlement, compromise or consent includes an
unconditional release of Junewicz and the controlling person of Junewicz from
all liability arising out of such claim, action, suit or proceeding.
Schedule D
----------
Permitted Liens
NONE, except for $102,808.00 due at the closing to individual lenders,
including $15,000.00 due to ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇.